Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 20-May-15 | |
Document And Entity Information | ||
Entity Registrant Name | TRUNITY HOLDINGS, INC. | |
Entity Central Index Key | 802257 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
Is Entity a Well-known Seasoned Issuer | No | |
Is Entity a Voluntary Filer | No | |
Is Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 54,803,131 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2015 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Current assets | ||
Cash | $16,524 | $14,119 |
Accounts receivable | 24,439 | 3,020 |
Debt issuance costs and other assets | 41,548 | 45,899 |
Prepaid, expenses and other current assets | 132,703 | 107,487 |
Total current assets | 215,214 | 170,525 |
Property and equipment | ||
Fixtures and equipment | 76,095 | 76,095 |
Less accumulated depreciation | -59,268 | -56,379 |
Total property and equipment, net | 16,827 | 19,716 |
Capitalized software development costs | ||
Costs incurred | 4,278,594 | 4,232,313 |
Less accumulated amortization | -3,590,413 | -3,457,907 |
Total capitalized software development costs, net | 688,181 | 774,406 |
TOTAL ASSETS | 920,222 | 964,647 |
Current liabilities | ||
Accounts payable | 1,014,159 | 984,841 |
Accrued expenses | 297,361 | 196,094 |
Accrued interest | 157,929 | 106,274 |
Debentures Series A, B, C, D, E and F, net | 1,620,831 | 1,457,163 |
Convertible debenture, net | 122,587 | 115,463 |
Deferred revenue | 298,059 | 324,169 |
Convertible promissory note, net | 48,697 | 45,089 |
Total current liabilities | 3,559,623 | 3,229,093 |
TOTAL LIABILITIES | 3,559,623 | 3,229,093 |
Commitments and Contingencies | ||
STOCKHOLDERS' EQUITY (DEFICIT) | ||
Preferred stock $0.0001 par value- 50,000,000 shares authorized; None issued and outstanding | ||
Common stock, $0.0001 par value - 200,000,000 shares authorized, 54,803,131 and 54,803,131 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively | 5,480 | 5,480 |
Additional paid-in capital | 14,469,056 | 14,220,266 |
Other comprehensive loss | 16,699 | 17,974 |
Accumulated Deficit | -17,130,636 | -16,508,166 |
Total Stockholders' Deficit | -2,639,401 | -2,264,446 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $920,222 | $964,647 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Preferred stock par value | $0.00 | $0.00 |
Preferred stock shares authorized | 50,000,000 | 50,000,000 |
Preferred stock shares issued | 0 | 0 |
Preferred stock shares outstanding | 0 | 0 |
Common stock par value | $0.00 | $0.00 |
Common stock shares authorized | 200,000,000 | 200,000,000 |
Common stock shares issued | 54,803,131 | 54,803,131 |
Common stock shares outstanding | 54,803,131 | 54,803,131 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations and Comprehensive Loss (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Income Statement [Abstract] | ||
Net Sales | $118,679 | $60,426 |
Cost of sales | 62,128 | 48,669 |
Gross Profit | 56,551 | 11,757 |
Operating expenses: | ||
Research and development | 194,699 | 365,037 |
Selling, general and administrative | 252,266 | 676,259 |
Total operating expenses | 446,965 | 1,041,296 |
Loss from Operations | -390,414 | -1,029,539 |
Other expense: | ||
Interest expense, net | -232,056 | -94,472 |
Net loss | -622,470 | -1,124,011 |
Other Comprehensive (Loss) Gain, Net of Tax: | ||
Foreign currency translation adjustments | -1,275 | 9,882 |
Comprehensive Loss | ($623,745) | ($1,114,129) |
Net Loss Per Share - Basic and Diluted | ($0.01) | ($0.02) |
Weighted Average Number of Shares Outstanding During the Period - Basic and Diluted | 54,803,131 | 46,724,406 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statement of Changes in Stockholders' Equity (Deficit) (USD $) | Common Stock | Paid-In Capital | Accumulated Comprehensive Loss | Accumulated Deficit | Total |
Balance beginning at Dec. 31, 2014 | $5,480 | $14,220,266 | $17,974 | ($16,508,166) | ($2,264,446) |
Balance beginning, Shares at Dec. 31, 2014 | 54,803,131 | 54,803,131 | |||
Sale of common stock, net of issuance costs | |||||
Debt beneficial conversion feature for warrants | 202,916 | 202,916 | |||
Stock compensation expense | 45,874 | 45,874 | |||
Foreign currency translation gain | -1,275 | -1,275 | |||
Net loss | -622,470 | -622,470 | |||
Balance ending at Mar. 31, 2015 | $5,480 | $14,469,056 | $16,699 | ($17,130,636) | ($2,639,401) |
Balance ending, Shares at Mar. 31, 2015 | 54,803,131 | 54,803,131 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Cash Flows from Operating Activities: | ||
Net Loss | ($622,470) | ($1,124,011) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 135,395 | 136,516 |
Stock-based compensation expense | 45,874 | 176,321 |
Accretion for debt discounts and issuance costs | 178,260 | 65,899 |
Shares issued in exchange or services | 20,752 | |
Fair value of embedded conversion feature | 637 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | -21,419 | 790 |
Prepaid expenses and other current assets | -25,216 | -8,407 |
Accounts payable | 29,318 | 151,099 |
Other assets | 2,895 | |
Accrued interest and other liabilities | 148,786 | -61,086 |
Deferred revenue | -26,111 | -17,001 |
Deferred rent | 1,884 | |
Net Cash Used in Operating Activities | -154,051 | -657,244 |
Cash Flows From Investing Activities: | ||
Payment for patent application | -1,400 | |
Payment of platform development costs | -46,281 | -136,460 |
Net Cash Used in Investing Activities | -47,681 | -136,460 |
Cash Flows from Financing Activities: | ||
Proceeds from issuance of debenture | 200,000 | |
Proceeds from notes payable related parties | 4,136 | |
Repayments on notes payable and interest on convertible debt to related parties | -252 | |
Proceeds from convertible promissory notes, net of issuance costs | 100,000 | |
Sale of common stock, net of issuance costs | 45,000 | |
Net Cash Provided by Financing Activities | 204,136 | 144,748 |
Net Increase -Decrease) in Cash and Cash Equivalents | 2,405 | -648,956 |
Cash, Beginning of Period | 14,119 | 812,064 |
Cash, End of Period | 16,524 | 163,108 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid during the period for interest | 9,603 | |
Non-cash Investing and Financing Transactions: | ||
Discount cost related to issuance of debentures, warrants and convertible notes | $202,916 |
NOTE_1_ORGANIZATION_BASIS_OF_P
NOTE 1 - ORGANIZATION, BASIS OF PRESENTATION AND NATURE OF OPERATIONS | 3 Months Ended |
Mar. 31, 2015 | |
Note 1 - Organization Basis Of Presentation And Nature Of Operations | |
NOTE 1 - ORGANIZATION, BASIS OF PRESENTATION AND NATURE OF OPERATIONS | NOTE 1 – ORGANIZATION, BASIS OF PRESENTATION AND NATURE OF OPERATIONS |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “Commission”) for interim financial information. Accordingly, they do not include all of the information required by U.S. GAAP for complete financial statement presentation and should be read in conjunction with the audited consolidated financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (the “2014 Annual Report”), filed with the Commission on April 15, 2015. It is management’s opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statements presentation. | |
The accompanying condensed consolidated financial statements include the accounts of Trunity Holdings, Inc. (“Trunity” or the “Company”) and its wholly owned subsidiary Trunity, Inc. (“Trunity, Inc.” or the “Company”), as of March 31, 2015 and December 31, 2014 and for the three months ended March 31, 2015 and 2014. All intercompany accounts have been eliminated in the consolidation. Certain amounts reported in prior periods have been reclassified to conform to the current presentation. | |
The Company is a “C” Corporation organized under the laws of Delaware with principal offices located in Davie, Florida. The Company was formed on July 28, 2009 to develop a cloud-based platform that focuses on collaborative knowledge management, publishing and education delivery platform – the Trunity eLearning Platform (the “Platform”) – which provides an end-to-end solution for the rapidly growing digital textbook, eLearning and enterprise training marketplaces. | |
The financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred net losses, working captial deficiencies and negative operating cash flows since its inception. To the extent the Company continues to experience working captial deficiencies and negative cash flows in the future, it will continue to require additional capital to fund operations. The Company has historically obtained additional capital investments under various debt and common stock issuances. Although management continues to pursue its financing plans, there is no assurance that the Company will be successful in generating sufficient revenues to provide positive cash flow or that financing at acceptable terms, if at all. In addition, the Company has defaulted on some of its lease and debt obligations as of March 31, 2015. Although the Company is currently in negotiations related to these defaults, there is no assurance that any negotiations will be successful in reducing the Company’s liabilities under default. Based on these factors, the Company may be unable to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts or classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
NOTE_2_SIGNIFICANT_ACCOUNTING_
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2015 | |
Note 2 - Summary Of Significant Accounting Policies | |
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES |
There were no material changes during the quarter ended March 31, 2015 in the Company’s significant accounting policies to those previously disclosed in the 2014 Annual Report. | |
Recently Issued Accounting Pronouncements | |
In April 2015, the Financial Accounting Standards Board issued a new pronouncement that requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The pronouncement becomes effective for the Company in the first quarter of 2016. Early adoption is permitted. The Company believes adoption of the pronouncement will not have a significant impact on the financial statements or its results of operations. |
NOTE_3_INTANGIBLE_ASSETS
NOTE 3 - INTANGIBLE ASSETS | 3 Months Ended | ||||||||||||||
Mar. 31, 2015 | |||||||||||||||
Note 3 - Intangible Assets | |||||||||||||||
NOTE 3 - INTANGIBLE ASSETS | NOTE 3 – INTANGIBLE ASSETS | ||||||||||||||
Intangible assets are recorded at cost and consist of the Trunity eLearning Platform software development costs which include direct labor, including taxes and benefits. Amortization is computed using the straight-line method over three years. Amortization of three years is based on management’s best estimate of useful life of current technology in this industry. | |||||||||||||||
Intangible assets were comprised of the following at March 31, 2015: | |||||||||||||||
Trunity eLearning Platform Software Development Cost | Estimated | Gross | Accumulated | Net Book | |||||||||||
Life | Cost | Amortization | Value | ||||||||||||
Internal costs capitalized for the twelve months ended December 31, 2012 | 3 years | 548,031 | (518,525 | ) | $ | 29,506 | |||||||||
Internal costs capitalized for the twelve months ended December 31, 2013 | 3 years | 519,733 | (322,307 | ) | $ | 197,426 | |||||||||
Internal costs capitalized for the twelve months ended December 31, 2014 | 3 years | 598,285 | (179,460 | ) | $ | 418,825 | |||||||||
Internal costs capitalized for the three months ended March 31, 2015 | 3 years | 46,281 | (3,857 | ) | $ | 42,424 | |||||||||
Carrying value as of March 31, 2015 | $ | 688,181 | |||||||||||||
Carrying value as of December 31, 2014 | $ | 774,407 | |||||||||||||
Estimated future amortization expense is as follows for the following periods: | |||||||||||||||
Remainder of 2015 | $ | 320,580 | |||||||||||||
2016 | 282,349 | ||||||||||||||
2017 | 85,252 | ||||||||||||||
Total future amortization expense | $ | 688,181 |
NOTE_4_SIGNIFICANT_TRANSACTION
NOTE 4 - SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES | 3 Months Ended |
Mar. 31, 2015 | |
Note 4 - Significant Transactions With Related Parties | |
NOTE 4 - SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES | NOTE 4 – SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES |
The Company has a number of transactions that warrant disclosure per ASC 850, Related Party Disclosures. | |
Transactions with Officers – The Company’s Interim CEO and CFO, Nicole Fernandez-McGovern, is one of the managing principals of both RCM Financial, a financial consulting firm, and Premier Financial Filings, a full-service financial printer; companies which have provided contracted financial services to Trunity. For the quarter ended March 31, 2015, RCM Financial provided outside accounting and tax professional services to Trunity, which resulted in accrued fees of $1,438. Premier Financial Filings provided services to the Company resulting in accrued fees of $3,000 for the quarter ended March 31, 2015. | |
During the quarter ended March 31, 2015, Ms. Fernandez-McGovern was issued, in exchange for $15,000 of consideration, a Series F Convertible Debenture resulting in 15,000 warrants at $0.15 being issued to her. Ms. Fernandez-McGovern is also the holder of a Series D Convertible Debenture in the principal amount of $35,322, resulting in 175,000 warrants at $0.20 being issued to her and in exchange for $7,500 of consideration, a July 2014 Convertible Promissory Note, resulting in 45,455 warrants at $0.50 was issued to her. See Note 5 for further details of the terms of the debentures and promissory note. | |
The Company’s Chief Education Officer, Cutler Cleveland, currently authors on the Trunity platform. In his capacity as an author of the Company, he has accrued royalties for the quarter ended March 31, 2015 of $4,171. | |
At March 31, 2015, the Company’s Chief Technology Officer, Joakim Lindblom, had an outstanding shareholder loan in the amount of $8,137. Mr. Lindblom is also the holder of a Series D Convertible Debenture in the principal amount of $92,106, resulting in 406,350 warrants at $0.20 being issued to him. See Note 5 for further details of the terms of the debenture. | |
Transactions with Board Members – An investment of $75,000 was made by board member and founder, Les Anderton, during the quarter ended March 31, 2015, for a Series F Convertible Debenture, resulting in 75,000 warrants at $0.15. In addition, Mr. Anderton is also the holder of a Series E Convertible Debentures, resulting in 75,000 warrants at $0.15 being issued to him, and, in exchange for $10,000 of consideration, he is also the holder of a July 2014 Convertible Note, resulting in 60,606 warrants at $0.50 being issued to him. Also, Mr. Anderton is the holder of a Series D Convertible Debenture in the principal amount of $195,052, resulting in 901,850 warrants at $0.20 being issued to him. See Note 5 for further details of the terms of the debentures and promissory note. | |
In exchange for $10,000 of consideration board member Ivan Berkowitz is a holder of a July 2014 Convertible Promissory Note, resulting in 60,606 warrants at $0.50 being issued to him. See Note 5 for further details of the terms of this promissory note. | |
Credit Agreements – Effective January 1, 2015 Les Anderton provided a new $1.5 million line of credit, at a 10% interest rate, to the Company on the same terms as in his prior credit agreement with a maturity date of the earlier of December 31, 2015 or the closing of a Company financing with gross proceeds of at least $15 million. The line of credit will be used to fund working capital needs. No draws have been made on the line of credit. |
NOTE_5_CONVERTIBLE_DEBT
NOTE 5 - CONVERTIBLE DEBT | 3 Months Ended | ||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||
Note 5 - Convertible Debt | |||||||||||||||||||||
NOTE 5 - CONVERTIBLE DEBT | NOTE 5 – CONVERTIBLE DEBT | ||||||||||||||||||||
The following is a summary of convertible debentures outstanding as of March 31, 2015: | |||||||||||||||||||||
Face Value | Initial | Amortization | Debt | Carrying | |||||||||||||||||
Discount | Extinguishment | Value | |||||||||||||||||||
Convertible Promissory Notes | $ | 52,500 | $ | (14,629 | ) | $ | 10,826 | $ | — | $ | 48,697 | ||||||||||
12% Series A Debentures | 168,815 | (69,219 | ) | 69,219 | — | 168,815 | |||||||||||||||
10% Series B Debentures | 161,932 | (69,135 | ) | 69,135 | — | 161,932 | |||||||||||||||
10% Series C Debentures | 350,833 | (72,869 | ) | — | 72,869 | 350,833 | |||||||||||||||
12% Series D Debentures | 763,199 | (271,878 | ) | 20,790 | 237,227 | 749,338 | |||||||||||||||
15% Series E Debentures | 145,000 | (145,000 | ) | 105,757 | — | 105,757 | |||||||||||||||
10% Series F Debentures | 200,000 | (200,000 | ) | 84,156 | — | 84,156 | |||||||||||||||
Total Debentures | $ | 1,789,779 | (828,101 | ) | 349,057 | 310,096 | 1,620,831 | ||||||||||||||
Face Value | Initial | Amortization | Derivative | Carrying | |||||||||||||||||
Discount | Liability | Value | |||||||||||||||||||
Convertible Debenture | $ | 114,155 | $ | (66,423 | ) | $ | 8,796 | $ | 66,059 | $ | 122,587 | ||||||||||
Total | $ | 1,956,434 | $ | (909,153 | ) | $ | 368,679 | $ | 376,155 | $ | 1,792,115 | ||||||||||
The following is a summary of convertible debentures outstanding as of December 31, 2014: | |||||||||||||||||||||
Face Value | Initial | Amortization | Debt | Carrying | |||||||||||||||||
Discount | Extinguishment | Value | |||||||||||||||||||
Convertible Promissory Notes | $ | 52,500 | $ | (14,629 | ) | $ | 7,218 | $ | — | $ | 45,089 | ||||||||||
Series A Debentures | 167,540 | (69,219 | ) | 69,219 | — | 167,540 | |||||||||||||||
Series B Debentures | 161,932 | (69,135 | ) | 69,135 | — | 161,932 | |||||||||||||||
Series C Debentures | 350,833 | (72,869 | ) | — | 72,869 | 350,833 | |||||||||||||||
Series D Debentures | 763,199 | (267,285 | ) | 9,992 | 237,227 | 743,133 | |||||||||||||||
Series E Debentures | 145,000 | (145,000 | ) | 33,725 | — | 33,725 | |||||||||||||||
Total Debentures | $ | 1,588,504 | $ | (623,508 | ) | $ | 182,017 | $ | 310,096 | $ | 1,457,163 | ||||||||||
Face Value | Initial | Amortization | Derivative | Carrying | |||||||||||||||||
Discount | Liability | Value | |||||||||||||||||||
Convertible Debenture | $ | 113,128 | $ | (66,423 | ) | $ | 3,336 | $ | 65,422 | $ | 115,463 | ||||||||||
Total | $ | 1,754,132 | $ | (895,678 | ) | $ | 383,743 | $ | 375,518 | $ | 1,617,715 | ||||||||||
January-March 2015 Unsecured Redeemable Debentures (Series F) | |||||||||||||||||||||
In 2015, the Company borrowed from accredited investors and related parties (the “Debenture Holders”) $200,000 ($15,000 was provided by the Interim CEO and CFO, and $25,000 was provided by board member Les V. Anderton) pursuant to an Unsecured Redeemable Debenture Series F (the “Series F Debentures”) that will pay interest during the three-month Debenture term in the amount of 10% of the principal amount. The holders of the Series F Debentures also received warrants to acquire 200,000 shares of Common Stock for an exercise price of $0.15 per share, exercisable over three years equal to 100% of the principal amount of the debenture. In addition the Company will issue the Debenture Holders warrants (the “2015 Warrant”) to purchase 200,000 shares of the Company’s Common Stock at a price per 2015 Warrant Share to be determined. The Series F Debentures are convertible into common stock at $.03 per share as to principal plus accrued interest upon an event of default. | |||||||||||||||||||||
The Company allocated the face value of the Series F Debentures to the warrants and the debentures based on their relative fair values, allocated $2,427 to the warrants, and determined that there were aggregate beneficial conversion features of $197,573. The fair value of the warrants was determined using the Black-Scholes-Merton (“BSM”) valuation model and the following assumptions: volatility – 43.95% to 49.60%, risk free rate – 0.83% to 1.13 %, dividend rate – 0.00%. The amount allocated to the warrants and beneficial conversion features totaling $200,000 was recorded as a discount against the Series F Debentures, with offsetting entry to additional paid-in capital. The discounts are being amortized into interest expense over the term of the Series F Debentures. | |||||||||||||||||||||
During the quarter ended March 31, 2015, the Company recorded amortization of the discount of $84,156 and recorded interest expense of $2,104. As of March 31, 2015, the carrying value of the Series E Debentures was $84,156, net of unamortized discounts of $115,844. | |||||||||||||||||||||
November and December 2014 Unsecured Redeemable Debentures (Series E) | |||||||||||||||||||||
In October and November 2014, the Company borrowed from accredited investors and a related party (the “Debenture Holders”) $145,000 pursuant to an Unsecured Redeemable Debenture Series E (the “Series E Debentures”) that will pay interest during the six-month Debenture term in the amount of 15% of the principal amount. The holders of the Series E Debentures also received warrants to acquire 145,000 shares of Common Stock for an exercise price of $0.15 per share, exercisable over four years equal to 100% of the principal amount of the debenture. In addition the Company will issue the Debenture Holders warrants (the “2015 Warrant”) to purchase 145,000 shares of the Company’s Common Stock at a price per 2015 Warrant Share to be determined. The Company incurred no commission costs in connection with these transactions. The Series E Debentures are convertible into common stock at $.03 per share as to principal plus accrued interest upon an event of default. | |||||||||||||||||||||
The Company allocated the face value of the Series E Debentures to the warrants and the debentures based on their relative fair values, allocated $7,945 to the warrants, and determined that there were aggregate beneficial conversion features of $137,055. The fair value of the warrants was determined using the BSM valuation model and the following assumptions: volatility – 42.31% to 44.28%, risk free rate – 1.63% to 1.75% %, dividend rate – 0.00%. The amount allocated to the warrants and beneficial conversion features totaling $145,000 was recorded as a discount against the Series E Debentures, with offsetting entry to additional paid-in capital. The discounts are being amortized into interest expense over the term of the Series E Debentures. | |||||||||||||||||||||
During the quarter ended March 31, 2015, the Company recorded amortization of the discount of $72,031 and recorded interest expense of $5,363. As of March 31, 2015, the carrying value of the Series E Debentures was $105,757, net of unamortized discounts of $39,243. | |||||||||||||||||||||
July to November 2014 Convertible Debentures (Series D) | |||||||||||||||||||||
During the months of July through November 2014, the Company issued Series D Convertible Debentures (the “Series D Debentures”) with an aggregate face value of $763,199 in exchange for $176,718 of cash plus accrued interest ($35,000 was provided by the interim CEO and CFO), in settlement of a Series A Convertible Debenture with outstanding principal and accrued interest of $26,477, and in settlement of Series B Convertible Debentures with aggregate outstanding principal and accrued interest of $560,003, of which $287,159 represented a conversion of notes payable-related parties to the Founders. The Series D Debentures accrue interest at an annual rate of 12%, mature in July through November 2015, and are convertible into the Company’s Common Stock at a conversion rate of $0.165 per share. The holders of the Series D Debentures also received warrants to acquire 3,332,000 shares of Common Stock for an exercise price of $0.20 per share, exercisable over five years. | |||||||||||||||||||||
The Company allocated the face value of the Series D Debentures to the warrants and the debentures based on their relative fair values, allocated $145,335 to the warrants, and determined that there were aggregate beneficial conversion features of $126,543. The fair value of the warrants was determined using the BSM valuation model and the following assumptions: volatility – 43.63% to 44.28%, risk free rate – 1.60% to 1.69% %, dividend rate – 0.00%. The amount allocated to the warrants and beneficial conversion features totaling $271,877 was recorded as a discount against the Series D Debentures, with offsetting entry to additional paid-in capital. A portion of the discount resulting in $237,227 was fully expensed upon execution of the new debentures as debt extinguishment costs and the remaining amount of $13,861 is being amortized into interest expense over the term of the Series D Debentures. | |||||||||||||||||||||
During the quarter ended March 31, 2015, the Company recorded amortization of the discount related to the Series D Debentures of $10,797 and interest expense of $10,797. As of March 31, 2015, the carrying value of the Series D Debentures was $346,415, net of unamortized discounts of $13,861. | |||||||||||||||||||||
August 2014 and November Convertible Debentures (Series C) | |||||||||||||||||||||
In August 2014, the Company issued Series C Convertible Debentures (the “Series C Debentures”) with an aggregate face value of $350,833 in exchange for the cancellation of Series B Convertible Debentures with outstanding principal and accrued interest of $350,833. The Series C Debentures accrue interest at an annual rate of 10%, mature in July and November 2015, and are convertible into the Company’s common stock at a conversion rate of $0.20 per share. The holders of the Series C Debentures also received warrants to acquire 1,500,000 shares of common stock for an exercise price of $0.20 per share, exercisable over five years. | |||||||||||||||||||||
The Company allocated the face value of the Series C Debentures to the warrants and the debentures based on their relative fair values, and allocated $72,869 to the warrants, which was recorded as a discount against the Series C Debentures, with offsetting entry to additional paid-in capital. The fair value of the warrants was determined using the BSM valuation model and the following assumptions: volatility – 43.74% and 44.28%, risk free rate – 1.62% and 1.67%, dividend rate – 0.00%. The discount was fully expensed upon execution of the new debentures as debt extinguishment costs. | |||||||||||||||||||||
As of March 31, 2015, the carrying value of the Series C Debentures was $350,833, interest expense of $8,771 was recorded and no amortization expense was recorded as it was fully expensed in the prior period. | |||||||||||||||||||||
October and November 2012 Convertible Debentures (Series B) | |||||||||||||||||||||
In October and November 2012, the Company issued Convertible Debentures (“Series B Debentures-Issuance II”) with an aggregate face value of $624,372 of which $565,372 represented a conversion of notes payable-related parties to the Founders. In 2013, two of the founders sold a portion of their debenture totaling $141,800 of their aggregate face to third parties. The Series B Debentures-Issuance II matured in October and November 2014, bore interest at an annual rate of 10%, and were convertible at the option of the holders into Units, each consisting of a) one share of common stock and b) one warrant to purchase one share of common stock at $0.40 per share (“Unit”). The number of Units issuable upon conversion of the Series B Debentures-Issuance II is determined by dividing the then outstanding principal and accrued but unpaid interest by a) $0.35 if a Liquidity Event, as defined in the debenture agreements, occurs within six months of the closing of the offering of the Series B Debentures-Issuance II, or b) $0.32 if a Liquidity Event does not occur within six months of the closing of the offering of the Series B Debentures-Issuance II. | |||||||||||||||||||||
In October and November 2014, all but one of the holders of the Series B Debentures-Issuance II exchanged the debentures with an aggregate face value of $464,440 and accrued interest of $51,317 for either a Series C or D Debenture with an aggregate face value of $513,757. The Company recorded a loss on early extinguishment of debt of $212,261, primarily related to fair value of the warrants in relation to the debt (relative fair value) on the debt exchange transaction. The Company has defaulted on its obligation to pay the remaining principal amount of a debenture due October and November 2014. The total amount due on this debenture, including interest, is $183,412. The Company has negotiated restructured terms with the majority of the debenture holders and is attempting to complete the formal restructuring of this debt obligation. | |||||||||||||||||||||
As of March 31, 2015, the net carrying value of the outstanding Series B Debentures-Issuance II totaled $161,932 and no unamortized discount remains therefore no amortization expense was recorded for the quarter ended March 31, 2015. During the quarter ended March 31, 2015, we recorded interest expense on the Series B Debentures-Issuance II of $6,548. | |||||||||||||||||||||
July 2012 Convertible Debentures (Series A) | |||||||||||||||||||||
In July 2012, the Company issued Convertible Debentures (the “Series A Debentures”) with an aggregate face value of $215,300 Canadian Dollars (US$197,344 as of December June 30, 2014). The Series A Debentures matured in July 2014, bore interest at an annual rate of 10% through July 2014 and 12% thereafter, and were convertible at the option of the holders into Units, each consisting of a) one share of Common stock and b) one warrant to purchase one share of common stock at 0.40 Canadian Dollars per share (“Unit”). The number of Units issuable upon conversion of the Series A Debentures is determined by dividing the then outstanding principal and accrued but unpaid interest by a) 0.35 Canadian Dollars if a Liquidity Event, as defined in the Debenture agreement, occurs within six months of the closing of the offering of the July Notes, or b) 0.32 Canadian Dollars if a Liquidity Event does not occur within six months of the closing of the offering of the Series A Debentures. | |||||||||||||||||||||
In July 2014, the holder of a Series A Debenture exchanged the debenture with a face value of $25,000 Canadian Dollars (US$23,360), and accrued interest of $3,336 Canadian Dollars (US$3,117) for a Series D Convertible Debenture with a face amount of US$26,477. The Company recorded a loss on early extinguishment of debt of US$6,728, primarily related to fair value of the warrants in relation to the debt (relative fair value) on the debt exchange transaction. The Company has defaulted on its obligation to pay the remaining principal amount of debentures due October and November 2014. The total amount due on these debentures, including interest, is US$220,031. The Company has negotiated restructured terms with the majority of the debenture holders and is attempting to complete the formal restructuring of these debt obligations. | |||||||||||||||||||||
As of March 31, 2015, the net carrying value of the outstanding Series A Debentures totaled $168,815 and no unamortized discount remains therefore no amortization expense was recorded for the quarter ended March 31, 2015. During the quarter ended March 31, 2015, we recorded interest expense on the Series A Debentures of $5,064. As of March 31, 2015 no unamortized debt issuance costs related to the Series A Debentures remains therefore no amortization expense was recorded during the quarter ended March 31, 2015. | |||||||||||||||||||||
November 2014 Convertible Debenture with Peak One Opportunity Fund, L.P. | |||||||||||||||||||||
In November 2014, the Company entered into a Securities Purchase Agreement with Peak One Opportunity Fund, L.P. (“Peak”) pursuant to which the Company sold to Peak for $112,500 a Convertible Debenture (the “Peak Debenture”) in the principal amount of $125,000 (the “Principal Amount”) due on November 6, 2017 (the “Maturity Date”). Pursuant to the Peak Debenture, the Company agreed to pay interest on the Principal Amount outstanding from time to time in arrears (i) upon conversion or (ii) on the Maturity Date, at the rate of 5% per annum. The Company has the option to redeem the Peak Debenture prior to the Maturity Date at any time or from time to time by paying the Principal Amount plus accrued interest. Beginning 91 days after the issue date, Peak may convert the principal and accrued interest (the “Conversion Amount”) into shares of Common Stock at a conversion price for each share of Common Stock (the “Conversion Price”) equal to 65% of the lowest closing bid price (as reported by Bloomberg LP) of Common Stock for the 20 trading days immediately preceding the date of conversion of the Debenture (subject to equitable adjustments resulting from any stock splits, stock dividends, recapitalizations or similar events). In addition with the Peak Agreement, the Company paid issuance costs of $10,000 and issued 137,500 shares of restricted Common Stock to cover the expenses incurred and analysis performed by Peak in connection with the transaction. On the date of issuance, the Company recorded the fair value of the conversion option of $66,423 as a derivative liability and debt discount to be amortized into interest expense through the maturity date. During the quarter ended March 31, 2015, the Company recognized $8,796 of amortization of the discount and recorded interest expense of $1,541. As of March 31, 2015, the Peak Debenture is carried at $67,373, net of unamortized discount of $57,627. | |||||||||||||||||||||
The fair value of the 137,500 shares of restricted stock of $24,750, and $10,000 of issuance costs added to the principal, was recorded as deferred issuance costs to be amortized into interest expense over the term of the debenture. During the quarter ended March 31, 2015, the Company recognized $2,856 of interest expense from the amortization of deferred financing fees. | |||||||||||||||||||||
July 2014 Convertible Promissory Notes | |||||||||||||||||||||
In July 2014, the Company issued Convertible Promissory Notes with an aggregate face value of $52,500 for cash ($27,500 was provided by the interim CEO and CFO and two board members). The Convertible Promissory Notes accrue interest at an annual rate of 10%, mature in July 2015, and are convertible into the Company’s Common Stock at a conversion rate of $0.165 per share. The holders of the Convertible Promissory Notes also received warrants to acquire 318,182 shares of Common Stock for an exercise price of $0.50 per share, exercisable over five years. | |||||||||||||||||||||
The Company allocated the proceeds from the Convertible Promissory Notes to the warrants and the notes based on their relative fair values, allocated $6,117 to the warrants, and determined that there were aggregate beneficial conversion features of $8,512. The fair value of the warrants was determined using the BSM valuation model and the following assumptions: volatility – 43.99% to 44.08%, risk free rate – 1.66 to 1.74% %, dividend rate – 0.00%. The amount allocated to the warrants and beneficial conversion features; totaling $14,629 was recorded as a discount against the Convertible Promissory Notes, with offsetting entry to additional paid-in capital. The discounts are being amortized into interest expense over the term of the Convertible Promissory Notes. | |||||||||||||||||||||
During the quarter ended March 31, 2015, the Company recorded amortization of the discount of $3,607 and recorded interest expense of $1,300. As of March 1, 2015, the carrying value of the Convertible Promissory Notes was $48,697, net of unamortized discounts of $3,803. |
NOTE_6_DERIVATIVES
NOTE 6 - DERIVATIVES | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Note 6 - Derivatives | |||||||||||||
NOTE 6 - DERIVATIVES | NOTE 6 – DERIVATIVES | ||||||||||||
The Company determined that the embedded conversion feature included in the November 2014 Peak Debenture required liability treatment because it is convertible into a fixed dollar amount based on a variable conversion rate. Because of the uncertainty regarding the number of shares of Common Stock that may be issuable upon the conversion of the convertible debt, the embedded conversion option is required to be accounted for separately and presented as a derivative liability on the Company’s balance sheet, with subsequent changes in fair value reported in the Company’s statement of operations. On the date of issuance, the Company recorded an initial derivative liability of $66,423 with an offsetting discount against the convertible debt to be amortized into interest expense through the maturity of the convertible debt. The Company adjusted the derivative liability of its fair value on March 31, 2015, of $637 resulting in derivative income of $637 for the quarter ended March 31, 2015. The fair value of the embedded conversion option was determined using Monte Carlo simulations and the following assumptions: | |||||||||||||
Issuance | December 31, | March 31, | |||||||||||
Date | 2014 | 2015 | |||||||||||
Expected Volatility | 41.5 | % | 44.1 | % | 41.4 | % | |||||||
Expected Term | 3.00 Years | 2.85 Years | 2.60 Years | ||||||||||
Risk-Free Interest Rate | 0.51 | % | 1.02 | % | 0.89 | % | |||||||
Dividend Rate | — | % | — | % | — | % | |||||||
The following table presents changes in Level 3 liabilities measured at fair value for the three month period ended March 31, 2015. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs. | |||||||||||||
Derivative | |||||||||||||
Liability | |||||||||||||
Balance at December 31, 2014 | $ | 65,422 | |||||||||||
Change in fair value | 637 | ||||||||||||
Balance at March 31, 2015 | $ | 66,059 |
NOTE_7_STOCKBASED_COMPENSATION
NOTE 7 - STOCK-BASED COMPENSATION | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Note 7 - Stock-Based Compensation | |||||||||||||||||
NOTE 7 - STOCK-BASED COMPENSATION | NOTE 7 – STOCK-BASED COMPENSATION | ||||||||||||||||
In 2009, the Company approved the 2009 Employee, Director and Consultant Stock Option Plan (the “2009 Plan”) and authorized an option pool of 5,500,000 shares that was subject to a 3 for 1 reverse stock split resulting in an authorized option pool of 1,833,333. Stock options typically vest over a three year period and have a life of ten years from the date granted. In 2009, the Company accelerated the option vesting of certain employees who terminated their employment, but agreed to work in a consulting capacity. In exchange for the accelerated vesting, the employees agreed to shorter expiration periods for their options. As of March 31, 2015, there were 1,468,766 shares available for awards under this plan. | |||||||||||||||||
In 2012, the Company approved the 2012 Employee, Director and Consultant Stock Option Plan (the “2012 Plan”) and authorized an option pool of 7,500,000 shares. Stock options typically vest over a three year period and have a life of ten years from the date granted. As of March 31, 2015, there were 4,553,000 shares available for awards under this plan. | |||||||||||||||||
On February 12, 2014, Arol Buntzman resigned from his positions as Chairman, Director and Chief Executive Officer (CEO) of the Company. The Company’s Board of Directors has commenced a search for a permanent CEO and has appointed Nicole Fernandez-McGovern, the Company’s Chief Financial Officer, as CEO to serve until a permanent CEO is hired. | |||||||||||||||||
As a result of Mr. Buntzman’s resignation pursuant to the December 2013 non-qualified stock option agreement between him and the Company, which granted to him options to purchase up to 4,000,000 shares of common stock outside of the Company’s 2009 and 2012 stock option plans (the “Option Agreement”), options to purchase 1,500,000 shares of stock were automatically cancelled, leaving 2,500,000 outstanding options. These options covered 1,000,000 shares at an excrcise price of $0.30 per share and three tranches of 500,000 shares each at an exercise price of $0.40, $0.60 and $0.70 per share, respectively. The Company believes that some or all of the remaining options under the Option Agreement, representing 1,500,000 shares in three tranches of 500,000 shares each at exercise prices of $0.40, $0.60 and $0.70, respectively, should be cancelled based on the circumstances of Mr. Buntzman’ s resignation. Mr. Buntzman disputes the Company’s position. If the dispute is not settled, the matter is subject to binding arbitration. No demand for arbitration has been filed by either party. | |||||||||||||||||
During the three months ended March 31, 2015, the Company issued 130,000 options, respectively, to acquire shares of common stock to employees, directors or consultants. | |||||||||||||||||
The grant-date fair value of options is estimated using the BSM valuation model. The per share weighted average fair value of stock options granted during 2015 was $0.07 and was determined using the following assumptions: expected price volatility is 49.6%, risk-free interest rate of 1.06%, zero expected dividend yield, and 6.5 years expected life of options. The expected term of options granted is based on the simplified method in accordance with Securities and Exchange Commission Staff Accounting Bulletin 107, and represents the period of time that options granted are expected to be outstanding. The Company makes assumptions with respect to expected stock price volatility based on the average historical volatility of peers with similar attributes. In addition, the Company determines the risk free rate by selecting the U.S. Treasury with maturities similar to the expected terms of grants, quoted on an investment basis in effect at the time of grant for that business day. | |||||||||||||||||
As of March 31, 2015, there was approximately $119,151 of total unrecognized stock compensation expense, related to unvested stock options under the both Plans. This expense is expected to be recognized over the remaining weighted average vesting periods of the outstanding options of .66 years. | |||||||||||||||||
A summary of options issued, exercised and cancelled for the quarter ended March 31, 2015 is as follows: | |||||||||||||||||
Shares | Weighted-Average Exercise Price ($) | Weighted-Average Remaining Contractual Term | Aggregate Intrinsic Value ($) | ||||||||||||||
Outstanding at December 31, 2014 | 6,810,766 | 0.26 | 8.11 | — | |||||||||||||
Granted | 130,000 | 0.07 | 10 | — | |||||||||||||
Exercised | — | — | — | — | |||||||||||||
Cancelled | (25,000 | ) | 0.33 | — | |||||||||||||
Outstanding at March 31, 2015 | 6,915,766 | 0.26 | 7.92 | — | |||||||||||||
Exercisable at March 31, 2015 | 6,813,327 | 0.35 | 8.07 | — |
NOTE_8_WARRANTS_TO_PURCHASE_CO
NOTE 8 - WARRANTS TO PURCHASE COMMON STOCK | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Note 8 - Warrants To Purchase Common Stock | |||||||||||||
NOTE 8 - WARRANTS TO PURCHASE COMMON STOCK | NOTE 8 – WARRANTS TO PURCHASE COMMON STOCK | ||||||||||||
During the quarter ended March 31, 2015, the Company issued, in connection with the issuance of debentures, warrants to purchase 326,500 shares of the Company’s common stock at an exercise price of $0.15 and $0.20. All warrants outstanding as of March 31, 2015 are scheduled to expire at various dates through 2019. | |||||||||||||
The grant date fair value of warrants is estimated using the BSM valuation model. The per share weighted average fair value of the warrants granted during 2015 was $0.17 and was determined using the following assumptions: expected price volatility ranging between 43.95% to 45.08%, risk-free interest rate ranging between 0.83% to 1.03%, zero expected dividend yield, and 3.0 years expected life of warrants. The Company makes assumptions with respect to expected stock price volatility based on the average historical volatility of peers with similar attributes. In addition, the Company determines the risk-free rate by selecting the U.S. Treasury with maturities similar to the expected terms of grants, quoted on an investment basis in effect at the time of grant for that business day. | |||||||||||||
A summary of warrants issued, exercised and expired for the three months ended March 31, 2015 follows: | |||||||||||||
Shares | Weighted-Average Exercise Price ($) | Weighted-Average Remaining Contractual Term | |||||||||||
Outstanding at December 31, 2014 | 17,308,258 | 0.7 | 2.04 | ||||||||||
Granted | 326,500 | 0.17 | 3.49 | ||||||||||
Exercised | — | — | — | ||||||||||
Expired | (826,810 | ) | 0.97 | — | |||||||||
Outstanding and exercisable at March 31, 2015 | 16,807,948 | 0.69 | 1.98 |
NOTE_9_STOCKHOLDERS_EQUITY
NOTE 9 - STOCKHOLDER'S EQUITY | 3 Months Ended |
Mar. 31, 2015 | |
Note 9 - Stockholders Equity | |
NOTE 9 - STOCKHOLDER'S EQUITY | NOTE 9 – STOCKHOLDER’S EQUITY |
Debt beneficial conversion feature for warrants – During the quarter ended March 31, 2015, the Company raised gross proceeds of $200,000 pursuant to an Unsecured Redeemable Debenture Series F (the “Series F Debentures”) that allocated the face value of the Series F Debentures to the warrants and the debentures based on their relative fair values and, resulted in the recording of beneficial conversion features totaling $200,000 as a discount against the Series F Debentures, with offsetting entry to additional paid-in capital. The discounts are being amortized into interest expense over the term of the Series F Debentures. |
NOTE_10_POTENTIALLY_DILUTIVE_S
NOTE 10 - POTENTIALLY DILUTIVE SECURITIES | 3 Months Ended | |||||
Mar. 31, 2015 | ||||||
Note 10 - Potentially Dilutive Securities | ||||||
NOTE 10 - POTENTIALLY DILUTIVE SECURITIES | NOTE 10 – POTENTIALLY DILUTIVE SECURTIES | |||||
Options, warrants and convertible debt were all considered anti-dilutive for the three months ended March 31, 2015 and 2014 due to net losses that the Company reported. The following table sets forth the securities that were not included in the diluted net loss per share calculation because their effect was anti-dilutive as of the periods presented: | ||||||
Three months ended | ||||||
31-Mar-15 | 31-Mar-14 | |||||
Options | 6,915,766 | 7,691,773 | ||||
Warrants | 16,807,948 | 10,971,066 | ||||
Convertible Debt | 22,545,516 | 4,009,002 | ||||
Total Potentially Dilutive Securities | 46,269,230 | 22,671,841 |
NOTE_11_COMMITMENTS_AND_CONTIN
NOTE 11 - COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
NOTE 10 - COMMITMENTS AND CONTINGENCIES | NOTE 11 – COMMITMENTS AND CONTINGENCIES |
Leases | |
In August 2013, the Company executed a lease for 8,713 square feet for its former corporate offices located in Portsmouth, New Hampshire. The lease commenced on August 9, 2013 and had a five-year term ending on September 8, 2018. The monthly rental payments for the first year were $10,165 per month and were scheduled to increase on each anniversary at a rate of 3% per annum. The Company was required to pay its proportionate share of the building’s common area maintenance (“CAM”), real estate taxes, utilities serving the premises and the cost of premises janitorial service estimated to be $5,210 on a monthly basis. | |
On August 11, 2014, the landlord declared the Company in default based on its failure to pay rent and other charges due since July 2014. The Company vacated the premises on August 22, 2014, and moved its office to smaller, less expensive premises in the neighboring area. Past due amounts owed on the lease through the date of surrender of the premises total approximately $51,000. Total payments from surrender through the end of the lease would be approximately $900,000. The Company is attempting to negotiate a settlement of the lease with the landlord based on an offset for the fair market rental value of the premises and a discount to present value, as well as a discount based on the Company’s precarious financial condition. No legal demands have been filed by either party. In addition, the Company has notified its former CEO, who it believes signed the lease without board approval and without proper disclosure, that it will hold him responsible for all losses arising from the lease. The former CEO has denied these charges. In this regard, the Company intends to set off any such losses against the amount accrued in his favor under the Series B debenture held by him (approximately $175,425 as of November 1, 2014) and against his options to purchase 222,100 shares of the Company’s common stock at an exercise price of $0.35 per share. The space was leased to a new tenant controlled by the former CEO effective January 1, 2015. In addition the company has accrued all past due amounts fully and an additional amount based on an offer of settlement presented to the landlord. There can be no assurance that settlement of this lease will not have a material adverse effect on the Company. | |
In April 2015, the Company executed a lease that commences on May 1, 2015, for office space located in Davie, Florida. The lease has monthly payments of $954 per month for a six-month term and has an option to extend for another six-month term. |
NOTE_12_SUBSEQUENT_EVENTS
NOTE 12 - SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2015 | |
Note 11 - Subsequent Events | |
NOTE 11 - SUBSEQUENT EVENTS | NOTE 12 – SUBSEQUENT EVENTS |
During the second quarter of 2015, the Company has borrowed from accredited investors and a related party (the “Debenture Holders”) $37,000 ($25,000 was provided by board member Les V. Anderton) pursuant to Series F Debenture. See Note 5 for the terms of the Series F Debentures. The Company incurred no commission costs in connection with these transactions. | |
During the second quarter of 2015, $228,000 of the Series E and Series F Debentures matured without payment creating an event of default. Consequently, aggregate principal amount of these debentures plus accrued interest is convertible into common stock at .03 per share. As of May 20, 2015, the Debentures were convertible into an aggregate of 7,600,000 shares. See Note 5 for the terms of the Series F Debentures. At this time the Company is in discussion with the Debenture Holders, the majority of which are related parties, and no notices of conversion of these debentures have been received as of May 20, 2015. |
NOTE_2_SUMMARY_OF_SIGNIFICANT_
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
Note 2 - Summary Of Significant Accounting Policies Policies | |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements |
In April 2015, the Financial Accounting Standards Board issued a new pronouncement that requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The pronouncement becomes effective for the Company in the first quarter of 2016. Early adoption is permitted. The Company believes adoption of the pronouncement will not have a significant impact on the financial statements or its results of operations. |
NOTE_3_INTANGIBLE_ASSETS_Table
NOTE 3 - INTANGIBLE ASSETS (Tables) | 3 Months Ended | ||||||||||||||
Mar. 31, 2015 | |||||||||||||||
Note 3 - Intangible Assets Tables | |||||||||||||||
Intangible assets | Intangible assets were comprised of the following at March 31, 2015: | ||||||||||||||
Trunity eLearning Platform Software Development Cost | Estimated | Gross | Accumulated | Net Book | |||||||||||
Life | Cost | Amortization | Value | ||||||||||||
Internal costs capitalized for the twelve months ended December 31, 2012 | 3 years | 548,031 | (518,525 | ) | $ | 29,506 | |||||||||
Internal costs capitalized for the twelve months ended December 31, 2013 | 3 years | 519,733 | (322,307 | ) | $ | 197,426 | |||||||||
Internal costs capitalized for the twelve months ended December 31, 2014 | 3 years | 598,285 | (179,460 | ) | $ | 418,825 | |||||||||
Internal costs capitalized for the three months ended March 31, 2015 | 3 years | 46,281 | (3,857 | ) | $ | 42,424 | |||||||||
Carrying value as of March 31, 2015 | $ | 688,181 | |||||||||||||
Carrying value as of December 31, 2014 | $ | 774,407 | |||||||||||||
Estimated future amortization expense | Estimated future amortization expense is as follows for the following periods: | ||||||||||||||
Remainder of 2015 | $ | 320,580 | |||||||||||||
2016 | 282,349 | ||||||||||||||
2017 | 85,252 | ||||||||||||||
Total future amortization expense | $ | 688,181 |
NOTE_5_CONVERTIBLE_DEBT_Tables
NOTE 5 - CONVERTIBLE DEBT (Tables) | 3 Months Ended | ||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||
Note 5 - Convertible Debt Tables | |||||||||||||||||||||
Summary of convertible debentures outstanding | The following is a summary of convertible debentures outstanding as of March 31, 2015: | ||||||||||||||||||||
Face Value | Initial | Amortization | Debt | Carrying | |||||||||||||||||
Discount | Extinguishment | Value | |||||||||||||||||||
Convertible Promissory Notes | $ | 52,500 | $ | (14,629 | ) | $ | 10,826 | $ | — | $ | 48,697 | ||||||||||
12% Series A Debentures | 168,815 | (69,219 | ) | 69,219 | — | 168,815 | |||||||||||||||
10% Series B Debentures | 161,932 | (69,135 | ) | 69,135 | — | 161,932 | |||||||||||||||
10% Series C Debentures | 350,833 | (72,869 | ) | — | 72,869 | 350,833 | |||||||||||||||
12% Series D Debentures | 763,199 | (271,878 | ) | 20,790 | 237,227 | 749,338 | |||||||||||||||
15% Series E Debentures | 145,000 | (145,000 | ) | 105,757 | — | 105,757 | |||||||||||||||
10% Series F Debentures | 200,000 | (200,000 | ) | 84,156 | — | 84,156 | |||||||||||||||
Total Debentures | $ | 1,789,779 | (828,101 | ) | 349,057 | 310,096 | 1,620,831 | ||||||||||||||
Face Value | Initial | Amortization | Derivative | Carrying | |||||||||||||||||
Discount | Liability | Value | |||||||||||||||||||
Convertible Debenture | $ | 114,155 | $ | (66,423 | ) | $ | 8,796 | $ | 66,059 | $ | 122,587 | ||||||||||
Total | $ | 1,956,434 | $ | (909,153 | ) | $ | 368,679 | $ | 376,155 | $ | 1,792,115 | ||||||||||
The following is a summary of convertible debentures outstanding as of December 31, 2014: | |||||||||||||||||||||
Face Value | Initial | Amortization | Debt | Carrying | |||||||||||||||||
Discount | Extinguishment | Value | |||||||||||||||||||
Convertible Promissory Notes | $ | 52,500 | $ | (14,629 | ) | $ | 7,218 | $ | — | $ | 45,089 | ||||||||||
Series A Debentures | 167,540 | (69,219 | ) | 69,219 | — | 167,540 | |||||||||||||||
Series B Debentures | 161,932 | (69,135 | ) | 69,135 | — | 161,932 | |||||||||||||||
Series C Debentures | 350,833 | (72,869 | ) | — | 72,869 | 350,833 | |||||||||||||||
Series D Debentures | 763,199 | (267,285 | ) | 9,992 | 237,227 | 743,133 | |||||||||||||||
Series E Debentures | 145,000 | (145,000 | ) | 33,725 | — | 33,725 | |||||||||||||||
Total Debentures | $ | 1,588,504 | $ | (623,508 | ) | $ | 182,017 | $ | 310,096 | $ | 1,457,163 | ||||||||||
Face Value | Initial | Amortization | Derivative | Carrying | |||||||||||||||||
Discount | Liability | Value | |||||||||||||||||||
Convertible Debenture | $ | 113,128 | $ | (66,423 | ) | $ | 3,336 | $ | 65,422 | $ | 115,463 | ||||||||||
Total | $ | 1,754,132 | $ | (895,678 | ) | $ | 383,743 | $ | 375,518 | $ | 1,617,715 |
NOTE_6_DERIVATIVES_Tables
NOTE 6 - DERIVATIVES (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Note 6 - Derivatives Tables | |||||||||||||
Fair value of this derivative liability | The fair value of the embedded conversion option was determined using Monte Carlo simulations and the following assumptions: | ||||||||||||
Issuance | December 31, | March 31, | |||||||||||
Date | 2014 | 2015 | |||||||||||
Expected Volatility | 41.5 | % | 44.1 | % | 41.4 | % | |||||||
Expected Term | 3.00 Years | 2.85 Years | 2.60 Years | ||||||||||
Risk-Free Interest Rate | 0.51 | % | 1.02 | % | 0.89 | % | |||||||
Dividend Rate | — | % | — | % | — | % | |||||||
Change in fair value | Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs. | ||||||||||||
Derivative | |||||||||||||
Liability | |||||||||||||
Balance at December 31, 2014 | $ | 65,422 | |||||||||||
Change in fair value | 637 | ||||||||||||
Balance at March 31, 2015 | $ | 66,059 |
NOTE_7_STOCKBASED_COMPENSATION1
NOTE 7 - STOCK-BASED COMPENSATION (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Note 7 - Stock-Based Compensation Tables | |||||||||||||||||
Summary of options issued, exercised and cancelled | A summary of options issued, exercised and cancelled for the quarter ended March 31, 2015 is as follows: | ||||||||||||||||
Shares | Weighted-Average Exercise Price ($) | Weighted-Average Remaining Contractual Term | Aggregate Intrinsic Value ($) | ||||||||||||||
Outstanding at December 31, 2014 | 6,810,766 | 0.26 | 8.11 | — | |||||||||||||
Granted | 130,000 | 0.07 | 10 | — | |||||||||||||
Exercised | — | — | — | — | |||||||||||||
Cancelled | (25,000 | ) | 0.33 | — | |||||||||||||
Outstanding at March 31, 2015 | 6,915,766 | 0.26 | 7.92 | — | |||||||||||||
Exercisable at March 31, 2015 | 6,813,327 | 0.35 | 8.07 | — |
NOTE_8_WARRANTS_TO_PURCHASE_CO1
NOTE 8 - WARRANTS TO PURCHASE COMMON STOCK (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Note 8 - Warrants To Purchase Common Stock Tables | |||||||||||||
Summary of warrants issued, exercised and expired | A summary of warrants issued, exercised and expired for the three months ended March 31, 2015 follows: | ||||||||||||
Shares | Weighted-Average Exercise Price ($) | Weighted-Average Remaining Contractual Term | |||||||||||
Outstanding at December 31, 2014 | 17,308,258 | 0.7 | 2.04 | ||||||||||
Granted | 326,500 | 0.17 | 3.49 | ||||||||||
Exercised | — | — | — | ||||||||||
Expired | (826,810 | ) | 0.97 | — | |||||||||
Outstanding and exercisable at March 31, 2015 | 16,807,948 | 0.69 | 1.98 |
NOTE_10_POTENTIALLY_DILUTIVE_S1
NOTE 10 - POTENTIALLY DILUTIVE SECURITIES (Tables) | 3 Months Ended | |||||
Mar. 31, 2015 | ||||||
Note 10 - Potentially Dilutive Securities Tables | ||||||
Securities not included in diluted net loss per share calculation | The following table sets forth the securities that were not included in the diluted net loss per share calculation because their effect was anti-dilutive as of the periods presented: | |||||
Three months ended | ||||||
31-Mar-15 | 31-Mar-14 | |||||
Options | 6,915,766 | 7,691,773 | ||||
Warrants | 16,807,948 | 10,971,066 | ||||
Convertible Debt | 22,545,516 | 4,009,002 | ||||
Total Potentially Dilutive Securities | 46,269,230 | 22,671,841 |
NOTE_3_INTANGIBLE_ASSETS_Detai
NOTE 3 - INTANGIBLE ASSETS (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Carrying value | $688,181 | $774,407 |
Internal costs capitalized for the twelve months ended December 31, 2012 | ||
Estimated Life | 3 years | |
Accumulated Amortization | 548,031 | |
Net Book Value | -518,525 | |
Carrying value | 29,506 | |
Internal costs capitalized for the twelve months ended December 31, 2013 | ||
Estimated Life | 3 years | |
Accumulated Amortization | 519,733 | |
Net Book Value | -322,307 | |
Carrying value | 197,426 | |
Internal costs capitalized for the twelve months ended December 31, 2014 | ||
Estimated Life | 3 years | |
Accumulated Amortization | 598,285 | |
Net Book Value | -179,460 | |
Carrying value | 418,825 | |
Internal costs capitalized for the three months ended March 31, 2015 | ||
Estimated Life | 3 years | |
Accumulated Amortization | 46,281 | |
Net Book Value | -3,857 | |
Carrying value | $42,424 |
NOTE_3_INTANGIBLE_ASSETS_Detai1
NOTE 3 - INTANGIBLE ASSETS (Details 1) (USD $) | Mar. 31, 2015 |
Note 3 - Intangible Assets Details 1 | |
Remainder of 2015 | $320,580 |
2016 | 282,349 |
2017 | 85,252 |
Total future amortization expense | $688,181 |
NOTE_4_SIGNIFICANT_TRANSACTION1
NOTE 4 - SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES (Details Narrative) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Professional fees accrued | $1,438 |
Accured Printing fees | 3,000 |
Royalty fees | 4,171 |
Mrs. Fernandez-McGovern [Member] | Series F Convertible Debenture [Member] | |
Convertible debentures exchanged | 15,000 |
Warrant issued | 15,000 |
Warrant exercise price | $0.15 |
Mrs. Fernandez-McGovern [Member] | Series D Convertible Debenture [Member] | |
Convertible debentures exchanged | 7,500 |
Warrant issued | 175,000 |
Warrant exercise price | $0.20 |
Debenture principal amount | 35,322 |
Mrs. Fernandez-McGovern [Member] | July 2014 Convertible Promissory Note [Member] | |
Warrant issued | 45,455 |
Warrant exercise price | $0.50 |
Joakim Lindblom [Member] | Series D Convertible Debenture [Member] | |
Warrant issued | 406,350 |
Warrant exercise price | $0.20 |
Debenture principal amount | 92,106 |
Les Anderton [Member] | Series F Convertible Debenture [Member] | |
Convertible debentures exchanged | 75,000 |
Warrant issued | 75,000 |
Warrant exercise price | $0.15 |
Les Anderton [Member] | Series D Convertible Debenture [Member] | |
Warrant issued | 901,850 |
Warrant exercise price | $0.20 |
Debenture principal amount | 195,052 |
Les Anderton [Member] | July 2014 Convertible Promissory Note [Member] | |
Warrant issued | 60,606 |
Warrant exercise price | $0.50 |
Les Anderton [Member] | Series E Convertible Debentures [Member] | |
Convertible debentures exchanged | 10,000 |
Warrant issued | 75,000 |
Warrant exercise price | $0.15 |
Ivan Berkowitz [Member] | July 2014 Convertible Promissory Note [Member] | |
Convertible debentures exchanged | 10,000 |
Warrant issued | 60,606 |
Warrant exercise price | $0.50 |
Chief Technology Officer [Member] | |
Shareholder receivables/loans | $8,137 |
NOTE_5_CONVERTIBLE_DEBT_Detail
NOTE 5 - CONVERTIBLE DEBT (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Face Value | $48,697 | $45,089 |
Initial Discount | -909,153 | -895,678 |
Amortization | 368,679 | 383,743 |
Derivative Liability | 376,155 | 375,518 |
Carrying Value | 1,792,116 | 1,617,715 |
Convertible Promissory Notes [Member] | ||
Face Value | 52,500 | 52,500 |
Initial Discount | -14,629 | -14,629 |
Amortization | 10,826 | 7,218 |
Debt Extinguishment | ||
Carrying Value | 48,697 | 45,089 |
Series A Debentures [Member] | ||
Face Value | 168,815 | 167,540 |
Initial Discount | -69,219 | -69,219 |
Amortization | 69,219 | 69,219 |
Debt Extinguishment | ||
Carrying Value | 168,815 | 167,540 |
Series B Debentures [Member] | ||
Face Value | 161,932 | 161,932 |
Initial Discount | -69,135 | -69,135 |
Amortization | 69,135 | 69,135 |
Debt Extinguishment | ||
Carrying Value | 161,932 | 161,932 |
Series C Debentures [Member] | ||
Face Value | 350,833 | 350,833 |
Initial Discount | -72,869 | -72,869 |
Amortization | ||
Debt Extinguishment | 72,869 | 72,869 |
Carrying Value | 350,833 | 350,833 |
Series D Debentures [Member] | ||
Face Value | 763,199 | 763,199 |
Initial Discount | -271,878 | -267,285 |
Amortization | 20,790 | 9,992 |
Debt Extinguishment | 237,227 | 237,227 |
Carrying Value | 749,338 | 743,133 |
Series E Debentures [Member] | ||
Face Value | 145,000 | 145,000 |
Initial Discount | -145,000 | -145,000 |
Amortization | 105,757 | 33,725 |
Debt Extinguishment | ||
Carrying Value | 105,757 | 33,725 |
Series F Debentures [Member] | ||
Face Value | 200,000 | |
Initial Discount | -200,000 | |
Amortization | 84,156 | |
Debt Extinguishment | ||
Carrying Value | 84,156 | |
Total Debentures [Member] | ||
Face Value | 1,789,779 | 1,588,504 |
Initial Discount | -828,101 | -623,508 |
Amortization | 349,057 | 182,017 |
Debt Extinguishment | 310,096 | 310,096 |
Carrying Value | 1,620,831 | 1,457,163 |
Convertible Debenture [Member] | ||
Face Value | 114,155 | 113,128 |
Initial Discount | -66,423 | -66,423 |
Amortization | 8,796 | 3,336 |
Derivative Liability | 66,059 | 65,422 |
Carrying Value | $122,587 | $115,463 |
NOTE_8_CONVERTIBLE_DEBT_Detail
NOTE 8 - CONVERTIBLE DEBT (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | 1 Months Ended | 2 Months Ended | 12 Months Ended | 5 Months Ended | |||||||||
Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Nov. 30, 2014 | Aug. 31, 2014 | Jul. 31, 2014 | Mar. 31, 2014 | Jul. 31, 2012 | Nov. 30, 2014 | Nov. 30, 2012 | Sep. 30, 2012 | Dec. 31, 2012 | Nov. 30, 2014 | Mar. 01, 2015 | Sep. 30, 2014 | |
Convertible Debentures, Face Value | $1,754,132 | ||||||||||||||
Convertible Debentures, Initial Discount | -909,153 | -895,678 | |||||||||||||
Convertible Debentures, Accumulated Amortization | 368,679 | 383,743 | |||||||||||||
Convertible Debentures, Derivative Liability | 375,518 | ||||||||||||||
Convertible Debentures, Carrying Value | 1,792,116 | 1,617,715 | |||||||||||||
Amortization of debt issuance costs | 540,041 | ||||||||||||||
Volatility | 49.60% | ||||||||||||||
Risk free interest rate | 1.06% | ||||||||||||||
Dividend rate | 0.00% | ||||||||||||||
Debt for the beneficial conversion feature | 200,000 | 189,687 | |||||||||||||
Sale of common stock price per share | $0.17 | ||||||||||||||
January-March 2015 Unsecured Redeemable Debentures | |||||||||||||||
Convertible Debentures, Initial Discount | 200,000 | ||||||||||||||
Convertible Debentures, Carrying Value | 84,156 | ||||||||||||||
Carrying value of the Series E Debentures | 84,156 | ||||||||||||||
Interest rate | 10.00% | ||||||||||||||
Interest Expense | 2,104 | ||||||||||||||
Amortization of discount | 8,415 | ||||||||||||||
Unmortized discount | 115,844 | ||||||||||||||
Warrants and the debentures fair values | 2,427 | ||||||||||||||
Debt for the beneficial conversion feature | 197,573 | ||||||||||||||
Sale of common stock price per share | $0.15 | ||||||||||||||
January-March 2015 Unsecured Redeemable Debentures | CEO [Member] | |||||||||||||||
Unsecured Redeemable Debenture | 15,000 | ||||||||||||||
January-March 2015 Unsecured Redeemable Debentures | CFO [Member] | |||||||||||||||
Unsecured Redeemable Debenture | 25,000 | ||||||||||||||
November 2014 Convertible Debenture | |||||||||||||||
Convertible Debentures, Carrying Value | 67,373 | 61,913 | 125,000 | 125,000 | 125,000 | ||||||||||
Debenture sold | 112,500 | ||||||||||||||
Maturity date | 6-Nov-17 | ||||||||||||||
Interest Expense | 1,541 | 2,856 | |||||||||||||
Amortization of discount | 8,796 | ||||||||||||||
Unmortized discount | 57,627 | ||||||||||||||
Issuance costs | 10,000 | ||||||||||||||
Restricted common stock issued | 137,500 | ||||||||||||||
Fair value of the conversion option | 66,423 | 66,423 | 66,423 | ||||||||||||
Fair value of restricted stock | 24,750 | 24,750 | 24,750 | ||||||||||||
August 2014 and November Convertible Debentures | |||||||||||||||
Convertible Debentures, Face Value | 350,833 | ||||||||||||||
Convertible Debentures, Carrying Value | 350,833 | ||||||||||||||
Maturity date | 31-Jul-15 | ||||||||||||||
Interest rate | 10.00% | ||||||||||||||
Valuation model used | Black Scholes | ||||||||||||||
Dividend rate | 0.00% | ||||||||||||||
Sale of common stock price per share | $0.20 | ||||||||||||||
Volatility, Minimum | 43.74% | ||||||||||||||
Volatility, maximum | 44.28% | ||||||||||||||
Risk free interest rate, Minimum | 1.62% | ||||||||||||||
Risk free interest rate, Maximum | 1.67% | ||||||||||||||
July 2014 Convertible Notes | |||||||||||||||
Convertible Debentures, Face Value | 52,500 | ||||||||||||||
Convertible Debentures, Carrying Value | 48,697 | ||||||||||||||
Interest rate | 10.00% | ||||||||||||||
Interest Expense | 1,300 | ||||||||||||||
Amortization of discount | 3,607 | ||||||||||||||
Unmortized discount | 3,803 | ||||||||||||||
Valuation model used | Black Scholes | ||||||||||||||
Dividend rate | 0.00% | ||||||||||||||
Debt for the beneficial conversion feature | 6,117 | ||||||||||||||
Volatility, Minimum | 43.99% | ||||||||||||||
Volatility, maximum | 44.08% | ||||||||||||||
Risk free interest rate, Minimum | 1.66% | ||||||||||||||
Risk free interest rate, Maximum | 1.74% | ||||||||||||||
March 2014 Convertible Note | |||||||||||||||
Convertible Debentures, Carrying Value | 100,000 | ||||||||||||||
Maturity date | 24-Sep-14 | ||||||||||||||
Interest rate | 10.00% | ||||||||||||||
Interest Expense | 2,685 | ||||||||||||||
Sale of common stock price per share | $0.17 | ||||||||||||||
Transactions fees to brokers, warrants | 25,000 | ||||||||||||||
Issuance costs | 5,000 | ||||||||||||||
Repurchase of common stock, shares | 101,010 | ||||||||||||||
Repurchase of common stock, value | 10,101 | ||||||||||||||
July Notes Convertible Debenture | |||||||||||||||
Convertible Debentures, Face Value | 23,360 | 197,344 | |||||||||||||
Convertible Debentures, Debt Extinguishment | 6,728 | ||||||||||||||
Convertible Debentures, Carrying Value | 220,031 | 220,031 | |||||||||||||
Net carrying value of outstanding Series A Debentures | 168,815 | ||||||||||||||
Accrued Interest | 117 | ||||||||||||||
Interest rate | 10.00% | ||||||||||||||
Interest Expense | 5,064 | ||||||||||||||
Sale of common stock price per share | $0.40 | ||||||||||||||
November and December 2014 Unsecured Redeemable Debentures | |||||||||||||||
Convertible Debentures, Carrying Value | 72,031 | 145,000 | 145,000 | 145,000 | |||||||||||
Interest rate | 15.00% | ||||||||||||||
Interest Expense | 5,363 | ||||||||||||||
Amortization of discount | 105,757 | ||||||||||||||
Unmortized discount | 39,243 | ||||||||||||||
Valuation model used | Black Scholes | ||||||||||||||
Dividend rate | 0.00% | ||||||||||||||
Debt for the beneficial conversion feature | 137,055 | ||||||||||||||
Volatility, Minimum | 42.31% | ||||||||||||||
Volatility, maximum | 44.28% | ||||||||||||||
Risk free interest rate, Minimum | 1.63% | ||||||||||||||
Risk free interest rate, Maximum | 1.75% | ||||||||||||||
October and November Notes | |||||||||||||||
Convertible Debentures, Face Value | 464,440 | 464,440 | 624,372 | 464,440 | |||||||||||
Convertible Debentures, Debt Extinguishment | 212,261 | 212,261 | 212,261 | ||||||||||||
Convertible Debentures, Carrying Value | 183,412 | 161,932 | 161,932 | 161,932 | |||||||||||
Debentures issued in conversion, cash | 565,372 | ||||||||||||||
Accrued Interest | 51,317 | ||||||||||||||
Maturity date | 30-Nov-14 | ||||||||||||||
Interest rate | 10.00% | ||||||||||||||
Interest Expense | 6,548 | ||||||||||||||
Amortization of discount | 127,193 | ||||||||||||||
Sale of common stock price per share | $0.40 | $0.40 | $0.40 | ||||||||||||
August and September 2012 Notes | |||||||||||||||
Convertible Debentures, Face Value | 330,900 | 330,900 | |||||||||||||
Convertible Debentures, Debt Extinguishment | 56,308 | ||||||||||||||
Accrued Interest | 66,000 | ||||||||||||||
Maturity date | 30-Sep-14 | ||||||||||||||
Interest rate | 10.00% | ||||||||||||||
Amortization of debt issuance costs | 6,602 | ||||||||||||||
Amortization of discount | 38,571 | ||||||||||||||
Valuation model used | Black Scholes | ||||||||||||||
Volatility | 50.50% | ||||||||||||||
Risk free interest rate | 0.22% | ||||||||||||||
Dividend rate | 0.00% | ||||||||||||||
Debt for the beneficial conversion feature | 115,712 | ||||||||||||||
Sale of common stock price per share | $0.40 | ||||||||||||||
Transactions fees to brokers, cash | 30,456 | ||||||||||||||
July to November 2014 Convertible Debentures | |||||||||||||||
Convertible Debentures, Face Value | 763,199 | 763,199 | 763,199 | ||||||||||||
Convertible Debentures, Debt Extinguishment | 271,877 | ||||||||||||||
Debt extinguishment costs | 237,227 | ||||||||||||||
Convertible Debentures, Carrying Value | 743,132 | ||||||||||||||
Debentures Interest expense | 10,797 | ||||||||||||||
Carrying value of the Series D Debentures | 346,415 | ||||||||||||||
Interest rate | 12.00% | ||||||||||||||
Interest Expense | 13,861 | ||||||||||||||
Amortization of discount | 10,797 | ||||||||||||||
Unmortized discount | 13,861 | ||||||||||||||
Valuation model used | Black Scholes | ||||||||||||||
Dividend rate | 0.00% | ||||||||||||||
Debt for the beneficial conversion feature | 126,543 | ||||||||||||||
Volatility, Minimum | 43.63% | ||||||||||||||
Volatility, maximum | 44.28% | ||||||||||||||
Risk free interest rate, Minimum | 1.60% | ||||||||||||||
Risk free interest rate, Maximum | 1.69% | ||||||||||||||
Convertible Promissory Notes [Member] | |||||||||||||||
Convertible Debentures, Face Value | 52,500 | ||||||||||||||
Convertible Debentures, Initial Discount | -14,629 | ||||||||||||||
Convertible Debentures, Accumulated Amortization | 7,218 | ||||||||||||||
Convertible Debentures, Carrying Value | 45,089 | ||||||||||||||
Series A Debentures [Member] | |||||||||||||||
Convertible Debentures, Face Value | 167,540 | ||||||||||||||
Convertible Debentures, Initial Discount | -69,219 | ||||||||||||||
Convertible Debentures, Accumulated Amortization | 69,219 | ||||||||||||||
Convertible Debentures, Carrying Value | 167,540 | ||||||||||||||
Series B Debentures [Member] | |||||||||||||||
Convertible Debentures, Face Value | 161,932 | ||||||||||||||
Convertible Debentures, Initial Discount | -69,135 | -69,135 | |||||||||||||
Convertible Debentures, Accumulated Amortization | 69,135 | 69,135 | |||||||||||||
Convertible Debentures, Debt Extinguishment | 69,135 | ||||||||||||||
Convertible Debentures, Carrying Value | 161,932 | 161,932 | |||||||||||||
Debentures [Member] | |||||||||||||||
Convertible Debentures, Face Value | 1,588,504 | ||||||||||||||
Convertible Debentures, Initial Discount | -623,508 | ||||||||||||||
Convertible Debentures, Accumulated Amortization | 182,017 | ||||||||||||||
Convertible Debentures, Debt Extinguishment | 310,096 | ||||||||||||||
Convertible Debentures, Carrying Value | 1,457,163 | ||||||||||||||
Convertible Debentures [Member] | |||||||||||||||
Convertible Debentures, Face Value | 113,128 | ||||||||||||||
Convertible Debentures, Initial Discount | -66,423 | ||||||||||||||
Convertible Debentures, Accumulated Amortization | 3,336 | ||||||||||||||
Convertible Debentures, Derivative Liability | 65,422 | ||||||||||||||
Convertible Debentures, Carrying Value | 115,463 | ||||||||||||||
Series C Debentures [Member] | |||||||||||||||
Convertible Debentures, Face Value | 350,833 | ||||||||||||||
Convertible Debentures, Initial Discount | -72,869 | -72,869 | |||||||||||||
Convertible Debentures, Accumulated Amortization | |||||||||||||||
Convertible Debentures, Debt Extinguishment | 72,869 | ||||||||||||||
Convertible Debentures, Carrying Value | 350,833 | 350,833 | |||||||||||||
Accrued Interest | 8,771 | ||||||||||||||
Series D Debentures [Member] | |||||||||||||||
Convertible Debentures, Face Value | 763,199 | ||||||||||||||
Convertible Debentures, Initial Discount | -271,878 | -267,285 | |||||||||||||
Convertible Debentures, Accumulated Amortization | 20,790 | 9,992 | |||||||||||||
Convertible Debentures, Debt Extinguishment | 237,227 | ||||||||||||||
Convertible Debentures, Carrying Value | 749,338 | 743,133 | |||||||||||||
Series E Debentures [Member] | |||||||||||||||
Convertible Debentures, Face Value | 145,000 | ||||||||||||||
Convertible Debentures, Initial Discount | -145,000 | -145,000 | |||||||||||||
Convertible Debentures, Accumulated Amortization | 105,757 | 33,725 | |||||||||||||
Convertible Debentures, Carrying Value | $105,757 | $33,725 |
NOTE_6_DERIVATIVES_Details
NOTE 6 - DERIVATIVES (Details) | 3 Months Ended |
Mar. 31, 2015 | |
Assumptions in estimating the fair value of the derivative liabilities | |
Expected Volatility | 49.60% |
Expected Term | 6 years 6 months |
Risk Free Interest Rate | 1.06% |
Dividend Rate | 0.00% |
Issuance Date [Member] | |
Assumptions in estimating the fair value of the derivative liabilities | |
Expected Volatility | 41.50% |
Expected Term | 3 years |
Risk Free Interest Rate | 0.51% |
Dividend Rate | 0.00% |
December 31, 2014 [Member] | |
Assumptions in estimating the fair value of the derivative liabilities | |
Expected Volatility | 44.10% |
Expected Term | 2 years 10 months 6 days |
Risk Free Interest Rate | 1.02% |
Dividend Rate | 0.00% |
March 31, 2015 [Member] | |
Assumptions in estimating the fair value of the derivative liabilities | |
Expected Volatility | 41.40% |
Expected Term | 2 years 7 months 6 days |
Risk Free Interest Rate | 0.89% |
Dividend Rate | 0.00% |
NOTE_6_DERIVATIVES_Details_1
NOTE 6 - DERIVATIVES (Details 1) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Note 6 - Derivatives Details 1 | |
Balance at December 31, 2014 | $65,422 |
Change in fair value | 637 |
Balance at March 31, 2015 | $66,059 |
NOTE_6_DERIVATIVES_Details_Nar
NOTE 6 - DERIVATIVES (Details Narrative) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Derivative liability | $376,155 | $375,518 |
November 2014 Convertible Peak Debenture [Member] | ||
Derivative Liability, Fair Value, Gross Liability | 637 | |
Derivative liability | 66,423 | |
Derivative income | $637 |
NOTE_7_STOCKBASED_COMPENSATION2
NOTE 7 - STOCK-BASED COMPENSATION (Details) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Note 7 - Stock Based Compensation Details | |
Option outstanding, Begining balance | 6,810,766 |
Option Granted | 130,000 |
Option Exercised | 0 |
Option Cancelled | -25,000 |
Option outstanding, Ending balance | 6,915,766 |
Options exercisable at End | 6,813,327 |
Outstanding at Beginning, Weighted-Average Exercise Price | $0.26 |
Weighted- Average Exercise Price, Granted | $0.07 |
Weighted- Average Exercise Price, Exercised | $0 |
Weighted- Average Exercise Price, Cancelled | $0.33 |
Outstanding at Ending, , Weighted-Average Exercise Price | $0.26 |
Weighted- Average exercisable at End | $0.35 |
Weighted- Average Remaining Contractual Term, Beginning balance | 8 years 1 month 10 days |
Weighted- Average Remaining Contractual Term, Granted | 10 years |
Weighted- Average Remaining Contractual Term, Ending Balance | 7 years 11 months 1 day |
Weighted- Average Remaining Contractual Term, exercisable at End | 8 years 26 days |
NOTE_7_STOCKBASED_COMPENSATION3
NOTE 7 - STOCK-BASED COMPENSATION (Details Narrative) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Options Outstanding | 6,915,766 | 6,810,766 |
Exercise price of option granted | $0 | |
Weighted average grant-date fair value of stock options granted | $0.07 | |
Expected Volatility | 49.60% | |
Expected Term | 6 years 6 months | |
Risk Free Interest Rate | 1.06% | |
Dividend Rate | 0.00% | |
Unrecognized stock compensation expense | $119,151 | |
Unrecognized stock compensation expense recognition period | 7 months 28 days | |
Shares Cancelled | 1,000,000 | |
Exercise price | $0.30 | |
Option Granted | 130,000 | |
Mr. Buntzman's | ||
Options Outstanding | 2,500,000 | |
Number of option granted | 4,000,000 | |
Shares Cancelled | 1,500,000 | |
Mr. Buntzman's | Tranche 1 | ||
Shares Cancelled | 500,000 | |
Exercise price | $0.40 | |
Mr. Buntzman's | Tranche 2 | ||
Shares Cancelled | 500,000 | |
Exercise price | $0.60 | |
Mr. Buntzman's | Tranche 3 | ||
Shares Cancelled | 500,000 | |
Exercise price | $0.70 | |
2009 Employee, Director and Consultant Stock Option Plan (the " 2009 Plan") | ||
Number of shares authorized | 5,500,000 | |
Authorized option pool | 1,833,333 | |
Stock option description | Stock options typically vest over a three year period and have a life of ten years from the date granted. | |
Shares available for awards | 1,468,766 | |
2012 Employee, Director and Consultant Stock Option Plan (the "2012 Plan") | ||
Number of shares authorized | 7,500,000 | |
Stock option description | Stock options typically vest over a three year period and have a life of ten years from the date granted. | |
Shares available for awards | 4,553,000 |
NOTE_8_WARRANTS_TO_PURCHASE_CO2
NOTE 8 - WARRANTS TO PURCHASE COMMON STOCK (Details) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Option outstanding, Begining balance | 6,810,766 |
Option Granted | 130,000 |
Option Exercised | 0 |
Option Cancelled | -25,000 |
Option outstanding, Ending balance | 6,915,766 |
Options exercisable at End | 6,813,327 |
Outstanding at Beginning, Weighted-Average Exercise Price | $0.26 |
Weighted- Average Exercise Price, Granted | $0.07 |
Weighted- Average Exercise Price, Exercised | $0 |
Weighted- Average Exercise Price, Cancelled | $0.33 |
Outstanding at Ending, , Weighted-Average Exercise Price | $0.26 |
Weighted- Average exercisable at End | $0.35 |
Weighted- Average Remaining Contractual Term, Beginning balance | 8 years 1 month 10 days |
Weighted- Average Remaining Contractual Term, Granted | 10 years |
Weighted- Average Remaining Contractual Term, Ending Balance | 7 years 11 months 1 day |
Weighted- Average Remaining Contractual Term, exercisable at End | 8 years 26 days |
Warrant [Member] | |
Option outstanding, Begining balance | 17,308,258 |
Option Granted | 326,500 |
Option Exercised | 0 |
Option Cancelled | -826,810 |
Option outstanding, Ending balance | 16,807,948 |
Options exercisable at End | 16,807,948 |
Outstanding at Beginning, Weighted-Average Exercise Price | $0.70 |
Weighted- Average Exercise Price, Granted | $0.17 |
Weighted- Average Exercise Price, Exercised | $0 |
Weighted- Average Exercise Price, Cancelled | $0.97 |
Outstanding at Ending, , Weighted-Average Exercise Price | $0.69 |
Weighted- Average exercisable at End | $0.69 |
Weighted- Average Remaining Contractual Term, Beginning balance | 2 years 15 days |
Weighted- Average Remaining Contractual Term, Granted | 3 years 5 months 27 days |
Weighted- Average Remaining Contractual Term, Ending Balance | 1 year 11 months 23 days |
Weighted- Average Remaining Contractual Term, exercisable at End | 1 year 11 months 23 days |
NOTE_8_WARRANTS_TO_PURCHASE_CO3
NOTE 8 - WARRANTS TO PURCHASE COMMON STOCK (Details Narrative) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Weighted average fair value of the warrants granted | $0.07 |
Warrant [Member] | |
Warrants issued to purchase shares | 326,500 |
Weighted average fair value of the warrants granted | $0.17 |
Warrants expires through | 31-Dec-19 |
Dividend yield | $0 |
Expected life | 3 years |
Warrant [Member] | Minimum [Member] | |
Exercise Price | $0.15 |
Volatility | 43.95% |
Risk-free interest rate | 0.83% |
Warrant [Member] | Maximum [Member] | |
Exercise Price | $0.20 |
Volatility | 45.08% |
Risk-free interest rate | 1.03% |
NOTE_9_STOCKHOLDERS_EQUITY_Det
NOTE 9 - STOCKHOLDER'S EQUITY (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Note 9 - Stockholders Equity Details Narrative | ||
Proceeds from debenture | $200,000 | |
Beneficial conversion features of debenture | $200,000 | $189,687 |
NOTE_10_POTENTIALLY_DILUTIVE_S2
NOTE 10 - POTENTIALLY DILUTIVE SECURITIES (Details) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Total Potentially Dilutive Securities | 46,269,230 | 22,671,841 |
Options [Member] | ||
Total Potentially Dilutive Securities | 6,915,766 | 7,691,773 |
Warrant [Member] | ||
Total Potentially Dilutive Securities | 16,807,948 | 10,971,066 |
Convertible Debt [Member] | ||
Total Potentially Dilutive Securities | 22,545,516 | 4,009,002 |
NOTE_11_COMMITMENTS_AND_CONTIN1
NOTE 11 - COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) | 1 Months Ended | |
Aug. 31, 2013 | Aug. 11, 2013 | |
Note 11 - Commitments And Contingencies Details Narrative | ||
Lease area | 8,713 | |
Lease term | 5 years | |
Lease commenced date | 9-Aug-13 | |
Lease expiration date | 8-Sep-18 | |
Lease rental payments monthly | $10,165 | |
Percentage of increase annually lease rent | 3.00% | |
Cost of premises janitorial service | 5,210 | |
Past due amounts owed | 51,000 | |
Total payments from surrender through the end of the lease | 900,000 | |
Shares issued against options to purchase, shares | 222,100 | |
Shares issued against options to purchase, value | $175,425 | |
Exercise price | $0.35 |
NOTE_12_SUBSEQUENT_EVENTS_Deta
NOTE 12 - SUBSEQUENT EVENTS (Details Narrative) (Subsequent Event [Member], USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Amount borrowed from an accredited investor | $37,000 |
Series E and Series F Debentures [Member] | |
Debentures matured amount | 228,000 |
Issuance of common stock price per share | $0.03 |
Debentures conversion amount | 7,600,000 |
Les Anderton [Member] | |
Amount borrowed from an accredited investor | $25,000 |