Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 10, 2015 | Jun. 30, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | MassRoots, Inc. | ||
Entity Central Index Key | 1589149 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $596,848 | ||
Entity Common Stock, Shares Outstanding | 41,179,000 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2014 |
Balance_Sheets
Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
CURRENT ASSETS | ||
Cash | $141,928 | $80,479 |
Other receivables | 11,201 | 0 |
Prepaid expense | 130,797 | 800 |
TOTAL CURRENT ASSETS | 283,926 | 81,279 |
FIXED ASSETS | ||
Computer and office equipment | 16,189 | 1,522 |
Accumulated depreciation | -2,027 | -228 |
NET FIXED ASSETS | 14,162 | 1,294 |
OTHER ASSETS | ||
Deposits | 2,550 | 0 |
Prepaid Expense | 65,891 | 0 |
Total Other Assets | 68,841 | 0 |
TOTAL ASSETS | 366,528 | 82,573 |
CURRENT LIABILITIES | ||
Accounts Payable | 25,842 | 0 |
Accrued expenses | 23,917 | 0 |
Accrued payroll tax | 1,778 | 1,846 |
Derivative Liabilities | 1,099,707 | 0 |
TOTAL CURRENT LIABILITIES | 1,151,242 | 1,846 |
LONG-TERM LIABILITY | ||
Convertible debentures, net of $107,016 discount | 162,084 | 0 |
TOTAL LONG-TERM LIABILITIES | 162,084 | 0 |
TOTAL LIABILITIES | 1,313,328 | 1,846 |
STOCKHOLDERS' EQUITY (DEFICIT) | ||
Preferred series A Stock, $1 par value, 21 shares authorized; 0 shares issued and outstanding | 0 | 0 |
Common stock, $0.001par value, 200,000,000 shares authorized; 38,909,000 and 0 shares issued and outstanding | 38,909 | 0 |
Common stock to be issued | 1,048 | 13,890 |
Additional paid in capital | 2,372,867 | 985,960 |
Retained Deficit | -3,359,623 | -919,123 |
TOTAL STOCKHOLDERS' EQUITY | -946,799 | 80,727 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $366,528 | $82,573 |
Balance_Sheets_Parenthetical
Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Sep. 30, 2014 | Mar. 31, 2014 | Mar. 18, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | |||||
Convertible Debenture Discount | $80,827 | ||||
Preferred Stock, Par Value | $1 | $1 | $1 | ||
Preferred Stock, Shares Authorized | 21 | 21 | 21 | ||
Preferred Stock, Shares Issued | 0 | 0 | 0 | ||
Preferred Stock, Shares Outstanding | 0 | 0 | 0 | ||
Common Stock, Par Value | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 |
Common Stock, Shares Authorized | 200,000,000 | 200,000,000 | 200,000,000 | 200,000,000 | 200,000,000 |
Common Stock, Shares Issued | 38,909,000 | 38,909,000 | 0 | 36,000,000 | 0 |
Common Stock, Shares Outstanding | 38,909,000 | 38,909,000 | 0 | 0 |
Statements_of_Operations
Statements of Operations (USD $) | 9 Months Ended | 12 Months Ended |
Dec. 31, 2013 | Dec. 31, 2014 | |
Income Statement [Abstract] | ||
ADVERTISING REVENUE | $470 | $9,030 |
COST OF GOODS SOLD | 0 | -690 |
GROSS PROFIT | 470 | 8,340 |
GENERAL AND ADMINISTRATIVE EXPENSES: | ||
Depreciation | 228 | 1,799 |
Independent contractor expense | 33,863 | 182,198 |
Legal expenses | 4,675 | 179,504 |
Payroll and related expense | 28,503 | 262,653 |
Preferred stock issued for services | 24,998 | 0 |
Common Stock Issued for Services | 0 | 30,658 |
Warrants issued for services | 555,598 | |
Options issued for services | 612,387 | 59,473 |
Other general and administrative expenses | 19,527 | 343,680 |
Total General and administrative expenses | 919,593 | 1,615,563 |
(LOSS) FROM OPERATIONS | -919,123 | -1,607,223 |
Change in Derivative Liabilities | 0 | -753,240 |
Interest income | 0 | 0 |
Interest expense | 0 | -8,316 |
Amortization of discount on convertible debentures | 0 | -67,363 |
Total Other income (expense) | 0 | 828,919 |
INCOME (LOSS) BEFORE INCOME TAXES | -919,123 | -2,436,142 |
PROVISION FOR INCOME TAXES | ||
NET (LOSS) | ($919,123) | ($2,436,142) |
Basic and fully diluted net income (loss) per common share: | ($0.17) | |
Weighted average common shares outstanding | 14,375,222 |
Shareholders_Equity
Shareholders Equity (USD $) | Preferred Stock | Common Stock | Preferred Stock to be Issued | Common Stock to be Issued | Additional Paid-In Capital | Retained Deficit | Total |
Beginning Balance, Amount at Apr. 23, 2013 | |||||||
Stock issued for cash, Shares | 0 | 0 | 18 | 0 | |||
Stock issued for cash, Amount | $0 | $18 | $0 | $149,982 | $0 | $150,000 | |
Stock issued for services, Shares | 0 | 0 | 3 | ||||
Stock issued for services, Amount | 0 | 0 | 3 | 24,995 | 0 | 24,998 | |
Retroactive adjustment for subsequent conversion, Shares | -21 | 6,273,052 | |||||
Retroactive adjustment for subsequent conversion, Amount | -21 | 6,273 | -6,252 | 0 | |||
Stock issued for repayment of short term borrowing and services, Shares | 0 | 0 | 0 | 7,616,625 | |||
Stock issued for repayment of short term borrowing and services, Amount | 0 | 0 | 0 | 7,617 | 204,848 | 0 | 212,465 |
Option issued for services | 0 | 0 | 0 | 0 | 612,387 | 0 | 612,387 |
Imputed interest | |||||||
Net Loss | 0 | 0 | 0 | 0 | 0 | -919,123 | -919,123 |
Ending Balance, Amount at Dec. 31, 2013 | 0 | 0 | 0 | 13,890 | 985,960 | -919,123 | 80,727 |
Ending Balance, Shares at Dec. 31, 2013 | 0 | 0 | 0 | 13,889,677 | |||
Accrued dividend on preferred stock | -4,358 | -4,358 | |||||
Conversion of dividend into common stock, Shares | 156,293 | ||||||
Conversion of dividend into common stock, Amount | 156 | 4,202 | 4,358 | ||||
Exercise of options, Shares | 21,954,030 | ||||||
Exercise of options, Amount | 21,954 | -21,882 | 72 | ||||
Intrinsic value from beneficial conversion feature | 87,189 | 87,189 | |||||
Stock issued for cash, Shares | 2,059,000 | 1,048,000 | |||||
Stock issued for cash, Amount | 2,059 | 1,048 | 467,515 | 470,622 | |||
Stock issued for services, Shares | 850,000 | ||||||
Stock issued for services, Amount | 850 | 84,150 | 85,000 | ||||
Issuance of Common Stock, Shares | 13,889,677 | -13,889,677 | |||||
Issuance of Common Stock, Amount | 13,890 | -13,890 | |||||
Option issued for services | 201,818 | 201,818 | |||||
Issuance of warrants for services | 555,598 | 555,598 | |||||
Imputed interest | 8,316 | 8,316 | |||||
Accumulated Deficit | -2,436,142 | -2,436,142 | |||||
Net Loss | -2,436,142 | ||||||
Ending Balance, Amount at Dec. 31, 2014 | $0 | $38,909 | $0 | $1,048 | $2,372,867 | ($3,359,623) | ($946,799) |
Ending Balance, Shares at Dec. 31, 2014 | 0 | 38,909,000 | 0 | 1,048,000 |
Statements_of_Cash_Flows
Statements of Cash Flows (USD $) | 9 Months Ended | 12 Months Ended |
Dec. 31, 2013 | Dec. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net (loss) | ($919,123) | ($2,436,142) |
Adjustments to reconcile net (loss) to net cash (used in) operating activities: | ||
Depreciation | 228 | 1,799 |
Amortization of discount | 0 | -67,363 |
Change in Derivative Liabilities | 0 | -753,240 |
Imputed Interest expense | 8,316 | |
Changes in operating assets and liabilities | ||
Other receivables | -11,201 | |
Prepaid expense | -800 | |
Deposit | -2,550 | |
Accounts payable and other liabilities | 50,557 | |
Accrued payroll tax | 1,846 | -68 |
Net Cash (Used in) Operating Activities | -85,052 | -922,956 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Payments for equipment | -1,522 | -14,667 |
Net Cash (Used in) Investing Activities | -1,522 | -14,667 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Issuance of preferred stock for cash | 150,000 | |
Issuance of convertible Debentures for cash | 269,100 | |
Issuance of common stock for cash | 729,900 | |
Proceeds from Exercise of Options | 72 | |
Accrued dividend on preferred stock | ||
Proceeds from short term borrowing - related party | 17,053 | |
Net Cash Provided by Financing Activities | 167,053 | 999,072 |
NET INCREASE IN CASH | 80,479 | 61,449 |
CASH AT BEGINNING OF PERIOD | 80,479 | |
CASH AT END OF YEAR | 80,479 | 141,928 |
NON-CASH FINANCING ACTIVITIES | ||
Repayment of Short Term Borrowing - related party through issuance of preferred stock | 17,053 | |
Common stock issued for services | 54,342 | |
Options issued for services | 142,345 | |
Preferred Stock dividend | 4,538 | |
Imputed Interest - APIC | 8,316 | |
Total Non-cash financing activities | 17,053 | 192,909 |
Preferred Stock | ||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net (loss) | 0 | |
Adjustments to reconcile net (loss) to net cash (used in) operating activities: | ||
Stock issued for services | 24,998 | |
Common Stock | ||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net (loss) | 0 | |
Adjustments to reconcile net (loss) to net cash (used in) operating activities: | ||
Stock issued for services | 30,658 | 195,412 |
Options [Member] | ||
Adjustments to reconcile net (loss) to net cash (used in) operating activities: | ||
Stock issued for services | 612,387 | 59,473 |
Common Stock Warrants | ||
Adjustments to reconcile net (loss) to net cash (used in) operating activities: | ||
Stock issued for services | $0 | $555,598 |
1_SUMMARY_OF_SIGNIFICANT_ACCOU
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Accounting Policies [Abstract] | ||||
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
MassRoots, Inc. (the “Company”) is a social network for the cannabis community. Through its mobile applications, systems and websites, MassRoots enables people to share their cannabis-related content and for businesses to connect with those consumers. The Company was incorporated in the State of Delaware on April 24, 2013. | ||||
The Company’s primary focus during fiscal year 2014 was increasing our user base from under 20,000 users to over 200,000 and developing additional features to expand the reach and utility of its network. | ||||
The Company has not focused on generating revenue to date. However, the primary source of revenue generated to date is advertising from businesses, brands and non-profits. Its secondary source of income is merchandise sales. | ||||
Basis of Presentation | ||||
The financial statements include the accounts of MassRoots, Inc. under the accrual basis of accounting. | ||||
Management’s Use of Estimates | ||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The financial statements above reflect all of the costs of doing business. | ||||
Deferred Taxes | ||||
The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary 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 the statements of operations in the period that includes the enactment date. | ||||
Cash and Cash Equivalents - For purposes of the Statement of Cash Flows, the Company considers highly liquid investments with an original maturity of three months or less to be cash equivalents. | ||||
Revenue Recognition – The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when services are realized or realizable and earned less estimated future doubtful accounts. The Company considers revenue realized or realizable and earned when all of the following criteria are met: | ||||
(i) | persuasive evidence of an arrangement exists, | |||
(ii) | the services have been rendered and all required milestones achieved, | |||
(iii) | the sales price is fixed or determinable, and | |||
(iv) | Collectability is reasonably assured. | |||
MassRoots primarily generates revenue by charging businesses to advertise on the network. MassRoots has the ability to target advertisements directly to a clients’ target audience, based on their location, on their mobile devices. All advertising services take between a few hours to up to one month to complete, unless otherwise noted. | ||||
MassRoots’ secondary source of income is merchandise sales. The objective with the sales is not to generate large profit margins, but to help offset the cost of marketing. Each t-shirt, sticker and jar MassRoots sells will likely lead to more downloads and active users. | ||||
Cost of Sales - The Company’s policy is to recognize cost of sales in the same manner in conjunction with revenue recognition, when the costs are incurred. Cost of sales includes the costs directly attributable to revenue recognition. Selling, general and administrative expenses are charged to expense as incurred. | ||||
Comprehensive Income (Loss) - The Company reports comprehensive income and its components following guidance set forth by section 220-10 of the FASB Accounting Standards Codification which establishes standards for the reporting and display of comprehensive income and its components in the financial statements. There were no items of comprehensive income (loss) applicable to the Company during the periods covered in the financial statements. | ||||
Loss Per Share - Net loss per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. | ||||
Risk and Uncertainties - The Company is subject to risks common to companies in the service industry, including, but not limited to, litigation, development of new technological innovations and dependence on key personnel. | ||||
Convertible Debentures - If the conversion features of conventional convertible debt provides for a rate of conversion that is below market value at issuance, 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. | ||||
Stock-Based Compensation- The Company accounts for stock-based compensation using the fair value method following the guidance set forth in section 718-10 of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. | ||||
Fair Value for Financial Assets and Financial Liabilities- The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below: | ||||
Level 1 | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. | |||
Level 2 | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. | |||
Level 3 | Pricing inputs that are generally observable inputs and not corroborated by market data. | |||
The carrying amounts of the Company’s financial assets and liabilities, such as cash, other receivables, accounts payable, prepaid expense and other assets and liabilities approximate their fair values because of the short maturity of these instruments. | ||||
The Company does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis, consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value on December 31, 2014, nor gains or losses are reported in the statements of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date for the year ended December 31, 2014. | ||||
Embedded Conversion Features | ||||
The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion feature. | ||||
Derivative Financial Instruments | ||||
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of it financial instruments, including stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. | ||||
For option-based simple derivative financial instruments, the Company uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. | ||||
Beneficial Conversion Feature | ||||
For conventional convertible debt where the rate of conversion is below market value, the Company records a "beneficial conversion feature" ("BCF") and related debt discount. | ||||
When the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument (offset to additional paid in capital) and amortized to interest expense over the life of the debt. | ||||
Recent Accounting Pronouncements | ||||
In June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders' equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted for financial statements not yet issued. The Company adopted ASU 2014-10 during the fourth quarter of 2014, thereby no longer presenting or disclosing any information required by Topic 915. The Company has reviewed all recently issued, but not yet effective, accounting pronouncements up to ASU 2014-05, and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations. |
2_FIXED_ASSETS
2. FIXED ASSETS | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
2. FIXED ASSETS | NOTE 2 FIXED ASSETS | ||||||||
Fixed assets were comprised of the following as of December 31, 2014 and December 31, 2013, respectively. Depreciation is calculated using the straight-line method over a 5 year period. | |||||||||
31-Dec-14 | 31-Dec-13 | ||||||||
Cost: | |||||||||
Computers | 12,134 | 1,522 | |||||||
Office equipment | 4,055 | 0 | |||||||
Total | 16,189 | 1,522 | |||||||
Less: Accumulated depreciation | 2,027 | 228 | |||||||
Property and equipment, net | 14,162 | 1,294 | |||||||
3_PREPAID_EXPENSE
3. PREPAID EXPENSE | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||
3. PREPAID EXPENSE | NOTE 3 – PREPAID EXPENSE | ||||||
On June 4, 2014, the Company issued a total of 850,000 shares of its common stock and 2,050,000 options in exchange for consulting services, valued at $286,818. The $286,818 is being charged to operations over the three-year term. | |||||||
Consulting fees charged to operations during the year ended December 31, 2014 relating to this transaction amounted to $90,131. The unamortized balance at December 31, 2014 was $196,687. Amortization expense over the remaining terms of the respective consulting agreement is as follows: | |||||||
December 31, | |||||||
2014 | $ | 90,131 | |||||
2015 | 130,797 | ||||||
2016 | 65,891 | ||||||
$ | 286,818 | ||||||
4_DERIVATIVE_LIABILITIES
4. DERIVATIVE LIABILITIES | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Notes to Financial Statements | |||||||||||||
4. DERIVATIVE LIABILITIES | NOTE 4 DERIVATIVE LIABILITIES | ||||||||||||
The Company identified conversion features embedded within convertible debt and warrants issued in 2014, and the Company also identified derivative liabilities embedded within warrants detachable with subscription agreement. The Company has determined that the features associated with the embedded conversion option, in the form a ratchet provision, should be accounted for at fair value, as a derivative liability, as the Company cannot determine if a sufficient number of shares would be available to settle all potential future conversion transactions. | |||||||||||||
As a result of the application of ASC No. 815, the fair value of the warrant related to convertible debt and subscription agreement is summarized as follow: | |||||||||||||
Warrants with convertible Debt | Warrants with subscription agreement | Total | |||||||||||
Fair value at the commitment date | 87,189 | 259,278 | 346,467 | ||||||||||
Fair value mark to market adjustment | 429,948 | 323,293 | 753,241 | ||||||||||
Balances as of December 31, 2014 | 517,137 | 582,571 | 1,099,708 | ||||||||||
The fair value at the commitment and re-measurement dates for the Company’s derivative liabilities were based upon the following management assumptions as of December 31, 2014: | |||||||||||||
Commitment Date | Remeasurement Date | ||||||||||||
Expected dividends | 0 | % | 0 | % | |||||||||
Expected volatility | 150 | % | 150 | % | |||||||||
Expected term | 3 years | 2.23 – 2.96 years | |||||||||||
Risk free interest rate | 0.75% - 1.1% | 1.1 | % |
5_DEBT_DISCOUNT
5. DEBT DISCOUNT | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Notes to Financial Statements | |||||
5. DEBT DISCOUNT | NOTE 5 DEBT DISCOUNT | ||||
The Company recorded the $174,378 debt discount due to beneficial conversion feature of $87,189 for the detachable warrants issued with convertible debt, and $87,189 in derivative liabilities related to the ratchet feature warrants. | |||||
The debt discount recorded in 2014 pertains to convertible debt and warrants issued that contain ratchet features that are required to bifurcated and reported at fair value. | |||||
Debt discount is summarized as follows: | |||||
Debt discount | 174,378 | ||||
Accumulated amortization - 2014 | (67,363 | ) | |||
Debt discount - net - December 31, 2014 | $ | 107,016 |
6_CONVERTIBLE_DEBENTURES
6. CONVERTIBLE DEBENTURES | 12 Months Ended |
Dec. 31, 2014 | |
Debt Disclosure [Abstract] | |
6. CONVERTIBLE DEBENTURES | NOTE 6 – CONVERTIBLE DEBENTURES |
On March 24, 2014, the Company issued several convertible debentures to certain accredited investors. The total amount of the debentures is $269,100 and matures on March 24, 2016 with zero percent interest rate. The debentures are convertible into shares of the Company’s common stock at $0.1 per share. In addition, the Company granted to the same investors three−year warrants to purchase an aggregate of 1,345,500 shares of the Company’s common stock at $0.4 per share. | |
The debentures were discounted in the amount of $174,389 due to the intrinsic value of the beneficial conversion option and relative fair value of the warrants. As of December 31, 2014, the aggregate carrying value of the debentures was $107,016, net of debt discounts of $162,084. The Company recorded amortization of debt discount in amount of $49,614 during the year ended December 31, 2014. |
7_CAPITAL_STOCK
7. CAPITAL STOCK | 12 Months Ended |
Dec. 31, 2014 | |
Equity [Abstract] | |
7. CAPITAL STOCK | NOTE 7 CAPITAL STOCK |
On March 18, 2014, the Company entered into a Plan of Reorganization with its shareholders in which the following was effected: (i) on March 21, 2014, the Company’s Certificate of Incorporation was amended to allow for the issuance of 200,000,000 shares of the Company’s common stock; (ii) on March 24, 2014, each of the Company’s preferred shareholders converted their shares into common stock on a one for one basis, and (iii) on March 24, 2014, each of the Company’s shareholders surrendered their shares of the Company’s common stock in exchange for the pro-rata distribution of 36,000,000 newly issued shares of Company’s common stock, based on the percentage of the total shares of common stock held by the shareholder immediately prior to the exchange (the “Exchange”). | |
The Company is currently authorized to issue 21 Series A preferred shares at $1.00 par value per share with 1:1 conversion and voting rights. As of December 31, 2014 and 2013, there were zero shares of Series A preferred share issued and outstanding. | |
The Company is currently authorized to issue 200,000,000 common shares at $0.001 par value per share. As of December 31, 2014, there were 38,909,000 shares of common stock issued and outstanding and 1,048,000 shares of common stock to be issued, all of which were subsequently issued on January 4, 2015. | |
On January 1, 2014, the directors and officers exercised all of then outstanding 72.06 stock options and acquired 72.06 shares of common stock at $1 per share. These 72.06 shares of common stock were exchanged for 21,954,160 shares of common stock during the Exchange. | |
On March 18, 2014, immediately prior to the exchange, the Company converted $4,358 accrued dividend from Series A preferred shares into 0.513 share of common stock, which was exchanged for 156,293 shares of common stock during the Exchange. | |
On March 24, 2014, the Company issued 2,059,000 shares of common stock in exchange for $205,900 cash. | |
On June 4, 2014, the Company issued 250,000 shares of common stock to Vincent “Tripp” Keber valued at $0.10 per share in exchange for his services on the Company’s Board of Directors for three years. These shares have a fair market value of $25,000, of which $4,795 was amortized during the year ended December 31, 2014. | |
On June 4, 2014, the Company issued 250,000 shares of common stock to Ean Seeb valued at $0.10 per share in exchange for his services on the Company’s Board of Directors for three years. These shares have a fair market value of $25,000, of which $4,795 was amortized during the year ended December 31, 2014. | |
On June 4, 2014, the Company issued 250,000 shares of common stock to Sebastian Stant valued at $0.10 per share in exchange for his services as the Company’s Lead Web Developer for one year. These shares have a fair market value of $25,000, of which $14,384 was amortized during the year ended December 31, 2014. | |
On May 1, 2014, the Company issued 100,000 shares of common stock to Jesus Quintero valued at $0.10 per share in exchange for his services as the Company’s Chief Financial Officer for one year. These shares have a fair market value of $10,000, of which $6,685 was amortized during the year ended December 31, 2014. | |
From September 15 to December 31, 2014, we completed an offering of $524,000 of our securities to certain accredited and non-accredited investors consisting of 1,048,000 shares of our common stock at $0.50 per share. As of December 31, 2014, the full $524,000 had been received. These shares have not been issued as of December 31, 2014 and was recorded as common stock to be issued. |
8_STOCK_WARRANTS
8. STOCK WARRANTS | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Summary of Investments, Other than Investments in Related Parties [Abstract] | ||||||||
8. STOCK WARRANTS | NOTE 8 – STOCK WARRANTS | |||||||
On March 24, 2014, the Company issued warrants to a third party for the purchase of 4,050,000 and 2,375,000 shares of common stock, at an exercise price of $0.001 and $0.4 per share, respectively. The warrants may be exercised any time after issuance through and including the third (3rd) anniversary of its original issuance. The Company recorded an expense of $555,598 equal to the estimated fair value of the warrants at the date of grants. The fair market value was calculated using the Black-Scholes options pricing model, assuming approximately 0.75% risk-free interest, 0% dividend yield, 150% volatility, and expected life of 3 years | ||||||||
On March 24, 2014, in connection to the issuance of convertible debentures of $269,100 to certain investors, which are convertible into shares of the Company’s common stock at $0.1 per share, the Company granted to the same investors three−year warrants to purchase an aggregate of 1,345,500 shares of the Company’s common stock at $0.4 per share. The warrants may be exercised any time after the issuance through and including the third (3rd) anniversary of its original issuance. See Note 4 for further discussion. | ||||||||
On March 24, 2014, in connection to the issuance of 2,059,000 shares of common stock, the Company granted to the same investors three−year warrants to purchase an aggregate of 1,029,500 shares of the Company’s common stock at $0.4 per share. The warrants may be exercised any time after the issuance through and including the third (3rd) anniversary of its original issuance. The warrants have a fair market value of $66,712. The fair market value was calculated using the Black-Scholes options pricing model, assuming approximately 0.75% risk-free interest, 0% dividend yield, 150% volatility, and expected life of 3 years. See Note 4 for further discussion. | ||||||||
On June 4, 2014, the Company issued warrants to purchase 750,000 shares at $0.10 per share to Vincent “Tripp” Keber for his services on the Company’s Board of Directors for 3 years. Under the terms of the agreement, 250,000 shares shall begin vesting on October 1, 2014 such that 20,833 shares shall vest on the first of every month except for every three months, when 20,834 shares shall vest. An additional 250,000 shares shall begin vesting the later of: October 1, 2015 or the Company reaching 830,000 users such that 20,833 shares shall vest on the first of every month except for every three months, when 20,834 shares shall vest. An additional 250,000 shares shall vest immediately upon the later of: October 1, 2016 or the Company reaching 1,080,000 users. These warrants were issued in exchange for his services on the Company’s Board of Directors for 3 years. The warrants may be exercised any time after the issuance through and including the tenth (10th) anniversary of its original issuance. The warrants have a fair market value of $73,836. The fair market value was calculated using the Black-Scholes options pricing model, assuming approximately 2.61% risk-free interest, 0% dividend yield, 150% volatility, and expected life of 10 years. During year ended December 31, 2014, $14,160 was amortized. | ||||||||
On June 4, 2014, the Company issued warrants to purchase 750,000 shares at $0.10 per share to Ean Seeb for his services on the Company’s Board of Directors for 3 years. Under the terms of the agreement, 250,000 shares shall begin vesting on October 1, 2014 such that 20,833 shares shall vest on the first of every month except for every three months, when 20,834 shares shall vest. An additional 250,000 shares shall begin vesting the later of: October 1, 2015 or the Company reaching 830,000 users such that 20,833 shares shall vest on the first of every month except for every three months, when 20,834 shares shall vest. An additional 250,000 shares shall vest immediately upon the later of: October 1, 2016 or the Company reaching 1,080,000 users. These warrants were issued in exchange for his services on the Company’s Board of Directors for 3 years. The warrants may be exercised any time after the issuance through and including the tenth (10th) anniversary of its original issuance. The warrants have a fair market value of $73,836. The fair market value was calculated using the Black-Scholes options pricing model, assuming approximately 2.61% risk-free interest, 0% dividend yield, 150% volatility, and expected life of 10 years. During year period ended December 31, 2014, $14,160 was amortized. | ||||||||
On June 4, 2014, the Company issued warrants to purchase 550,000 shares at $0.10 per share to Sebastian Stant for his services as the Company’s Lead Web Developer for 1 year. Under the terms of the agreement, 250,000 shares shall vest immediately upon the company reaching 250,000 users. An additional 150,000 shares shall vest immediately upon the company reaching 500,000 users. An additional 150,000 shares shall vest immediately upon the company reaching 750,000 users. The warrants were issued in exchange for his services as the Company’s Lead Web Developer for 1 year. The warrants may be exercised any time after the issuance through and including the tenth (10th) anniversary of its original issuance. The warrants have a fair market value of $54,146. The fair market value was calculated using the Black-Scholes options pricing model, assuming approximately 2.61% risk-free interest, 0% dividend yield, 150% volatility, and expected life of 10 years. During year period ended December 31, 2014, $31,153 was amortized. | ||||||||
During the four months ended December 31, 2014, in connection to the sale of 1,048,000 shares of common stock, the Company granted to the same investors three−year warrants to purchase an aggregate of 524,000 shares of the Company’s common stock at $1.00 per share. The warrants may be exercised any time after the issuance through and including the third (3rd) anniversary of its original issuance. The warrants have a fair market value of $42,650. The fair market value was calculated using the Black-Scholes options pricing model, assuming approximately 1% risk-free interest, 0% dividend yield, 150% volatility, and expected life of 3 years. See Note 4 for further discussion. | ||||||||
Stock warrants outstanding and exercisable on December 31, 2014 are as follows: | ||||||||
Exercise Price per Share | Shares Under Warrants | Remaining Life in Years | ||||||
Outstanding | ||||||||
$ | 0.001 | 4,050,000 | 3 | |||||
$ | 0.1 | 2,050,000 | 10 | |||||
$ | 0.4 | 4,750,000 | 3 | |||||
$ | 1 | 524,000 | 3 | |||||
Exercisable | ||||||||
$ | 0.001 | 4,050,000 | 3 | |||||
$ | 0.1 | 125,000 | 10 | |||||
$ | 0.4 | 4,750,000 | 3 | |||||
$ | 1 | 524,000 | 3 | |||||
No other stock warrants have been issued or exercised during the twelve months ended December 31, 2014. |
9_GOING_CONCERN_AND_UNCERTAINT
9. GOING CONCERN AND UNCERTAINTY | 12 Months Ended |
Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
9. GOING CONCERN AND UNCERTAINTY | NOTE 9 GOING CONCERN AND UNCERTAINTY |
The Company has suffered losses from operations since inception. In addition, the Company has yet to generate an internal cash flow from its business operations. These factors raise substantial doubt as to the ability of the Company to continue as a going concern. | |
Management’s plans with regard to these matters encompass the following actions: 1) obtain funding from new investors to alleviate the Company’s working deficiency, and 2) implement a plan to generate sales. The Company’s continued existence is dependent upon its ability to translate its vast user base into sales. However, the outcome of management’s plans cannot be ascertained with any degree of certainty. The accompanying financial statements do not include any adjustments that might result from the outcome of these risks and uncertainties. |
10_SIGNIFICANT_EVENTS
10. SIGNIFICANT EVENTS | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
10. SIGNIFICANT EVENTS | NOTE 10 SIGNIFICANT EVENTS |
On July 24, 2014, MassRoots entered into a lease for a new company headquarters located at 2247 Federal Blvd, Denver. This location is co-leased by the Company, along with CannaBuild, LLC, from 2247 Federal Boulevard, LLC pursuant to a written lease which expires on July 22, 2015 and contains an option for a one year renewal at the same monthly rate. This location is shared with CannaBuild, LLC, which pays a portion of the monthly rent. The lease is for a total of $3,450 per month, which, pursuant to an expense sharing agreement between the Company and CannaBuild, LLC, the Company is responsible for paying $2,250 per month. | |
The Company had previously rented virtual office space from Opus Virtual Offices which provides conference rooms, mail forwarding and call answering for $99 per month ($1,188 on an annual basis). The Opus Virtual Office lease has been cancelled by the Company and expired on September 14, 2014. | |
On September 1, 2014, MassRoots entered into an employment contract with Sebastian Stant. For his services as Lead Developer, Mr. Stant shall be compensated five thousand dollars ($5,000) per month. Upon the successful execution of all of our outstanding forty-cent ($0.40) warrants, Mr. Stant's salary will increase to seven thousand five hundred dollars ($7,500) per month. The employment contract is “at-will” and may be terminated by either party with or without cause with one (1) month’s written notice. No retirement plan, health insurance or employee benefits program was awarded to Mr. Stant and he serves at the discretion of the Board of Directors. | |
On September 15, 2015, MassRoots entered into a contract with Direct Media Advertising for a sponsorship of B-Real’s “Smokers Club Tour.” Under the terms of the agreement, B-Real has promoted MassRoots on his social media accounts, featured MassRoots on B-Real's "Smoke Box" and produced a promotional video for MassRoots. MassRoots compensated Direct Media Advertising a one-time fee of twenty thousand dollars ($20,000). The tour lasted from October 1, 2014 to November 30, 2014. |
11_SUBSEQUENT_EVENTS
11. SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2014 | |
Subsequent Events [Abstract] | |
11. SUBSEQUENT EVENTS | NOTE 11 SUBSEQUENT EVENTS |
On January 1, 2015, MassRoots amended its employment contract with Tyler Knight. For his services as Chief Marketing Officer, Mr. Knight shall be five thousand dollars ($5,000) per month. The employment contract is “at-will” and may be terminated by either party with or without cause with one (1) month’s written notice. No retirement plan, health insurance or employee benefits program was awarded to Mr. Knight and he serves at the direction of the Chief Executive Officer and Board of Directors. | |
On March 3, 2015, MassRoots entered into an investment banking relationship with Chardan Capital Markets, LLC. Under the terms of the agreement, MassRoots shall pay Chardan a non-refundable retainer of 200,000 common shares and pay a commission equal to: (a) an aggregate cash fee equal to four percent (4%) of the gross proceeds received from the sale of the Stock; and (b) an aggregate restricted stock fee equal to eight percent (8.0%) of the aggregate number of shares of Stock sold in the offering. | |
On March 9, 2015, Sebastian Stant resigned his position as Lead Developer of MassRoots and surrendered 350,000 options with a strike price of $0.10 back to the 2014 Employee Incentive Plan. | |
On March 9, 2015 MassRoots entered into an employment contract with Alan Janis. For his services as Director of Technology, Mr. Janis shall be compensated one hundred thirty thousand dollars ($130,000) per year. The employment contract is “at-will” and may be terminated by either party with or without cause with one (1) month’s written notice. No retirement plan, health insurance or employee benefits program was awarded to Mr. Janis and he serves at the discretion of the Board of Directors. | |
On March 31, 2015, MassRoots amended its employment contract with Isaac Dietrich. For his services as Chief Executive Officer, Mr. Dietrich shall be compensated seven thousand five hundred dollars ($7,500) per month, effective April 1, 2015. The employment contract is “at-will” and may be terminated by either party with or without cause with one (1) month’s written notice. No retirement plan, health insurance or employee benefits program was awarded to Mr. Dietrich and he serves at the direction of the Board of Directors. | |
On March 31, 2015, MassRoots amended its employment contract with Hyler Fortier. For her services as Chief Operating Officer, Ms. Fortier shall be compensated five thousand dollars ($5,000) per month, effective April 1, 2015. The employment contract is “at-will” and may be terminated by either party with or without cause with one (1) month’s written notice. No retirement plan, health insurance or employee benefits program was awarded to Ms. Fortier and she serves at the direction of the Board of Directors. | |
From January 1, 2015 to March 11, 2015, we sold $448,000 of our securities to certain accredited and non-accredited investors consisting of 896,000 shares of our common stock at $0.50 per share, with a warrant, exercisable into an amount of our common stock equal to fifty percent (50%) of the common stock purchased, at $1.00 per share. On March 11, this offering was terminated per the Company’s Board of Trustees. | |
On January 12, 2015, debentures with a face value of $40,000 were converted into 400,000 shares of common stock. | |
On January 14, 2015, the Company issued 1,508,000 shares of common stock to investors who had purchased the shares at $0.50 per share from September 15, 2014 to January 9, 2015. |
1_SUMMARY_OF_SIGNIFICANT_ACCOU1
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Accounting Policies [Abstract] | ||||
Basis of Presentation | Basis of Presentation | |||
The financial statements include the accounts of MassRoots, Inc. under the accrual basis of accounting. | ||||
Managements Use of Estimates | Management’s Use of Estimates | |||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The financial statements above reflect all of the costs of doing business. | ||||
Deferred Taxes | Deferred Taxes | |||
The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary 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 the statements of operations in the period that includes the enactment date. | ||||
Cash and Cash Equivalents | Cash and Cash Equivalents - For purposes of the Statement of Cash Flows, the Company considers highly liquid investments with an original maturity of three months or less to be cash equivalents. | |||
Revenue Recognition | Revenue Recognition – The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when services are realized or realizable and earned less estimated future doubtful accounts. The Company considers revenue realized or realizable and earned when all of the following criteria are met: | |||
(i) | persuasive evidence of an arrangement exists, | |||
(ii) | the services have been rendered and all required milestones achieved, | |||
(iii) | the sales price is fixed or determinable, and | |||
(iv) | Collectability is reasonably assured. | |||
MassRoots primarily generates revenue by charging businesses to advertise on the network. MassRoots has the ability to target advertisements directly to a clients’ target audience, based on their location, on their mobile devices. All advertising services take between a few hours to up to one month to complete, unless otherwise noted. | ||||
MassRoots’ secondary source of income is merchandise sales. The objective with the sales is not to generate large profit margins, but to help offset the cost of marketing. Each t-shirt, sticker and jar MassRoots sells will likely lead to more downloads and active users. | ||||
Cost of Sales | Cost of Sales - The Company’s policy is to recognize cost of sales in the same manner in conjunction with revenue recognition, when the costs are incurred. Cost of sales includes the costs directly attributable to revenue recognition. Selling, general and administrative expenses are charged to expense as incurred. | |||
Comprehensive Income (Loss) | Comprehensive Income (Loss) - The Company reports comprehensive income and its components following guidance set forth by section 220-10 of the FASB Accounting Standards Codification which establishes standards for the reporting and display of comprehensive income and its components in the financial statements. There were no items of comprehensive income (loss) applicable to the Company during the periods covered in the financial statements. | |||
Loss Per Share | Loss Per Share - Net loss per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. | |||
Risk and Uncertainties | Risk and Uncertainties - The Company is subject to risks common to companies in the service industry, including, but not limited to, litigation, development of new technological innovations and dependence on key personnel. | |||
Convertible Debentures | Convertible Debentures - If the conversion features of conventional convertible debt provides for a rate of conversion that is below market value at issuance, 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. | |||
Stock Based Compensation | Stock-Based Compensation- The Company accounts for stock-based compensation using the fair value method following the guidance set forth in section 718-10 of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. | |||
Fair Value for Financial Assets and Financial Liabilities | Fair Value for Financial Assets and Financial Liabilities- The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below: | |||
Level 1 | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. | |||
Level 2 | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. | |||
Level 3 | Pricing inputs that are generally observable inputs and not corroborated by market data. | |||
The carrying amounts of the Company’s financial assets and liabilities, such as cash, prepaid expense and accrued payroll tax approximate their fair values because of the short maturity of these instruments. | ||||
The Company does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis, consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value on September 30, 2014, nor gains or losses are reported in the statements of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date for the period ended September 30, 2014. | ||||
Embedded Conversion Features | Embedded Conversion Features | |||
The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion feature. | ||||
Derivative Financial Instruments | Derivative Financial Instruments | |||
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of it financial instruments, including stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. | ||||
For option-based simple derivative financial instruments, the Company uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. | ||||
Beneficial Conversion Feature | Beneficial Conversion Feature | |||
For conventional convertible debt where the rate of conversion is below market value, the Company records a "beneficial conversion feature" ("BCF") and related debt discount. | ||||
When the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument (offset to additional paid in capital) and amortized to interest expense over the life of the debt. | ||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements | |||
In June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders' equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted for financial statements not yet issued. The Company adopted ASU 2014-10 during the fourth quarter of 2014, thereby no longer presenting or disclosing any information required by Topic 915. The Company has reviewed all recently issued, but not yet effective, accounting pronouncements up to ASU 2014-05, and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations. |
2_FIXED_ASSETS_Tables
2. FIXED ASSETS (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Fixed Assets | 31-Dec-14 | 31-Dec-13 | |||||||
Cost: | |||||||||
Computers | 12,134 | 1,522 | |||||||
Office equipment | 4,055 | 0 | |||||||
Total | 16,189 | 1,522 | |||||||
Less: Accumulated depreciation | 2,027 | 228 | |||||||
Property and equipment, net | 14,162 | 1,294 |
3_PREPAID_EXPENSE_Tables
3. PREPAID EXPENSE (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||
Prepaid Expenses | December 31, | ||||
2014 | $ | 90,131 | |||
2015 | 130,797 | ||||
2016 | 65,891 | ||||
$ | 286,818 |
4_DERIVATIVE_LIABILITIES_Table
4. DERIVATIVE LIABILITIES (Tables) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Notes to Financial Statements | ||||
Derivative Liabilities Ratchet Feature | Warrants with convertible Debt | Warrants with subscription agreement | Total | |
Fair value at the commitment date | 87,189 | 259,278 | 346,467 | |
Fair value mark to market adjustment | 429,948 | 323,293 | 753,241 | |
Balances as of December 31, 2014 | 517,137 | 582,571 | 1,099,708 | |
Derivative Liabilities Assumptions Used | Commitment Date | Remeasurement Date | ||
Expected dividends | 0% | 0% | ||
Expected volatility | 150% | 150% | ||
Expected term | 3 years | 2.23 – 2.96 years | ||
Risk free interest rate | 0.75% - 1.1% | 1.1% |
5_DEBT_DISCOUNT_Tables
5. DEBT DISCOUNT (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Notes to Financial Statements | |||||
Debt Discount | Debt discount | 174,378 | |||
Accumulated amortization - 2014 | (67,363 | ) | |||
Debt discount - net - December 31, 2014 | $ | 107,016 |
8_STOCK_WARRANTS_Tables
8. STOCK WARRANTS (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Summary of Investments, Other than Investments in Related Parties [Abstract] | ||||||||
Stock Warrants | Stock warrants outstanding and exercisable on December 31, 2014 are as follows: | |||||||
Exercise Price per Share | Shares Under Warrants | Remaining Life in Years | ||||||
Outstanding | ||||||||
$ | 0.001 | 4,050,000 | 3 | |||||
$ | 0.1 | 2,050,000 | 10 | |||||
$ | 0.4 | 4,750,000 | 3 | |||||
$ | 1 | 524,000 | 3 | |||||
Exercisable | ||||||||
$ | 0.001 | 4,050,000 | 3 | |||||
$ | 0.1 | 125,000 | 10 | |||||
$ | 0.4 | 4,750,000 | 3 | |||||
$ | 1 | 524,000 | 3 |
2_FIXED_ASSETS_Fixed_Assets_De
2. FIXED ASSETS - Fixed Assets (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Property and equipment, gross | $16,189 | $1,522 |
Less: Accumulated depreciation | 2,027 | 228 |
Property and equipment, net | 14,162 | 1,294 |
Computers | ||
Property and equipment, gross | 12,134 | 1,522 |
Office Equipment | ||
Property and equipment, gross | $4,055 | $0 |
3_PREPAID_EXPENSE_Prepaid_Expe
3. PREPAID EXPENSE - Prepaid Expenses (Details) (USD $) | Dec. 31, 2014 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
2014 | $90,131 |
2015 | 130,797 |
2016 | $65,891 |
3_PREPAID_EXPENSE_Details_Narr
3. PREPAID EXPENSE (Details Narrative) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Stock Issued for Consulting Services, Shares | 850,000 |
Options Issued for Consulting Services, Options | 2,050,000 |
Stock and Options Issued for Consulting Services, Value | $286,818 |
4_DERIVATIVE_LIABILITIES_Deriv
4. DERIVATIVE LIABILITIES - Derivative Liabilities Ratchet Feature (Details) (USD $) | Dec. 31, 2014 |
Warrants with Convertible Debt [Member] | |
Fair value at the commitment date | $87,189 |
Fair value mark to market adjustment | 429,948 |
Balances as of December 31, 2014 | 517,137 |
Warrants with Subscription Agreement [Member] | |
Fair value at the commitment date | 259,278 |
Fair value mark to market adjustment | 323,293 |
Balances as of December 31, 2014 | 582,571 |
Total [Member] | |
Fair value at the commitment date | 346,467 |
Fair value mark to market adjustment | 753,241 |
Balances as of December 31, 2014 | $1,099,708 |
4_DERIVATIVE_LIABILITIES_Deriv1
4. DERIVATIVE LIABILITIES - Derivative Liabilities Assumptions Used (Details) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2014 | Dec. 31, 2014 | |
Expected volatility | 150.00% | |
Expected term | 3 years | |
Commitment Date [Member] | Minimum [Member] | ||
Expected dividends | 0.00% | |
Expected volatility | 150.00% | |
Expected term | 3 years | |
Risk free interest rate | 0.75% | |
Commitment Date [Member] | Maximum [Member] | ||
Risk free interest rate | 1.10% | |
Remeasurement [Member] | Minimum [Member] | ||
Expected dividends | 0.00% | |
Expected volatility | 150.00% | |
Expected term | 2 years 3 months | |
Risk free interest rate | 1.10% | |
Remeasurement [Member] | Maximum [Member] | ||
Expected term | 2 years 11 months |
5_DEBT_DISCOUNT_Debt_Discount_
5. DEBT DISCOUNT - Debt Discount (Details) (USD $) | Dec. 31, 2014 |
Notes to Financial Statements | |
Debt discount | $174,378 |
Accumulated amortization - 2014 | -67,363 |
Debt discount - net - December 31, 2014 | $107,016 |
5_DEBT_DISCOUNT_Details_Narrat
5. DEBT DISCOUNT (Details Narrative) (USD $) | Dec. 31, 2014 |
Notes to Financial Statements | |
Debt Discount | $174,378 |
Beneficial conversion feature | $87,189 |
6_CONVERTIBLE_DEBENTURES_Detai
6. CONVERTIBLE DEBENTURES (Details Narrative) (USD $) | 9 Months Ended | 12 Months Ended |
Dec. 31, 2013 | Dec. 31, 2014 | |
Debt Disclosure [Abstract] | ||
Total Amount of Debentures | $269,100 | |
Interest Rate on Debentures | 0.00% | |
Convertible Conversion Per SharePrice | $0.10 | |
Warrant Term | 3 years | |
Warrants Granted Shares | 1,345,500 | |
Debenture Discount Amount | 174,389 | |
Aggregate Carrying Value of Debentures | 188,273 | |
Debt Discounts Net | 80,827 | |
Amortization of Debt Discounts | $0 | ($67,363) |
7_CAPITAL_STOCK_Details_Narrat
7. CAPITAL STOCK (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Dec. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2014 | Mar. 31, 2014 | Mar. 18, 2014 | Jun. 04, 2014 | |
Preferred Stock, Par Value | $1 | $1 | $1 | $1 | |||
Preferred Stock, Shares Authorized | 21 | 21 | 21 | 21 | |||
Preferred Stock, Shares Issued | 0 | 0 | 0 | 0 | |||
Preferred Stock, Shares Outstanding | 0 | 0 | 0 | 0 | |||
Conversion and Voting Rights Ratio | 1:01 | ||||||
Common Stock, Shares to be Issued | 1,048,000 | ||||||
Stock Options Issued Shares | 72.06 | ||||||
Number of Shares Post Conversion | 21,954,160 | ||||||
Stock Subscription Receivable | $72 | ||||||
Series A Preferred Accrued Dividend | -4,358 | 4,538 | |||||
Common Shares Coverted from Preferred | 0.513 | ||||||
Common Shares Converted | 156,293 | ||||||
Common Stock, Par Value | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | |
Common Stock, Shares Authorized | 200,000,000 | 200,000,000 | 200,000,000 | 200,000,000 | 200,000,000 | 200,000,000 | |
Common Stock, Shares Issued | 38,909,000 | 0 | 38,909,000 | 38,909,000 | 0 | 36,000,000 | |
Common Stock, Value | 38,909 | 0 | 38,909 | 38,909 | |||
Common Stock, Shares Outstanding | 38,909,000 | 0 | 38,909,000 | 38,909,000 | 0 | ||
Common stock Issued for Cash Shares | 1,048,000 | 2,059,000 | |||||
Common stock Issued for Cash Value | 524,000 | 150,000 | 205,900 | 470,622 | |||
Vincent Keber | |||||||
Common Stock, Par Value | $0.10 | ||||||
Common Stock, Shares Issued | 250,000 | ||||||
Common Stock, Value | 25,000 | ||||||
Compensation expense Amortized | 4,795 | ||||||
Ean Seeb | |||||||
Common Stock, Par Value | $0.10 | ||||||
Common Stock, Shares Issued | 250,000 | ||||||
Common Stock, Value | 25,000 | ||||||
Compensation expense Amortized | 4,795 | ||||||
Sebastian Stant | |||||||
Common Stock, Par Value | $0.10 | ||||||
Common Stock, Shares Issued | 250,000 | ||||||
Common Stock, Value | 25,000 | ||||||
Compensation expense Amortized | 14,384 | ||||||
Jesus Quintero | |||||||
Common Stock, Par Value | $0.10 | ||||||
Common Stock, Shares Issued | 100,000 | ||||||
Common Stock, Value | 10,000 | ||||||
Compensation expense Amortized | $6,685 |
8_STOCK_WARRANTS_Stock_Warrant
8. STOCK WARRANTS - Stock Warrants (Details) (USD $) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2014 | Dec. 31, 2014 | |
Shares Under warrants, Outstanding | 524,000 | 524,000 |
Remaining Life in Years, Outstanding | 3 years | |
Warrant 4 [Member] | ||
Remaining Life in Years, Outstanding | 3 years | |
Remaining Life in Years, Exercisable | 3 years | |
Warrant 1 [Member] | ||
Exercise Price per Share, Outstanding | 0.001 | 0.001 |
Shares Under warrants, Outstanding | 4,050,000 | 4,050,000 |
Remaining Life in Years, Outstanding | 3 years | |
Exercise Price per Share, Exercisable | 0.001 | 0.001 |
Shares Under warrants, Exercisable | 4,050,000 | 4,050,000 |
Remaining Life in Years, Exercisable | 3 years | |
Warrant 2 [Member] | ||
Exercise Price per Share, Outstanding | 0.1 | 0.1 |
Shares Under warrants, Outstanding | 2,050,000 | 2,050,000 |
Remaining Life in Years, Outstanding | 10 years | |
Exercise Price per Share, Exercisable | 0.1 | 0.1 |
Shares Under warrants, Exercisable | 125,000 | 125,000 |
Remaining Life in Years, Exercisable | 10 years | |
Warrant 3 [Member] | ||
Exercise Price per Share, Outstanding | 0.4 | 0.4 |
Shares Under warrants, Outstanding | 4,750,000 | 4,750,000 |
Remaining Life in Years, Outstanding | 3 years | |
Exercise Price per Share, Exercisable | 0.4 | 0.4 |
Shares Under warrants, Exercisable | 4,750,000 | 4,750,000 |
Remaining Life in Years, Exercisable | 3 years | |
Warrant 4 [Member] | ||
Exercise Price per Share, Outstanding | 1 | 1 |
Shares Under warrants, Outstanding | 524,000 | 524,000 |
Exercise Price per Share, Exercisable | 1 | 1 |
Shares Under warrants, Exercisable | 524,000 | 524,000 |
8_STOCK_WARRANTS_Details_Narra
8. STOCK WARRANTS (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2014 | Mar. 23, 2014 | Jun. 04, 2014 | |
Warrants Issued, Shares | 524,000 | 524,000 | ||
Warrants, Exercise Price | $1 | $1 | ||
Warrant Expense | $259,278 | $259,278 | $555,598 | |
Risk-Free Interest | 1.00% | |||
Dividend Yield | 0.00% | |||
Volatility | 150.00% | |||
Expected Life | 3 years | |||
Warrant, Fair Market Value | 42,650 | |||
Vincent Tripp Keber | ||||
Warrants Issued, Shares | 750,000 | |||
Warrants, Exercise Price | $0.10 | |||
Warrant Expense | 73,836 | |||
Risk-Free Interest | 2.61% | |||
Dividend Yield | 0.00% | |||
Volatility | 150.00% | |||
Expected Life | 10 years | |||
Warrants Amortized | 14,160 | |||
Vesting Terms | Under the terms of the agreement, 250,000 shares shall begin vesting on October 1, 2014 such that 20,833 shares shall vest on the first of every month except for every three months, when 20,834 shares shall vest. An additional 250,000 shares shall begin vesting the later of: October 1, 2015 or the Company reaching 830,000 users such that 20,833 shares shall vest on the first of every month except for every three months, when 20,834 shares shall vest. An additional 250,000 shares shall vest immediately upon the later of: October 1, 2016 or the Company reaching 1,080,000 users. These warrants were issued in exchange for his services on the Company’s Board of Directors for 3 years. The warrants may be exercised any time after the issuance through and including the tenth (10th) anniversary of its original issuance | |||
Ean Seeb | ||||
Risk-Free Interest | 2.61% | |||
Dividend Yield | 0.00% | |||
Volatility | 150.00% | |||
Expected Life | 10 years | |||
Warrants Amortized | 14,160 | |||
Vesting Terms | Under the terms of the agreement, 250,000 shares shall begin vesting on October 1, 2014 such that 20,833 shares shall vest on the first of every month except for every three months, when 20,834 shares shall vest. An additional 250,000 shares shall begin vesting the later of: October 1, 2015 or the Company reaching 830,000 users such that 20,833 shares shall vest on the first of every month except for every three months, when 20,834 shares shall vest. An additional 250,000 shares shall vest immediately upon the later of: October 1, 2016 or the Company reaching 1,080,000 users. These warrants were issued in exchange for his services on the Company’s Board of Directors for 3 years. The warrants may be exercised any time after the issuance through and including the tenth (10th) anniversary of its original issuance. | |||
Sebastian Stant | ||||
Risk-Free Interest | 2.61% | |||
Dividend Yield | 0.00% | |||
Volatility | 150.00% | |||
Expected Life | 10 years | |||
Warrants Amortized | 31,153 | |||
Vesting Terms | Under the terms of the agreement, 250,000 shares shall vest immediately upon the company reaching 250,000 users. An additional 150,000 shares shall vest immediately upon the company reaching 500,000 users. An additional 150,000 shares shall vest immediately upon the company reaching 750,000 users. The warrants were issued in exchange for his services as the Company’s Lead Web Developer for 1 year The warrants may be exercised any time after the issuance through and including the tenth (10th) anniversary of its original issuance. | |||
Warrant [Member] | ||||
Warrants Issued, Shares | 4,050,000 | |||
Warrants, Exercise Price | $0.00 | |||
Warrant 2 [Member] | ||||
Warrants Issued, Shares | 2,375,000 | |||
Warrants, Exercise Price | $0.40 | |||
Warrant 1 and 2 [Member] | ||||
Risk-Free Interest | 0.75% | |||
Dividend Yield | 0.00% | |||
Volatility | 150.00% | |||
Expected Life | 3 years | |||
Warrant 3 [Member] | ||||
Warrants Issued, Shares | 1,345,000 | |||
Warrants, Exercise Price | $0.40 | |||
Warrant Expense | 269,100 | |||
Warrant 4 [Member] | ||||
Warrants, Exercise Price | $0.40 | |||
Warrant Expense | $66,712 | |||
Risk-Free Interest | 0.75% | |||
Dividend Yield | 0.00% | |||
Volatility | 150.00% | |||
Expected Life | 3 years |
10_SIGNIFICANT_EVENTS_Details_
10. SIGNIFICANT EVENTS (Details Narrative) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Advertising Fee | $20,000 |
Sebastian Stant | |
Monthly Compensation | 5,000 |
Sebastian Stant | Compensation Increase [Member] | |
Monthly Compensation | 7,500 |
Total [Member] | |
Lease Monthly Payment | 3,450 |
Mass Roots [Member] | |
Lease Monthly Payment | 2,250 |
Opus Virtual Office [Member] | |
Lease Monthly Payment | $99 |
11_SUBSEQUENT_EVENTS_Details_N
11. SUBSEQUENT EVENTS (Details Narrative) (Subsequent Event [Member], USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Service Retainer | 200,000 |
Commission Details | (a) an aggregate cash fee equal to four percent (4%) of the gross proceeds received from the sale of the Stock; and (b) an aggregate restricted stock fee equal to eight percent (8.0%) of the aggregate number of shares of Stock sold in the offering. |
Shares Forfeited | 350,000 |
Sale of Stock, Value | $448,000 |
Sale of Stock, Shares | 896,000 |
Sale of Stock, Price per share | $0.50 |
Tyler Knight [Member] | |
Monthly Compensation | 5,000 |
Alan Janis [Member] | |
Monthly Compensation | 10,833 |
Isaac Dietrich [Member] | |
Monthly Compensation | 7,500 |
Hyler Fortier [Member] | |
Monthly Compensation | $5,000 |