Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | |
Dec. 31, 2012 | Jun. 30, 2011 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'CARDIFF INTERNATIONAL INC | ' |
Entity Central Index Key | '0000811222 | ' |
Document Type | '10-K | ' |
Document Period End Date | 31-Dec-12 | ' |
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 | ' | $0 |
Entity Common Stock, Shares Outstanding | 119,151,297 | ' |
Document Fiscal Period Focus | 'FY | ' |
Document Fiscal Year Focus | '2012 | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2012 | Dec. 31, 2011 |
Current assets | ' | ' |
Cash | $1,852 | $8,874 |
Advances to employees | 1,659 | 1,659 |
Total current assets | 3,511 | 10,533 |
Property and equipment, net of accumulated depreciation of $3,969 and $3,626 | 155 | 498 |
Website | 0 | 33,878 |
Patents and trademarks, net of accumulated amortization of $76 | 0 | 607 |
Deposits | 600 | 600 |
Total Assets | 4,266 | 46,116 |
CURRENT LIABILITIES | ' | ' |
Accounts payable and accrued expenses | 784,765 | 841,760 |
Accounts payable, related party | 273,565 | 241,863 |
Interest payable | 1,047,753 | 825,799 |
Accrued payroll taxes | 374,223 | 335,823 |
Settlement payable, shareholder | 50,500 | 52,500 |
Derivative liability | 199,027 | 3,679,746 |
Due to officers | 580,962 | 900,939 |
Note payable, unrelated party | 718,000 | 718,000 |
Convertible notes payable | 501,000 | 450,000 |
Notes payable, related-party - current portion | 19,990 | 24,990 |
Total current liabilities | 4,549,785 | 8,071,420 |
LONG-TERM LIABILITIES | ' | ' |
Notes payable, unrelated-party, net of current portion and discount of $218,758 and $283,758, respectively | 106,242 | 41,242 |
Notes payable, related-party, net of current portion and discount $135,775 and $230,985, respectively | 156,816 | 117,106 |
Total liabilities | 4,812,843 | 8,229,768 |
SHAREHOLDERS' EQUITY (DEFICIT): | ' | ' |
Common stock; 250,000,000 shares authorized with no par value; 119,151,297 and 54,194,408 issued and outstanding at December 31, 2012 and December 31, 2011, respectively | 8,639,161 | 7,472,783 |
Additional paid-in capital | 1,700,214 | 87,762 |
Deficit accumulated during development stage | -15,147,952 | -15,744,197 |
Total shareholders' deficiency | -4,808,577 | -8,183,652 |
Total liabilities and shareholders' deficiency | $4,266 | $46,116 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2012 | Dec. 31, 2011 |
Accumulated depreciation | $3,969 | $3,626 |
Discount on notes payable | 218,758 | 283,758 |
Discount on notes payable, related party | 135,775 | 230,985 |
Common stock, shares authorized | 250,000,000 | 60,000,000 |
Common stock, shares issued | 119,151,297 | 54,194,408 |
Common stock, shares outstanding | 119,151,297 | 54,194,408 |
Patents and Trademarks | ' | ' |
Accumulated amortization | ' | $76 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | 136 Months Ended | |
Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2012 | |
Income Statement [Abstract] | ' | ' | ' |
REVENUE | $839 | $262 | $1,869 |
OPERATING EXPENSES | 820,069 | 1,089,344 | 13,389,660 |
LOSS FROM OPERATIONS | -819,230 | -1,089,082 | -13,387,791 |
OTHER INCOME (EXPENSE) | ' | ' | ' |
Interest income | 0 | 7 | 6,775 |
Sublease rental income | 0 | 0 | 55,979 |
Other miscellaneous income | 0 | 0 | 106,512 |
Change in value of derivative liability | 1,936,878 | -839,167 | 777,654 |
Interest expense | -521,403 | -906,569 | -2,707,081 |
TOTAL OTHER INCOME (EXPENSE) | 1,415,475 | -1,745,729 | -1,760,161 |
NET INCOME (LOSS) FOR THE PERIOD | $596,245 | ($2,834,811) | ($15,147,952) |
INCOME (LOSS) PER COMMON SHARE | ' | ' | ' |
BASIC | $0.01 | ($0.05) | ' |
DILUTED | $0.01 | ($0.05) | ' |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES - BASIC | 72,655,027 | 54,257,476 | ' |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES - DILUTED | 74,941,694 | 54,257,476 | ' |
Consolidated_Statement_of_Shar
Consolidated Statement of Shareholders' Equity (Deficiency) (USD $) | Common Stock | Additional Paid-In Capital | Accumulted Deficit During Exploration | Total |
Beginning balance, value at Aug. 28, 2001 | $0 | ' | ' | $0 |
Beginning balance, shares at Aug. 28, 2001 | 0 | ' | ' | ' |
Common stock issued for cash, shares | 2,066,717 | ' | ' | ' |
Common stock issued for cash, value | 200,833 | ' | ' | 200,833 |
Net loss/ income | ' | ' | 0 | 0 |
Ending balance, value at Dec. 31, 2001 | 200,833 | ' | ' | 200,833 |
Ending balance, shares at Dec. 31, 2001 | 2,066,717 | ' | ' | ' |
Common stock issued for cash, shares | 10,703,678 | ' | ' | ' |
Common stock issued for cash, value | 1,040,129 | ' | ' | 1,040,129 |
Net loss/ income | ' | ' | -1,182,273 | -1,182,273 |
Ending balance, value at Dec. 31, 2002 | 1,240,962 | ' | -1,182,273 | 58,689 |
Ending balance, shares at Dec. 31, 2002 | 12,770,395 | ' | ' | ' |
Common stock issued for cash, shares | 4,846,930 | ' | ' | ' |
Common stock issued for cash, value | 471,000 | ' | ' | 470,000 |
Net loss/ income | ' | ' | -1,608,882 | -1,608,882 |
Ending balance, value at Dec. 31, 2003 | 1,711,962 | ' | -2,791,155 | -1,079,193 |
Ending balance, shares at Dec. 31, 2003 | 17,617,325 | ' | ' | ' |
Net loss/ income | ' | ' | -1,058,911 | -1,058,911 |
Ending balance, value at Dec. 31, 2004 | 1,711,962 | ' | -3,850,066 | -2,138,104 |
Beginning balance, shares at Dec. 31, 2004 | 17,617,325 | ' | ' | ' |
Common stock issued for cash, shares | 561,764 | ' | ' | ' |
Common stock issued for cash, value | 277,000 | ' | ' | 277,000 |
Common stock issued for stock based compensation | ' | 106,839 | ' | 106,839 |
Common stock issued for consideration of loan, shares | 100,000 | ' | ' | ' |
Common stock issued for consideration of loan, value | 110,000 | ' | ' | 110,000 |
Common stock issued for conversion of note, shares | 998,635 | ' | ' | ' |
Common stock issued for conversion of note, value | 1,138,029 | ' | ' | 1,138,029 |
Warrants issued in connection with notes payable | ' | 85,734 | ' | 85,734 |
Recapitalization of common equity | 1,615,000 | ' | ' | ' |
Net loss/ income | ' | ' | -1,668,498 | -1,668,498 |
Ending balance, value at Dec. 31, 2005 | 3,236,991 | 192,573 | -5,518,564 | -2,089,000 |
Ending balance, shares at Dec. 31, 2005 | 20,892,724 | ' | ' | ' |
Common stock issued for cash, shares | 803,179 | ' | ' | ' |
Common stock issued for cash, value | 855,600 | ' | ' | 855,600 |
Common stock issued for stock based compensation | ' | 16,401 | ' | 16,401 |
Common stock issued | 550,000 | ' | ' | ' |
Common stock issued for subscriptions receivable | 428,000 | ' | ' | 428,000 |
Common stock issued for services, shares | 120,000 | ' | ' | ' |
Net loss/ income | ' | ' | -1,280,821 | -1,280,821 |
Ending balance, value at Dec. 31, 2006 | 4,520,591 | 208,974 | -6,799,385 | -2,069,820 |
Ending balance, shares at Dec. 31, 2006 | 22,365,903 | ' | ' | ' |
Common stock issued for cash, shares | 5,704,583 | ' | ' | ' |
Common stock issued for cash, value | 714,100 | ' | ' | 714,100 |
Common stock issued | 166,667 | ' | ' | ' |
Common stock issued for subscriptions receivable | ' | 23,000 | ' | 23,000 |
Common stock issued for services, shares | 40,000 | ' | ' | ' |
Common stock issued for services, value | 10,000 | ' | ' | 10,000 |
Net loss/ income | ' | ' | -788,596 | -788,596 |
Ending balance, value at Dec. 31, 2007 | 5,267,691 | 208,974 | -7,587,981 | -2,111,316 |
Ending balance, shares at Dec. 31, 2007 | 28,277,153 | ' | ' | ' |
Common stock issued for cash, shares | 4,387,500 | ' | ' | ' |
Common stock issued for cash, value | 176,000 | ' | ' | 176,000 |
Common stock issued for subscriptions receivable | 25,000 | ' | ' | 25,000 |
Common stock issued for services, shares | 15,654,650 | ' | ' | ' |
Common stock issued for services, value | 1,453,222 | ' | ' | 1,453,222 |
Common stock issued for settlement of liability, shares | 1,154,380 | ' | ' | ' |
Common stock issued for settlement of liability, value | 130,945 | ' | ' | 130,945 |
Common stock issued for conversion of debt | ' | 150,000 | ' | 150,000 |
Derivative liability | ' | -222,575 | ' | -222,575 |
Net loss/ income | ' | ' | -1,896,782 | -1,896,782 |
Ending balance, value at Dec. 31, 2008 | 7,052,858 | 136,399 | -9,484,763 | -2,295,506 |
Ending balance, shares at Dec. 31, 2008 | 49,473,683 | ' | ' | ' |
Common stock issued for cash, shares | 2,325,834 | ' | ' | ' |
Common stock issued for cash, value | 34,925 | ' | ' | 34,925 |
Derivative liability | ' | -134,110 | ' | -134,110 |
Warrants issued in connection with debt, shares | 4,000,000 | ' | ' | ' |
Warrants issued in connection with debt, value | 137,000 | ' | ' | 137,000 |
Capital contribution from officer, non-cash | ' | 35,711 | ' | 35,711 |
Common stock issued for loan discount on debt, value | ' | 53,629 | ' | 53,629 |
Net loss/ income | ' | ' | -1,135,283 | -1,135,283 |
Ending balance, value at Dec. 31, 2009 | 7,224,783 | 91,629 | -10,620,046 | -3,303,634 |
Ending balance, shares at Dec. 31, 2009 | 55,799,517 | ' | ' | ' |
Common stock issued for cash, shares | 2,244,891 | ' | ' | ' |
Common stock issued for cash, value | 188,000 | ' | ' | 188,000 |
Common stock issued for stock based compensation | ' | 304,350 | ' | 304,350 |
Common stock issued for services, shares | 60,000 | ' | ' | ' |
Common stock issued for services, value | 3,000 | ' | ' | 3,000 |
Common stock issued for settlement of liability, value | ' | 297,664 | ' | 297,664 |
Derivative liability | ' | -1,209,482 | ' | -1,209,482 |
Common stock issued for loan discount on debt, value | ' | 250,000 | ' | 250,000 |
Warrants issued for services | ' | 254,800 | ' | 254,800 |
Net loss/ income | ' | ' | -2,289,340 | -2,289,340 |
Ending balance, value at Dec. 31, 2010 | 7,415,783 | -11,039 | -12,909,386 | -5,504,642 |
Ending balance, shares at Dec. 31, 2010 | 58,104,408 | ' | ' | ' |
Common stock issued for cash, shares | 1,140,000 | ' | ' | ' |
Common stock issued for cash, value | 57,000 | ' | ' | 57,000 |
Fair value of vested stock options | ' | 22,826 | ' | 22,826 |
Common stock issued upon converstion of accrued salaries, value | ' | ' | ' | 0 |
Common stock issued in connection with notes payable, value | ' | ' | ' | 0 |
Derivative liability | ' | -7,480 | ' | -7,480 |
Common stock issued for loan discount on debt, shares | 4,500,000 | ' | ' | ' |
Common stock issued for loan discount on debt, value | ' | 83,455 | ' | 83,455 |
Cancelled and returned shares | -9,550,000 | ' | ' | ' |
Extinguishment of fair value of derivatives | ' | ' | ' | 0 |
Net loss/ income | ' | ' | -2,834,811 | -2,834,811 |
Ending balance, value at Dec. 31, 2011 | 7,472,783 | 87,762 | -15,744,197 | -8,183,652 |
Ending balance, shares at Dec. 31, 2011 | 54,194,408 | ' | ' | ' |
Common stock issued for cash, shares | 10,368,333 | ' | ' | ' |
Common stock issued for cash, value | 163,300 | ' | ' | 163,300 |
Common stock issued for services, shares | 2,902,273 | ' | ' | ' |
Common stock issued for services, value | 139,272 | ' | ' | 139,272 |
Common stock issued upon converstion of accrued salaries, shares | 46,958,514 | ' | ' | ' |
Common stock issued upon converstion of accrued salaries, value | 724,378 | ' | ' | 724,378 |
Common stock issued in connection with notes payable, shares | 1,250,000 | ' | ' | ' |
Common stock issued in connection with notes payable, value | 25,000 | ' | ' | 25,000 |
Extinguishment of fair value of derivatives | ' | 1,578,405 | ' | 1,578,405 |
Common stock issued upon conversion of convertible debenture, shares | 3,477,769 | ' | ' | ' |
Common stock issued upon conversion of convertible debenture, value | 114,428 | 34,047 | ' | 148,475 |
Net loss/ income | ' | ' | 596,245 | 596,245 |
Ending balance, value at Dec. 31, 2012 | $8,639,161 | $1,700,214 | ($15,147,952) | ($4,808,577) |
Ending balance, shares at Dec. 31, 2012 | 119,151,297 | ' | ' | ' |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | 136 Months Ended | |
Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2012 | |
CASH FLOW FROM OPERATING ACTIVITIES | ' | ' | ' |
Net income (loss) | $596,245 | ($2,834,811) | ($15,147,952) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ' | ' | ' |
Depreciation and amortization | 15,752 | 11,571 | 265,935 |
Loss on disposal/writedown of assets | 19,076 | 0 | 20,480 |
Amortization of loan discount | 253,821 | 714,804 | 1,361,337 |
Stock-based compensation | 139,272 | 22,826 | 589,188 |
Change in value of derivative liability | -1,936,878 | 839,167 | -777,654 |
Issuance of common stock for loan costs | 0 | 0 | 110,000 |
Issuance of warrants for services | 0 | 0 | 254,800 |
Issuance of warrants as loan costs | 0 | 0 | 85,734 |
Issuance of common stock for services | 0 | 0 | 1,441,222 |
Gain on settlement of accounts payable | 0 | 0 | -23,435 |
(Increase) decrease in: | ' | ' | ' |
Advances to Employees | 0 | 0 | -1,659 |
Deposits | 0 | 0 | -600 |
Increase (decrease) in: | ' | ' | ' |
Accounts payable and accrued expenses | 13,107 | 258,528 | 1,554,327 |
Accrued officers' salaries | 404,401 | 535,000 | 2,269,401 |
Interest payable | 241,382 | 179,697 | 1,270,540 |
Settlement payable, shareholder | -2,000 | -27,500 | -39,500 |
Net cash used in operating activities | -255,822 | -300,718 | -6,767,836 |
INVESTING ACTIVITIES | ' | ' | ' |
Acquisition of property and equipment | 0 | -43,000 | -241,571 |
Net cash used in investing activities | 0 | -43,000 | -241,571 |
FINANCING ACTIVITIES | ' | ' | ' |
Proceeds from shareholder advances | 0 | 1,350 | 1,463,477 |
Repayments of shareholder advances | 0 | -140,080 | -2,255,051 |
Proceeds from ICE advance | 0 | 0 | 50,000 |
Proceeds from note payable-Legacy Investors | 0 | 0 | 451,428 |
Proceeds from note payable-Maricopa Equity Management | 0 | 0 | 100,000 |
Proceeds from convertible notes payable, related-party | 0 | 0 | 1,283,699 |
Proceeds from note payable, unrelated party | 0 | 335,000 | 385,000 |
Repayments of notes payable, unrelated party | 0 | -10,000 | -10,000 |
Proceeds from note payable, convertible, unrelated-party | 96,000 | 0 | 346,000 |
Proceeds from notes payable, related-party | 0 | 175,000 | 494,990 |
Repayments of notes payable, related-party | -10,500 | -67,500 | -117,410 |
Proceeds from sale of common stock | 163,300 | 57,000 | 4,783,415 |
Write-off of payable | 0 | 0 | 35,711 |
Net cash provided by financing activities | 248,800 | 350,770 | 7,011,259 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | -7,022 | 7,052 | 1,852 |
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 8,874 | 1,822 | 0 |
CASH AND CASH EQUIVALENTS - END OF PERIOD | 1,852 | 8,874 | 1,852 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ' | ' | ' |
Cash paid for interest | 0 | 4,778 | 0 |
Cash paid for taxes | 0 | 0 | 0 |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ' | ' | ' |
Common stock issued upon conversion of accrued salaries | 724,378 | 0 | 724,378 |
Common stock issued in connection with notes payable | 25,000 | 0 | 25,000 |
Common stock issued upon conversion of notes payable | 148,475 | 0 | 148,475 |
Extinguishment of fair value of derivatives | $1,578,405 | $0 | $1,578,405 |
1_SUMMARY_OF_SIGNIFICANT_ACCOU
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||||||||||||||||
Dec. 31, 2012 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||||||||||
Organization and Nature of Operations | |||||||||||||||||
Legacy Card Company was formed as a Limited Liability Company on August 29, 2001. On April 18, 2005, the Company converted from a California Limited Liability Company to a Nevada Corporation. On November 10, 2005, the Company merged with Cardiff International, Inc. (“Cardiff”), a publicly held corporation. The purpose of the Company is to develop a co-marketing agreement with a premier national bank to offer an integrated financial program to consumers. Cardiff International, Inc., is a tech company who has developed a proprietary software system to track and manage consumer purchases from unlimited businesses: service companies, retailers, merchants, health industry, insurance industry, most consumer orientated businesses. Our software infrastructure tracks all commissions, rebates, discounts providing the public the ability to track all savings regardless of what program they participate in as long as the program utilizes the Cardiff technology. | |||||||||||||||||
Cardiff’s first national program launched during the fourth quarter 2011 is “Mission Tuition” a rewards program that helps solve a real need for families – saving for education. The Mission Tuition program is easy to understand and use, and is emotionally positioned to appeal to all consumers. The Mission Tuition Rewards program will become the rewards program of preference for every day spending for families with young children. | |||||||||||||||||
The Mission Tuition program launched during the fourth quarter 2011 but has had no revenues to date. As such, Management has determined to restructure Cardiff International, Inc. into a Holding company by purchasing new companies who meet the following criteria: (1) in business for a minimum of 3 years; (2) profitable; (3) good management team; (4) little to no debt; (5) assets of a minimum of $1,000,000. In addition, we will continue to move forward with Mission Tuition. There are no assurances that such companies will become available to us for purchase or that we will be able to obtain necessary financing. | |||||||||||||||||
Development Stage Activities | |||||||||||||||||
The Company is a development stage enterprise. All losses accumulated since the inception of the Company have been considered as part of the Company’s development stage activities. | |||||||||||||||||
Going Concern | |||||||||||||||||
The accompanying financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The Company is in the development stage and as such has sustained operating losses since its inception and has negative working capital, a shareholders’ deficiency and accumulated deficit. | |||||||||||||||||
These factors raise substantial doubts about the Company’s ability to continue as a going concern. Specifically, the Company has cumulated net losses from inception (August 29, 2001) of $15,147,952 and has used cash of $6,767,836 in operating the Company during this same period. As of December 31, 2012, the Company had a shareholders’ deficiency of $4,808,577, was delinquent in payroll taxes of $374,223 and significant amount of debt was in default. The accompanying financial statements do not reflect any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classifications of liabilities that might result if the Company is unable to continue as a going concern. | |||||||||||||||||
The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, additional cash infusions. Management has prospective investors and believes the raising of capital will allow the Company to pursue the development of its credit card business. There can be no assurance that we will be able to obtain sufficient capital from debt or equity transactions or from operations in the necessary time frame or on terms acceptable to us. Should we be unable to raise sufficient funds, we may be required to curtail our operating plans and possibly relinquish rights to portions of our technology or products. In addition, increases in expenses or delays in product development may adversely impact our cash position and may require cost reductions. No assurance can be given that we will be able to operate profitably on a consistent basis, or at all, in the future. Should the Company not be able to raise sufficient funds, it may cease their operations. | |||||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||
The Company considers all highly liquid investments with an original maturity of three (3) months or less to be cash equivalents. | |||||||||||||||||
Advertising | |||||||||||||||||
Advertising costs are charged to expense when incurred. During the year ended December 31, 2012 and 2011, the amount charged to expense was $5,220 and $20,929, respectively. From inception (August 29, 2001) through December 31, 2012, advertising costs was $605,554. | |||||||||||||||||
Revenue Recognition | |||||||||||||||||
The Company recognizes revenue on an accrual basis. Revenue is generally realized or realizable and earned when all of the following criteria are met: 1) persuasive evidence of an arrangement exists between the Company and our customer(s); 2) services have been rendered; 3) our price to our customer is fixed or determinable; and 4) collectability is reasonably assured. | |||||||||||||||||
Use of Estimates | |||||||||||||||||
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Management uses its historical records and knowledge of its business in making estimates. Accordingly, actual results could differ from those estimates. | |||||||||||||||||
Valuation of Derivative Instruments | |||||||||||||||||
FASB ASC 815-10, Derivatives and Hedging, requires that embedded derivative instruments be bifurcated and assessed, along with free-standing derivative instruments such as warrants, on their issuance date to determine whether they would be considered a derivative liability and measured at their fair value for accounting purposes. Prior to July 12, 2012, the Company did not have enough authorized shares to issue common shares resulting in the potential exercise or conversion of its issued and outstanding options/warrants and convertible notes, respectively. Accordingly, these instruments were reflected as derivative liabilities for the period ended June 30, 2012 and prior. In July 2012, the Company was successful in increasing the number of authorized shares in the corporate treasury effectively eliminating the majority of the derivative liability. As such derivative liabilities with a fair value of $1,578,405 on July 12, 2012 related to equity investments were extinguished and accounted for as additional paid in capital. In determining the appropriate fair value, the Company uses a weighted average Black-Scholes pricing model. At December 31, 2012 and 2011, the Company adjusted its derivative liability to its fair value and reflected the (increase) decrease in fair value for the years ended December 31, 2012 and 2011, of $1,936,878 and ($839,167), respectively, as other income on the Consolidated Statement of Operations. | |||||||||||||||||
Fair Value Measurements | |||||||||||||||||
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: | |||||||||||||||||
Level Input | Input Definition | ||||||||||||||||
Level 1 | Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date. | ||||||||||||||||
Level 2 | Inputs, other than quoted prices included in Level 1, that are observable for the asset or liability through corroboration with market data at the measurement date. | ||||||||||||||||
Level 3 | Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. | ||||||||||||||||
The following table presents certain investments and liabilities of the Company’s financial assets measured and recorded at fair value on the Company’s balance sheets on a recurring basis and their level within the fair value hierarchy as of December 31, 2012 and 2011. | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Fair value of Derivative Liability – December 31, 2012 | $ | – | $ | – | $ | 199,027 | $ | 199,027 | |||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Fair value of Derivative Liability – December 31, 2011 | $ | – | $ | – | $ | 3,679,746 | $ | 3,679,746 | |||||||||
Stock Based Compensation | |||||||||||||||||
The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date. | |||||||||||||||||
Property and Equipment | |||||||||||||||||
Property and equipment are carried at cost. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation and amortization of property and equipment is provided using the straight-line method for financial reporting purposes at rates based on the following estimated useful lives: | |||||||||||||||||
Classification | Useful Life | ||||||||||||||||
Computer equipment | 3 Years | ||||||||||||||||
Website design | 3 Years | ||||||||||||||||
Patents and trademarks | 15 Years | ||||||||||||||||
During the year ended December 31, 2012 and 2011, depreciation and amortization expense was $15,752 and $11,571 respectively. During the year ended December 31, 2012, the Company determined that the value of its website design and patents and trademarks had been impaired and wrote down the value of these assets in the amount of $19,076. | |||||||||||||||||
Income Taxes | |||||||||||||||||
The Company was treated as a partnership for federal income tax purposes up to April 18, 2005, when it converted to a Nevada Corporation. Consequently, federal income taxes were not payable by, or provided for, the Company. Members were taxed individually on their shares of the Company’s earnings. The Company’s net income or loss was allocated among the members in accordance with the regulations of the Company since April 18, 2005, when the Company was incorporated, the Company accounts for income taxes under the liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes, if any, represents the tax payable for the period and the change during the period in deferred tax assets and liabilities. | |||||||||||||||||
Earnings (Loss) per Share | |||||||||||||||||
FASB ASC Subtopic 260, Earnings Per Share, provides for the calculation of "Basic" and "Diluted" earnings per share. Basic earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, warrants, and debts convertible into common shares. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per common share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s common stock can result in a greater dilutive effect from potentially dilutive securities. | |||||||||||||||||
The following table sets forth the computation of basic and diluted earnings per common share for the years ended December 31, 2012 and 2011. During a period of net loss, all potentially dilutive securities are antidilutive. Accordingly, for the year ended December 31, 2011, potentially dilutive securities have been excluded from the computations since they would be antidilutive. However, these dilutive securities could potentially dilute earnings per share in the future: | |||||||||||||||||
Year | Year | ||||||||||||||||
Ended | Ended | ||||||||||||||||
31-Dec-12 | 31-Dec-11 | ||||||||||||||||
Numerator: | |||||||||||||||||
Net income (loss) | $ | 596,245 | $ | (2,834,811 | ) | ||||||||||||
Interest on convertible notes | 185,798 | 191,765 | |||||||||||||||
Net income available for common shareholders | 782,043 | (2,643,046 | ) | ||||||||||||||
Denominator: | |||||||||||||||||
Weighted-average shares outstanding | 72,655,027 | 54,257,476 | |||||||||||||||
Effect of dilutive securities | 2,286,667 | – | |||||||||||||||
Weighted-average diluted shares outstanding | 74,941,694 | 54,257,476 | |||||||||||||||
Basic earnings (loss) per share | $ | 0.01 | $ | (0.05 | ) | ||||||||||||
Diluted earnings (loss) per share | $ | 0.01 | $ | (0.05 | ) | ||||||||||||
Principles of Consolidation | |||||||||||||||||
The consolidated financial statements include the accounts of Cardiff International, Inc. and its wholly owned subsidiary, Legacy Card Company. All significant intercompany accounts and transactions are eliminated in consolidation. | |||||||||||||||||
Recently Issued Accounting Pronouncements | |||||||||||||||||
The Company has evaluated all of the recent accounting pronouncements through the filing date of these financial statements and feels that none of them will have a material effect on the Company’s interim financial statements. |
2_RELATED_PARTY_TRANSACTIONS
2. RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2012 | |
Related Party Transactions [Abstract] | ' |
RELATED PARTY TRANSACTIONS | ' |
Due to Officers | |
The Company borrows funds from Daniel Thompson who is a Shareholder and Officer of the Company. The terms of repayment stipulate the loans are due twenty-four (24) months after the launch of the Legacy Tuition Card (or prior to such date) at an annual interest rate of six (6) percent. In addition, the Company has an employment agreement with Daniel Thompson whereby the Company provides for compensation of $25,000 per month. A total salary of $300,000 and $300,000 was accrued and reflected as an expense to Daniel Thompson during the years ended December 31, 2012 and 2011, respectively. The total balance due to Daniel Thompson for accrued salaries, advances, and accrued interest, at December 31, 2012 and 2011, was $281,462 and $485,939, respectively. | |
The Company has an employment agreement with the Company President whereby the Company provides for compensation of $15,000 per month. A total salary of $180,000 and $180,000 was accrued and reflected as an expense during the years ended December 31, 2012 and 2011, respectively. The total balance due to the President for accrued salaries at December 31, 2012 and 2011, was $244,500 and $360,000, respectively. | |
The total balance due others for accrued salaries at December 31, 2012 and 2011, was $55,000 and $55,000, respectively. | |
Accounts Payable- Related Party | |
At December 31, 2012 and 2011 the Company had amounts payable to a related party of $273,565 and $241,863, respectively, for professional services rendered. | |
Notes Payable – Related Party | |
The Company has entered into several loan agreements with related parties (see note 3). |
3_NOTES_PAYABLE
3. NOTES PAYABLE | 12 Months Ended | ||||||||
Dec. 31, 2012 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
NOTES PAYABLE | ' | ||||||||
Legacy Investors, LLC | |||||||||
On August 5, 2004, the Company entered into a loan agreement with Legacy Investors, LLC, a Florida limited liability company. The initial loan amount of $1,000,000 (the “Initial Loan Amount”) was made by Legacy Investors, LLC upon the satisfaction of the post-closing covenant, comprised of a convertible debenture in the amount of $500,000 and an initial debenture for the amount of $500,000. Legacy Investors, LLC required funds to be deposited into an escrow account. Disbursements were required to be from an escrow agent. The convertible debenture and initial debentures bear interest at 10.00% per year and matured in August 2006. The indebtedness was convertible into Series A Preferred Membership interests of the Company. This loan is secured by all assets of the Company. | |||||||||
During 2004, Legacy Card Company received $451,428, assumed $106,572 of fees, and the balance of $442,000 was deposited in an escrow account. In May 2005, $382,000 was paid back to Legacy Investors, LLC and $60,000 of fees was left with the escrow agent. During 2008, an additional $100,000 was repaid by an officer on behalf of the Company. The balance on the note payable was $518,000 at December 31, 2012 and 2011, of which a portion is convertible into shares of the Company’s common stock at a conversion price of $0.03 per share. | |||||||||
Under an event of default, the interest rate on both debentures increases to 18% and the terms of repayment and the maturity dates are subject to change. The Company is in default under the terms of the loan agreement and continues to accrue interest on the outstanding principal balance. | |||||||||
Maricopa Equity Management Corporation | |||||||||
On October 27, 2005, the Company entered into a loan agreement in the amount of $100,000 with Maricopa Equity Management Corporation. The loan bears interest at 8% per annum and became due at the closing of the merger with Cardiff International, Inc. In connection with the loan, the Company issued 100,000 shares of common stock in 2005. The balance on the loan was $100,000 at December 31, 2012 and 2011. The Company is in default on this loan agreement. | |||||||||
International Card Establishment, Inc. | |||||||||
The Company entered into an agreement with International Card Establishment, Inc. (“ICE”) on April 19, 2007 whereby ICE will be the exclusive provider for the rewards and loyalty programs related to merchant contributions to a 529 College Savings Plan. | |||||||||
In connection with the agreement, the Company received a $50,000 advance from ICE during the second quarter of 2008. This advance is to be repaid within 120 days of written notice by ICE if the Company launches the card in a test market and the results of that test launch prove to be unsuccessful. If the Company fails to make the required payment within 120 days, the Company will be granted an additional 30 day period to remedy the default. If the Company does not remedy the default within this 30 day period, ICE may, at its discretion, convert the $50,000 debt to equity equaling 10% of the outstanding stock of the Company on a fully diluted basis. | |||||||||
Also, if ICE determines that the test launch was successful, ICE shall obtain up to three (3) $500,000 loan facilities for the Company within five (5) business days of the successful completion of the test launch. The Company will be required to repay the $50,000 advance directly from the loan proceeds. Upon receipt of each of the $500,000 loan facilities, the Company shall issue ICE a warrant to purchase three and one-third percent (3 1/3%) of the Company’s outstanding common stock on a fully diluted basis as of the date of issuance. Each warrant shall have an exercise price equal to $200,000 and shall have a five (5) year term from the issuance date. | |||||||||
In conjunction with the Loan, the Company issued 1,500,000 warrants to purchase its common stock, exercisable at $0.20 per share and expire June 2, 2014. As a result of the warrants issued, the Company recorded $13,639 debt discount during 2009. | |||||||||
All warrants will have a cashless exercise provision and shall entitle ICE to one (1) demand registration right for each warrant, at the Company’s expense. | |||||||||
The balance outstanding on the advance from ICE at December 31, 2012 and 2011 was $50,000. | |||||||||
Other | |||||||||
On June 2, 2009, the Company entered into a Loan Agreement with an unrelated party for $50,000. The note is non-interest bearing and matured on September 2, 2009. In conjunction with the Loan, the Company issued 1,500,000 warrants to purchase its common stock, exercisable at $0.20 per share and expire June 2, 2014. The Company is in default on this Preferred Debenture, the warrants have not been exercised. The balance of the note, net of discount was $50,000 at December 31, 2012 and 2011. The Company is in renegotiations with this lender. | |||||||||
On February 8, 2011, the Company entered into an unsecured Promissory Note agreement with an unrelated party for $200,000. The Note bears interest at 8% per year and matures on February 8, 2016. Interest is payable annually on the anniversary of the Note, and the principal and any unpaid interest will be due upon maturity. In conjunction with the Note, the Company issued 10,000,000 shares of its common stock to the lender. As a result of the shares issued with the Note, the Company recorded a $200,000 debt discount during 2011. The balance of the note, net of discount was $75,600 and $35,600 at December 31, 2012 and 2011, respectively. | |||||||||
On May 10, 2011, the Company entered into a Promissory Note agreement with an unrelated party for $25,000. The Note bears interest at 8% per year and matures on May 10, 2016. Interest is payable annually on the anniversary of the Note, and the principal and any unpaid interest will be due upon maturity. In conjunction with the Note, the Company issued 1,250,000 shares of its common stock to the lender. As a result of the shares issued in conjunction with the note, the Company recorded a $25,000 debt discount during 2011. The balance of the note, net of discount was $8,200 and $3,200 at December 31, 2012 and 2011, respectively. | |||||||||
On September 30, 2011, the Company entered into a Promissory Note agreement with an unrelated party for $25,000. The Note bears interest at 8% per year and matures on October 1, 2016. Interest is payable annually on the anniversary of the Note, and the principal and any unpaid interest will be due upon maturity. In conjunction with the Note, the Company issued 1,250,000 shares of its common stock to the lender. As a result of the shares issued in conjunction with the note, the Company recorded a $25,000 debt discount during 2011. The balance of the note, net of discount was $6,250 and $1,250 at December 31, 2012 and 2011, respectively. | |||||||||
On November 1, 2011, the Company entered into a Promissory Note agreement with an unrelated party for $75,000. The Note bears interest at 8% per year and matures on November 1, 2016. Interest is payable annually on the anniversary of the Note, and the principal and any unpaid interest will be due upon maturity. In conjunction with the Note, the Company issued 3,750,000 shares of its common stock to the lender. As a result of the shares issued in conjunction with the note, the Company recorded a $75,000 debt discount during 2011. The balance of the note, net of discount was $16,192 and $1,192 at December 31, 2012 and 2011, respectively. | |||||||||
Notes payable at December 31, 2012 and 2011 are summarized as follows: | |||||||||
December 31, | December 31, | ||||||||
2012 | 2011 | ||||||||
Legacy Investors, LLC | $ | 518,000 | $ | 518,000 | |||||
Maricopa Equity | 100,000 | 100,000 | |||||||
International Card Establishment, Inc. | 50,000 | 50,000 | |||||||
Other | 375,000 | 375,000 | |||||||
Discount on notes | (218,758 | ) | (283,758 | ) | |||||
Total | $ | 824,242 | $ | 759,242 | |||||
Current portion | (718,000 | ) | (718,000 | ) | |||||
Long-term portion | $ | 106,242 | $ | 41,242 | |||||
4_CONVERTIBLE_NOTES_PAYABLE
4. CONVERTIBLE NOTES PAYABLE | 12 Months Ended | ||||||||
Dec. 31, 2012 | |||||||||
Convertible Notes Payable [Abstract] | ' | ||||||||
CONVERTIBLE NOTES PAYABLE | ' | ||||||||
Some of the Convertible Notes issued as described below included an anti-dilution provision that allowed for the adjustment of the conversion price. The Company considered the current Financial Accounting Standards Board guidance of “Determining Whether an Instrument Indexed to an Entity’s Own Stock” which indicates that the instrument is not indexed to the issuers own stock. Accordingly, the Company determined that as the conversion price of the Notes issued in connection therewith could fluctuate based future events, such prices were not fixed amounts. As a result, the Company determined that the conversion features of the Notes issued in connection therewith are not considered indexed to the Company’s own stock and characterized the value of the conversion feature of such notes as derivative liabilities upon issuance. | |||||||||
Convertible Notes Payable – Unrelated Party | |||||||||
On June 3, 2010, the Company entered into an unsecured Convertible Promissory Note agreement with an unrelated party for $250,000. The Note bears interest at 8% per year and matured on June 3, 2011. The Note is convertible into the Company’s common shares at $0.08 per share. In conjunction with this loan, the Company issued warrants to purchase 5,000,000 shares of its common stock, exercisable at $0.08 per share, which expires on June 3, 2015. As a result of issued warrants, the Company recorded a $250,000 debt discount during 2009 that was fully amortized in 2011. As of December 31, 2012, the Company is in default on this Preferred Debenture and the warrants have not been exercised. The balance of the note, net of discount was $250,000 at December 31, 2012 and 2011. | |||||||||
On March 15, 2012, the Company entered into an unsecured Convertible Promissory Note agreement with an unrelated party for $50,000. The Note bears interest at 8% per year and matures on December 19, 2012. The Note and any accrued and outstanding interest is convertible into the Company’s common shares at a discount of 42% of the lowest three (3) Trading Prices for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. During the year ended December 31, 2012, $10,000 of this note was converted into 1,388,889 shares of common stock. The balance of the note was $40,000 at December 31, 2012. | |||||||||
On March 29, 2012, the Company entered into a Loan Agreement with an unrelated party for $25,000. The Note bears interest at 6% per year and matured on September 29, 2012. In conjunction with the Loan, the Company agreed to issue 1,250,000 shares of common stock that was recorded as a discount of $25,000 and fully amortized in 2012. The balance of the note was $25,000 at December 31, 2012. | |||||||||
On May 4, 2012, the Company entered into an unsecured Convertible Promissory Note agreement with an unrelated party for $21,000. The Note bears interest at 8% per year and matures on February 4, 2013. The Note and any accrued and outstanding interest is convertible into the Company’s common shares at a discount of 42% of the lowest three (3) Trading Prices for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. The balance of the note was $21,000 at December 31, 2012. | |||||||||
Convertible Note Payable – Related Party | |||||||||
On April 21, 2008, the Company entered into a Convertible Debenture with a shareholder in the amount of $150,000. The Debenture is convertible into common shares of the Company at $0.03 per share at the option of the holder no earlier than August 21, 2008. The Debenture bears interest at 12% per year, matured in August 2009, and is unsecured. All principal and unpaid accrued interest is due at maturity. In conjunction with the Convertible Debenture, the company also issued warrants to purchase 5,000,000 shares of the Company’s common stock at $0.03 per share. The warrants expire on April 20, 2013. As a result of issued warrants, the Company recorded a $150,000 debt discount during 2008 which has been fully amortized. The Company is in default on this Convertible Debenture, the warrants have not been exercised. The balance of the note was $150,000 at December 31, 2012 and 2011. | |||||||||
On March 11, 2009, the Company entered into a Convertible Debenture with a shareholder in the amount of $15,000. The Debenture is convertible into common shares of the Company at $0.03 per share at the option of the holder. The Debenture bears interest at 12% per year, matures March 11, 2014, and is unsecured. All principal and unpaid accrued interest is due at maturity. The balance of the note was $15,000 at December 31, 2012 and 2011. | |||||||||
On April 29, 2009, the Company entered into an unsecured Convertible Debenture agreement with a shareholder in the amount of $35,000. The Debenture was convertible into common shares of the Company at $0.08 per share at the option of the holder no earlier than August 21, 2009. The Debenture bore interest at 12% per year, matured on April 29, 2011, and was unsecured. All principal and unpaid accrued interest was due at maturity. During the year ended December 31, 2012, $35,000 of this note was converted into 860,127 shares of common stock. The balance of the note was $0 and $35,000 at December 31, 2012 and 2011, respectively. | |||||||||
Convertible notes at December 31, 2012 and 2011 are summarized as follows: | |||||||||
December 31, | December 31, | ||||||||
2012 | 2011 | ||||||||
Unrelated party | $ | 336,000 | $ | 250,000 | |||||
Related party | 165,000 | 200,000 | |||||||
Total - current | $ | 501,000 | $ | 450,000 |
5_NOTES_PAYABLE_RELATED_PARTY
5. NOTES PAYABLE - RELATED PARTY | 12 Months Ended | ||||||||
Dec. 31, 2012 | |||||||||
Notes Payable - Related Party | ' | ||||||||
NOTES PAYABLE - RELATED PARTY | ' | ||||||||
On March 12, 2009, the Company entered into a Preferred Debenture agreement with a shareholder for $20,000. The note bears interest at 12% per year and matured on September 12, 2009. In conjunction with the Preferred Debenture, the Company issued 2,000,000 warrants to purchase its common stock, exercisable at $0.10 per share and expire March 12, 2014. As a result of the warrants issued, the Company recorded a $20,000 debt discount during 2009. The Company assigned all of its receivables from consumer activations of the rewards program as collateral on this debenture. On March 24, 2011, the Company amended the note and the principal balance was reduced to $15,000. The Company is due to pay annual principal payments of $5,000 plus accrued interest beginning March 12, 2012. On July 20, 2011 the Company repaid $5,000 of the note. As of December 31, 2012, the warrants have not been exercised. As of December 31, 2012, the Company is in default on this Debenture Agreement. The balance of the note was $10,000 and $15,000 at December 31, 2012 and 2011, respectively. | |||||||||
On April 27, 2009, the Company entered into a Preferred Debenture agreement with a shareholder for $19,990. The note bears interest at 12% per year and matured on October 27, 2009. In conjunction with the Preferred Debenture, the Company issued 2,000,000 warrants to purchase its common stock exercisable at $0.10 per share and expire on April 27, 2014. As a result of the warrants issued, the Company recorded a discount of $19,990 during 2009 which has been fully amortized. The Company assigned all of its receivables from consumer activations of the rewards program as collateral on this debenture. The Company is in default on this Preferred Debenture and the warrants have not been exercised. The balance of the note, net of discount was $19,990 at December 31, 2012 and 2011. | |||||||||
On October 8, 2009, the Company entered into a Preferred Debenture agreement with an individual who is a shareholder and employee of the Company for $250,000. The Debenture bears interest at 7% per year and matures on October 1, 2014, and is unsecured. Monthly interest-only payments are due from November 1, 2009 through October 1, 2014. The principal and interest balances are due upon maturity, however, prepayments are allowed. In conjunction with the Debenture, the Company will issue 2,500,000 shares of its common stock to this lender, to be distributed at 500,000 shares per year for five years commencing October 1, 2009. As of December 31, 2012, the Company has distributed 500,000 shares and is due to distribute the remaining 2,000,000 shares of its common stock to the lender. As a result of the 2,500,000 shares, the Company recorded a discount of $250,000 during 2009. As of December 31, 2012 and 2011, principal balance of the note was $157,590 and $163,090, respectively. As of December 31, 2012 and 2011, balance of the note net of discount was $113,840 and $94,340, respectively. | |||||||||
On March 10, 2011, the Company entered into a Promissory Note agreement with a shareholder for $25,000. The Note bears interest at 8% per year and matures on March 10, 2015. Interest is payable annually on the anniversary of the Note, and the principal and any unpaid interest will be due upon maturity. In conjunction with the Note, the Company issued 1,250,000 shares of its common stock to the lender. As a result of the issuance of these shares, the Company recorded a debt discount of $25,000 during 2011. The balance of the note, net of discount was $9,050 and $4,050 at December 31, 2012 and 2011, respectively. | |||||||||
During July 2011, the Company entered into a Promissory Note agreement with a related party for $50,000. The Note bears interest at 8% per year and matures on May 16, 2016. Interest is payable annually on the anniversary of the Note, and the principal and any unpaid interest will be due upon maturity. In conjunction with the Note, the Company issued 3,500,000 shares of its common stock to the lender. As a result of the of the shares issued in conjunction with the note, the Company recorded a $50,000 debt discount during 2011. The Company has not distributed these shares to the lender, therefore, these shares are not in equity and have been included in the calculation of the derivative liability at December 31, 2012. During the year ended December 31, 2012, $50,000 of this note was converted into 1,228,753 shares of common stock. The balance of the note, net of discount was $0 and $4,790 at December 31, 2012 and 2011, respectively. | |||||||||
On September 7, 2011, the Company entered into a Promissory Note agreement with a related party for $50,000. The Note bears interest at 8% per year and matures on September 7, 2016. Interest is payable annually on the anniversary of the Note, and the principal and any unpaid interest will be due upon maturity. In conjunction with the Note, the Company issued 2,500,000 shares of its common stock to the lender. As a result of the shares issued in conjunction with the note, the Company recorded a $50,000 debt discount during 2011. The balance of the note, net of discount was $13,130 and $3,130 at December 31, 2012 and 2011, respectively. | |||||||||
On November 17, 2011, the Company entered into a Promissory Note agreement with a related party for $50,000. The Note bears interest at 8% per year and matures on November 17, 2016. Interest is payable annually on the anniversary of the Note, and the principal and any unpaid interest will be due upon maturity. In conjunction with the Note, the Company issued 2,500,000 shares of its common stock to the lender. As a result of the shares issued in conjunction with the note, the Company recorded a $50,000 debt discount during 2011. The Company has not distributed these shares to the lender, therefore, these shares are not in equity and have been included in the calculation of the derivative liability at December 31, 2012. The balance of the note, net of discount was $10,795 and $795 at December 31, 2012 and 2011, respectively. | |||||||||
Notes payable – related party at December 31, 2012 and 2011 are summarized as follows: | |||||||||
December 31, | December 31, | ||||||||
2012 | 2011 | ||||||||
Total principal balance | $ | 312,581 | $ | 373,081 | |||||
Discount on notes | (135,775 | ) | (230,985 | ) | |||||
176,806 | 142,096 | ||||||||
Current portion | (19,990 | ) | (24,990 | ) | |||||
Long-term portion | $ | 156,816 | $ | 117,106 | |||||
6_DERIVATIVE_LIABILITY
6. DERIVATIVE LIABILITY | 12 Months Ended | ||||
Dec. 31, 2012 | |||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||
DERIVATIVE LIABILITY | ' | ||||
In April 2008, the FASB issued a pronouncement that provides guidance on determining what types of instruments or embedded features in an instrument held by a reporting entity can be considered indexed to its own stock for the purpose of evaluating the first criteria of the scope exception in the pronouncement on accounting for derivatives. This pronouncement was effective for financial statements issued for fiscal years beginning after December 15, 2008. The adoption of these requirements can affect the accounting for warrants and many convertible instruments with provisions that protect holders from a decline in the stock price (or “down-round” provisions). For example, warrants with such provisions will no longer be recorded in equity. Down-round provisions reduce the exercise price of a warrant or convertible instrument if a company either issues equity shares for a price that is lower than the exercise price of those instruments or issues new warrants or convertible instruments that have a lower exercise price. | |||||
The Company evaluated whether convertible debt and warrants to acquire stock of the Company contain provisions that protect holders from declines in the stock price or otherwise could result in modification of the exercise price under the respective convertible debt and warrant agreements. The Company determined that the notes and the conversion notes of certain notes contained such provisions and recorded such instruments as derivative liabilities upon issuance. In addition, in periods prior to July 1, 2012, the Company did not have enough authorized shares to issue common shares resulting in the potential exercise or conversion of its issued and outstanding options, warrants or convertible notes. Accordingly, these instruments were reflected as derivative liabilities as of June 30, 2012 and prior. In July 2012, the Company was successful in increasing the number of authorized shares in the corporate treasury effectively eliminating the majority of the derivative liability. | |||||
Derivative liabilities were valued using the weighted-average Black-Scholes-Merton option pricing model, which approximates the Monte Carlo and other binomial valuation techniques, with the following assumptions: | |||||
31-Dec-12 | 31-Dec-11 | ||||
Conversion feature: | |||||
Risk-free interest rate | 0.01% to 0.27% | 0.25% | |||
Expected volatility | 100% | 100% | |||
Expected life (in years) | 0 -2 years | 2 years | |||
Expected dividend yield | 0% | 0% | |||
Warrants: | |||||
Risk-free interest rate | – | 0.88% | |||
Expected volatility | – | 100% | |||
Expected weighted average life (in years) | – | 0.1 to 5 years | |||
Expected dividend yield | – | 0% | |||
Fair Value : | |||||
Conversion feature | $199,027 | $291,163 | |||
Warrants | – | 3,388,583 | |||
$199,027 | $3,679,746 | ||||
The risk-free interest rate was based on rates established by the Federal Reserve Bank. The Company based the expected volatility assumption on a volatility index of peer companies as the Company did not have sufficient market information to estimate the volatility of its own stock, and the expected life of the instruments is determined by the expiration date of the instrument. The expected dividend yield was based on the fact that the Company has not paid dividends to common stockholders in the past and does not expect to pay dividends to common stockholders in the future. | |||||
The Company determined the fair value of the derivative liabilities related to debt instruments to be $3,679,746 as of December 31, 2011. During the year ended December 31, 2012, the Company recorded a gain for the change in fair value of derivative liabilities of $1,936,878 which is recorded in the accompanying statement of operations for the year then ended. Also in 2012, the completion of the increase in the number of authorized shares resulted in the extinguishment of the derivatives of $1,578,405 pertaining to warrants and options. As the warrants and options are related to equity instruments, the extinguishment of derivative liabilities was recorded as an increase in additional paid in capital. The fair value of the derivative liabilities was determined to be $199,027 at December 31, 2012. |
7_COMMITMENTS_AND_CONTINGENCIE
7. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2012 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
COMMITMENTS AND CONTINGENCIES | ' |
Operating Leases | |
There was no rent expense for the years ended December 31, 2012 and 2011 as such office space was contributed at no cost from the Company President. From inception (August 29, 2001) through December 31, 2012, rent expense was $514,936. | |
Payroll Taxes | |
The Company has failed to remit payroll tax payments since 2006, as required by various taxing authorities. When payment is ultimately made management believes that the Company will be assessed various penalties for the delayed payments. As of December 31, 2012 and 2011, to the Company estimates the amount of taxes, interest, and penalties that the Company would incur as a result of these unpaid taxes to be $374,223 and $335,823, respectively. |
8_INCOME_TAXES
8. INCOME TAXES | 12 Months Ended |
Dec. 31, 2012 | |
Income Tax Disclosure [Abstract] | ' |
8. INCOME TAXES | ' |
At December 31, 2012, the Company has net operating loss carryforwards available for federal tax purposes. Because of statutory “ownership changes” the amount of net operating losses which may be utilized in future years are subject to significant annual limitations. The Company also has operating loss carryforwards available for state tax purposes. At December 31, 2012 the Company has approximately $11,387,162, of state NOL carryforwards that expire through 2031. At December 31, 2011 the Company has approximately $11,493,162 in Federal NOL carryforwards that expire through 2031. | |
As of December 31, 2012 and 2011, total deferred income tax assets consist principally of net operating loss carryforwards which have been fully reduced by a valuation allowance due to the uncertainty surrounding their ultimate realization. | |
The Company has adopted guidance issued by the Financial Accounting Standards Board (“FASB”) that clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold of more likely than not and a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, a company must determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position and must assume that the tax position will be examined by taxing authorities. Our policy is to include interest and penalties related to unrecognized tax benefits in income tax expense. There were no interest and penalties for the years ended December 31, 2011 and 2010, respectively. The Company files income tax returns with the Internal Revenue Service (“IRS”) and various states. For jurisdictions in which tax filings are prepared, the Company is no longer subject to income tax examinations by state tax authorities for tax years through 2006, and by the IRS for tax years through 2007. The Company’s net operating loss carryforwards are subject to IRS examination until they are fully utilized and such tax years are closed. |
9_CAPITAL_STOCK
9. CAPITAL STOCK | 12 Months Ended |
Dec. 31, 2012 | |
Stockholders' Equity Note [Abstract] | ' |
CAPITAL STOCK | ' |
On March 28, 2012, a motion to amend the Corporation’s Articles of Incorporation with the State of Colorado to increase the authorized shares of common stock from 60,000,000 to 250,000,000 was brought before the Board and adopted. The board passed the resolution on June 4, 2012 and called a special meeting to be held on July 18, 2012, the agenda of which was to invite all shareholders of record to vote on the proposed amendment. On July 18, 2012 the amendment was passed. | |
During the year ended December 31, 2012, the Company granted 1,250,000 shares of its common stock valued at $25,000 to a note holder as additional consideration for the issuance of a note. The value of the shares has been reflected by the Company as a valuation discount upon issuance of the note. The Company has yet to issue the shares as of December 31, 2012 but has reflected these shares as outstanding in the accompanying statement of shareholders’ deficiency. | |
During the year ended December 31, 2012, the Company issued 2,902,273 shares of common stock to consultants for services rendered that were valued at $139,272. | |
During the year ended December 31, 2012, the Company issued 46,958,514 shares of common stock to officers for the conversion of accrued salaries valued at $724,378. | |
Stock Options | |
Stock based compensation expense related to an employee for the year ended December 31, 2012 and 2011. The Company has issued options to purchase shares of common stock. As of December 31, 2012, the Company has 2,500,000 options outstanding with an exercise price of $0.10 per share. | |
There was no activity in relation to the Company’s Stock Options for the three and year ended December 31, 2012. | |
Warrants | |
The Company also issued warrants to purchase shares of common stock. As of December 31, 2012, the Company has 28,266,613 warrants outstanding with exercise prices ranging from $0.01 per share to $1.75 per share. These warrants expire through November 2015. | |
During the year ended December 31, 2012, the Company issued an additional 1,594,167 warrants in connection with the common stock cash subscriptions and 5,469,166 warrants expired or were surrendered. |
10_SUBSEQUENT_EVENTS
10. SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2012 | |
Subsequent Events [Abstract] | ' |
SUBSEQUENT EVENTS | ' |
In October 2013, the Board of Directors approved increasing the number of authorized share of common stock from 250,000,000 to 3,000,000,000 and authorize 2 classes of Preferred Stock having 4 class A authorized and 10,000,000 Class B authorized. | |
In December 2013, the Board of Directors approved an amendment to the Company’s Articles of Incorporation to amend series B Preferred Stock Designations, Rights & Privileges and to authorize 5 additional classes of Preferred Stock having 10,000 class C with a par value of $0.00001; 1,000,000 class D with a par value of $0.001; 2,000,000 class E with a par value of $0.001; 1,000,000 class F with a par value of $0.001 and 2,000,000 class G with a par value of $0.001. After this action the Company has 8 classes of Common Stock and Preferred Stock. The total number of shares of stock which this Company has authority to issue is 3,16,010,004, of which 3,000,000,000 shares shall be Common Stock, $0.00001 par value per share; and 4 shares shall be Series A Preferred Stock, $0.0001 par value $0.0001 per share; and 10,000,000 shares shall be Series B Preferred Stock, $0.001 par value per share, and 10,000 shares shall be Series C Preferred Stock, $0.00001 par value per share; and 1,000,000 shares shall be Series D Preferred Shares, $0.001 par value per share; and 2,000,000 shares shall be Series E Preferred Shares, $0.001 par value per share; 1,000,000 shares shall be Series F Preferred Shares, $0.001 par value per share and 2,000,000 class G with a par value of $0.001. | |
During the three months ended March 31, 2013, the Company issued 60,509,257 share of its common stock for $72,750 in cash, services value at $200,000 and conversion of debt of $65,874. | |
During the three months ended June 30, 2013, the Company issued 8,926,657 share of its common stock for $35,000 in cash and services value at $13,800. | |
During the three months ended December 31, 2013, the Company issued 1,880,848,703 share of its common stock to the Company’s CEO for services. | |
In December 2013, the Company issued 1,116,255 shares of Series B preferred stock in exchange for approximately $3 million of outstanding debt. In addition the Company issued 28,000 shares of Series B preferred stock for $70,000 in cash that was received during the third quarter of 2013. Class B is authorized to have 10 Million shares, which have the right to bear dividends at the Board of Directors sole discretion, which have liquidation rights of $1.00 per share, which convert to common shares at the par value of 0.00001 but may not be converted into shares of Common Stock for a period of: a) six (6) months after purchase, if the Company voluntarily or involuntarily files public reports pursuant to Section 12 or 15 of the Securities Exchange Act of 1934; or b) twelve (12) months if the Company does not file such public reports , which anti-dilutive to reverse stock splits, and have voting rights equal to 10 votes. | |
On December 5, 2013, the Company agreed to issue to Daniel Thompson, One Hundred and Twelve Thousand Five Hundred and Eighty Five (112,585) shares of Class “C” Preferred shares of stock pursuant to an agreement to convert the accrued principal and interest amount of $281,462.00 due him to Preferred Stock at a price of $2.50 per share. |
1_SUMMARY_OF_SIGNIFICANT_ACCOU1
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2012 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Organization and Nature of Operations | ' | ||||||||||||||||
Organization and Nature of Operations | |||||||||||||||||
Legacy Card Company was formed as a Limited Liability Company on August 29, 2001. On April 18, 2005, the Company converted from a California Limited Liability Company to a Nevada Corporation. On November 10, 2005, the Company merged with Cardiff International, Inc. (“Cardiff”), a publicly held corporation. The purpose of the Company is to develop a co-marketing agreement with a premier national bank to offer an integrated financial program to consumers. Cardiff International, Inc., is a tech company who has developed a proprietary software system to track and manage consumer purchases from unlimited businesses: service companies, retailers, merchants, health industry, insurance industry, most consumer orientated businesses. Our software infrastructure tracks all commissions, rebates, discounts providing the public the ability to track all savings regardless of what program they participate in as long as the program utilizes the Cardiff technology. | |||||||||||||||||
Cardiff’s first national program launched during the fourth quarter 2011 is “Mission Tuition” a rewards program that helps solve a real need for families – saving for education. The Mission Tuition program is easy to understand and use, and is emotionally positioned to appeal to all consumers. The Mission Tuition Rewards program will become the rewards program of preference for every day spending for families with young children. | |||||||||||||||||
The Mission Tuition program launched during the fourth quarter 2011 but has had no revenues to date. As such, Management has determined to restructure Cardiff International, Inc. into a Holding company by purchasing new companies who meet the following criteria: (1) in business for a minimum of 3 years; (2) profitable; (3) good management team; (4) little to no debt; (5) assets of a minimum of $1,000,000. In addition, we will continue to move forward with Mission Tuition. There are no assurances that such companies will become available to us for purchase or that we will be able to obtain necessary financing. | |||||||||||||||||
Development Stage Activities | ' | ||||||||||||||||
Development Stage Activities | |||||||||||||||||
The Company is a development stage enterprise. All losses accumulated since the inception of the Company have been considered as part of the Company’s development stage activities. | |||||||||||||||||
Going Concern | ' | ||||||||||||||||
Going Concern | |||||||||||||||||
The accompanying financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The Company is in the development stage and as such has sustained operating losses since its inception and has negative working capital, a shareholders’ deficiency and accumulated deficit. | |||||||||||||||||
These factors raise substantial doubts about the Company’s ability to continue as a going concern. Specifically, the Company has cumulated net losses from inception (August 29, 2001) of $15,147,952 and has used cash of $6,767,836 in operating the Company during this same period. As of December 31, 2012, the Company had a shareholders’ deficiency of $4,808,577, was delinquent in payroll taxes of $374,223 and significant amount of debt was in default. The accompanying financial statements do not reflect any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classifications of liabilities that might result if the Company is unable to continue as a going concern. | |||||||||||||||||
The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, additional cash infusions. Management has prospective investors and believes the raising of capital will allow the Company to pursue the development of its credit card business. There can be no assurance that we will be able to obtain sufficient capital from debt or equity transactions or from operations in the necessary time frame or on terms acceptable to us. Should we be unable to raise sufficient funds, we may be required to curtail our operating plans and possibly relinquish rights to portions of our technology or products. In addition, increases in expenses or delays in product development may adversely impact our cash position and may require cost reductions. No assurance can be given that we will be able to operate profitably on a consistent basis, or at all, in the future. Should the Company not be able to raise sufficient funds, it may cease their operations. | |||||||||||||||||
Cash and Cash Equivalents | ' | ||||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||
The Company considers all highly liquid investments with an original maturity of three (3) months or less to be cash equivalents. | |||||||||||||||||
Advertising | ' | ||||||||||||||||
Advertising | |||||||||||||||||
Advertising costs are charged to expense when incurred. During the year ended December 31, 2012 and 2011, the amount charged to expense was $5,220 and $20,929, respectively. From inception (August 29, 2001) through December 31, 2012, advertising costs was $605,554. | |||||||||||||||||
Revenue Recognition | ' | ||||||||||||||||
Revenue Recognition | |||||||||||||||||
The Company recognizes revenue on an accrual basis. Revenue is generally realized or realizable and earned when all of the following criteria are met: 1) persuasive evidence of an arrangement exists between the Company and our customer(s); 2) services have been rendered; 3) our price to our customer is fixed or determinable; and 4) collectability is reasonably assured. | |||||||||||||||||
Use of Estimates | ' | ||||||||||||||||
Use of Estimates | |||||||||||||||||
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Management uses its historical records and knowledge of its business in making estimates. Accordingly, actual results could differ from those estimates. | |||||||||||||||||
Valuation of Derivative Instruments | ' | ||||||||||||||||
Valuation of Derivative Instruments | |||||||||||||||||
FASB ASC 815-10, Derivatives and Hedging, requires that embedded derivative instruments be bifurcated and assessed, along with free-standing derivative instruments such as warrants, on their issuance date to determine whether they would be considered a derivative liability and measured at their fair value for accounting purposes. Prior to July 12, 2012, the Company did not have enough authorized shares to issue common shares resulting in the potential exercise or conversion of its issued and outstanding options/warrants and convertible notes, respectively. Accordingly, these instruments were reflected as derivative liabilities for the period ended June 30, 2012 and prior. In July 2012, the Company was successful in increasing the number of authorized shares in the corporate treasury effectively eliminating the majority of the derivative liability. As such derivative liabilities with a fair value of $1,578,405 on July 12, 2012 related to equity investments were extinguished and accounted for as additional paid in capital. In determining the appropriate fair value, the Company uses a weighted average Black-Scholes pricing model. At December 31, 2012 and 2011, the Company adjusted its derivative liability to its fair value and reflected the (increase) decrease in fair value for the years ended December 31, 2012 and 2011, of $1,936,878 and ($839,167), respectively, as other income on the Consolidated Statement of Operations. | |||||||||||||||||
Fair Value Measurements | ' | ||||||||||||||||
Fair Value Measurements | |||||||||||||||||
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: | |||||||||||||||||
Level Input | Input Definition | ||||||||||||||||
Level 1 | Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date. | ||||||||||||||||
Level 2 | Inputs, other than quoted prices included in Level 1, that are observable for the asset or liability through corroboration with market data at the measurement date. | ||||||||||||||||
Level 3 | Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. | ||||||||||||||||
The following table presents certain investments and liabilities of the Company’s financial assets measured and recorded at fair value on the Company’s balance sheets on a recurring basis and their level within the fair value hierarchy as of December 31, 2012 and 2011. | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Fair value of Derivative Liability – December 31, 2012 | $ | – | $ | – | $ | 199,027 | $ | 199,027 | |||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Fair value of Derivative Liability – December 31, 2011 | $ | – | $ | – | $ | 3,679,746 | $ | 3,679,746 | |||||||||
Stock Based Compensation | ' | ||||||||||||||||
Stock Based Compensation | |||||||||||||||||
The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date. | |||||||||||||||||
Property and Equipment | ' | ||||||||||||||||
Property and Equipment | |||||||||||||||||
Property and equipment are carried at cost. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation and amortization of property and equipment is provided using the straight-line method for financial reporting purposes at rates based on the following estimated useful lives: | |||||||||||||||||
Classification | Useful Life | ||||||||||||||||
Computer equipment | 3 Years | ||||||||||||||||
Website design | 3 Years | ||||||||||||||||
Patents and trademarks | 15 Years | ||||||||||||||||
During the year ended December 31, 2012 and 2011, depreciation and amortization expense was $15,752 and $11,571 respectively. During the year ended December 31, 2012, the Company determined that the value of its website design and patents and trademarks had been impaired and wrote down the value of these assets in the amount of $19,076. | |||||||||||||||||
Income Taxes | ' | ||||||||||||||||
Income Taxes | |||||||||||||||||
The Company was treated as a partnership for federal income tax purposes up to April 18, 2005, when it converted to a Nevada Corporation. Consequently, federal income taxes were not payable by, or provided for, the Company. Members were taxed individually on their shares of the Company’s earnings. The Company’s net income or loss was allocated among the members in accordance with the regulations of the Company since April 18, 2005, when the Company was incorporated, the Company accounts for income taxes under the liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes, if any, represents the tax payable for the period and the change during the period in deferred tax assets and liabilities. | |||||||||||||||||
Earnings (Loss) per Share | ' | ||||||||||||||||
Earnings (Loss) per Share | |||||||||||||||||
FASB ASC Subtopic 260, Earnings Per Share, provides for the calculation of "Basic" and "Diluted" earnings per share. Basic earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, warrants, and debts convertible into common shares. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per common share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s common stock can result in a greater dilutive effect from potentially dilutive securities. | |||||||||||||||||
The following table sets forth the computation of basic and diluted earnings per common share for the years ended December 31, 2012 and 2011. During a period of net loss, all potentially dilutive securities are antidilutive. Accordingly, for the year ended December 31, 2011, potentially dilutive securities have been excluded from the computations since they would be antidilutive. However, these dilutive securities could potentially dilute earnings per share in the future: | |||||||||||||||||
Year | Year | ||||||||||||||||
Ended | Ended | ||||||||||||||||
31-Dec-12 | 31-Dec-11 | ||||||||||||||||
Numerator: | |||||||||||||||||
Net income (loss) | $ | 596,245 | $ | (2,834,811 | ) | ||||||||||||
Interest on convertible notes | 185,798 | 191,765 | |||||||||||||||
Net income available for common shareholders | 782,043 | (2,643,046 | ) | ||||||||||||||
Denominator: | |||||||||||||||||
Weighted-average shares outstanding | 72,655,027 | 54,257,476 | |||||||||||||||
Effect of dilutive securities | 2,286,667 | – | |||||||||||||||
Weighted-average diluted shares outstanding | 74,941,694 | 54,257,476 | |||||||||||||||
Basic earnings (loss) per share | $ | 0.01 | $ | (0.05 | ) | ||||||||||||
Diluted earnings (loss) per share | $ | 0.01 | $ | (0.05 | ) | ||||||||||||
Principles of Consolidation | ' | ||||||||||||||||
Principles of Consolidation | |||||||||||||||||
The consolidated financial statements include the accounts of Cardiff International, Inc. and its wholly owned subsidiary, Legacy Card Company. All significant intercompany accounts and transactions are eliminated in consolidation. | |||||||||||||||||
Recently Issued Accounting Pronouncements | ' | ||||||||||||||||
Recently Issued Accounting Pronouncements | |||||||||||||||||
The Company has evaluated all of the recent accounting pronouncements through the filing date of these financial statements and feels that none of them will have a material effect on the Company’s interim financial statements. |
1_SUMMARY_OF_SIGNIFICANT_ACCOU2
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2012 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Fair Value Measurements | ' | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Fair value of Derivative Liability – December 31, 2012 | $ | – | $ | – | $ | 199,027 | $ | 199,027 | |||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Fair value of Derivative Liability – December 31, 2011 | $ | – | $ | – | $ | 3,679,746 | $ | 3,679,746 | |||||||||
Property and equipment useful lives | ' | ||||||||||||||||
Classification | Useful Life | ||||||||||||||||
Computer equipment | 3 Years | ||||||||||||||||
Website design | 3 Years | ||||||||||||||||
Patents and trademarks | 15 Years | ||||||||||||||||
Earnings (Loss) per Share | ' | ||||||||||||||||
Year | Year | ||||||||||||||||
Ended | Ended | ||||||||||||||||
31-Dec-12 | 31-Dec-11 | ||||||||||||||||
Numerator: | |||||||||||||||||
Net income (loss) | $ | 596,245 | $ | (2,834,811 | ) | ||||||||||||
Interest on convertible notes | 185,798 | 191,765 | |||||||||||||||
Net income available for common shareholders | 782,043 | (2,643,046 | ) | ||||||||||||||
Denominator: | |||||||||||||||||
Weighted-average shares outstanding | 72,655,027 | 54,257,476 | |||||||||||||||
Effect of dilutive securities | 2,286,667 | – | |||||||||||||||
Weighted-average diluted shares outstanding | 74,941,694 | 54,257,476 | |||||||||||||||
Basic earnings (loss) per share | $ | 0.01 | $ | (0.05 | ) | ||||||||||||
Diluted earnings (loss) per share | $ | 0.01 | $ | (0.05 | ) |
3_NOTES_PAYABLE_Tables
3. NOTES PAYABLE (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2012 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
NOTES PAYABLE | ' | ||||||||
December 31, | December 31, | ||||||||
2012 | 2011 | ||||||||
Legacy Investors, LLC | $ | 518,000 | $ | 518,000 | |||||
Maricopa Equity | 100,000 | 100,000 | |||||||
International Card Establishment, Inc. | 50,000 | 50,000 | |||||||
Other | 375,000 | 375,000 | |||||||
Discount on notes | (218,758 | ) | (283,758 | ) | |||||
Total | $ | 824,242 | $ | 759,242 | |||||
Current portion | (718,000 | ) | (718,000 | ) | |||||
Long-term portion | $ | 106,242 | $ | 41,242 |
4_CONVERTIBLE_NOTES_PAYABLE_Ta
4. CONVERTIBLE NOTES PAYABLE (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2012 | |||||||||
Convertible Notes Payable [Abstract] | ' | ||||||||
CONVERTIBLE NOTES | ' | ||||||||
December 31, | December 31, | ||||||||
2012 | 2011 | ||||||||
Unrelated party | $ | 336,000 | $ | 250,000 | |||||
Related party | 165,000 | 200,000 | |||||||
Total - current | $ | 501,000 | $ | 450,000 |
5_NOTES_PAYABLE_RELATED_PARTY_
5. NOTES PAYABLE - RELATED PARTY (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2012 | |||||||||
Notes Payable - Related Party Tables | ' | ||||||||
NOTES PAYABLE RELATED PARTY | ' | ||||||||
December 31, | December 31, | ||||||||
2012 | 2011 | ||||||||
Total principal balance | $ | 312,581 | $ | 373,081 | |||||
Discount on notes | (135,775 | ) | (230,985 | ) | |||||
176,806 | 142,096 | ||||||||
Current portion | (19,990 | ) | (24,990 | ) | |||||
Long-term portion | $ | 156,816 | $ | 117,106 |
6_DERIVATIVE_LIABILITY_Tables
6. DERIVATIVE LIABILITY (Tables) | 12 Months Ended | ||||
Dec. 31, 2012 | |||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||
DERIVATIVE LIABILITY | ' | ||||
31-Dec-12 | 31-Dec-11 | ||||
Conversion feature: | |||||
Risk-free interest rate | 0.01 % to 0.27% | 0.25% | |||
Expected volatility | 100% | 100% | |||
Expected life (in years) | 0 -2 years | 2 years | |||
Expected dividend yield | 0% | 0% | |||
Warrants: | |||||
Risk-free interest rate | – | 0.88% | |||
Expected volatility | – | 100% | |||
Expected weighted average life (in years) | – | 0.1 to 5 years | |||
Expected dividend yield | – | 0% | |||
Fair Value : | |||||
Conversion feature | $199,027 | $291,163 | |||
Warrants | – | 3,388,583 | |||
$199,027 | $3,679,746 |
1_SUMMARY_OF_SIGNIFICANT_ACCOU3
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details-Fair Value Derivative Liability) (USD $) | Dec. 31, 2012 | Dec. 31, 2011 |
Fair value of Derivative Liability | $199,027 | $3,679,746 |
Fair Value Inputs Level 1 [Member] | ' | ' |
Fair value of Derivative Liability | 0 | 0 |
Fair Value Inputs Level 2 [Member] | ' | ' |
Fair value of Derivative Liability | 0 | 0 |
Fair Value Inputs Level 3 [Member] | ' | ' |
Fair value of Derivative Liability | $199,027 | $3,679,746 |
1_SUMMARY_OF_SIGNIFICANT_ACCOU4
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details-Useful lives of property) | 12 Months Ended |
Dec. 31, 2012 | |
Computer Equipment [Member] | ' |
Property Plant And Equipment Useful Life | '3 years |
Website Design [Member] | ' |
Property Plant And Equipment Useful Life | '3 years |
Patents [Member] | ' |
Property Plant And Equipment Useful Life | '15 years |
1_SUMMARY_OF_SIGNIFICANT_ACCOU5
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details-Earnings (Loss) Per Share) (USD $) | 12 Months Ended | |
Dec. 31, 2012 | Dec. 31, 2011 | |
Numerator: | ' | ' |
Net income (loss) | $596,245 | ($2,834,811) |
Interest on convertible notes | 185,798 | 191,765 |
Net income available for common shareholders | $782,043 | ($2,643,046) |
Denominator: | ' | ' |
Weighted-average shares outstanding | 72,655,027 | 54,257,476 |
Effect of dilutive securities | 2,286,667 | 0 |
Weighted-average diluted shares outstanding | 74,941,694 | 54,257,476 |
Basic earnings (loss) per share | $0.01 | ($0.05) |
Diluted earnings (loss) per share | $0.01 | ($0.05) |
1_SUMMARY_OF_SIGNIFICANT_ACCOU6
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (USD $) | 12 Months Ended | 136 Months Ended | |
Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2012 | |
Accounting Policies [Abstract] | ' | ' | ' |
Advertising costs | $5,220 | $20,929 | $605,554 |
Increase (decrease) in fair value of derivative instruments | 1,936,878 | -839,167 | 777,654 |
Depreciation and amortization expense | 15,752 | 11,571 | 265,935 |
Impairment of intangibles | $19,076 | ' | ' |
2_RELATED_PARTY_TRANSACTIONS_N
2. RELATED PARTY TRANSACTIONS (Narrative) (USD $) | Dec. 31, 2012 | Dec. 31, 2011 |
Amounts payable to a related party | $273,565 | $241,863 |
Daniel Thompson [Member] | ' | ' |
Total salary accrued | 300,000 | 300,000 |
Total accrued salaries, advances and accrued interest | 281,462 | 485,939 |
Company President [Member] | ' | ' |
Total salary accrued | 180,000 | 180,000 |
Total accrued salaries, advances and accrued interest | 244,500 | 360,000 |
Others [Member] | ' | ' |
Total salary accrued | $55,000 | $55,000 |
3_NOTES_PAYABLE_Details
3. NOTES PAYABLE (Details) (USD $) | Dec. 31, 2012 | Dec. 31, 2011 |
Other notes | $375,000 | $375,000 |
Discount on notes | -218,758 | -283,758 |
Total | 824,242 | 759,242 |
Current portion | -718,000 | -718,000 |
Long-term portion | 106,242 | 41,242 |
Legacy Investors LLC [Member] | ' | ' |
Total | 518,000 | 518,000 |
Maricopa Equity [Member] | ' | ' |
Total | 100,000 | 100,000 |
International Card Establishment Inc [Member] | ' | ' |
Total | $50,000 | $50,000 |
4_CONVERTIBLE_NOTES_PAYABLE_De
4. CONVERTIBLE NOTES PAYABLE (Details) (USD $) | Dec. 31, 2012 | Dec. 31, 2011 |
Total convertible notes | $501,000 | $450,000 |
Unrelated Party | ' | ' |
Total convertible notes | 336,000 | 250,000 |
Related Party | ' | ' |
Total convertible notes | $165,000 | $200,000 |
4_CONVERTIBLE_NOTES_PAYABLE_Na
4. CONVERTIBLE NOTES PAYABLE (Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2012 | Dec. 31, 2011 | |
Convertible promissory notes | $501,000 | $450,000 |
Unrelated Party | ' | ' |
Convertible promissory notes | 336,000 | 250,000 |
Convertible Promissory Note 1 | ' | ' |
Convertible promissory notes | 250,000 | 250,000 |
Convertible Promissory Note 2 | ' | ' |
Convertible promissory notes | 40,000 | 0 |
Note converted to stock, value | 10,000 | ' |
Note converted to stock, shares issued | 1,388,889 | ' |
Convertible Promissory Note 3 | ' | ' |
Convertible promissory notes | 25,000 | 0 |
Note converted to stock, shares issued | 1,250,000 | ' |
Convertible Promissory Note 4 | ' | ' |
Convertible promissory notes | 21,000 | 0 |
Related Party | ' | ' |
Convertible promissory notes | 165,000 | 200,000 |
Convertible Note Related Party 1 | ' | ' |
Convertible promissory notes | 150,000 | 150,000 |
Convertible Note Related Party 2 | ' | ' |
Convertible promissory notes | 15,000 | 15,000 |
Convertible Note Related Party 3 | ' | ' |
Convertible promissory notes | 0 | 35,000 |
Note converted to stock, value | $35,000 | ' |
Note converted to stock, shares issued | 860,127 | ' |
5_NOTES_PAYABLE_RELATED_PARTY_1
5. NOTES PAYABLE - RELATED PARTY (Details) (USD $) | Dec. 31, 2012 | Dec. 31, 2011 |
Notes Payable - Related Party Details | ' | ' |
Total principal balance | $312,581 | $373,081 |
Discount on notes | -135,775 | -230,985 |
Total | 176,596 | 142,096 |
Current portion | -19,990 | -24,990 |
Long-term portion | $156,816 | $117,106 |
5_NOTES_PAYABLE_RELATED_PARTY_2
5. NOTES PAYABLE - RELATED PARTY (Narrative) (USD $) | Dec. 31, 2012 | Dec. 31, 2011 |
Notes payable, related party, net of discounts | $176,596 | $142,096 |
Note Payable - Related Party 1 | ' | ' |
Notes payable, related party, net of discounts | 10,000 | 15,000 |
Note Payable - Related Party 2 | ' | ' |
Notes payable, related party, net of discounts | 19,990 | 19,990 |
Note Payable - Related Party 3 | ' | ' |
Notes payable, related party, net of discounts | 113,840 | 94,340 |
Note Payable - Related Party 4 | ' | ' |
Notes payable, related party, net of discounts | 9,050 | 4,050 |
Note Payable - Related Party 5 | ' | ' |
Notes payable, related party, net of discounts | 0 | 4,790 |
Note Payable - Related Party 6 | ' | ' |
Notes payable, related party, net of discounts | 13,130 | 3,130 |
Note Payable - Related Party 7 | ' | ' |
Notes payable, related party, net of discounts | $10,795 | $795 |
6_DERIVATIVE_LIABILITY_Details
6. DERIVATIVE LIABILITY (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2012 | Dec. 31, 2011 | |
Total derivative liabilities | $199,027 | $3,679,746 |
Conversion Feature | ' | ' |
Risk-free interest rate minimum | 0.01% | 0.25% |
Risk-free interest rate maximum | 0.27% | ' |
Expected volatility | 100.00% | 100.00% |
Expected life (in years) | '0-2 years | '2 years |
Expected dividend yield | 0.00% | 0.00% |
Total derivative liabilities | 199,027 | 291,163 |
Warrants | ' | ' |
Risk-free interest rate minimum | ' | 0.88% |
Expected volatility | ' | 100.00% |
Expected life (in years) | ' | '0.1 to 5 years |
Expected dividend yield | ' | 0.00% |
Total derivative liabilities | $0 | $3,388,583 |
6_DERIVATIVE_LIABILITY_Details1
6. DERIVATIVE LIABILITY (Details Narrative) (USD $) | 12 Months Ended | 136 Months Ended | |
Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2012 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ' | ' |
Derivative liability | $199,027 | $3,679,746 | $199,027 |
Change in value of derivative liability | 1,936,878 | -839,167 | 777,654 |
Extinguishment of equity instrument derivative | $1,578,405 | ' | ' |
7_COMMITMENTS_AND_CONTINGENCIE1
7. COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) | 12 Months Ended | 136 Months Ended | |
Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2012 | |
Commitments and Contingencies Disclosure [Abstract] | ' | ' | ' |
Rent expense | $0 | $0 | $514,936 |
Accrued payroll taxes | $374,223 | $335,823 | $374,223 |
8_INCOME_TAXES_Narrative
8. INCOME TAXES (Narrative) (USD $) | 12 Months Ended |
Dec. 31, 2012 | |
Income Tax Disclosure [Abstract] | ' |
State net operating loss carryforwards | $11,387,162 |
Federal NOL carryforwards | $11,493,162 |
Federal carryforward expiration date | 31-Dec-31 |
9_CAPITAL_STOCK_Details_Narrat
9. CAPITAL STOCK (Details Narrative) (USD $) | 12 Months Ended | |||
Dec. 31, 2012 | Dec. 31, 2010 | Dec. 31, 2008 | Dec. 31, 2007 | |
Common stock issued for services, value | $139,272 | $3,000 | $1,453,222 | $10,000 |
Stock options outstanding | 5,500,000 | ' | ' | ' |
Stock option exercise price range per share | '$0.08 to $0.10 per share | ' | ' | ' |
Warrants outstanding | 28,266,613 | ' | ' | ' |
Exercise price range, warrants | '$0.01 to $1.75 per share | ' | ' | ' |
Warrants issued | 1,594,167 | ' | ' | ' |
Warrants expired or surrendered | 5,469,166 | ' | ' | ' |
Consultants | ' | ' | ' | ' |
Common stock issued for services, shares | 4,152,273 | ' | ' | ' |
Common stock issued for services, value | 164,272 | ' | ' | ' |
Officers | ' | ' | ' | ' |
Common stock issued for services, shares | 49,958,514 | ' | ' | ' |
Common stock issued for services, value | $724,378 | ' | ' | ' |