Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Jun. 30, 2014 | 6-May-14 | |
Document And Entity Information | ' | ' | ' |
Entity Registrant Name | 'Elite Data Services, Inc. | ' | ' |
Entity Central Index Key | '0000704366 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Is Entity a Well-known Seasoned Issuer | 'No | ' | ' |
Is Entity a Voluntary Filer | 'No | ' | ' |
Is Entity's Reporting Status Current | 'Yes | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Public Float | ' | $1,053,150 | ' |
Entity Common Stock, Shares Outstanding | ' | ' | 14,915,450 |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Current Assets | ' | ' |
Cash | $2,884 | $592 |
Total Assets | 2,884 | 592 |
Current Liabilities | ' | ' |
Accounts payable and accrued expenses | 460,278 | 470,843 |
Income taxes payable | ' | 1,750 |
Loans to a related party | 41,348 | 119,139 |
Contingent consideration payable | 906,574 | 1,015,362 |
Total Current Liabilities | 1,408,200 | 1,607,094 |
Stockholders' Deficit | ' | ' |
Preferred stock, $0.001 par value; 50,000,000 shares Series A authorized; issued and outstanding 0 and 8,811, respectively | ' | 1 |
Common stock, $0.001 par value; 300,000,000 shares authorized; issued and outstanding 150,488 and 63,468, respectively | 5 | 2 |
Subscription agreements | 155,000 | ' |
Additional paid-in capital | 4,907,390 | 4,389,052 |
Deficit accumulated | -6,467,711 | -5,995,557 |
Total Stockholders' Deficit | -1,405,316 | -1,606,502 |
Total Liabilities and Stockholders' Deficit | $2,884 | $592 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Stockholders' Deficit | ' | ' |
Preferred stock Series A, par value | $0.00 | $0.00 |
Preferred stock Series A, Authorized | 50,000,000 | 50,000,000 |
Preferred stock Series A, Issued | 0 | 8,811 |
Preferred stock Series A, outstanding | 0 | 8,811 |
Common stock, par value | $0.00 | $0.00 |
Common stock, Authorized | 300,000,000 | 300,000,000 |
Common stock, Issued | 150,488 | 63,468 |
Common stock, outstanding | 150,488 | 63,468 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Consolidated Statements Of Operations | ' | ' |
Revenue | ' | $420,189 |
Operating Expenses | ' | ' |
Project development costs | 21,999 | 119,229 |
Consulting services | 261,536 | 597,221 |
General and administrative expenses | 147,434 | 721,017 |
Total Operating Expenses | 430,969 | 1,437,467 |
LOSS FROM OPERATIONS | -430,969 | -1,017,278 |
OTHER (EXPENSE): | ' | ' |
Interest expense | 41,185 | 34,098 |
Other | ' | 322 |
Total Other Expense | 41,185 | 34,420 |
LOSS BEFORE PROVISION FOR INCOME TAXES | -472,154 | -1,051,698 |
PROVISION FOR INCOME TAX(BENEFIT) | ' | -1,750 |
NET LOSS | ($472,154) | ($1,049,948) |
Basic and Diluted Per Share Data: Net Loss Per Share - basic and diluted | ($5.70) | ($16.70) |
Weighted Average Common Shares Outstanding: Basic and diluted | 85,640 | 62,890 |
CONSOLIDATED_STATEMENT_OF_STOC
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT (USD $) | Preferred Stock | Common Stock | Stock Subscriptions | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, amount at Dec. 31, 2011 | $1 | $2 | ' | $3,645,609 | ($4,945,609) | ($1,299,961) |
Beginning balance, shares at Dec. 31, 2011 | 5,949 | 62,542 | ' | ' | ' | ' |
Issuance of warrants | ' | ' | ' | 570,000 | ' | 570,000 |
Issuance of common stock, amount | ' | ' | ' | 173,035 | ' | 173,035 |
Issuance of common stock, shares | ' | 926 | ' | ' | ' | ' |
Issuance of preferred stock, amount | ' | ' | ' | 250 | ' | 250 |
Issuance of preferred stock, shares | 1,923 | ' | ' | ' | ' | ' |
Dilutive issuance, amount | ' | ' | ' | 122 | ' | 122 |
Dilutive issuance, shares | 939 | ' | ' | ' | ' | ' |
Subscription agreements | ' | ' | ' | ' | ' | ' |
Net loss for the year | ' | ' | ' | ' | -1,049,948 | -1,049,948 |
Ending balance, amount at Dec. 31, 2012 | 1 | 2 | ' | 4,389,052 | -5,995,557 | -1,606,502 |
Ending balance, shares at Dec. 31, 2012 | 8,811 | 63,486 | ' | ' | ' | ' |
Issuance of warrants | ' | ' | ' | 140,000 | ' | 140,000 |
Issuance of preferred stock, amount | ' | ' | ' | 40 | ' | 40 |
Issuance of preferred stock, shares | 302 | ' | ' | ' | ' | ' |
Cashless conversion of warrants to common stock, shares | ' | 385 | ' | ' | ' | ' |
Conversion of warrants to common stock, amount | ' | 1 | ' | 298,299 | ' | 298,300 |
Conversion of warrants to common stock, shares | ' | 16,923 | ' | ' | ' | ' |
Issuance of common stock in exchange for preferred stock, amount | -1 | 2 | ' | -1 | ' | ' |
Issuance of common stock in exchange for preferred stock, shares | -9,113 | 70,032 | ' | ' | ' | ' |
Subscription agreements | ' | ' | 155,000 | ' | ' | 155,000 |
Effect of reverse stock split, shares | ' | -320 | ' | ' | ' | ' |
Net loss for the year | ' | ' | ' | ' | -472,154 | -472,154 |
Ending balance, amount at Dec. 31, 2013 | ' | $5 | $155,000 | $4,907,390 | ($6,467,711) | ($1,405,316) |
Ending balance, shares at Dec. 31, 2013 | ' | 150,488 | ' | ' | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net loss | ($472,154) | ($1,049,948) |
Adjustments to reconcile net loss to net cash used in opearting activities | ' | ' |
Non-cash consulting expenses | 40 | 173,408 |
Warrants issued for services | 140,000 | 570,000 |
Changes in operating assets and liabilities: | ' | ' |
Accounts payable and accrued expenses | 69,435 | 264,727 |
Income taxes payable | -1,750 | -13,750 |
Loans payable to related parties | 30,922 | 29,555 |
Net cash used in operating activities | -233,507 | -26,008 |
Financing Activities: | ' | ' |
Proceeds from subscription agreements | 155,000 | ' |
Cash received from contingent consideration | ' | 18,948 |
Proceeds from related parties | 80,799 | ' |
Net cash provided by financing activities | 235,799 | 18,948 |
NET INCREASE (DECREASE) IN CASH | 2,292 | -7,060 |
CASH BEGINNING OF THE YEAR | 592 | 7,652 |
CASH END OF THE YEAR | 2,884 | 592 |
SUPPLEMENTAL DISCLOSURES: | ' | ' |
Cash paid for interest | ' | 12,025 |
Cash paid for taxes | ' | ' |
Non-Cash Transactions: | ' | ' |
Warrants converted to common stock as settlement for related loans | 298,300 | ' |
Forgiveness of related party loans | $80,000 | ' |
DESCRIPTION_OF_BUSINESS
DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2013 | |
Description Of Business | ' |
NOTE 1 - DESCRIPTION OF BUSINESS | ' |
Elite Data Services, Inc. (hereinafter the “Company”, “Our”, “We” or “Us”) changed its name from Dynamic Energy Alliance Corporation on November 4, 2013. Prior to that, we were formerly Mammatech Corporation, and were incorporated in the State of Florida on November 23, 1981 under the name Mammathetics Corp. From 1981 through the first quarter of 2011, the Company’s business was that of a marketer of tumor detection equipment. On March 9, 2011, the Company and Dynamic Energy Development Corporation (DEDC), a private corporation, transacted a reverse triangular merger in which DEDC became a subsidiary of the Company, shifting its focus to the recoverable energy sector. In connection with this the Company planned to develop, commercialize, and sell innovative technologies in the recoverable energy sector. Specifically, it was focused on identifying, combining and enhancing existing industry technologies with proprietary recoverable production and finishing processes to produce synthetic oil, carbon black, gas, and carbon steel from discarded or waste tires waste. | |
In conjunction with the acquisition of DEDC, the Company acquired Transformation Consulting (‘TC”), a wholly-owned subsidiary of DEDC. TC provides business development, marketing, and administrative consulting services. Through a January 2010 management services and agency agreement (“Agency Agreement”), TC received revenues from a related party based on billings received from certain of TC’s direct to consumer membership club products that were transferred to the related party under the Agency Agreement. As the Company continues its operations, it has decided to focus more on the advertising and marketing plan that generated revenues in the Company’s past. | |
History | |
DEDC’s business plan focused on developing and implementing recoverable energy technologies. DEDC, the Company’s wholly owned subsidiary, sought joint venture partners or other financing partners (hereinafter collectively “joint venture partners”), on a project by project basis, for the purpose of development, construction and operation of free standing plants to provide full cycle processing to convert discarded tires into shelf ready, saleable synthetic oil and solvents and carbon products (hereinafter referred to as “plants”). Although, the Company identified various plant locations and potential joint venture opportunities, as of today, it has not executed any agreements for the development of a plant. | |
DEDC proposed to develop a full cycle process plant for converting discarded tires to saleable synthetic oil and solvents and carbon products. To accomplish this plan and other milestones, management attempted to secure one or more partnerships, on a site-by-site basis, with local joint venture partners and/or financing sources, including companies who produced shredded tire feedstock usable in the plants. The Company’s business plan anticipated the creation of a state-of-the-art production facility called the “Pyrol Black Energy Campus” in late 2013 and early 2014, as one of its initial milestones. Specifically, the Company planned to acquire, combine and optimize a variety of existing proven and potentially innovative “Renewable Energy” technologies currently available in the market. Creation of such an initial plant required obtaining a location that has a dependable supply of waste feed stock for the plant, obtaining the necessary capital to develop, construct and set in operation the plant (likely with local joint venture partners and/or other financing sources), and establishment of markets for the resale of resulting products. The Company hoped to partner with other companies who can provide tire feedstock, land for a plant, and/or capital, on a joint venture basis. The Company had identified a potential site in Ennis, Texas upon which it could develop its first Energy Campus, and announced its intention to purchase such site, pending the completion of favorable due diligence and the obtaining of the necessary capital required to proceed. However to date, the Company was unable to obtain the necessary financing to secure the Energy Campus. | |
As the market for high end financing suffered to the downtown in the economy, the Company’s management began to assess the future of the Company for acquisitions relating to TC’s marketing strategies. Beginning in August 2013, the Company introduced new management to assist with the Company’s priorities and determine the best course of action to implement its business plan. This included evaluating all business opportunities related to the Company’s subsidiaries. | |
During this period, the Company evaluated DEDC’s potential assets to assess the feasibility of going forward on DEDC’s business plan and determined conclusively it was not in the Company’s best interest based on past operations and significant reliance on external financing. As the Company plans to continue and concentrate on the marketing and advertising solutions in which Transformation Consulting, Inc. had generated the most revenue for the Company in the past, the Company will not be exclusively focusing on DEDC’s business plan absent a joint partnership if these operations of the Company are to continue. As of December 31, 2013, no reasonably acceptable joint partnership has surfaced, prompting the Company to focus on the marketing and advertising sector of its wholly owned subsidiary Transformation Consulting, Inc. | |
History of Transformation Consulting, Inc. | |
Since September 30, 2013, the Company has been focused on its wholly owned subsidiary, Transformation Consulting, Inc.’s (“TC”) business model involving advertising, consulting and marketing services. More specifically, TC is in the business of developing, marketing, administering and selling various consumer products and services including its membership club products. In March 9, 2011, DEDC acquired all of the outstanding shares, of TC pursuant to a Stock Purchase Agreement between a former director of the Company (“the Director”) and DEDC, dated February 25, 2011 and Amendments No. 1, 2 and 3 to Stock Purchase Agreement, dated December 30, 2011, March 31, 2012 and September 26, 2012, respectively. The purchase price for the Shares was $2,000,000, payable from the gross revenues (pre-tax) of TC, as received, subject to the following contingent reduction or increase of the purchase price. Under the original agreement (which is not currently in effect to date), if TC’s gross revenues during the two years following the closing are less than $2,000,000, then the purchase price for the shares shall be reduced to the actual revenue received by TC during the two year period. If TC’s revenues during the same two year period exceed $2,000,000, then the purchase price for the shares shall be increased by one-half of the excess revenues over $2,000,000 (“contingent consideration”). At the time of the acquisition, TC had minimal tangible assets and the entire $2,000,000 purchase price was allocated to a customers’ list intangible asset. | |
Through December 31, 2012, TC’s gross revenues under the Stock Purchase Agreement totaled approximately $2,000,000. Through December 31, 2012, payments of the purchase price, net of refunds, totaled $984,638. At December 31, 2012 and 2013, the contingent consideration payable was $1,015,362 and $906,574, respectively. Under an amended payment schedule, the contingent consideration owing was due December 15, 2012. Under this original agreement, the Company needed funding to fulfill its financial obligations and was in default for non-payment. TC’s past revenues were primarily related to a January 2013, Management Services and Agency Agreement (“Agency Agreement”). On September 30, 2013, Charles R. Cronin assigned to Habanero Properties, Ltd, all of its rights under this note. | |
Merger Acquisition by way of Share Exchange | |
On March 9, 2011, the Company effectively completed a merger transaction whereby it entered into a Share Exchange Agreement (“SEA”) with DEDC, a privately held corporation, with DEDC becoming a wholly-owned subsidiary of the Company. The share transactions to complete the merger transaction are hereinafter collectively referred to as the “Merger.” All costs incurred in connection with the Merger have been expensed. Following the Merger, the Company abandoned its prior business and concurrently adopted DEDC’s business plan as its principal business. In addition, the director and officer of the Company were replaced by the directors and officers of DEDC. On October 2, 2013, an Assignment and Assumption Agreement was entered into by the Company and Habanero Properties in which Habanero Properties purchased controlling ownership of the Company’s outstanding common stock. |
GOING_CONCERN
GOING CONCERN | 12 Months Ended |
Dec. 31, 2013 | |
Going Concern | ' |
Note 2 - GOING CONCERN | ' |
Since inception, the Company has a cumulative net loss of $6,467,711. The Company currently has only limited working capital with which to continue its operating activities. The amount of capital required to sustain operations is subject to future events and uncertainties. The Company must secure additional working capital through loans, sale of equity securities, or a combination, in order to implement its business plans. There can be no assurance that such funding will be available in the future, or available on commercially reasonable terms favorable to the Company. These conditions raise substantial doubt about the Company's ability to continue as a going concern. | |
The accompanying financial statements have been presented on the basis of the continuation of the Company as a going concern and do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. | |
During 2012, the Company has generated revenue in the amount of $420,189. Management has continued to manage its costs for 2013 to ensure appropriate funding is on hand for its operation. The Company's 2013 projections were not met. |
MERGER_WITH_DYNAMIC_ENERGY_DEV
MERGER WITH DYNAMIC ENERGY DEVELOPMENT CORPORATATION | 12 Months Ended | |
Dec. 31, 2013 | ||
Merger With Dynamic Energy Development Corporatation | ' | |
NOTE 3 - MERGER WITH DYNAMIC ENERGY DEVELOPMENT CORPORATION | ' | |
(a) | Description of the Merger | |
This merger acquisition was transacted as follows (The Company’s shares of common stock disclosures in this note have been presented on a post forward stock split basis.): | ||
The Company, DEDC and Verdad Telecom (“Controlling Shareholder”) entered into a Share Exchange Agreement, pursuant to which Controlling Shareholder, owning an aggregate of 44,786,188 shares of common stock of the Company (“Common Stock”), equivalent to 85.5% of the issued and outstanding Common Stock (the “Old Shares”) would return its shares to treasury and DEDC shareholders would exchange 17,622,692 DEDC shares on a one for one basis of newly issued shares of the Company. On return of such shares to treasury, the Controlling Shareholder received a cash payment of $322,000 (the “Purchase Price”). In addition, prior to the effective time of the Merger, 6,000,000 shares of the Company’s common stock were issued to a debenture holder pursuant to an investment bonus feature in the convertibility of debenture notes. Immediately prior to the effective time of the Merger, 22,871,100 shares of the Company’s common stock were issued and outstanding. Upon completion of the Merger, the DEDC shareholders owned approximately 69.8% of the Company’s issued and outstanding common stock. | ||
All references to share and per share amounts in these financial statements have been restated to retroactively reflect the number of shares of common stock issued pursuant to the Merger. | ||
(b) | Accounting Treatment of the Merger; Financial Statement Presentation | |
The Merger was accounted for as a reverse acquisition pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805-40-25.1, which provides that the merger of a private operating company into a non-operating public shell corporation without significant net assets typically results in the owners and management of the private company having actual or effective operating control of the combined company after the transaction, with the shareholders of the former public corporation continuing only as passive investors. | ||
These transactions are considered by the Securities and Exchange Commission to be capital transactions in substance, rather than business combinations. That is, the transaction is equivalent to the issuance of stock by the private company for the net monetary assets of the shell corporation, accompanied by a recapitalization. Accordingly, the Merger has been accounted for as a recapitalization, and, for accounting purposes, DEDC is considered the accounting acquirer in a reverse acquisition. | ||
The Company’s historical accumulated deficit for periods prior to March 9, 2011, in the amount of $3,075,165 was eliminated by offset against additional-paid-in-capital, and the accompanying financial statements present the previously issued shares of common stock as having been issued pursuant to the Merger on March 9, 2011. The shares of common stock of the Company issued to the DEDC stockholders in the Merger are presented as having been outstanding since December 13, 2010, the month when DEDC first sold its equity securities. | ||
Because the Merger was accounted for as a reverse acquisition under Generally Accepted Accounting Principles (“GAAP”), the financial statements for periods prior to March 9, 2011 reflect only the operations of DEDC. |
ACQUISITION_OF_TRANSFORMATION_
ACQUISITION OF TRANSFORMATION CONSULTING, INC. | 12 Months Ended |
Dec. 31, 2013 | |
Acquisition Of Transformation Consulting | ' |
NOTE 4 - ACQUISITION OF TRANSFORMATION CONSULTING | ' |
On March 9, 2011, DEDC acquired all of the outstanding shares, of Transformation Consulting (“TC”) pursuant to a Stock Purchase Agreement between a director of the Company (“the Director”) and DEDC, dated February 25, 2011 and Amendments No. 1, 2 and 3 to Stock Purchase Agreement, dated December 30, 2011, March 31, 2012 and September 26, 2012, respectively. The purchase price for the Shares was $2,000,000, payable from the gross revenues (pre-tax) of TC, as received, subject to the following contingent reduction or increase of the purchase price. If TC’s gross revenues during the two years following the closing are less than $2,000,000, then the purchase price for the shares shall be reduced to the actual revenue received by TC during the two year period. If TC’s revenues during the same two year period exceed $2,000,000, then the purchase price for the shares shall be increased by one-half of the excess revenues over $2,000,000 (“contingent consideration”). At the time of the acquisition, TC had minimal tangible assets and the entire $2,000,000 purchase price was allocated to a customers’ list intangible asset. | |
Through December 31, 2012, TC gross revenues under the Stock Purchase Agreement totaled approximately $2,000,000. Through December 31, 2012, payments of the purchase price, net of refunds, totaled $984,638. At December 31, 2012 and 2013, contingent consideration payable is $1,015,362 and $906,574, respectively. Under an amended payment schedule, the contingent consideration owing was due December 15, 2012. On September 30, 2013, Charles R. Cronin assigned this debt to Habanero Properties, Ltd. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | |
Dec. 31, 2013 | ||
Summary Of Significant Accounting Policies | ' | |
NOTE 5 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | |
Basis of Presentation | ||
The consolidated financial statements have been prepared in accordance with generally accepted accounting principles and include the accounts of the Company and its subsidiaries, Dynamic Energy Development Corporation and Transformation Consulting, Inc.. All intercompany balances and transactions have been eliminated. | ||
Use of Estimates | ||
Preparation of the Company's financial statements in conformity with United States GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as well as the reported amounts of revenues and expenses. Accordingly, actual results could differ from those estimates. | ||
Development Costs | ||
Development costs are expensed in the period they are incurred unless they meet specific criteria related to technical, market and financial feasibility, as determined by management, including but not limited to the establishment of a clearly defined future market for the product, and the availability of adequate resources to complete the project. If all criteria are met, the costs are deferred and amortized over the expected useful life, or written off if a product is abandoned. For the years ended December 31, 2013 and 2012, total development costs amounted to $21,999 and $119,229, respectively. At December 31, 2013 and December 31, 2012, the Company had no deferred product development costs. | ||
Cash and Cash Equivalents | ||
Cash and cash equivalents, if any, include all highly liquid instruments with an original maturity of three months or less at the date of purchase. At December 31, 2013 and December 31, 2012, the Company had no cash equivalents. | ||
Financial Instruments and Concentration of Risk | ||
The fair values of financial instruments, which include cash, accounts payable and accrued liabilities and convertible notes, were estimated to approximate their carrying values due to the immediate or relatively short maturity of these instruments. Management does not believe that the Company is subject to significant interest, currency or credit risks arising from these financial instruments. | ||
Fair Value of Financial Instruments | ||
The Company accounts for the fair value of financial instruments in accordance with the FASB ASC Topic 820, Fair Value Measurements and Disclosures ("Topic 820"). Topic 820 defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. | ||
The three levels are defined as follows: | ||
Level 1 | inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. | |
Level 2 | inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. | |
Level 3 | inputs to the valuation methodology are unobservable and significant to the fair measurement. | |
The fair value of the Company's cash, accounts payable, and accrued expenses approximate carrying value because of the short-term nature of these items. | ||
Management believes it is not practical to estimate the fair value of loan to related parties because the transactions cannot be assumed at arm's length, the terms are not deemed to be market terms, there are no quoted values available for these instruments, and an independent valuation would not be practical due to the lack of data regarding similar instruments, if any, and the associated potential costs. | ||
Revenue Recognition | ||
The Company recognizes revenue in accordance with the FASB ASC Section 605-10-S99, Revenue Recognition, Overall, SEC Materials ("Section 605-10-S99"). Section 605-10-S99 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the fee is fixed and determinable; and (4) collectability is reasonably assured. | ||
Specifically with respect to TC, commission revenue is earned on consulting services provided to a company controlled by a director of the Company. TC earns these commissions based on this company’s revenues from certain direct to consumer membership club products. Commissions earned are recorded when deposited into an escrow account, effectively allowing for uncertainty of collectability and bad debt issues. | ||
Loss Per Common Share | ||
Basic loss per common share (“EPS”) is calculated by dividing the net loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. The number of common shares that are exercisable or converted into common stock is not material to effect diluted EPS results. Further, since the Company shows losses for the periods presented basic and diluted loss per share are the same for all periods presented. As of December 31, 2013 and December 31, 2012, there were no outstanding dilutive securities. | ||
Certain Reclassification | ||
Certain 2012 items were reclassified to conform to current year presentation. Such reclassifications had no effect on 2012 net income. | ||
Income Taxes | ||
Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted the accounting standards codified in ASC 740, Income Taxes as of its inception. Pursuant to those standards, the Company is required to compute tax asset benefits for net operating losses carried forward. Potential benefit of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not that it will utilize the net operating losses carried forward in future years. | ||
ASC 740-10-25 prescribes recognition thresholds that must be met before a tax position is recognized in the financial statements and provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. An entity may only recognize or continue to recognize tax positions that meet a "more likely than not" threshold. Based on its evaluation, the Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements. | ||
The Company does not have any unrecognized tax benefits as of December 31, 2013 and December 31, 2012 that, if recognized, would affect the Company's effective income tax rate. The Company's policy is to recognize interest and penalties related to income tax issues as components of income tax expense. The Company did not recognize or have any accrual for interest and penalties relating to income taxes as of December 31, 2013 and December 31, 2012. | ||
Common Share Non-Monetary Consideration | ||
In situations where common shares are issued and the fair value of the goods or services received is not readily determinable, the fair value of the common shares is used to measure and record the transaction. The fair value of the common shares issued in exchange for the receipt of goods and services is based on the stock price as of the earliest of the date at which: | ||
i) the counterparty’s performance is complete; | ||
ii) a commitment for performance by the counterparty to earn the common shares is reached; or | ||
iii) the common shares are issued if they are fully vested and non-forfeitable at that date. | ||
Stock-Based Compensation | ||
On December 1, 2005, the Company adopted the fair value recognition provisions codified in ASC 718, Compensation-Stock Compensation. The Company adopted those provisions using the modified-prospective-transition method. Under this method, compensation cost recognized for all periods prior to December 1, 2005 includes: a) compensation cost for all share-based payments granted prior to, but not yet vested as of November 30, 2005, based on the grant-date fair value and b) compensation cost for all share-based payments granted subsequent to November 30, 2005, based on the grant-date fair value. In addition, deferred stock compensation related to non-vested options is required to be eliminated against additional paid-in capital. The results for periods prior to December 1, 2005 were not restated. | ||
The Company accounts for equity instruments issued in exchange for the receipt of goods or services from parties other than employees in accordance with ASC 505, Equity. 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 counterparty. | ||
Share Purchase Warrants | ||
The Company accounts for common share purchase warrants at fair value in accordance with ASC 815, Derivatives and Hedging. The Black-Scholes option pricing valuation method is used to determine fair value of these warrants. Use of this method requires that the Company make assumptions regarding stock volatility, dividend yields, expected term of the warrants and risk-free interest rates. | ||
Recently and Issued Accounting Pronouncements | ||
Recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC during the current reporting period did not, or are not, believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
RELATED_PARTY_TRANSACTIONS_AND
RELATED PARTY TRANSACTIONS AND AMOUNTS OWING | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Related Party Transactions And Amounts Owing | ' | ||||||||
NOTE 6 - RELATED PARTY TRANSACTIONS AND AMOUNTS OWING | ' | ||||||||
a) | Loans payable to related party - Cronin – LOC | ||||||||
The amounts due to a related party at December 31, 2013 and 2012 of $-0- and $119,139 , respectively, represent an unsecured promissory note (“Cronin - LOC”) due to a former shareholder and former director of the Company. These amounts are unsecured, bear interest at 15% per annum and payable, with accumulated interest. This financial instrument has no outstanding balance at December 31, 2013, as the outstanding balance owed at the time of exercise of his warrants was offset towards partial payment of the warrants exercised at their strike price and aggregated $189,512. | |||||||||
In conjunction with the execution of the Cronin - LOC, the Company issued a Warrant to the shareholder and director for the purchase of 6,923 shares of common stock in July 2011, which were exercised in September 2013. | |||||||||
b) | Loans payable to related party – Myers - LOC | ||||||||
The amounts due to a related party at December 31, 2013 of $41,348, represents an unsecured promissory note (“Myers – LOC”) due to a shareholder and director of the Company. These amounts are unsecured and bear interest at the rate of 12%. The note is due and payable in August 2014. | |||||||||
c) | Contingent consideration payable to related party | ||||||||
Pursuant to Stock Purchase Agreement between a former director of the Company (“the Director”) and DEDC, dated February 25, 2011 and Amendments No. 1, No. 2 and No. 3 to Stock Purchase Agreement, dated December 30, 2011, March 31, 2012 and September 26, 2012, respectively, DEDC acquired all of the outstanding shares, of Transformation Consulting, Inc. (“TC”). The purchase price for the shares was $2,000,000, payable from the gross revenues of TC, subject to the following contingent reduction or increase of the purchase price. If TC’s gross revenues during the two years following the closing are less than $2,000,000, then the purchase price for the shares shall be reduced to the actual revenue received by TC during the two year period. If TC’s revenues during the same two year period exceed $2,000,000, then the purchase price for the shares shall be increased by one-half of the excess revenues over $2,000,000 (“contingent consideration”). | |||||||||
TC’s revenues are primarily related to revenues received from an entity controlled by the Director (“related entity”) under a January 2010, Management Services and Agency Agreement (“Agency Agreement”). Under the Agency Agreement, TC receives revenues based on billings received from certain of TC’s direct to consumer membership club products that were transferred to the related entity under the Agency Agreement. Pursuant to the Agency Agreement, TC agreed to (1) transfer to the related entity the ownership of certain TC current direct to consumer membership products upon TC receiving a total of $1,000,000 in revenues; (2) introduce the related entity to TC’s existing and potential vendors for use in managing the TC current programs on behalf of TC; and (3) have the related entity act as TC’s sales agent for new product sales. In consideration, TC receives all gross receipts of existing sales, less the related entity’s management fee of 20% of gross sales. Separately, TC and the related entity would each be entitled to 50% of new business sales. After total payments of $2,000,000 to TC from all related revenues under the Agency Agreement, the related entity would no longer be obligated to pay TC any further compensation. | |||||||||
Pursuant to the contingent consideration of $2,000,000 due to the Director from TC, all revenues generated by TC under the Agency Agreement are disbursed to Director. All cash management services, pertaining to the revenues generated by TC under the Agency Agreement are managed by the Director directly from an escrow account, including deposits of revenues and payment disbursements to the Director. As a result, the Company does not have access to the cash flow from such revenues, which are administered from said escrow account. Contingent consideration is payable based on a payment schedule, as amended, as follows: | |||||||||
- | Payment one: the first $900,000 of gross revenues paid on receipt; | ||||||||
- | Payment two: the next $115,944 of gross revenues paid at the later of 90 days of receipt or June 30, 2012; | ||||||||
For the years ended December 31, 2013 and 2012, TC gross revenues totaled $-0- and $1,580,302, respectively. Through December 31, 2012, TC gross revenues under the TC Stock Purchase Agreement totaled approximately $2,000,000. | |||||||||
Through December 31, 2013, payments, net of refunds, made to Director under the TC Stock Purchase Agreement totaled $984,638. Part of the outstanding balance owed at the time of exercise of the warrants was offset towards the payment of the warrants exercised at their strike price and aggregated $108,788. As part of the Assignment and Assumption Agreement entered into by the Company and Habanero Properties, TC assigned this debt to Habanero Properties, Ltd. At December 31, 2013 and 2012, the contingent consideration payable is $906,574 and $1,015,362, respectively, as follows: | |||||||||
As of | As of | ||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Contingent consideration due | $ | 2,000,000 | $ | 2,000,000 | |||||
Less payments, net of refunds, to Director | (984,638 | ) | 984,638 | ||||||
Payment of exercise of warrants | (108,788 | ) | - | ||||||
$ | 906,574 | $ | 1,015,362 | ||||||
d) | Assignment and Assumption Agreement and Right of First Refusal and Option Agreement – IWSI PS Plan | ||||||||
On June 1, 2012, the Company, through its wholly owned subsidiary, DEDC, entered into an assignment and assumption agreement (“Assignment Agreement”) with IWSI PS Plan, an entity controlled by Charles R. Cronin, Jr., a shareholder and former director of the Company, and C.C. Crawford Retreading Company, Inc. (“CTR”), pursuant to which DEDC assigned its rights to acquire CTR to IWSI PS Plan (“IWSI PS”). On March 20, 2012, DEDC had entered into a stock purchase agreement with CTR in which DEDC agreed to acquire 100% of the issued and outstanding common shares of CTR. See Note 8. Commitments and Contractual Obligations – Stock Purchase Agreement - C.C. Crawford Retreading Company, Inc., for discussion. | |||||||||
On October 2, 2012, the DEDC executed a right of first refusal and option agreement (“Right of First Refusal”) with IWSI PS Plan for both an option to purchase and right of first refusal to purchase CTR. | |||||||||
The option to purchase granted to the DEDC extends for one year from the date of execution, and provides for certain terms and conditions as follows: | |||||||||
1 | An option exercise price equal to $1,032,500, the original purchase price paid by IWSI PS (the “Option Purchase Price”) with the following adjustments; | ||||||||
2 | A quarterly option payment of $15,000 (the “Option Payment”) , payable every 90 days during the Term of this Agreement; | ||||||||
3 | An amount equal to any increased accounts receivable over the Term and amount equal to five percent (5%) per month of the original purchase price paid by IWSI PS; | ||||||||
4 | All amounts expensed by CTR to advance the business, including tire pyrolysis, the amounts paid the Officers as employment bonuses, the closing costs on the original acquisition, and an amount equal to any increase in IWSI PS shareholder equity, less any amounts CTR received from the prior sale of any assets; | ||||||||
5 | Amount equal to any decrease in accounts payable, and a monthly fee of $10,000 per month, accrued monthly, for each month of use of the facility by DEAC and/or its affiliates. | ||||||||
As of December 31, 2013, the assignment and assumption agreement and right of first refusal and option agreement “IWSI PS Plan” have terminated. | |||||||||
e) | Non-Binding Letter of Intent – Terpen Kraftig LLC | ||||||||
On October 10, 2012, the Company, through its wholly owned subsidiary, Dynamic Energy IP Corporation (“DEIP”), executed a Non-Binding Letter of Intent (LOI) with Terpen Kraftig LLC (TK), a company managed by two of the Company’s former Directors, Charles R. Cronin, Jr. and Dr. Earl Beaver, contemplating a definitive agreement within 45 days from said letter of intent under which TK would assign to DEIP the exclusive, worldwide license and right in and to Licensor’s catalyst(s), reactor and fractionator technology relating to the recovery of high valued organics from the processing of waste tires (the “Licensed Technology”). | |||||||||
The LOI sets forth terms for a future definitive agreement that anticipates that the term of the license and assignment to Licensor of the Licensed Technology shall be the greater of (a) twenty-five (25) years, or (b) twenty (20) years from the issuance of the Licensed IP patent(s), whichever is greater, and that compensation payable to TK from the Company and DEIP would consist of: | |||||||||
1 | A non-refundable deposit in the amount of $100,000 to secure the exclusivity of the term sheet, payable within 30 days and prior to preparation and execution of the Definitive Agreement, which shall, upon execution of the Definitive Agreement, be allocated towards to costs associated with the purchase of the equipment required to construct a prototype unit (the “Prototype”) of the Licensed Technology. | ||||||||
2 | A payment to Licensor in the amount of Four Hundred Thousand and No/100 Dollars (USD$400,000), on or before December 31, 2012, for the purchase of the equipment required to construct a pilot plant with input of a minimum of 50/gallons per day (the “Pilot Plant”). If Licensee fails to fund the Pilot Plant on or before December 31, 2012, the Licensor shall have the right cancel and rescind the licensing rights of the Licensed IP granted to Licensee under the Definitive Agreement. | ||||||||
3 | A minimum royalty cash payment of Thirty-Five Thousand and No/100 Dollars (USD $35,000) per month, from the date of execution of the Definitive Agreement forward over the term of the license, until and except when the royalty stream exceeds $35,000 per month (the “Minimum Licensing Fee”). | ||||||||
The LOI contains customary warranties and representations and confidentiality provisions, including specific terms which are considered trade secrets, and are therefore not being released. | |||||||||
The Company is still seeking funding and is in default on this agreement due to non-payment. Without funds to secure the exclusivity of the term sheet or obtaining consent from TK to defer payment of the amount required, TK has the right to terminate its agreement with the Company. | |||||||||
As of December 31, 2013, TK had terminated this agreement. | |||||||||
f) | Transactions in Normal Course of Operations with Related Parties | ||||||||
Related party transactions were in the normal course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. | |||||||||
(i) | Consulting Agreement- Key Services, Inc. – The Company incurred expenses for consulting services for development and construction of the Company’s energy campus project, provided by a company related through common shareholdings (“Consultant”) for the years ended December 31, 2013 and 2012, in the amount of $-0- and $140,000 respectively. At December 31, 2013 and 2012 the Company has an accounts payable balance of $-0- and $0, respectively, to this related party. In July 2012, the consulting services agreement was amended and the accounts payable was settled in full. See Note 8, Commitments and Contractual Obligations, for discussion. | ||||||||
(ii) | Consulting Agreement – NBN Enterprises, Inc. (“NBN”) – The Company incurred expenses for strategic business and legal services provided by a company related through common shareholdings - for the years ended December 31, 2013 and 2012, in the amount of $-0- and $42,000, respectively. At December 31, 2013 and 2012, the Company has an accounts payable balance of $-0- and $10,500, respectively, to this related party. See Note 8, Commitments and Contractual Obligations, for discussion. | ||||||||
(iii) | Consulting Agreement - TMDS, LLC – On July 9, 2011, as amended December 30, 2011, Company executed a consulting agreement with TMDS, LLC (“TMDS”), an entity controlled by a former director and shareholder of the Company. Under the consulting agreement, TMDS will locate and assist in the Company’s development and construction of energy campus projects to be undertaken by the Company in the future. The consulting agreement is non-exclusive and runs for a period of five years. As consideration, the Company has agreed to pay compensation to TMDS in the form of one or more Warrants for the purchase of 1,000,000 shares of restricted common stock of the Company (“Shares”) every 90 days, exercisable at $0.0001 per share, with an exercise term of five (5) years from the date of each issuance. In addition, TMDS is entitled to additional fees, including but not limited to, joint venture, partnership, consulting, developer, contractor and/or project management fees, to be negotiated separately, and agreed to in writing on a project-by-project basis. This agreement was terminated effective September 30, 2013. | ||||||||
During the years ended December 31, 2013 and 2012, the Company recorded, the issuance of Warrants valued at $80,000 and 400,000 respectively to TMDS under this agreement. See Note 7, Capital Stock – Common Stock Warrants, for discussion. | |||||||||
(iv) | Industry Consulting and Nondisclosure Agreement - Practical Sustainability - On May 25, 2012, Dynamic Energy Development Company, LLC (“DEDC”), a wholly owned subsidiary of Dynamic Energy Alliance Corporation, modified a prior agreement, Industry Consulting and Nondisclosure Agreement (“ICNA”), with Practical Sustainability, LLC (“PS”), an entity controlled by Dr. Earl Beaver, a director of the Company, dated November 19, 2010, whereby services and compensation were amended to reflect PS’s role that was effective March 1, 2011. Changes under the amended agreement include: | ||||||||
- | Nature of Services: Development of Life Cycle Analysis Models, Research of Government Information on Technology for Tire Pyrolysis Oil, Analysis of various tire pyrolysis operations, evaluation of the marketability of tire pyrolysis oil and carbon black produced by vendors of tire pyrolysis processes, participation in the development of the roll-out plan for tire pyrolysis plants, participation on the analysis of vended solutions of the manufacturing of tire pyrolysis plants. Analysis of fuels produced by third party propriety processed that reportedly produce gasoline, diesel, jet fuel and other similar fuels for the use in combustion engines. Provide and manage a central laboratory for DEDC or its parent. | ||||||||
- | Compensation: The Company or DEDC shall pay to PS a flat fee of $5,000 per month. Compensation has been paid through January 2012. | ||||||||
On January 17, 2013, the ICNA agreement was further amended to terminate the agreement effective February 1, 2012. Under this amendment, DEDC and PS have agreed that all work under the ICNA agreement has been performed for those services through January 2013 and there are no obligations due PS as of December 31, 2013. |
CAPITAL_STOCK
CAPITAL STOCK | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Capital Stock | ' | ||||||||
NOTE 7 - CAPITAL STOCK | ' | ||||||||
Authorized | |||||||||
The Company is authorized to issue 200,000,000 shares of preferred stock, having a par value of $0.0001 per share, and 300,000,000 shares of common stock, having a par value of $0.00003 per share. | |||||||||
Forward Stock Split and Authorized Capital Stock | |||||||||
Effective September 15, 2011, by Articles of Amendment, the Company effected the following changes: | |||||||||
-1 | forward split all outstanding shares of the Corporation’s common stock on a 3 for 1 basis. Accordingly, common share disclosure has been presented on a post split basis, except where noted. | ||||||||
-2 | increased authorized capital stock to 500,000,000 shares, of which 300,000,000 shares shall be common stock, par value $0.00003, and 200,000,000 shares shall be preferred stock, par value $0.0001, and to give the Board of Directors the power to fix by resolution the rights, preferences and privileges of preferred stock. | ||||||||
On October 5, 2011, by approval of shareholders of the Company and the Florida Secretary of State, the authorized number of Series A Convertible Preferred Stock was changed to 50,000,000 shares from the previously authorized 200,000,000 shares of preferred stock. The Certificate of Designation for these shares provides among other rights and privileges the requirement that 75% of the outstanding Series A Convertible Preferred must give their prior consent, before the Company can elect members to the Board of Directors, issue any securities of the Company or affect any fundamental transaction (defined as acquisitions, mergers, sale or purchase of substantially all assets, etc.). The Company effectuated these amendments during the fourth fiscal quarter of 2011. | |||||||||
The shareholders of convertible preferred stock are voted equally with the shares of the Company’s common stock. Each share of the convertible preferred stock is convertible into two fully paid and non-assessable shares of common stock, subject to certain adjustments, as follows: | |||||||||
(i) | During the period commencing on October 10, 2013 and terminating on October 10, 2015 (“the quarterly conversion period”), each holder of convertible preferred stock may elect to convert, on each March 31, June 30, September 30 and December 31 occurring during the quarterly conversion period, that number of shares of convertible preferred stock equal to 25% of the total number of shares of convertible preferred stock initially issued to such Holder into full paid and non-assessable shares of common stock; and | ||||||||
(ii) | After the quarterly conversion period, each Holder may elect to convert all or any portion of its shares of convertible preferred stock then outstanding into full paid and non-assessable shares of common stock. | ||||||||
(iii) | At any time after the issue date and while the convertible preferred stock are outstanding, the Company sells or grants any option to purchase or otherwise disposes or issues any common stock and/or common stock equivalents entitling any person to acquire shares of common stock at a price per share that is lower than $2.50 (such issuances, collectively, then the Company is required to issue additional shares of preferred shares “Dilutive Issuance”), based on the ratio of the number of shares of common stock and equivalents divided by the number of shares of common stock prior to the dilutive issuance, times the number of shares of preferred stock prior to the dilutive issuance. Each preferred stock shareholder is entitled to receive a pro rate portion of the dilutive issuance based on the number of its shares of preferred stock held prior to the dilutive issuance. | ||||||||
Issued and Outstanding | |||||||||
Preferred Stock | |||||||||
At December 31, 2013 and 2012, shares of preferred stock issued and outstanding totaled -0- and 8,811, respectively. | |||||||||
On September 13, 2012, the Company issued a total of 386 shares of series A convertible preferred stock, at par value of $0.0001 per share, to two directors of the Company, with each receiving 193 shares, in conjunction with the execution and completion of certain contract provisions related to the R.F.B., LLC agreement. | |||||||||
On October 2, 2012, the Company issued a total of 1,537 shares of series A convertible preferred stock, at par value of $0.0001 per share, to one director of the Company, in conjunction with the execution of the C.C Crawford Option Agreement. | |||||||||
During 2012, the Company issued 939 shares of preferred stock, at par value of $.0001 per share, for a dilutive issuance under the preferred share agreement, to the shareholders of preferred stock. Each preferred stock shareholder is entitled to receive a pro rate portion of the dilutive issuance based on the number of its shares of preferred stock held prior to the dilutive issuance. | |||||||||
During the year ended September 30, 2013, the Company issued 302 shares of preferred stock, at par value of $.0001 per share, for a dilutive issuance under the preferred share agreement to the shareholders of preferred stock. Each preferred stock shareholder is entitled to receive a pro rate portion of the dilutive issuance based on the number of its shares of preferred stock held prior to the dilutive issuance. | |||||||||
On September 30, 2013, the Company entered into a series of repurchasing agreements with each of the shareholders of its Series A Convertible Preferred Stock. The Company entered into the agreement to eliminate future dilutive issuance as a result the Company was able to reduce its convertible share exposure by 33% and eliminate 75% control held by the Series A Preferred Stock. In exchange for the agreement, each of the Series A Preferred Stock holders were issued common stock in the Company based on weighted average conversation rate of 67% of the conversion rate. As a result the Company issued 70,032 shares of common stocks at par value of $.00003 in exchange for the repurchase each of the Series A Preferred Stock. | |||||||||
Common Stock | |||||||||
At December 31, 2013 and 2012, shares of common stock issued and outstanding totaled 150,488 and 63,468, respectively. | |||||||||
During the year ended December 31, 2013, the Company issued 87,340 shares of common stock as follows: | |||||||||
On September 30, 2013, in conjunction with the repurchase agreements with the holders of the Series A Convertible Preferred Stock, Mr. Cronin exercised his warrants and those of TMDS at their strike price and 17,308 shares of common stock were issued for $298,300. The purchase price offset amounts due him under his line of credit and amount due under the contingent liability amount from the Company. | |||||||||
On September 30, 2013, the Company issued 70,032 shares of common stock under the repurchase agreements in exchange all of the outstanding Series A Convertible Preferred Stock. | |||||||||
Effective November 4, 2013, the Company received an affirmative vote by the shareholders for a reverse split of all the outstanding shares of the Company at a reverse split ratio of 1:1,300. No fractional shares were issued and cash was paid in lieu of the fractional shares. As a result of the fractional shares, outstanding shares were reduced by 320 post split shares. | |||||||||
During the year ended December 31, 2012, the Company issued 926 shares of common stock as follows: | |||||||||
On July 18, 2012, issued 469 shares to Key Services, Inc. (‘Key Services”), valued at $121,862, for settlement of accounts payable balance per amendment to Key Services’ consulting agreement; | |||||||||
On August 8, 2012, issued 192 shares to Heartland Capital Markets, LLC (“Heartland”), valued at $15,000, for corporate advisory services per amendment to Heartland’s corporate advisory services agreement; | |||||||||
On August 15, 2012, issued 96 shares to Undiscovered Equities, Inc. (“UEI”) valued at $17,500, for consulting services per amendment to UEI’s consulting agreement; | |||||||||
On September 13, 2012, issued 77 shares to R.F.B., LLC, (“RFB”), valued at $6,000, for acquisition of exclusive license by Company per RFB’s license and assignment agreement. | |||||||||
On December 31, issued 92 shares to outside contractor, valued at $12,673, under the outside contractor’s consulting agreement. | |||||||||
Stock Purchase Warrants | |||||||||
During the year ended December 31, 2012, the Company issued a total of six warrants for the purchase of 4,231shares of common stock with a total value of $570,000. | |||||||||
-1 | On January 17, 2012, the Company issued a warrant for the purchase of 769 shares of common stock to TMDS, LLC ("TMDS"'), a company controlled by a director of the Company, as consideration for services rendered per a Contractor Agreement, dated July 9, 2011, and as further amended December 30, 2011. TMDS receives a warrant to purchase 769 shares of common stock every ninety days during the term of the Contractor Agreement for a total of five (5) years. The warrant is exercisable at $0.13 per share, and has term expiring on the fifth anniversary date from the date of each issuance. The fair value of the issued warrant is $70,000, based on Black-Scholes option-pricing model using risk free interest rate of 0.79%, expected life of 5 years and expected volatility of 473.82%. | ||||||||
(2) | On March 17, 2012, the Company issued a warrant for the purchase of 385 shares of common stock, at an exercise price of $1.30 per share, exercisable after twelve months from issue date, with a term expiring on the fifth anniversary date from the date of issuance, to a departing Chief Financial Officer, who resigned effective March 14, 2012. The fair value of the issued warrant is $70,000, based on Black-Scholes option-pricing model using risk free interest rate of 1.13%, expected life of 5 years and expected volatility of 460.03%. The warrant was exercised in September 2013 under the cashless provision contained in the warrant. | ||||||||
-3 | On April 16, 2012, the Company issued a warrant for the purchase of 769 shares of common stock to TMDS. As discussed above, TMDS receives a warrant to purchase 769 Shares every ninety days during the term of the Contractor Agreement for a total of five (5) years. The fair value of the issued warrant is $160,000, based on Black-Scholes option-pricing model using risk free interest rate of 0.85%, expected life of 5 years and expected volatility of 481.39%. | ||||||||
-4 | On July 1, 2012, the Company issued a warrant share issuance for the purchase of 769 Shares of common stock (‘Warrant Shares’) to Joseph M. Danko, an independent contractor (“Contractor”), per a January 1, 2012 four year Stock Purchase Warrant Agreement that gives Contractor right to purchase 2,307 shares (“Warrant Shares”) of common stock, as consideration for services rendered per an Independent Contractor Agreement with the Company, effective January 1, 2012. The contractor is entitled to purchase 2,307 Warrant Shares as follows: | ||||||||
769 Warrant Shares after the first year anniversary, at exercise price of $260.00 per share, with a term expiring on on January 1, 2016; | |||||||||
769 Warrant Shares after the second the second anniversary and expiring on January 1, 2016; | |||||||||
The fair value of the issued warrant is $100,000, based on Black-Scholes option-pricing model using risk free interest rate of 0.67%, expected life of 4 years and expected volatility of 486.46%. | |||||||||
-5 | On July 15, 2012, the Company issued a warrant for the purchase of 769 shares of common stock to TMDS. As discussed above, TMDS receives a warrant to purchase 769 Shares every ninety days during the term of the Contractor Agreement for a total of five (5) years. The fair value of the issued warrant is $80,000, based on Black-Scholes option-pricing model using risk free interest rate of 0.62%, expected life of 5 years and expected volatility of 488.56%. | ||||||||
-6 | On October 13, 2012, the Company issued a warrant for the purchase of 769 shares of common stock to TMDS. As discussed above, TMDS receives a warrant to purchase 769 shares of common stock every ninety days during the term of the Contractor Agreement for a total of five (5) years. The fair value of the issued warrant is $90,000, based on Black-Scholes option-pricing model using risk free interest rate of 0.67%, expected life of 5 years and expected volatility of 547.10%. | ||||||||
During the year ended December 31, 2013, the Company issued a total of four warrants for the purchase of 3,077 shares of common stock with a total value of $140,000. The following discusses the issuance of warrants during 2013: | |||||||||
On January 1, 2013, the Company incurred a warrant share issuance for the purchase of 769 Shares of common stock (‘Warrant Shares’) by an independent contractor (“Contractor”), per a January 1, 2012 Stock Purchase Warrant Agreement that gives Contractor right to purchase 769 shares (“Warrant Shares”) of common stock, after the first anniversary at exercise price of $260.00 per share, as discussed above. The fair value of the issued warrant is $60,000, based on Black-Scholes option-pricing model using risk free interest rate of 0.72%, expected life of 4 years and expected volatility of 534.55%. | |||||||||
On January 11, 2013, the Company issued a warrant for the purchase of 769 shares of common stock to TMDS. As discussed above, TMDS receives a warrant to purchase 769 shares of common stock every ninety days during the term of the Contractor Agreement for a total of five (5) years. The fair value of the issued warrant is $50,000, based on Black-Scholes option-pricing model using risk free interest rate of 0.80%, expected life of 4 years and expected volatility of 529.81%. | |||||||||
On April 11, 2013, the Company issued a warrant for the purchase of 769 shares of common stock to TMDS. As discussed above, TMDS receives a warrant to purchase 769 shares of common stock every ninety days during the term of the Contractor Agreement for a total of five (5) years. The fair value of the issued warrant is $20,000, based on Black-Scholes option-pricing model using risk free interest rate of 0.74%, expected life of 4 years and expected volatility of 429.77%. | |||||||||
On July 15, 2013, the Company issued a warrant for the purchase of 769 shares of common stock to TMDS. As discussed above, TMDS receives a warrant to purchase 769 shares of common stock every ninety days during the term of the Contractor Agreement for a total of five (5) years. The fair value of the issued warrant is $10,000, based on Black-Scholes option-pricing model using risk free interest rate of 0.34%, expected life of 2 years and expected volatility of 420.04%. | |||||||||
On September 30, 2013, in conjunction with the repurchase agreements with the holders of the Series A Convertible Preferred Stock, Mr. Cronin exercised his warrants and those of TMDS at their strike price and 17,308 shares of common stock were issued for $298,800. The purchase price offset amounts due him under his line of credit and amount due under the contingent liability amount from the Company. | |||||||||
As of December 31, 2013 and 2012 were 1,538 and 15,769 warrants outstanding, respectively. | |||||||||
The following table summarizes the warrant activity for the years ended December 31, 2013 and 2012: | |||||||||
Warrants Outstanding | |||||||||
Weighted | |||||||||
Average | |||||||||
Number of | Exercise | ||||||||
Shares | Price | ||||||||
Balance, December 31, 2011 | 11,538 | $ | 25.79 | ||||||
Granted | 4,231 | $ | 23.85 | ||||||
Exercised | — | — | |||||||
Expired/Cancelled | — | $ | — | ||||||
Balance, December 31, 2012 | 15,769 | $ | 25.27 | ||||||
Granted | 3,077 | $ | 65.1 | ||||||
Exercised | (17,308 | ) | (17.26 | ) | |||||
Expired/Cancelled | — | — | |||||||
Balance, December 31, 2013 | 1,538 | $ | 195 | ||||||
Exercisable at December 31, 2013 | 1,538 | $ | 195 | ||||||
The range of exercise prices and the weighted average exercise price and remaining weighted average life of the warrants outstanding at December 31, 2013 were $130.00 to 260.00, $195.00 and two years, respectively. The aggregate intrinsic value of the outstanding warrants at December 31, 2013 was $-0-. |
COMMITMENTS_AND_CONTRACTUAL_OB
COMMITMENTS AND CONTRACTUAL OBLIGATIONS | 12 Months Ended | |
Dec. 31, 2013 | ||
Commitments And Contractual Obligations | ' | |
NOTE 8 - COMMITMENTS AND CONTRACTUAL OBLIGATIONS | ' | |
a) | Strategic Business and Legal Services Agreement - NBN Enterprises, Inc. | |
On April 25, 2011, the Company entered into an agreement with NBN Enterprises, Inc. (“NBN”), through to May 1, 2013, whereby NBN provides strategic business services to the Company and pays the cost of outside legal counsel who will advise the Company on securities, corporate and contract matters. The agreement provides for compensation to NBN in the form of issuance of restricted Company common stock equal to 5% of outstanding shares, with anti-dilution protection through the issuance of additional shares through the term and for the succeeding 12 months, and a non-accountable expense allowance of $3,500 per month. | ||
On September 11, 2012, the Company executed an amendment to the NBN agreement which substantially changed the terms for compensation under the original agreement, and made certain other changes, as follows: | ||
(a) | The due and owing, but unissued Company 1,065,226 shares of common stock shall be issued to NBN with a private placement restriction. | |
(b) | NBN agreed to execute a separate Lock-up Agreement restricting the sale of the above referenced shares of common stock until September 21, 2013. | |
(c) | The Company and NBN agreed to modify the original agreement whereby the Company is no longer obligated to issue additional or catch-up shares to NBN in order to maintain total aggregate share issuances under original agreement to 5% of outstanding shares of common stock after September 21, 2012, provided that that the Company continues to pay the $3,500 per month payments through May 30, 2013. | |
As the Company failed to make payments under this agreement, this agreement has terminated. | ||
During the years ended December 31, 2013 and 2012, the Company incurred legal expenses of $10,500 and $10,500, respectively, under this agreement. At December 31, 2013 and 2012, the Company has amounts due of $-0- and $10,500, respectively, under the agreement | ||
b) | Line of Credit - Cronin | |
On July 9, 2011, the Company established a revolving line of credit (LOC – Cronin), bearing interest at 15% per annum, and payable with accumulated interest, and due December 31, 2011 with Charles R. Cronin, Jr., a shareholder and former director of the Company, (the “Lender”). On September 11, 2011 and October 5, 2011, the Board of Directors of the Company approved and the Company executed approvals of credit limit amendments to increase the Company’s outstanding line of credit to $300,000. | ||
On September 30, 2013, in conjunction with the repurchase agreements with the holders of the Series A Convertible Preferred Stock, Mr. Cronin exercised his warrants and those of TMDS at their strike price and 17,308 shares of common stock were issued for $298,800. A portion of the purchase price was offset by an amounts due him under his line of credit that amounted to $189,512 at the time of exercise. | ||
On December 31, 2013 and December 21, 2012 the Company owed the Lender $-0-and $183,045, respectively. During year ended December 31, 2013 and 2012, the Company recorded interest expense of $17,845 and $29,555, respectively, related to the line of credit. | ||
c) | Loans payable to related party – Myers - LOC | |
The amounts due to a related party at December 31, 2013 of $41,348, represents an unsecured promissory note (“Myers – LOC”) due to a shareholder and director of the Company. These amounts are unsecured and bear interest at 12% per annum. | ||
d) | Consulting Agreement – Key Services, Inc. | |
On July 9, 2011, the Company executed a consulting agreement with Key Services, Inc. (“Key”), whereby Key will locate and assist in the Company’s development and construction of an energy campus project to be undertaken by the Company in the future. The Consulting Agreement is non-exclusive and runs for a period of five years. As consideration, the Company has agreed to pay compensation to Key in the form of cash in an amount equal to $20,000 per month or at the Company’s option (if funds are not available), restricted shares of the Company’s common stock, valued at the average closing price of Company’s common stock over the preceding 20 trading days. In addition, Key is entitled to additional fees, including but not limited to, joint venture, partnership, consulting, developer, contractor and/or project management fees, to be negotiated separately, and agreed to in writing on a project-by-project basis. | ||
On July 18, 2012, the Company executed an amendment to the Key Services, Inc. consulting agreement which settled the accounts payable balance and substantially changed the terms for compensation under the original consulting agreement, and made certain other changes, as follows: | ||
(a) | The Company agreed to settle in full the past due and outstanding obligation for prior consulting fees to the Consultant which aggregated $121,862, at July 18, 2012, by the immediate private issuance of 609,315 shares of the Company’s restricted Common Stock to Consultant. The shares of common stock were issued September 28, 2012. | |
(b) | The Consultant agreed to execute a separate Lock-up Agreement restricting the related sale of the above referenced Shares for a period of twelve (12) months after the date of expiration of the customary SEC Rule 144 restriction period (normally 6 months). | |
(c) | The Company and Consultant agreed to terminate payment of a $20,000 monthly consulting fee during the remaining term of the Consulting Agreement, beginning July 1, 2012. | |
(d) | Reaffirmed the Parties agreement that the Company would pay Consultant additional fees to be separately negotiated, including site development, joint venture, partnership, consulting, developer, contractor and/or project management fees, on a project by project basis. | |
(e) | Provided that the Company has the right to assign its obligations under the Consulting Agreement to one or more wholly owned subsidiaries or related party entities. The Amendment contains customary warranties and representations and indemnification and confidentiality provisions and provides that the Consultant is subject to noncompetition and noninterference covenants. | |
For the year ended December 30, 2013 and 2012, the Company recorded consulting services expense of $0 and $140,000, respectively, to Key Services. | ||
As of December 31, 2013, the Company had no amounts owing to Key Services and the contract was effectively terminated. | ||
e) | Consulting Agreement – TMDS, LLC | |
On July 9, 2011, as amended December 30, 2011, Company executed a consulting agreement with TMDS, LLC (“TMDS”), an entity controlled by a director and shareholder of the Company, whereby TMDS will locate and assist in the Company’s development and construction of energy campus projects to be undertaken by the Company in the future. The consulting agreement is non-exclusive and runs for a period of five years. As consideration, the Company has agreed to pay compensation to TMDS in the form of one or more Warrants for the purchase of 729 shares of restricted common stock of the Company (“Shares”) every 90 days, exercisable at $0.13 per share, with an exercise term of five (5) years from the date of each issuance. In addition, TMDS is entitled to additional fees, including but not limited to, joint venture, partnership, consulting, developer, contractor and/or project management fees, to be negotiated separately, and agreed to in writing on a project-by-project basis. | ||
During the years ended December 31, 2013 and 2012, the Company recorded the issuance of three Warrants totaling 2,308 shares of common stock, valued at $80,000, and four Warrants totaling 3,077 shares of common stock, valued at $400,000, respectively, to TMDS under this agreement. See Note 7, Capital Stock – Common Stock Warrants, for discussion. | ||
This Agreement was terminated September 26, 2013. | ||
f) | Consulting Agreement – Investor and Broker Dealer Relations and Financing Alternatives | |
On March 14, 2012, the Company executed a consulting agreement with Undiscovered Equities, Inc. (“UEI”), pursuant to which UEI has agreed to provide various consulting services, including retention and supervision of various public relations services and investor relations services, strategic business planning, broker dealer relations, financing alternatives and sources, and due diligence meetings for the investor community. The agreement has a six month term, but may be terminated early after 60 days, and provides for the Company to pay consulting fees as follows: (i) the sum of $25,000 per month over the term of the agreement upon the Company procuring financing of $500,000 or more, and (ii) a signing bonus in the form of immediate issuance of 96 shares of the Company’s restricted Common stock (the “Stock Payments”). | ||
On May 3, 2012, the Company and UEI executed a letter of execution (the “Letter of Extension”) of the consulting agreement to extend the payment terms of Cash Payments and Stock Payments from the May 7, 2012 to June 15, 2012. | ||
On August 15, 2012, the Company and UEI executed Amendment No. 1 to the consulting agreement, whereby the commencement date for the services to be provided by UEI, including the obligation of the Company to pay the monthly compensation to UEI upon the Company procuring financing of $500,000 or more, was amended to reflect a commencement date of September 1, 2012 instead of June 15, 2012. The shares of common stock, valued at $17,500, were issued in November 2012. | ||
On November 8, 2012, the Company and UEI executed Amendment No. 2 to the consulting agreement, whereby the commencement date for the services to be provided by UEI, including the obligation of the Company to pay the monthly compensation to UEI upon the Company procuring financing of $500,000 or more, was amended to reflect a commencement date of December 1, 2012 instead of September 1, 2012. | ||
As of December 31, 2013, this consulting agreement had officially lapsed. | ||
g) | Stock Purchase Agreement – C.C. Crawford Retreading Company, Inc. (“CTR”) and Assignment and Assumption Agreement and Right of First Refusal and Option Agreement – IWSI PS Plan | |
On March 20, 2012, the Company, through its wholly owned subsidiary, DEDC, entered into a stock purchase agreement (the “Stock Purchase Agreement”) with C.C. Crawford Tire Company, Inc. (“CTR”), pursuant to which DEDC agreed to acquire 100% of the issued and outstanding common shares of CTR, for an aggregate purchase price of $600,000 in cash, due and payable upon the date of closing, on or before April 20, 2012, subject to the completion of certain closing conditions precedent, to be performed by both the Seller and DEDC. | ||
On June 1, 2012, the Company, through its wholly owned subsidiary, DEDC, entered into an assignment and assumption agreement (“Assignment Agreement”) with IWSI PS Plan (“IWSI PS”), an entity controlled by Charles R. Cronin, a shareholder and director of the Company, and the Seller pursuant to which DEDC assigned its rights to acquire CTR to IWSI PS Plan. | ||
On October 2, 2012, the Company, through its wholly owned subsidiary, DEDC executed a right of first refusal and option agreement with IWSI PS for both an option to purchase and right of first refusal to purchase CTR. | ||
The option to purchase granted to the Company extends for one year from the date of execution, and provides for certain terms and conditions as follows: | ||
1 | An option exercise price equal to $1,032,500, the original purchase price paid by IWSI (the “Option Purchase Price”) with the following adjustments; | |
2 | A quarterly option payment of $15,000 (the “Option Payment”, payable every 90 days during the Term of this Agreement; | |
3 | An amount equal to any increased accounts receivable over the Term and amount equal to five percent (5%) per month of the original purchase price paid by IWSI; | |
4 | All amounts expensed by CTR to advance the business, including tire pyrolysis, the amounts paid the Officers as employment bonuses, the closing costs on the original acquisition, and an amount equal to any increase in IWSI’s shareholder equity, less any amounts CTR received from the prior sale of any assets; | |
5 | Amount equal to any decrease in accounts payable, and a monthly fee of $10,000 per month, accrued monthly, for each month of use of the facility by DEAC and/or its affiliates. | |
After 180 days from the date of execution of the Assignment Agreement, if IWSI PS receives a bona fide offer or enters into a purchase agreement with a Third Party Offeree to purchase CTR and DEDC fails to execute the Right of First Refusal, then the Right of First Refusal is terminated. | ||
As of December 31, 2013, all options and agreements relating to the purchase of CTR are officially terminated. | ||
h) | License and Assignment Agreement – R.F.B., LLC | |
On May 23, 2012, Dynamic Energy IP, LLC, a Delaware corporation, a wholly owned subsidiary of Dynamic Energy Alliance Corporation, a Florida corporation (“DEAC”), entered into a definitive agreement (the “Contract”) with R.F.B., LLC (“RFB”), pursuant to which RFB licensed and assigned to Dynamic Energy LP, a Non-Provisional Patent Application (the “Application”), and the World Wide exclusive right, license and privilege of utilizing certain RFB technology and expertise. In consideration, the Company has an obligation to issue RFB 77 shares of the Company’s restricted common when RFB completes certain provisions of the Contract. On September 13, 2012, RFB completed its contract provisions and the shares of common stock, valued at $6,000, were issued in November 2012. | ||
Further, the Contract provides for payment by the Company to RFB of specified license fees based on both gallons of high value organics produced utilizing the RFB technology, and a formula percentage of net profits realized from the recovery of all energy products from oil sands or tar sands over the term of the Contract by the Company (regardless of technology used) The Contract has a term of 25 years, or 20 years from the date of issuance of patents, whichever is shorter. | ||
As of December 31, 2013 and 2012, there are no obligations due under the Contract. | ||
i) | Industry Consulting and Nondisclosure Agreement and Amendments – Practical Sustainability LLC | |
On May 25, 2012, Dynamic Energy Development Company, LLC, (“DEDC’”) a wholly owned subsidiary of Dynamic Energy Alliance Corporation, modified a prior agreement, Industry Consulting and Nondisclosure Agreement (“ICNA”), with Practical Sustainability, LLC (“PS”), an entity controlled by Dr. Earl Beaver, a director of the Company, dated November 19, 2010, whereby services and compensation were amended to reflect PS’s role that was effective March 1, 2011. Changes under the amended agreement include: | ||
- | Nature of Services: Development of Life Cycle Analysis Models, Research of Government Information on Technology for Tire Pyrolysis Oil, Analysis of various tire pyrolysis operations, evaluation of the marketability of tire pyrolysis oil and carbon black produced by vendors of tire pyrolysis processes, participation in the development of the roll-out plan for tire pyrolysis plants, participation on the analysis of vended solutions of the manufacturing of tire pyrolysis plants. Analysis of fuels produced by third party propriety processed that reportedly produce gasoline, diesel, jet fuel and other similar fuels for the use in combustion engines. Provide and manage a central laboratory for DEDC or its parent. | |
- | Compensation: The Company or DEDC shall pay to PS a flat fee of $5,000 per month. Compensation has been paid through January 2012. | |
On January 17, 2013, the ICNA agreement was further amended to terminate the agreement effective February 1, 2012. Under this amendment, DEDC and PS have agreed that all work under the ICNA agreement has been performed for those services through January 2012 and there are no obligations due PS as of December 31, 2012. | ||
j) | Consulting Agreement – Financing and Acquisitions Advisor | |
On June 1, 2012, the Company executed a corporate advisory agreement (“Agreement”) with Heartland Capital Markets, LLC (“Heartland”), pursuant to which Heartland agreed to provide various advisory services, including equity and/or debt financings, strategic planning, merger and acquisition possibilities and business development activities that include various investor relations services, strategic business planning, broker dealer relations, financing alternatives and sources, and due diligence meetings for the investor community. The agreement has a three month term which is renewable for additional three month periods, and provides for the Company to pay an advisory fee of one hundred ninety-two (192) restricted shares of the Company’s restricted common stock (“Stock”). The advisory fee is considered fully earned pro rata over the course of the term of the agreement and due to Heartland at the execution of the agreement. | ||
On August 17, 2012, the Company and Heartland amended the Agreement, whereby the commencement date for the services to be provided by Heartland was changed to September 1, 2012. Further, the amendment changed the date that the advisory fee consisting of 192 restricted shares of the Company’s restricted common stock (“Stock”) was considered fully earned to the date that Heartland was issued the Stock. The Company issued the common stock, valued at $15,000, on August 8, 2012. | ||
As of December 31, 2013, this agreement was no longer in effect. | ||
k) | Non-Binding Letter of Intent – Terpen Kraftig, LLC | |
On October 10, 2012, the Company, through its wholly owned subsidiary, Dynamic Energy IP Corporation (“DEIP”), executed a non-binding letter of intent (“LOI”) with Terpen Kraftig LLC (TK), a company managed by two of the Company’s Directors, Charles R. Cronin, Jr. and Dr. Earl Beaver, contemplating a definitive agreement within 45 days from said letter of intent under which TK would assign to DEIP the exclusive, worldwide license and right in and to Licensor’s catalyst(s), reactor and fractionator technology relating to the recovery of high valued organics from the processing of waste tires (the “Licensed Technology”). | ||
The LOI sets forth terms for a future definitive agreement that anticipates that the term of the license and assignment to Licensor of the Licensed Technology shall be the greater of (a) twenty-five (25) years, or (b) twenty (20) years from the issuance of the Licensed IP patent(s), whichever is greater, and that compensation payable to TK from the Company and DEIP would consist of: | ||
1 | A non-refundable deposit in the amount of $100,000 to secure the exclusivity of the term sheet, payable within 30 days and prior to preparation and execution of the Definitive Agreement, which shall, upon execution of the Definitive Agreement, be allocated towards to costs associated with the purchase of the equipment required to construct a prototype unit (the “Prototype”) of the Licensed Technology. | |
2 | A payment to Licensor in the amount of Four Hundred Thousand and No/100 Dollars (USD$400,000), on or before December 31, 2012, for the purchase of the equipment required to construct a pilot plant with input of a minimum of 50/gallons per day (the “Pilot Plant”). If Licensee fails to fund the Pilot Plant on or before December 31, 2012, the Licensor shall have the right cancel and rescind the licensing rights of the Licensed IP granted to Licensee under the Definitive Agreement. | |
3 | A minimum royalty cash payment of Thirty-Five Thousand and No/100 Dollars (USD $35,000) per month, from the date of execution of the Definitive Agreement forward over the term of the license, until and except when the royalty stream exceeds $35,000 per month (the “Minimum Licensing Fee”). | |
The letter of intent contains customary warranties and representations and confidentiality provisions, including specific terms which are considered trade secrets, and are therefore not being released. | ||
As of December 31, 2013, this agreement had not been exercised by the Company and was terminated. | ||
l) | Birch First Capital Fund, LLC | |
On August 16, 2013 Birch First Capital Fund, LLC (“Birch First”) filed a complaint against the Company in the 15th judicial circuit of Florida (2013 CA 012838) alleging that the Company owes them $168,661. The Company filed a response and counterclaim against Birch First and its principal for unspecified damages relating to Birch First’s fraudulent inducement and violation of U.S. securities law. Both claims are currently pending. | ||
On November 18, 2013 the Company became aware of litigation by Birch First and Birch First Capital Management, LLC against Mr. Charles Cronin and Dr. Earl Beaver, naming the Company as a nominal defendant. The litigation is correlated to conduct by the former board members named above in relation to energy sector technologies. A motion to dismiss has been filed by the Company concerning this derivative lawsuit, ascertaining, among other things, that Birch First’s representation of the shareholder class is inconsistent based on his position to directly recover a judgment from the company, which in turn negatively impacts the very class of shareholders Birch alleges to represent. At this point in time, the Company has no evidence that supports Birch’s litigation, but believes it is the proper party to take action in recovery if evidence to the contrary is provided in further proceedings that is in the Company’s and shareholder’s best interest. | ||
The disputed liability amount, including accrued interest, of $178,818 is currently classified in accounts payable. |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Taxes | ' | ||||||||
NOTE 9 - INCOME TAXES | ' | ||||||||
Potential benefits of income tax losses and other tax assets are not recognized in the accounts until realization is more likely than not. As of December 31, 2013 and 2012, the Company has net operating losses carryforwards of approximately $1,609,051 and $1,261,897, respectively, for tax purposes in various jurisdictions subject to expiration as described below. Pursuant to ASC 740, Income Taxes, the Company is required to compute tax asset benefits for net operating losses carried forward and other items giving rise to deferred tax assets. Future tax benefits which may arise as a result of these losses and other items 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 items. | |||||||||
The actual income tax provisions differ from the expected amounts calculated by applying the combined income tax statutory rates applicable in each jurisdiction to the Company’s loss before income taxes and non-controlling interest. The components of these differences are as follows: | |||||||||
For the Year Ended December 31, | |||||||||
2013 | 2012 | ||||||||
Corporate income tax rate | 34 | % | 34 | % | |||||
Expected income tax (recovery) | $ | (165,632 | ) | $ | (357,578 | ) | |||
Non-deductible finance costs and other | 47,600 | 193,800 | |||||||
Change in valuation allowance | 118,032 | 163,183 | |||||||
State income tax net of federal benefit | - | (1,155 | ) | ||||||
Income tax (benefit) provision | $ | - | $ | (1,750 | ) | ||||
The Company’s tax-effected deferred income tax asset is estimated as follows: | |||||||||
As of December 31, | |||||||||
2013 | 2012 | ||||||||
Net operating loss carryforward | $ | 547,077 | $ | 429,045 | |||||
Total deferred tax asset | 547,077 | 429,045 | |||||||
Less: Valuation allowance | (547,077 | ) | (429,045 | ) | |||||
Net deferred tax asset after valuation allowance | $ | - | $ | - | |||||
The Company has approximately $1,609,051 in net operating losses carried forward for United States income tax purposes which will expire, if not utilized in various amounts through 2033. |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2013 | |
Subsequent Events | ' |
NOTE 10 - SUBSEQUENT EVENTS | ' |
On January 13, 2014, the Company entered into an asset purchase agreement with Baker Myers and Associates, LLC (“Baker Myers LLC”) to acquire www.classifiedride.com, whose platform was designed to revolutionize the selling and buying platform for online automotive markets. As consideration for the sale, the Company entered into a promissory note for $3,000,000 and 14,000,000 shares of the Company’s common stock with an interest rate calculated at $17,500 per month. Ms. Myers is the sole managing member of Baker Myers LLC and currently serves the Company as Chief Operating Officer and director. The classifiedride.com website was officially launched to the public in February 2012. Currently, ClassifiedRide provides a classified listing platform where users can list their vehicle truck, boat (i.e. anything that has a motor) to the Company’s website ether by free or paid listing options. The main premise of the website is to aid the private seller in selling or trading their vehicle. The Company, in turn, then works as the community leader to establish relationships between buyers and sellers using social media platforms and consumer customer support incentives. These relationships are used to generate revenue from private sellers, dealerships, affiliate lead providers, and third party advertisers. Part of the initial strategy will be to implement TC’s subscription agreements to produce reoccurring revenues. | |
On January 15, 2014, the Company entered into an Asset Purchase Agreement with Baker Myers LLC for 51% of the membership interest of Autoglance, LLC, a Tennessee Limited Liability Company, and with it majority control over all owned assets of Autoglance, LLC, including the website www.autoglance.com (collectively “Autoglance”). The Company tendered 765,000 shares of common stock as consideration to this agreement. Ms. Myers is the sole managing member of Baker Myers LLC and currently serves the Company as Chief Operating Officer and director. Autoglance is a search engine of used cars that prioritizes and compares inventory in individualized markets by displaying the best deals first while hiding listings that are older, more expensive, and have more mileage. Autoglance currently has a provisional patent for this method of organizing and displaying vehicles. More specifically, Autoglance’s invention groups vehicles of the same make and model in a market location to determine the best price based on the market value of the vehicle. Vehicles that are deemed worse deals are hidden from the user. The user can easily see hidden cars if he/she wishes by the click of a button. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||
Dec. 31, 2013 | |||
Summary Of Significant Accounting Policies Policies | ' | ||
Basis Of Presentation | ' | ||
The consolidated financial statements have been prepared in accordance with generally accepted accounting principles and include the accounts of the Company and its subsidiaries, Dynamic Energy Development Corporation and Transformation Consulting, Inc.. All intercompany balances and transactions have been eliminated. | |||
Use of Estimates | ' | ||
Preparation of the Company's financial statements in conformity with United States GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as well as the reported amounts of revenues and expenses. Accordingly, actual results could differ from those estimates. | |||
Development Costs | ' | ||
Development costs are expensed in the period they are incurred unless they meet specific criteria related to technical, market and financial feasibility, as determined by management, including but not limited to the establishment of a clearly defined future market for the product, and the availability of adequate resources to complete the project. If all criteria are met, the costs are deferred and amortized over the expected useful life, or written off if a product is abandoned. For the years ended December 31, 2013 and 2012, total development costs amounted to $21,999 and $119,229, respectively. At December 31, 2013 and December 31, 2012, the Company had no deferred product development costs. | |||
Cash and Cash Equivalents | ' | ||
Cash and cash equivalents, if any, include all highly liquid instruments with an original maturity of three months or less at the date of purchase. At December 31, 2013 and December 31, 2012, the Company had no cash equivalents. | |||
Financial Instruments and Concentration of Risk | ' | ||
The fair values of financial instruments, which include cash, accounts payable and accrued liabilities and convertible notes, were estimated to approximate their carrying values due to the immediate or relatively short maturity of these instruments. Management does not believe that the Company is subject to significant interest, currency or credit risks arising from these financial instruments. | |||
Fair Value of Financial Instruments | ' | ||
The Company accounts for the fair value of financial instruments in accordance with the FASB ASC Topic 820, Fair Value Measurements and Disclosures ("Topic 820"). Topic 820 defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. | |||
The three levels are defined as follows: | |||
Level 1 | inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. | ||
Level 2 | inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. | ||
Level 3 | inpuinputs to the valuation methodology are unobservable and significant to the fair measurement. | ||
The fair value of the Company's cash, accounts payable, and accrued expenses approximate carrying value because of the short-term nature of these items. | |||
Management believes it is not practical to estimate the fair value of loan to related parties because the transactions cannot be assumed at arm's length, the terms are not deemed to be market terms, there are no quoted values available for these instruments, and an independent valuation would not be practical due to the lack of data regarding similar instruments, if any, and the associated potential costs. | |||
Revenue Recognition | ' | ||
The Company recognizes revenue in accordance with the FASB ASC Section 605-10-S99, Revenue Recognition, Overall, SEC Materials ("Section 605-10-S99"). Section 605-10-S99 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the fee is fixed and determinable; and (4) collectability is reasonably assured. | |||
Specifically with respect to TC, commission revenue is earned on consulting services provided to a company controlled by a director of the Company. TC earns these commissions based on this company’s revenues from certain direct to consumer membership club products. Commissions earned are recorded when deposited into an escrow account, effectively allowing for uncertainty of collectability and bad debt issues. | |||
Loss Per Common Share | ' | ||
Basic loss per common share (“EPS”) is calculated by dividing the net loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. The number of common shares that are exercisable or converted into common stock is not material to effect diluted EPS results. Further, since the Company shows losses for the periods presented basic and diluted loss per share are the same for all periods presented. As of December 31, 2013 and December 31, 2012, there were no outstanding dilutive securities. | |||
Certain Reclassification | ' | ||
Certain 2012 items were reclassified to conform to current year presentation. Such reclassifications had no effect on 2012 net income. | |||
Income Taxes | ' | ||
Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted the accounting standards codified in ASC 740, Income Taxes as of its inception. Pursuant to those standards, the Company is required to compute tax asset benefits for net operating losses carried forward. Potential benefit of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not that it will utilize the net operating losses carried forward in future years. | |||
ASC 740-10-25 prescribes recognition thresholds that must be met before a tax position is recognized in the financial statements and provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. An entity may only recognize or continue to recognize tax positions that meet a "more likely than not" threshold. Based on its evaluation, the Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements. | |||
The Company does not have any unrecognized tax benefits as of December 31, 2013 and December 31, 2012 that, if recognized, would affect the Company's effective income tax rate. The Company's policy is to recognize interest and penalties related to income tax issues as components of income tax expense. The Company did not recognize or have any accrual for interest and penalties relating to income taxes as of December 31, 2013 and December 31, 2012. | |||
Common Share Non-Monetary Consideration | ' | ||
In situations where common shares are issued and the fair value of the goods or services received is not readily determinable, the fair value of the common shares is used to measure and record the transaction. The fair value of the common shares issued in exchange for the receipt of goods and services is based on the stock price as of the earliest of the date at which: | |||
i) the counterparty’s performance is complete; | |||
ii) a commitment for performance by the counterparty to earn the common shares is reached; or | |||
iii) the common shares are issued if they are fully vested and non-forfeitable at that date. | |||
Stock-Based Compensation | ' | ||
On December 1, 2005, the Company adopted the fair value recognition provisions codified in ASC 718, Compensation-Stock Compensation. The Company adopted those provisions using the modified-prospective-transition method. Under this method, compensation cost recognized for all periods prior to December 1, 2005 includes: a) compensation cost for all share-based payments granted prior to, but not yet vested as of November 30, 2005, based on the grant-date fair value and b) compensation cost for all share-based payments granted subsequent to November 30, 2005, based on the grant-date fair value. In addition, deferred stock compensation related to non-vested options is required to be eliminated against additional paid-in capital. The results for periods prior to December 1, 2005 were not restated. | |||
The Company accounts for equity instruments issued in exchange for the receipt of goods or services from parties other than employees in accordance with ASC 505, Equity. 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 counterparty. | |||
Share Purchase Warrants | ' | ||
The Company accounts for common share purchase warrants at fair value in accordance with ASC 815, Derivatives and Hedging. The Black-Scholes option pricing valuation method is used to determine fair value of these warrants. Use of this method requires that the Company make assumptions regarding stock volatility, dividend yields, expected term of the warrants and risk-free interest rates. | |||
Recently and Issued Accounting Pronouncements | ' | ||
Recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC during the current reporting period did not, or are not, believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
RELATED_PARTY_TRANSACTIONS_AND1
RELATED PARTY TRANSACTIONS AND AMOUNTS OWING (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Related Party Transactions And Amounts Owing Tables | ' | ||||||||
Contingent Consideration to Director | ' | ||||||||
As of | As of | ||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Contingent consideration due | $ | 2,000,000 | $ | 2,000,000 | |||||
Less payments, net of refunds, to Director | (984,638 | ) | 984,638 | ||||||
Payment of exercise of warrants | (108,788 | ) | - | ||||||
$ | 906,574 | $ | 1,015,362 |
CAPITAL_STOCK_Tables
CAPITAL STOCK (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Capital Stock Tables | ' | ||||||||
Warrants Outstanding | ' | ||||||||
The following table summarizes the warrant activity for the years ended December 31, 2013 and 2012: | |||||||||
Warrants Outstanding | |||||||||
Weighted | |||||||||
Average | |||||||||
Number of | Exercise | ||||||||
Shares | Price | ||||||||
Balance, December 31, 2011 | 11,538 | $ | 25.79 | ||||||
Granted | 4,231 | $ | 23.85 | ||||||
Exercised | — | — | |||||||
Expired/Cancelled | — | $ | — | ||||||
Balance, December 31, 2012 | 15,769 | $ | 25.27 | ||||||
Granted | 3,077 | $ | 65.1 | ||||||
Exercised | (17,308 | ) | (17.26 | ) | |||||
Expired/Cancelled | — | — | |||||||
Balance, December 31, 2013 | 1,538 | $ | 195 | ||||||
Exercisable at December 31, 2013 | 1,538 | $ | 195 |
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Taxes Tables | ' | ||||||||
Expected Amount of Income tax Statuary | ' | ||||||||
For the Year Ended December 31, | |||||||||
2013 | 2012 | ||||||||
Corporate income tax rate | 34 | % | 34 | % | |||||
Expected income tax (recovery) | $ | (165,632 | ) | $ | (357,578 | ) | |||
Non-deductible finance costs and other | 47,600 | 193,800 | |||||||
Change in valuation allowance | 118,032 | 163,183 | |||||||
State income tax net of federal benefit | - | (1,155 | ) | ||||||
Income tax (benefit) provision | $ | - | $ | (1,750 | ) | ||||
Deferred Income Tax Assets And Liability | ' | ||||||||
The Company’s tax-effected deferred income tax asset is estimated as follows: | |||||||||
As of December 31, | |||||||||
2013 | 2012 | ||||||||
Net operating loss carryforward | $ | 547,077 | $ | 429,045 | |||||
Total deferred tax asset | 547,077 | 429,045 | |||||||
Less: Valuation allowance | (547,077 | ) | (429,045 | ) | |||||
Net deferred tax asset after valuation allowance | $ | - | $ | - |
DESCRIPTION_OF_BUSINESS_Detail
DESCRIPTION OF BUSINESS (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Description Of Business Details Narrative | ' | ' |
Gross revenues under the Stock Purchase Agreement | $2,000,000 | ' |
Net of refunds of purchase | ' | 984,638 |
Contingent consideration payable | $906,574 | $1,015,362 |
GOING_CONCERN_Details_Narrativ
GOING CONCERN (Details Narrative) (USD $) | 12 Months Ended | 385 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | |
Going Concern Details Narrative | ' | ' | ' |
Cumulative net loss | ($472,154) | ($1,049,948) | $6,467,711 |
ACQUISITION_OF_TRANSFORMATION_1
ACQUISITION OF TRANSFORMATION CONSULTING (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Acquisition Of Transformation Consulting Details Narrative | ' | ' |
Contingent consideration payable | $906,574 | $1,015,362 |
Gross revenues under the Stock Purchase Agreement | 2,000,000 | ' |
Payments of the purchase price | ' | $984,638 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Summary Of Significant Accounting Policies Details | ' | ' |
Development Costs | $21,999 | $119,229 |
Deferred product development costs | $0 | $0 |
RELATED_PARTY_TRANSACTIONS_AND2
RELATED PARTY TRANSACTIONS AND AMOUNTS OWING (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Related Party Transactions And Amounts Owing Details | ' | ' |
Contingency consideration due | $2,000,000 | $2,000,000 |
Less: payments, net of refunds, to Director | -984,638 | 984,938 |
Payment of exercise of warrants | -108,788 | ' |
Contingency consideration payable, net | $906,574 | $1,015,362 |
RELATED_PARTY_TRANSACTIONS_AND3
RELATED PARTY TRANSACTIONS AND AMOUNTS OWING (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Related Party Transactions And Amounts Owing Details Narrative | ' | ' |
Amounts due to a related party for Cronin - LOC | $0 | $119,139 |
Amounts due to a related party for Myers - LOC | 41,348 | ' |
Gross revenues | 0 | 1,580,302 |
Contingent consideration payable | 906,574 | 1,015,362 |
Obligation to issue warrants for common stock | 80,000 | 400,000 |
Consulting services for development and construction for Key Services | 0 | 140,000 |
Consulting services for development and construction for NBN Enterprises | 0 | 42,000 |
Accounts payable balance for Key Services | 0 | 0 |
Accounts payable balance for NBN Enterprises | $0 | $10,500 |
CAPITAL_STOCK_Details
CAPITAL STOCK (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Number of warrants shares, Ending | 1,538 | 15,769 |
Warrant [Member] | ' | ' |
Number of warrants shares, Beginning | 15,769 | 11,538 |
Granted warrants | 3,077 | 4,231 |
Exercised warrants | -17,308 | ' |
Expired/Cancelled warrants | ' | ' |
Number of warrants shares, Ending | 1,538 | 15,769 |
Exercisable warrants | 1,538 | ' |
Weighted Average Exercise Price warrants, Beginning | $25.27 | $25.79 |
Weighted Average Exercise Price warrants, Granted | $65.10 | $23.85 |
Weighted Average Exercise Price warrants, Exercised | ($17.26) | ' |
Weighted Average Exercise Price warrants, Expired/Cancelled | ' | ' |
Weighted Average Exercise Price warrants, Ending | $195 | $25.27 |
Weighted Average Exercise Price warrants, Exercisable | $195 | ' |
CAPITAL_STOCK_Details_Narrativ
CAPITAL STOCK (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Capital Stock Details Narrative | ' | ' |
Preferred stock issued | 0 | 8,811 |
Preferred stock Outstanding | 0 | 8,811 |
Common stock issued | 150,488 | 63,468 |
Common stock Outstanding | 150,488 | 63,468 |
Purchase of common stock fair value | $140,000 | $570,000 |
Purchase of common stock fair value, Shares | 3,077 | 4,231 |
Range of exercise prices, Minimum | $130 | ' |
Range of exercise prices, Maximum | $260 | ' |
Weighted average exercise price | $195 | ' |
Weighted average life of the warrants outstanding | '2 years | ' |
Aggregate intrinsic value of the outstanding | $0 | ' |
Warrants outstanding | 1,538 | 15,769 |
COMMITMENTS_AND_CONTRACTUAL_OB1
COMMITMENTS AND CONTRACTUAL OBLIGATIONS (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Commitments And Contractual Obligations Details Narrative | ' | ' |
Amounts due | $0 | $10,500 |
Credit owed | 0 | 183,045 |
Interest expense | 17,845 | 29,555 |
Amounts due to a related party | 41,348 | 119,139 |
Interest rate | 12.00% | ' |
Consulting services expense | $0 | $140,000 |
Warrant issued description | ' | ' |
During the years ended December 31, 2013 and 2012, the Company recorded the issuance of three Warrants totaling 2,308 shares of common stock, valued at $80,000, and four Warrants totaling 3,077 shares of common stock, valued at $400,000, respectively, to TMDS under this agreement. See Note 7, Capital Stock - Common Stock Warrants, for discussion. |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Taxes Details | ' | ' |
Corporate income tax rate | 34.00% | 34.00% |
Expected income tax (recovery) | ($165,632) | ($357,578) |
Non-deductible finance costs and other | 47,600 | 193,800 |
Change in valuation allowance | 118,032 | 163,183 |
State income tax net of federal benefit | ' | -1,155 |
Income tax (benefit) provision | ' | ($1,750) |
INCOME_TAXES_Details_1
INCOME TAXES (Details 1) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Income Taxes Details 1 | ' | ' |
Net operating loss carryforward | $547,077 | $429,045 |
Total deferred tax assets | 547,077 | 429,045 |
Less: Valuation allowance | -547,077 | -429,045 |
Net deferred tax asset after valuation allowance | ' | ' |
INCOME_TAXES_Details_Narrative
INCOME TAXES (Details Narrative) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Income Taxes Details Narrative | ' | ' |
Net operating losses carried forward | $1,609,051 | $1,261,897 |