Stockholders' Equity | 6 Months Ended |
Jun. 30, 2014 |
Equity [Abstract] | ' |
Note 5. Stockholders' Equity | ' |
Note 5 - | Stockholders’ Equity |
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Preferred Stock |
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Series A1 Preferred Stock |
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On September 6, 2011, the Company filed a Certificate of Designation of Series A1 Convertible Preferred Stock ("Series A1") with the Secretary of State of Nevada. Pursuant to the Series A1 Certificate of Designation, the Company designated 25,000,000 shares of its blank check preferred stock as Series A1 Preferred Stock. The Series A1 Preferred Stock ranks senior to the common stock (the "Junior Stock"). The Series A1 Preferred Stock can be converted at anytime into 30 common shares per one preferred share. In the event of a liquidation, the Series A1 Preferred Stock will be entitled to a liquidation at the same as common stock. The Series A1 Preferred Stock has no voting rights. |
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Series A2 Preferred Stock |
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On October 5, 2012, the Company filed a Certificate of Designation of Series A2 Convertible Preferred Stock ("Series A2") with the Secretary of State of Nevada. Pursuant to the Series A2 Certificate of Designation, the Company designated 300 shares of its blank check preferred stock as Series A2 . The Series A2 ranks senior to the common stock and any subsequently created series of preferred stock that does not expressly rank pari passu with or senior to the Series A2 (the "Junior Stock"). The Series A2 can be converted at anytime and has a fixed conversion price of $0.00225 per common share. The Series A2 is entitled to minimum six years worth of dividends accruing at a rate of 8.5% per annum potentially increasing to 18% per annum under certain circumstances such as a significant decrease in the price of the Company's common stock. Dividends are payable in cash or in shares of common stock valued at 85.0% of the closing market price of the Company's common stock for any trading day following the issuance date of the Series A2. In the event of a liquidation, the Series A2 will be entitled to a payment of the Stated Value of $10,000 per share plus any accrued but unpaid dividends prior to any payments being made in respect of the Junior Stock. The holders of Series A2 does not have voting rights, except for shares in which have already been converted into shares of common stock. |
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On January 8, 2014, the holder converted 10 Series A2 shares into 44,444,444 shares of common stock. In addition, under the terms of the Series A2 the holder was entitled to immediate payment of dividends on the $100,000 stated value of the Series A2 at an annual dividend rate of 18% rate, which is an increase over the stated 8.5% due to adjustments related to the decrease in the fair market value of the Company's common stock, for a period of six years resulting in dividends payable of $108,000. The holder elected to convert the dividends to common stock based upon 85% of the closing market price as disclosed above resulting in a conversion price of $0.00017 with 635,294,118 common shares being issued. On the date of conversion, the fair market value of the dividend shares issued was $1,334,118 based upon the closing market price of the Company's common stock. Thus, the Company recorded additional expense of $1,334,118 in connection with the dividend shares issued. |
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On February 11, 2014, the holder converted 15 Series A2 shares into 66,666,666 shares of common stock. In addition, under the terms of the Series A2 the holder was entitled to immediate payment of dividends on the $150,000 stated value of the Series A2 at an annual dividend rate of 18% rate, which is an increase over the stated 8.5% due to adjustments related to the decrease in the fair market value of the Company's common stock, for a period of six years resulting in dividends payable of $162,000. The holder elected to convert the dividends to common stock based upon 85% of the closing market price as disclosed above resulting in a conversion price of $0.00017 with 952,941,176 common shares to be issued. On the date of conversion, the fair market value of the dividend shares issued was $3,144,706 based upon the closing market price of the Company's common stock. Thus, the Company recorded additional expense of $3,144,706 in connection with the dividend shares issued. As of June 30, 2014, the Company has recorded within stockholders' equity "Shares to Be Issued" of $2,853,206 as the 864,607,842 common shares have not been delivered due to the 9.99% ownership limitation placed on the shareholders. |
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Series B Preferred Stock |
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On February 28, 2013, the Company filed a Certificate of Designation of Series B Convertible Preferred Stock ("Series B") with the Secretary of State of Nevada. Pursuant to the Series B Certificate of Designation, the Company designated 16,000,000 shares of its blank check preferred stock as Series B . The Series B ranks senior to the common stock and any subsequently created series of preferred stock that does not expressly rank pari passu with or senior to the Series B (the "Junior Stock"). The Series B cannot be converted into any other securities and does not receive dividends. Each share of Series B shall have voting rights equal to that of 2,000 shares of common stock. In the event of a liquidation, the Series B will be entitled to net assets on a pro rata basis. |
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On March 1, 2013, the Company issued its Chief Executive Officer 16,000,000 shares of Series B Preferred Stock. The Company valued the Series B at its par value resulting in a current period expense of $16,000. The only rights the holder under the Series B has relates to voting control of the Company, which prior to the issuance the Chief Executive Officer, was the only officer and Board of Director member and already could make significant decisions. Although, the Series B was issued during the year ended December 31, 2013, it was not accounted for until the six months ended June 30, 2014. The effect on the prior years' financial statements is deemed insignificant and thus the amounts have not been restated. |
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Series C Preferred Stock |
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On March 27, 2014, the Company filed a Certificate of Designation of Series C Convertible Preferred Stock ("Series C") with the Secretary of State of Nevada. Pursuant to the Series C Certificate of Designation, the Company designated 5,000 shares of its blank check preferred stock as Series C. The Series C ranks senior to the common stock and any subsequently created series of preferred stock that does not expressly rank pari passu with or senior to the Series C (the "Junior Stock") and pari passu in rights to dividends and liquidation to the Series A2 and junior to all existing and future indebtedness of the Company. The Series C can be converted at anytime and has a fixed conversion price of $0.01 per common share. The Series C is entitled to minimum six years worth of dividends accruing at a rate of 8.5% per annum potentially increasing to 18% per annum under certain circumstances such as a significant decrease in the price of the Company's common stock. Dividends are payable in cash or in shares of common stock valued at 85.0% of the closing market price of the Company's common stock for any trading day following the issuance date of the Series C. In the event of a liquidation, the Series C will be entitled to a payment of the Stated Value of $10,000 per share plus any accrued but unpaid dividends prior to any payments being made in respect of the Junior Stock. The holders of Series C do not have voting rights, except for shares in which have already been converted into shares of common stock. During the six months ended June 30, 2014, the Company issued 5,000 shares of Series C for a subscription receivable of $5.0 Million, see Note 4 for additional information. |
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Common Stock |
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During the six months ended June 30, 2014, the Company issued 1,754,386 shares of common stock valued at $4,737 based upon the closing market price of the Company's common stock on the date of the agreement to a third party for the rights to future royalties related to Global Specialty Products, Inc.'s MicroRoasters brand. |
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In addition, the Company amortized $60,000 of deferred compensation related to common stock granted during the year ended December 31, 2013 which is being expensed over the service period. As of June 30, 2014, the Company had $20,000 of amortization remaining which will be expensed during the year ending December 31, 2014. |
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Additionally, during the six months ended June 30, 2014, the Company issued 50,000,000 shares of common stock valued at $135,000 based upon the closing market price of the Company's common stock on the on the date of the agreement to a third party for sales and marketing services. The fair market value of the common stock issued was recorded as prepaid expenses and is being amortized over the contract period of one year. During the six months ended June 30, 2014, the Company amortized $45,000 to sales and marketing on the accompanying statement of operations. As of June 30, 2014, the remaining prepaid is $90,000. In addition, as of the date of this filing the common stock has not been issued and thus the value of $135,000 is recorded within stock to be issued on the accompanying balance sheet. |
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On January 27, 2014, the Company entered into a settlement with the prior management whereby prior management agreed to return 60,000,000 shares of the Company’s common stock previously issued to them for services rendered. In return, the Company has agreed to release prior management from any claims related to all costs deemed of a non-business nature. The Company accounted for the shares at their par value of $60,000 reducing common stock by that amount with the reclass to additional paid in capital. Upon return, the common stock was cancelled by the transfer agent and reflected in our calculation of weighted average shares for the six months ended June 30, 2014 as of the date of the agreement |
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During the six months ended June 30, 2013, the Company issued 90,000,000 shares of common stock in connection with the conversion of 3,000,000 shares of Series A1 Preferred Stock with a carrying value of $3,000 held by the former Chief Executive Officer. |
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Ironridge Global IV, Ltd. |
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On September 19, 2012, the Supreme Court of the State of California for the County of Los Angeles Central District (the “Court”), entered an order (the “Order”) approving, among other things, the fairness of the terms and conditions of an exchange pursuant to Section 3(a)(10) of the Securities Act of 1933, as amended (the “Securities Act”), in accordance with a stipulation of settlement (the “Settlement Agreement”) between Rapid Fire Marketing, Inc., a Nevada corporation (the “Company”), and Ironridge Global IV, Ltd. (“Ironridge”), in the matter entitled Ironridge Global IV, Ltd. v. Rapid Fire Marketing, Inc., Case No. BC 490059 (the “Action”). Ironridge commenced the Action against the Company to recover an aggregate of $643,133 of past-due accounts payable of the Company, plus fees and costs (the “Claim”). The Order provides for the full and final settlement of the Claim and the Action. The Settlement Agreement became effective and binding upon the Company and Ironridge upon execution of the Order by the Court on September 19, 2012. The amounts due to Ironridge had previously been recorded within accounts payable but were reclassed to common stock to be issued within stockholders' equity upon settlement as the obligation was to be settled in shares of common stock. Upon issuance of common stock, the Company determines the fair market value of the common shares issued based upon the closing market price of the Company's common stock. The fair value of the common stock issued in excess of the reduction of the liability is recorded as a loss on common shares issued. During the six months ended June 30, 2013, the Company issued 320,000,000 common shares valued at $406,999 relieving $190,959 in amounts due to Ironridge and additional loss on common shares of $216,040. As of June 30, 2013, the Company's obligation to Ironridge was $370,559 which was settled through the issuance of common stock through the remainder of 2013. |
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The issuance of common stock to Ironridge pursuant to the terms of the Settlement Agreement approved by the Order is exempt from the registration requirements of the Securities Act pursuant to Section 3(a)(10) thereof, as an issuance of securities in exchange for bona fide outstanding claims, where the terms and conditions of such issuance are approved by a court after a hearing upon the fairness of such terms and conditions at which all persons to whom it is proposed to issue securities in such exchange shall have the right to appear. See Note 4 for discussion of additional transactions with Ironridge. |
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Equity Line of Credit |
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On February 28, 2014, the Company, entered into an Equity Line of Credit (the “Equity Line of Credit”) with Iconic Holdings, LLC (“Iconic”). Pursuant to the Equity Line of Credit, Iconic committed to purchase up to $2,000,000 of the Company’s common stock over twenty-four months from the first day following the effectiveness of a registration statement, subject to certain conditions. |
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As soon as the Company has an effective registration statement in place, the Company may draw on the facility from time to time, as and when it determines appropriate in accordance with the terms and conditions of the related Equity Line of Credit. The Company has not yet filed a registration statement registering the shares and therefore, it has not yet sold any shares under the Equity Line of Credit. The purchase price will be 85% of the lowest trading price of the Company's common stock during the five (5) consecutive trading day period beginning on the trading day immediately following the date of delivery of the applicable put notice. The maximum amount that the Company is entitled to put in on any one notice shall be any amount up to the greater of 1) the average of the trading dollar volume of the Company's common stock during the ten (10) trading days preceding the request or 2) $100,000. Iconic is not obligated to purchase shares if its total number of shares beneficially held at that time would exceed 4.99% of the number of shares of the Company’s outstanding common stock as determined in accordance with Rule 13d-1 of the Securities Exchange Act of 1934, as amended. In addition, the Company is not permitted to draw on the facility unless there is an effective registration statement to cover the resale of the shares, which it does not currently have in place. |
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Pursuant to the terms of a Registration Rights Agreement between the Company and Iconic, the Company is obligated to file a registration statement with the SEC to register the resale by Iconic of shares of the common stock underlying the Investment Agreement and it has not yet done so. |
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In addition, under the terms of the Equity Line of Credit the Company was required to issue Iconic 10% of the total commitment amount in restricted common stock as a commitment fee. The Company issued 29,585,799 shares of common stock valued at $88,757 based upon the closing market price of the Company's common stock on the date of the agreement. The Company recorded the value of such common stock as a deferred offering cost on the accompanying balance sheet which will be offset against future proceeds received in connection with Equity Line of Credit. As of June 30, 2014, no proceeds have been received under the Equity Line of Credit. |
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