Document_And_Entity_Informatio
Document And Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Mar. 21, 2014 | Jun. 30, 2013 | |
DocumentAndEntityInformationAbstract | ' | ' | ' |
Entity Registrant Name | 'World Surveillance Group Inc. | ' | ' |
Entity Central Index Key | '0000919742 | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Document Type | '10-K | ' | ' |
Amendment Flag | 'false | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Trading Symbol | 'WSGI | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Common Stock, Shares Outstanding | ' | 706,057,033 | ' |
Public Float | ' | ' | $7,626,700 |
Is Entity's Reporting Status Current? | 'Yes | ' | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' | ' |
Is Entity a Voluntary Filer? | 'No | ' | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
CURRENT ASSETS | ' | ' |
Cash | $118,732 | $49,343 |
Accounts receivable, net of allowance for bad debts of $0 and $0 | 67,736 | 8,977 |
Accounts receivable from related party | 59,833 | 48,220 |
Inventories | 75,311 | 0 |
Prepaid expenses | 40,126 | 46,134 |
Deposits | 0 | 50,000 |
TOTAL CURRENT ASSETS | 361,738 | 202,674 |
PROPERTY AND EQUIPMENT | ' | ' |
Property and equipment, net of accumulated depreciation of $497,233 and $309,670, respectively. | 2,271,964 | 2,452,966 |
OTHER NONCURRENT ASSETS | ' | ' |
Goodwill | 807,824 | 0 |
Deferred financing costs | 22,398 | 43,074 |
TOTAL NONCURRENT ASSETS | 830,222 | 43,074 |
TOTAL ASSETS | 3,463,924 | 2,698,714 |
CURRENT LIABILITIES | ' | ' |
Accounts payable | 4,593,647 | 4,781,075 |
Accounts payable due related party | 50,691 | 0 |
Notes payable | 9,501,083 | 8,651,380 |
Accrued liabilities | 2,812,953 | 2,132,085 |
Deferred revenues | 1,650 | 7,500 |
TOTAL CURRENT LIABILITIES | 16,960,024 | 15,859,403 |
COMMITMENTS AND CONTINGENCIES | ' | ' |
STOCKHOLDERS' DEFICIT | ' | ' |
Common stock, $.00001 par value, 1,000,000,000 and 750,000,000 shares authorized, respectively; 681,127,043 and 546,887,530 shares issued, respectively; and 669,127,043 and 546,887,530 outstanding, respectively | 6,691 | 5,469 |
Additional paid-in capital | 138,909,766 | 135,829,194 |
Preferred Stock, $.0001 par value, 10,000,000 shares authorized; 0 shares issued and outstanding | 0 | 0 |
Accumulated deficit | -152,412,557 | -148,995,352 |
TOTAL STOCKHOLDERS' DEFICIT | -13,496,100 | -13,160,689 |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $3,463,924 | $2,698,714 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Statement of Financial Position [Abstract] | ' | ' |
Property and equipment, accumulated depreciation | $497,233 | $309,670 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 1,000,000,000 | 750,000,000 |
Common stock, shares issued | 681,127,043 | 546,887,530 |
Common stock, shares outstanding | 669,127,043 | 546,887,530 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
REVENUES | ' | ' |
Contract revenues | $0 | $200,000 |
Sales | 1,857,635 | 891,844 |
Cost of sales | 1,299,061 | 819,643 |
Gross profit | 558,574 | 72,201 |
NET REVENUES | 558,574 | 272,201 |
COSTS AND EXPENSES: | ' | ' |
General and administrative | 2,445,325 | 3,359,924 |
Professional fees | 640,418 | 1,060,164 |
Depreciation and amortization | 184,915 | 183,000 |
Research and development | 0 | 210,700 |
Acquisition-related expenses | 21,000 | 0 |
TOTAL EXPENSES | 3,291,658 | 4,813,788 |
LOSS FROM OPERATIONS | -2,733,084 | -4,541,587 |
OTHER INCOME (EXPENSE) | ' | ' |
Net gain from release of restricted assets and derecognition of liabilities of discontinued operations | 0 | 544,201 |
Gain on derecognition of legacy payables | 0 | 1,787,324 |
Loss from conversion debt | -233,381 | -816,703 |
Gain on settlement of shareholder debt | 58,000 | 0 |
Change in fair value of derivative liabilities | 363 | 125,057 |
Interest expense, net | -509,103 | -461,145 |
OTHER INCOME (EXPENSE) | -684,121 | 1,178,734 |
NET LOSS | ($3,417,205) | ($3,362,853) |
NET LOSS PER SHARE: | ' | ' |
Basic and Diluted | ($0.01) | ($0.01) |
WEIGHTED AVERAGE SHARES: | ' | ' |
Basic and Diluted | 632,009,690 | 420,841,556 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (USD $) | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Total |
Beginning Balance at Dec. 31, 2011 | $4,269 | $131,426,211 | ($145,632,499) | ($14,202,019) |
Beginning Balance (in shares) at Dec. 31, 2011 | 426,884,160 | ' | ' | ' |
Shares issued as inducement for loans | ' | ' | ' | 0 |
Shares issued for legal settlement (in shares) | 16,715,543 | ' | ' | ' |
Shares issued for legal settlement | 167 | 269,158 | 0 | 269,325 |
Shares issued to services (in shares) | 13,140,325 | ' | ' | ' |
Shares issued to services | 131 | 458,848 | 0 | 458,979 |
Shares issued for directors’ compensation (in shares) | 12,700,000 | ' | ' | ' |
Shares issued for directors’ compensation | 127 | 586,793 | 0 | 586,920 |
Shares issued for compensation and accrued salaries (in shares) | 12,978,261 | ' | ' | ' |
Shares issued for compensation and accrued salaries | 130 | 396,170 | 0 | 396,300 |
Shares issued for convertible debt conversion (in shares) | 81,785,908 | ' | ' | ' |
Shares issued for convertible debt conversion | 818 | 1,692,053 | 0 | 1,692,871 |
Fair value of vested restricted shares issued for compensation (in shares) | 5,000,000 | ' | ' | ' |
Fair value of vested restricted shares issued for compensation | 50 | 58,929 | 0 | 58,979 |
Vested restricted shares previously issued as performance-based compensation (in shares) | 0 | ' | ' | ' |
Vested restricted shares previously issued as performance-based compensation | 0 | 342,370 | 0 | 342,370 |
Common and restricted shares rescinded and exchanged for fully-vested options (in shares) | -22,316,667 | ' | ' | ' |
Common and restricted shares rescinded and exchanged for fully-vested options | -223 | 223 | 0 | 0 |
Fair value of vested options issued as share-based compensation (in shares) | 0 | ' | ' | ' |
Fair value of vested options issued as share-based compensation | 0 | 598,439 | 0 | 598,439 |
Net loss | ' | ' | -3,362,853 | -3,362,853 |
Ending Balance at Dec. 31, 2012 | 5,469 | 135,829,194 | -148,995,352 | -13,160,689 |
Ending Balance (in shares) at Dec. 31, 2012 | 546,887,530 | ' | ' | ' |
Shares issued as inducement for loans | ' | ' | ' | 34,400 |
Shares issued for legal settlement (in shares) | 24,741,372 | ' | ' | ' |
Shares issued for legal settlement | 247 | 338,879 | 0 | 339,126 |
Shares issued for LTAS selling shareholder debt (in shares) | 20,000,000 | ' | ' | ' |
Shares issued for LTAS selling shareholder debt | 200 | 191,800 | 0 | 192,000 |
Shares issued for directors’ compensation (in shares) | 900,000 | ' | ' | ' |
Shares issued for directors’ compensation | 9 | 13,881 | 0 | 13,890 |
Shares issued for convertible debt (in shares) | 2,933,333 | ' | ' | ' |
Shares issued for convertible debt | 29 | 76,310 | 0 | 76,339 |
Fair value of vested restricted shares issued as retention bonuses (in shares) | 16,000,000 | ' | ' | ' |
Fair value of vested restricted shares issued as retention bonuses | 160 | 9,152 | 0 | ' |
Fair value of vested restricted shares issued for compensation (in shares) | 20,000,000 | ' | ' | ' |
Fair value of vested restricted shares issued for compensation | 200 | 85,768 | 0 | 85,968 |
Fair value of vested options issued as share-based compensation and director’s fees (in shares) | 0 | ' | ' | ' |
Fair value of vested options issued as share-based compensation and director’s fees | 0 | 339,697 | 0 | 339,697 |
Fair value of vested options issued for salary conversion | 0 | 524,624 | 0 | 524,624 |
Common and restricted shares rescinded and exchanged for fully-vested options (in shares) | -12,000,000 | ' | ' | ' |
Common and restricted shares rescinded and exchanged for fully-vested options | -120 | 216,120 | 0 | 216,000 |
Net loss | 0 | 0 | -3,417,205 | -3,417,205 |
Ending Balance at Dec. 31, 2013 | $6,691 | $138,909,766 | ($152,412,557) | ($13,496,100) |
Ending Balance (in shares) at Dec. 31, 2013 | 669,127,043 | ' | ' | ' |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
OPERATING ACTIVITIES: | ' | ' |
Net loss | ($3,417,205) | ($3,362,853) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ' | ' |
Depreciation and amortization | 184,915 | 183,000 |
Fair value of share-based compensation | 664,596 | 1,879,813 |
Change in fair value of derivative liabilities | -363 | -125,057 |
Net gain on release of restricted assets and derecognition of liabilities of discontinued operations | 0 | -544,201 |
Gain on derecognition of legacy payables | 0 | -1,787,324 |
Loss on conversion of convertible debt | 233,382 | 1,304,712 |
Gain on settlement of LTAS selling shareholder debt | -58,000 | 0 |
Loan interest capitalized to debt | 432,703 | 420,078 |
Shares issued as inducement to loan | 34,400 | 0 |
Amortization of deferred financing costs | 20,676 | 18,952 |
Change in operating assets and liabilities: | ' | ' |
Accounts receivable | 120,447 | -8,977 |
Accounts receivable from related party | -11,613 | -27,334 |
Inventories | 154,387 | 4,500 |
Prepaid expenses | 8,974 | 56,015 |
Deposits | 50,000 | -50,000 |
Accounts payable | 186,333 | 535,051 |
Accounts payable due related party | -57,003 | 0 |
Accrued liabilities | 1,100,065 | 804,622 |
Deferred revenues | -5,850 | -197,160 |
NET CASH USED IN OPERATING ACTIVITIES | -359,156 | -896,163 |
CASH FLOWS FROM INVESTING ACTIVITIES | ' | ' |
Acquisition, net of cash acquired | 158,545 | 0 |
NET CASH PROVIDED BY INVESTING ACTIVITIES | 158,545 | 0 |
CASH FLOWS FROM FINANCING ACTIVITIES | ' | ' |
Proceeds from sale of common stock | 120,000 | 0 |
Notes payable | 150,000 | 0 |
Proceeds from convertible debt, net of deferred financing costs | 0 | 354,974 |
Proceeds from purchases under the Equity Investment Agreement | 0 | 585,000 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 270,000 | 939,974 |
NET CHANGE IN CASH | 69,389 | 43,811 |
CASH – BEGINNING OF YEAR | 49,343 | 5,532 |
CASH – END OF YEAR | 118,732 | 49,343 |
SUPPLEMENTAL INFORMATION: | ' | ' |
Interest paid | 0 | 0 |
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ' | ' |
Reclassification of long-term convertible notes payable to current notes payable | 267,000 | 0 |
Common stock issued for LTAS acquisition | 672,500 | 0 |
Common stock issued for settlement of LTAS selling shareholder debt | 192,000 | 0 |
Common stock issued in exchange for convertible debt | 76,339 | 1,692,871 |
Common stock issued as payments for services | 367,250 | 458,979 |
Common stock issued for accrued settlements | 339,126 | 269,325 |
Common stock issued as payments for accrued salaries and directors’ fees | 100,000 | 103,200 |
Fair value of vested options issued for accrued salary conversions | $524,624 | $0 |
1_SUMMARY_OF_SIGNIFICANT_ACCOU
1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES | 12 Months Ended | ||
Dec. 31, 2013 | |||
Summary Of Significant Accounting Principles | ' | ||
SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES | ' | ||
DESCRIPTION OF BUSINESS | |||
World Surveillance Group Inc. (the “Company”) designs, develops, markets, and sells, autonomous lighter-than-air (LTA) aerostats and unmanned aerial systems (UAS) capable of carrying payloads that provide semi-persistent intelligence, surveillance and reconnaissance (ISR), security and/or wireless communications from air to ground solutions at low and mid altitudes. The Company’s business focuses primarily on the design and development of innovative aerostats and UAS that provide situational awareness and other communications capabilities via the integration of wireless capabilities and customer payloads. The Company’s aerostats and airships, when integrated with cameras, electronics systems and other high technology payloads, are designed for use by government-related and commercial entities that require real-time ISR or communications support for military, homeland defense, border control, drug interdiction, natural disaster relief, maritime and environmental missions. | |||
The Company’s wholly owned subsidiary Global Telesat Corp. (GTC), provides mobile voice and data communications services globally via satellite to the U.S. government, defense industry and commercial users. GTC specializes in services related to the Globalstar satellite constellation, including satellite telecommunications voice airtime, tracking devices and services, and ground station construction. GTC has an e-commerce mobile satellite solutions portal and is an authorized reseller of satellite telecommunications equipment and services offered by other leading satellite network providers such as Inmarsat, Iridium, Globalstar and Thuraya. GTC also has a new subscription based online tracking portal called GTCTrack, designed to attract new satellite and GSM tracking customers by offering an easy-to-use interface and compatibility with a wide range of devices. GTC’s equipment is installed in various ground stations across Africa, Asia, Australia, Europe and South America. | |||
The Company’s wholly owned subsidiary Lighter Than Air Systems Corp. (LTAS), provides critical aerial and land-based surveillance and communications solutions to government and commercial customers. LTAS systems are designed and developed in-house utilizing proprietary technologies and processes that result in compact, rapidly deployable aerostat solutions and mast-based ISR systems. The LTAS systems have been proven to fulfill critical requirements of the military and law enforcement in the U.S. and internationally. | |||
PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION | |||
The accompanying consolidated financial statements of World Surveillance Group Inc. and its subsidiaries were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the assets, liabilities, revenues and expenses of all majority-owned subsidiaries over which the Company exercises control and, where applicable entities for which the Company has a controlling financial interest or is the primary beneficiary. | |||
All material intercompany accounts and transactions are eliminated in consolidation. | |||
The preparation of financial statements in accordance with U.S. GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The Company’s consolidated financial statements include amounts that are based on management’s best estimates and judgments. Actual results could differ from those estimates. | |||
RECLASSIFICATIONS | |||
Certain 2012 amounts have been reclassified to conform to the 2013 presentation. | |||
GOING CONCERN | |||
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. However, as reflected in the accompanying consolidated financial statements, the Company incurred a loss from operations of $2,733,084 and negative cash flows from operations of $359,156 for the year ended December 31, 2013. The Company had a working capital deficit of $16,598,286 and total stockholders’ deficit of $13,496,100 at December 31, 2013. The Company had an accumulated deficit of $152,412,557 at December 31, 2013. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to raise additional funds either through investments or by generating revenue from the sale of the Company’s products to continue its business operations and implement its strategic plan, which includes, among other things, continued development of its aerostats and UAS, the pursuit or continued development of strategic relationships and expansion of the Company’s subsidiaries’ businesses. The Company’s business plan, which if successfully implemented, will allow it to sell its products for a profit, which in turn will reduce the Company’s dependence on raising additional funds from outside sources. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. The Company anticipates a net loss to continue for at least the next several quarters if not for all of the year 2014. | |||
Additional cash will be needed to support our ongoing operations until such time that operations provide sufficient cash flow to cover expenditures. We are currently pursuing both short and long-term financing options from private investors as well as through institutional investors. We are also working to commercialize our aerostats, Argus One airship, and subsidiaries’ products to begin generating revenues from customers. We are already generating revenue from our aerostats, mast-based products and GTC products. The costs associated with our strategic plan are variable and contingent on our ability to raise capital or begin generating revenue from customer contracts, but we expect to need funding of approximately $3 million over the next 12 months. We are currently in litigation with La Jolla Cove Investors and do not expect any future financing under those agreements. We continue to have discussions with various entities relating to funding, but there can be no assurance that such funding will be received in the amounts required, on a timely basis, or at all. While we believe we will be able to continue to raise capital from various funding sources in such amounts sufficient to sustain operations at our current levels through at least December 31, 2014, if we are not able to do so and if we are not able to generate revenue through the sale of our products, we would likely need to modify our strategy or cut back or terminate some of our operations. If we are able to raise additional funds through the issuance of equity securities, substantial dilution to existing shareholders may result. However, if our plans are not achieved and/or if significant unanticipated events occur or if we are unable to obtain the necessary additional funding on favorable terms or at all, we will likely have to modify our business plan and reduce, delay or discontinue some or all of our operations to continue as a going concern or seek a buyer for all or a portion of our assets. As of the date hereof, we continue to raise capital to sustain our current operations. | |||
REVENUE RECOGNITION | |||
The Company recognizes revenue when all four of the following criteria are met: 1) persuasive evidence of an arrangement exists; 2) delivery has occurred and title has transferred or services have been rendered; 3) our price to the buyer is fixed or determinable; and 4) collectability is reasonably assured. The Company records unearned contract revenues and subscription fees as deferred revenues and their associated costs of sales as prepaid expenses. Deferred revenue from contracts and their related costs are recognized upon completion and fulfillment of the contractual obligation using the completed contract method. During 2012, the Company recognized $200,000 in contract revenue, previous recorded as deferred revenue. Deferred revenues from subscription fees and their related costs are amortized over the subscription term. | |||
INCOME TAXES | |||
The Company accounts for income taxes using the asset and liability approach. Under this approach, deferred income taxes are recognized based on the tax effects of temporary differences between the financial statement and tax bases of assets and liabilities, as measured by current enacted tax rates. Valuation allowances are recorded to reduce the deferred tax assets to an amount that will more likely than not be realized. | |||
U.S. GAAP requires that, in applying the liability method, the financial statement effects of an uncertain tax position be recognized based on the outcome that is more likely than not to occur. Under this criterion the most likely resolution of an uncertain tax position should be analyzed based on technical merits and on the outcome that will likely be sustained under examination. There were no adjustments related to uncertain tax positions recognized during the years ended December 31, 2013 and 2012, respectively. | |||
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS | |||
The Company’s financial instruments include cash, accounts payable, notes payable. The carrying values for the current financial assets and liabilities approximate fair value due to their short maturity. | |||
BASIC AND DILUTED NET LOSS PER COMMON SHARE | |||
Basic and diluted net loss per common share has been computed by dividing the net loss by the weighted average number of shares of common stock outstanding during each period. Whenever losses are reported, the weighted average number of common shares outstanding excludes common stock equivalents because their inclusion would result in a diluted loss per share less than the basic loss per share and therefore would be anti-dilutive. Whenever net income is reported, the weighted average number of common shares outstanding will include common stock equivalents that are in-the-money. If all outstanding options, warrants and convertible shares were converted or exercised as of December 31, 2013, the shares outstanding would be 802,338,749. | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment are carried at historical cost less accumulated depreciation. Depreciation is based on the estimated service lives of the depreciable assets and is calculated using the straight-line method. Expenditures that increase the value or productive capacity of assets are capitalized. Fully depreciated assets are retained in the property and equipment, and accumulated depreciation accounts until they are removed from service. When property and equipment are retired, sold or otherwise disposed of, the asset’s carrying amount and related accumulated depreciation are removed from the accounts and any gain or loss is included in operations. Repairs and maintenance are expensed as incurred. | |||
The estimated useful lives of property and equipment are generally as follows: | |||
· | Appliqués and ground stations | 15 – 25 years | |
· | Machinery and equipment | 3 – 12 years | |
· | Office furniture and fixtures | 3 – 10 years | |
· | Computer hardware and software | 3 – 7 years | |
· | Transportation vehicles | 3 – 6 years | |
LONG LIVED ASSETS | |||
The Company evaluates the fair value of long-lived assets on an annual basis or whenever events or changes in circumstances indicate that its carrying amounts may not be recoverable. Accordingly, any impairment of value is recognized when the carrying amount of a long-lived asset exceeds its fair value. The Company’s evaluations have not indicated any impairment of fair values. | |||
SHARE-BASED COMPENSATION | |||
The Company offers share-based compensation programs to its officers, directors and employees that consist of employee stock options, common stock and restricted stock awards. Common stock and restricted stock awards are issued at the closing price of the Company’s common stock on the date of grant. The Company recognizes compensation expense ratably over the vesting periods for restricted stock awards using the grant date fair value of the stock awarded. The Black-Scholes option pricing model is used to value stock options, and compensation expense is recognized ratably over the requisite service vesting period. Stock options typically have contractual terms of three to seven years. Share-based compensation for employees and non-employees is reflected in the appropriate functional expense category, primarily general and administrative, and research and development. Share-based compensation incurred during the years ended December 31, 2013 and 2012 was $991,893 and $1,983,008, respectively. | |||
2_DISCONTINUED_OPERATIONS
2. DISCONTINUED OPERATIONS | 12 Months Ended |
Dec. 31, 2013 | |
Discontinued Operations and Disposal Groups [Abstract] | ' |
2. DISCONTINUED OPERATIONS | ' |
In 2007, the Company discontinued operations of its telecom and wireless segments and reported the effects as discontinued operations. | |
During the quarter ended June 30, 2012, the Company conducted a detailed analysis of certain of its accounts payable and accrued liabilities including (i) liabilities from discontinued operations of $1,365,929, and (ii) legacy payables and accrued liabilities of $1,787,324. Accounts payable includes an amount for legal judgments that were excluded from the potential write-off. The remaining analyzed liabilities from discontinued operations and legacy payables and accrued liabilities are no longer enforceable debts of the Company due to the passage of the applicable statutes of limitation and were written-off the books of the Company. These liabilities along with the assets of discontinued operations of $6,406 have resulted in an aggregate gain of $2,331,525, comprised of the gain on the release of restricted assets and derecognition of liabilities of discontinued operations of $544,201 and the gain on the derecognition of legacy payables of $1,787,324. |
3_ACQUISITIONS
3. ACQUISITIONS | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Business Combination, Description [Abstract] | ' | ||||||||||||
ACQUISITIONS | ' | ||||||||||||
On March 28, 2013, the Company consummated a Stock Purchase Agreement (the “Agreement”) by and among the Company, Lighter Than Air Systems Corp. (“LTAS”), Felicia Hess (the “Shareholder”) and Kevin Hess (“KHess”) pursuant to which the Company acquired 100% of the outstanding shares of capital stock of LTAS, thereby making LTAS a wholly-owned subsidiary of the Company. | |||||||||||||
The purchase price paid by the Company for LTAS consisted of $250,000 in cash payable on or before the date that is 30 days after the closing of the acquisition (the “Closing”), 25,000,000 shares of the Company’s common stock valued at the acquisition date based on the market price of $0.0269 per share, and an earn-out based on varying percentages of the gross revenues based on the level of revenue from contracts with an identified group of potential customers. No value was ascribed to the earn-out because future revenues, if any, cannot be reliably predicted. Pursuant to the Agreement and an Escrow Agreement, 7,500,000 shares of common stock out of the 25,000,000 shares issued by the Company have been placed in escrow for one year to satisfy possible indemnification claims of the Company. Felicia Hess, the President of LTAS, has entered into an employment agreement to continue in her role as President of LTAS. The Agreement also includes restrictions on the sale of the Company’s securities issued as the purchase price by the Shareholder for a one-year period following the Closing. | |||||||||||||
The Shareholder has the right pursuant to the Agreement to nominate one member of the Company’s Board of Directors, and as a result, the size of the Company’s Board of Directors has been increased and Felicia Hess has been appointed as a Class I director as of March 28, 2013. Since Ms. Hess would not be an “independent” director pursuant to the rules of the Securities and Exchange Commission, it is not expected that she will be appointed to any committees. | |||||||||||||
In connection with the Closing, LTAS, the Shareholder and the Company also entered into an Option Agreement dated March 28, 2013 pursuant to which the Shareholder was granted an exclusive option to purchase the shares of LTAS held by WSGI on the occurrence of (i) a WSGI bankruptcy event, or (ii) a decrease in the daily volume of WSGI’s common stock to below 50,000 shares for 30 consecutive days, occurring within 18 months of the Closing at a purchase price equal to the fair market value of the LTAS stock at the time of such triggering event, as determined by an independent valuation firm. | |||||||||||||
The common stock of the Company issued as purchase price pursuant to the Agreement was issued as restricted securities under an exemption provided by Section 4(2) of the Securities Act of 1933, as amended. The Agreement, however, provides the Shareholder with certain piggyback registration rights. | |||||||||||||
LTAS provides critical aerial and land-based surveillance and communications solutions to government and commercial customers. LTAS systems are designed and developed in-house utilizing proprietary technologies and processes that result in compact, rapidly deployable aerostat solutions and mast-based ISR systems. The LTAS systems have been proven to fulfill critical requirements of the military and law enforcement in the U.S. and internationally. | |||||||||||||
On December 31, 2013, the Company entered into a First Amendment to Agreement (the “First Amendment”) by and among the Company, Lighter Than Air Systems Corp. (“LTAS”), Felicia Hess (the “Shareholder”) and Kevin Hess (“KHess”), which amended and restated various terms and conditions of the Agreement and revised the purchase price from 25 million shares plus $250,000 cash payment to 45 million shares and no cash payment due the selling shareholder and deleted the earn-out payment provisions in their entirety. | |||||||||||||
The Company’s Consolidated Balance Sheet at December 31, 2013 includes the accounts of LTAS amended and restated pursuant to the First Amendment to the Agreement. The operating results of LTAS since the acquisition date of March 28, 2013 are reflected in the Company’s Consolidated Statements of Operations. | |||||||||||||
The following table summarizes the original allocation of the LTAS acquisition purchase price, which has been accounted at the fair values of the assets acquired and liabilities assumed under the acquisition method of accounting adjusted pursuant to the First Amendment to the Agreement: | |||||||||||||
Original | Allocation Adjustments | Amended Allocation | |||||||||||
Allocation | |||||||||||||
Current assets | $ | 703,220 | $ | 7,195 | $ | 710,415 | |||||||
Property and equipment | 1,357 | 2,556 | 3,913 | ||||||||||
Goodwill | 479,585 | 328,239 | 807,824 | ||||||||||
Due to selling shareholder | 0 | (350,000 | ) | (350,000 | ) | ||||||||
Current liabilities assumed | (261,662 | ) | 12,010 | (249,652 | ) | ||||||||
Total Purchase Price | $ | 922,500 | $ | 0 | $ | 922,500 | |||||||
4_RELATED_PARTY_TRANSACTIONS
4. RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2013 | |
Related Party Transactions [Abstract] | ' |
RELATED PARTY TRANSACTIONS | ' |
The accounts receivable from related party at December 31, 2013 and 2012, includes trade receivables from Global Telesat Communications, Ltd. (“GTCL”) of $59,833 and $48,220, respectively. GTCL is a related party based in the United Kingdom and controlled by a current officer of GTC. Total sales to GTCL for the years ended December 31, 2013 and 2012 were $478,582 and $632,992, respectively, and account for 75% and 71% of GTC’s total sales for the respective periods. GTC began charging a 10% handling fee on all orders from GTCL in 2012. | |
The accounts payable due to related party at December 31, 2013, includes allocated rent charges, aerostat envelopes, and labor charges due Aerial Products Corp (“APC”) of $50,691. APC is a related party, controlled by a current employee of the Company. APC shares the manufacturing facilities with LTAS and provides aerostat envelopes and manufacturing labor to LTAS. Total charges from APC to LTAS during the period ended December 31, 2013 were $28,589. |
5_PROPERTY_AND_EQUIPMENT
5. PROPERTY AND EQUIPMENT | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
PROPERTY AND EQUIPMENT | ' | ||||||||
Property and equipment consisted of the following: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Appliqués | $ | 2,755,732 | $ | 2,755,732 | |||||
Office furniture and fixtures | 134,654 | 6,904 | |||||||
2,769,197 | 2,762,636 | ||||||||
Less: accumulated depreciation | -497,233 | -309,670 | |||||||
$ | 2,271,964 | $ | 2,452,966 |
6_OTHER_ACCRUED_LIABILITIES
6. OTHER ACCRUED LIABILITIES | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Unsecured short term promissory notes | ' | ||||||||
OTHER ACCRUED LIABILITIES | ' | ||||||||
Accrued liabilities consisted of the following: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Payroll liabilities | $ | 1,908,171 | $ | 1,494,883 | |||||
Professional fees | 10,000 | 10,000 | |||||||
Accrued legal claims payable | 354,684 | 334,540 | |||||||
Accrued cash true-up from conversion | 353,873 | 176,831 | |||||||
Accrued interest on debenture | 31,133 | 18,243 | |||||||
GTC acquisition payable | 75,000 | 75,000 | |||||||
Other | 80,092 | 22,588 | |||||||
OTHER ACCRUED LIABILITIES | $ | 2,812,953 | $ | 2,132,085 | |||||
7_NOTES_PAYABLE
7. NOTES PAYABLE | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes Payable [Abstract] | ' | ||||||||
NOTES PAYABLE | ' | ||||||||
Notes payable is comprised of the following: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Unsecured promissory notes | $ | 5,997,030 | $ | 5,997,030 | |||||
Unsecured short-term promissory notes | 150,000 | 0 | |||||||
Convertible debenture | 267,000 | 0 | |||||||
Accrued interest | 3,087,053 | 2,654,350 | |||||||
NOTES PAYABLE | $ | 9,501,083 | $ | 8,651,380 | |||||
At December 31, 2013 and 2012, notes payable included two unsecured promissory notes aggregating $5,997,030 with no stated interest rate or terms of repayment. The Company has accrued interest at 7% per annum on both notes since their inception and includes the notes in current liabilities. | |||||||||
On February 1, 2013, the Company issued a $100,000 75-day unsecured 10% promissory note to an individual investor for funds received. On March 18, 2013, the Company issued a $50,000 60-day unsecured 12% promissory note to the same investor for funds received. The Company issued 2 million common shares to the investor as an inducement for the loans, which were amortized as financing fees. As of December 31, 2013, the Company is in default has not repaid these notes. | |||||||||
On February 2, 2012, the Company closed on a Securities Purchase Agreement with La Jolla Cove Investors, Inc. a California-based institutional investor (the “Investor”) for an aggregate of $5.5 million. The $500,000 initial tranche was funded at the closing in connection with a Convertible Debenture due in February 2015 and an Equity Investment Agreement (the “EIA”). A portion of the Debenture was converted by the Investor into shares of common stock beginning on May 3, 2012. | |||||||||
The Debenture grants the Investor with a right of first refusal on future financings of the Company subject to certain terms and conditions and contains acceleration provisions requiring 120% of the principal amount, accrued and unpaid interest, to become immediately due and payable on certain events of default described therein. | |||||||||
Pursuant to the EIA, the Investor agreed to invest an additional $5.0 million in monthly tranches beginning on May 3, 2012. The Investor also has the right to purchase an additional $5.0 million of the Company’s common stock at an exercise price of $0.21 per share for a period of three years. | |||||||||
The Company incurred customary closing costs including attorney’s fees, commissions and closing costs of $62,027, which are recorded as deferred financing costs to be amortized as additional interest expense on a straight-line basis over the 3-year term of the Debenture and EIA. | |||||||||
On July 25, 2013, the Company filed a lawsuit against the Investor in the United States District Court for the Northern District of California relating to the finance documents entered into by the Company and the Investor in January 2012. In the lawsuit, the Company alleges breach of contract and other causes of action. The Company has reclassified the convertible notes payable to current notes payable. | |||||||||
8_DERIVATIVE_LIABILITIES
8. DERIVATIVE LIABILITIES | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Derivative Liability [Abstract] | ' | ||||||||||||||||
8. DERIVATIVE LIABILITIES | ' | ||||||||||||||||
The Company accounts for derivative instruments at fair value. Gains and losses from changes in the fair value of derivatives are recognized in interest expense. The Company’s derivative instruments consist of stock warrants that contained anti-dilution provisions that were issued with certain debt and equity financings. During 2013, all financial instruments that gave rise to the derivative liabilities have expired. | |||||||||||||||||
Warrants | |||||||||||||||||
In the past, the Company entered into financing agreements for convertible promissory notes and stock purchase agreements, which included Class A and Class B warrants. Both Class A and Class B warrants contained anti-dilution rights and are considered to be derivative liabilities under U.S. GAAP. During 2010 and 2011, the Company entered into new stock purchase agreements and issued an aggregate of 9,677,167 warrants under the 2010 and 2011 stock purchase agreements. Warrants issued under the 2010 and 2011 stock purchase agreements have no anti-dilution rights and are not considered to be derivative liabilities. All warrants have 3-year terms and are exercisable for a purchase price of $0.21 per share or, in the case of Class B warrants, $0.315 per share. | |||||||||||||||||
The following table summarizes certain information about the Company’s warrants to purchase common stock. | |||||||||||||||||
Derivative Liabilities | |||||||||||||||||
Warrants | Warrants | Warrants | Weighted | ||||||||||||||
Class A | Class B | & Purchase Rights | Average | ||||||||||||||
Outstanding at December 31, 2012 | 8,327,462 | 8,327,462 | 20,033,021 | $ | 0.234 | ||||||||||||
Warrants Granted | 0 | 0 | 972,381 | 0.21 | |||||||||||||
Warrants Expired | (8,327,462 | ) | (8,327,462 | ) | -2,377,167 | 0.256 | |||||||||||
Outstanding at December 31, 2013 | 0 | 0 | 18,628,235 | $ | 0.21 | ||||||||||||
The warrants outstanding and exercisable at December 31, 2013 and 2012 had no intrinsic value. All warrants were fully exercisable and there was no unamortized cost to be recognized in future. | |||||||||||||||||
9_SHAREBASED_COMPENSATION
9. SHARE-BASED COMPENSATION | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Share-based Compensation [Abstract] | ' | ||||||||||||||||
SHARE-BASED COMPENSATION | ' | ||||||||||||||||
The Company makes share-based compensation awards to its directors, officers, employees and consultants that consist of common stock, restricted stock and stock options. All common stock and restricted stock awards are subject to the securities law restrictions of Rule 144 as promulgated under the Securities Act of 1933, as amended. | |||||||||||||||||
Common Stock | |||||||||||||||||
The Company recognizes the cost of the common stock issued to directors, officers, and employees as compensation expense at the closing market price on the grant date. All common stock awards are fully vested on the date of grant, therefore no unrecognized compensation expense is associated with these awards. During 2013, the Company issued 7,692,308 common shares totaling $100,000 for salary conversions against accrued salaries; and issued 900,000 common shares for director fees totaling $13,890. Director fees and compensation expenses are included in general and administrative expense. | |||||||||||||||||
Restricted Stock | |||||||||||||||||
Awards of restricted stock are independent of stock option grants and are generally subject to forfeiture if employment terminates prior to vesting. Prior to vesting, ownership of the restricted stock cannot be transferred. The restricted stock has the same voting rights as the common stock. The Company recognizes fair value of restricted stock awards based upon the stock’s closing market price on the grant date as compensation according to the terms of award’s vesting schedule; i.e. ratably over the vesting period or upon attainment of specific performance-based goals and objectives. During 2013, the Company awarded 20 million common shares with a vested total of $85,968 as retention bonuses, of which 12 million were rescinded and exchanged for fully-vested stock options on December 31, 2013. Share-based compensation is included in general and administration expense. At December 31, 2013, there remains approximately $118,650 in unrecognized compensation relating to performance-based restricted stock awards. | |||||||||||||||||
Stock Options | |||||||||||||||||
The Company has issued stock options at exercise prices equal to the Company’s common stock market price on the date of grant with contractual terms of three to seven years. Historically, the stock options were fully vested and expensed as compensation on the grant date. During 2010, the Company began issuing stock options with vesting schedules and such stock options are generally subject to forfeiture if employment terminates prior to vesting. On December 31 2013, certain officers and employees rescinded 12 million shares of previously awarded restricted shares for fully-vested stock options on a one-for-one basis valued at $216,000. Also during 2013, the Company issued 40,355,693 stock options in lieu of accrued salaries for $524,624; awarded 14 million options for retention bonuses totaling $285,600; issued 900,000 options for director’s fees totaling $23,412 and; had previously issued options vest totaling $30,685. Total share-based compensation attributable to vested option agreements of $339,697 is included in general and administrative. At December 31, 2013, there was approximately $80,700 in unrecognized compensation expense. | |||||||||||||||||
The Company uses the Black-Scholes option pricing model to estimate the fair value of stock options. The principal assumptions utilized in valuing stock options include the expected stock price volatility (based on the most recent historical period equal to the expected life of the option); the expected option life (an estimate based on historical experience); the expected dividend yield; and the risk-free interest rate (an estimate based upon on the yields of Treasury constant maturities equal to the expected life of the option). | |||||||||||||||||
The following table summarizes the stock option activity for the years ended December 31, | |||||||||||||||||
2013 | 2012 | ||||||||||||||||
Shares | Weighted | Shares | Weighted | ||||||||||||||
average | average | ||||||||||||||||
exercise | exercise | ||||||||||||||||
price | price | ||||||||||||||||
Outstanding at beginning of year | 68,650,000 | $ | 0.046 | 40,916,667 | $ | 0.067 | |||||||||||
Granted | 15,300,000 | 0.023 | 0 | 0 | |||||||||||||
Exchanged for salary conversion | 40,355,693 | 0.013 | 22,316,667 | 0.023 | |||||||||||||
Exchanged for rescinded stock | 12,000,000 | 0.009 | 14,000,000 | 0.015 | |||||||||||||
Exercised | 0 | 0 | 0 | 0 | |||||||||||||
Forfeited / expired / cancelled | (11,722,222 | ) | 0.086 | (8,583,334 | ) | 0.073 | |||||||||||
Outstanding at end of year | 124,583,471 | $ | .025 | 68,650,000 | $ | .046 | |||||||||||
Options exercisable at end of year | 119,583,471 | $ | 0.026 | 63,358,333 | $ | 0.048 | |||||||||||
Weighted average remaining contractual term | 5.60 years | 4.55 years | |||||||||||||||
The following table summarizes information about stock options outstanding and exercisable at December 31, 2013: | |||||||||||||||||
Options Outstanding and Exercisable | |||||||||||||||||
Exercise prices | Number | Weighted average | Weighted | ||||||||||||||
outstanding | remaining | Average | |||||||||||||||
contractual | Exercise | ||||||||||||||||
terms | price | ||||||||||||||||
(years) | |||||||||||||||||
$0.01 | 12,000,000 | 7 | 0.0096 | ||||||||||||||
$0.01 | 400,000 | 2.87 | 0.011 | ||||||||||||||
$0.01 | 40,355,693 | 6.73 | 0.013 | ||||||||||||||
$0.02 | 11,000,000 | 5.75 | $ | 0.015 | |||||||||||||
$0.02 | 250,000 | 2.17 | 0.016 | ||||||||||||||
$0.02 | 250,000 | 2.37 | 0.021 | ||||||||||||||
$0.02 | 22,316,667 | 5.87 | 0.023 | ||||||||||||||
$0.02 | 12,000,000 | 6.58 | 0.0238 | ||||||||||||||
$0.03 | 400,000 | 2.58 | 0.0275 | ||||||||||||||
$0.05 | 4,444,444 | .34 | 0.045 | ||||||||||||||
$0.07 | 1,500,000 | .11 | 0.07 | ||||||||||||||
$0.08 | 10,250,000 | 3.25 | 0.075 | ||||||||||||||
$0.08 | 1,500,000 | .27 | 0.08 | ||||||||||||||
$0.09 | 2,916,667 | .27 | 0.09 | ||||||||||||||
119,583,471 | 5.59 | $ | 0.026 | ||||||||||||||
The aggregate intrinsic value of the 119,583,471 options outstanding and exercisable at December 31, 2013 was $0. The aggregate intrinsic value for the options is calculated as the difference between the prices of the underlying awards and quoted price of the Company’s common stock for the options that were in-the-money at December 31, 2013. | |||||||||||||||||
10_INCOME_TAXES
10. INCOME TAXES | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||||||
INCOME TAXES | ' | ||||||||||||
The Company has federal and state net operating loss (NOL) carryforwards, which can be used to offset future earnings. Accordingly, no provision for income taxes is recorded in these consolidated financial statements. A deferred tax asset for the future benefits of net operating losses and other differences is offset by a 100% valuation allowance due to the uncertainty of the Company's ability to realize future tax benefits from the losses. These net operating losses will expire in the years 2021 through 2031. | |||||||||||||
Certain income and expenses are recognized in different periods for tax and financial reporting purposes. The items that give rise to these temporary differences at the Company consist of its NOL carryforwards and the related valuation allowances. The resulting deferred tax assets and liabilities consist of the tax effects (computed at 15%) of the temporary differences and are listed below: | |||||||||||||
2013 | 2013 | 2012 | |||||||||||
Changes | |||||||||||||
Deferred tax assets: | |||||||||||||
Net operating loss carry-forwards | $ | 18,245,910 | $ | 496,209 | $ | 17,749,701 | |||||||
Valuation allowance | (18,245,910 | ) | (496,209 | ) | (17,749,701 | ) | |||||||
Net deferred tax asset | $ | — | $ | — | $ | — | |||||||
A reconciliation of income benefit provided at the federal statutory rate of 15% to income tax benefit is as follows: | |||||||||||||
2013 | 2012 | ||||||||||||
Income tax benefit computed at federal statutory rate | $ | (496,209 | ) | $ | (504,428 | ) | |||||||
Deferred income taxes | 496,209 | 504,428 | |||||||||||
$ | — | $ | — | ||||||||||
At the end of 2013, the Company also had net operating loss carry-forwards of its predecessor, related to its reincorporation and reorganization under the Internal Revenue Code, available to offset future taxable income. These NOL carryforwards total approximately $81,429,083 and expire at various dates through 2022. | |||||||||||||
The Company operated in multiple tax jurisdictions within the United States of America. Although management does not believe that the Company is currently under examination in any major tax jurisdiction in which it operates other than for the issues with the IRS as described in Note 15, the Company remains subject to examination in all of those tax jurisdictions until the applicable statute of limitations expire. As of December 31, 2013, 2008 and subsequent tax years remain subject to examination by the Internal Revenue Service (“IRS”) and in the Company’s major state tax jurisdictions. The Company does not expect to have a material change to unrecognized tax positions within the next twelve months. | |||||||||||||
11_PER_SHARE_INFORMATION
11. PER SHARE INFORMATION: | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Earnings Per Share [Abstract] | ' | ||||||||
PER SHARE INFORMATION: | ' | ||||||||
Basic earnings per share (“Basic EPS”) of common stock is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding. Diluted earnings per share of common stock (“Diluted EPS”) is computed by dividing the net loss by the weighted-average number of shares of common stock, and dilutive common stock equivalents and convertible securities then outstanding. U.S. GAAP requires the presentation of both Basic EPS and Diluted EPS on the face of the Company’s Condensed Consolidated Statements of Operations. There were no dilutive common stock equivalents at December 31, 2013 and 2012. | |||||||||
Years Ended December 31, | |||||||||
2013 | 2012 | ||||||||
Numerator: | |||||||||
Net loss | $ | (3,417,205 | ) | $ | (3,362,853 | ) | |||
Denominator: | |||||||||
Weighted-average common shares outstanding | 632,009,690 | 420,841,556 | |||||||
Net loss per share: | |||||||||
Basic and diluted | $ | (0.01 | ) | $ | (0.01 | ) |
12_COMMITMENTS
12. COMMITMENTS | 12 Months Ended |
Dec. 31, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
12. COMMITMENTS | ' |
Agreements | |
The Company has entered into several agreements and memorandums of understanding during 2013 and 2012 and through the date of this Annual Report on Form 10-K, none of which require the recording of any assets, liabilities, revenues or expenses. | |
Lease Commitments | |
The Company’s headquarters are located at the Kennedy Space Center, FL on State Road 405, Building M6-306A, Room 1400. The Company intends to renew its annual lease agreement. Currently, the Company is paying office rent on a month-to-month basis for $1,607 per month plus state sales tax. In November 2013, the Company renewed an annual lease agreement for GTC office space at $3,500 per month. LTAS does not have a contractual rental allocation agreement with related party, APC, who is under a lease agreement with the landlord. The Company is also obligated under other monthly rental agreements for additional facilities and office furniture. | |
Rent expense for 2013 and 2012 was $119,139 and $120,727, respectively. | |
The estimated future minimum rental payments on non-cancelable operating leases at December 31, 2013 consist of $37,625 due during the year ended December 31, 2014. | |
13_LITIGATION_AND_CONTINGENCIE
13. LITIGATION AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2013 | |
Stock Issued During Period Shares Director Stock Award | ' |
LITIGATION AND CONTINGENCIES | ' |
In the ordinary conduct of business, the Company is subject to periodic lawsuits, investigations and litigation claims, which the Company accrues for where appropriate and can be reasonably estimated. The Company cannot predict with certainty the ultimate resolution of such lawsuits, investigations and claims asserted against it. At December 31, 2012, the Company had the following material contingencies: | |
Brio Capital | |
Brio Capital, the holder of a warrant, filed an action against us on February 25, 2011 in the New York Supreme Court, County of New York, for the issuance of approximately 6.2 million shares of common stock upon the exercise of certain warrants. The Court granted a non-final Summary Judgment Order on a portion of the action in favor of Brio in December 2011 requiring us, among other things, to issue 6.2 million shares of common stock. We have issued the shares required by the Court order. We also entered into a settlement agreement to pay $57,661 in legal fees as required by the Court order, which has been satisfied. We reached a settlement with Brio resolving all remaining matters. Under the terms of the settlement, we are required to issue a number of shares of common stock in twelve (12) monthly installments equal to $31,250 divided by the average of the closing bid prices of our common stock for the last three (3) trading days of the month immediately preceding the month in which the shares are due to be issued. Pursuant to the Court’s Section 3(a) (10) approval, the shares of common stock issued to Brio shall be freely tradable upon issuance. All shares issued are subject to a leak-out provision contained in the settlement agreement. | |
The DeCarlo Group | |
A lawsuit was filed by the DeCarlo Group on November 24, 2010 in Miami-Dade County Courthouse for over $400,000 claimed in connection with CFO and accounting services allegedly rendered to the Company. It is our position that we were overcharged in connection with the services rendered and that no amounts are due. DeCarlo has now filed a second amended complaint that we have responded to and intend to otherwise defend ourselves vigorously in this matter, but the outcome of the action cannot be predicted. | |
La Jolla Cove Investors, Inc. | |
On July 25, 2013, we filed a lawsuit against La Jolla Cove Investors, Inc. in the United States District Court for the Northern District of California relating to the finance documents entered into by us and La Jolla in January 2012. In the lawsuit, we allege breach of contract and other causes of action. We are seeking injunctive relief in addition to unspecified monetary damages as well as other relief. La Jolla has made counterclaims against us and is defending against our complaint. We intend to otherwise pursue this matter vigorously, but the outcome of the action cannot be predicted. | |
IRS | |
During 2010 and 2009, we, under our former name Sanswire Corp., incurred and reported to the Internal Revenue Service (“IRS”) payroll tax liabilities (and deposited the appropriate withholding amounts) during the normal course of business at each payroll cycle. We reported payroll tax liabilities for all the tax periods in 2007 and 2008, however, we failed to deposit the appropriate withholding amounts for those periods. We recognized this issue and, accordingly, contacted the IRS to make arrangements to pay any taxes due. One such matter has been resolved with the IRS, and we currently estimate the amount involved in the second matter to be approximately $200,000. We may be subject to additional penalties and interest from the IRS in connection with these payroll tax matters. We are engaged in discussions and continue to cooperate with the IRS to resolve this matter. | |
The Company provides indemnification, to the extent permitted by law, to its officers, directors, employees and agents for liabilities arising from certain events or occurrences while the officer, director, employee, or agent is or was serving at our request in such capacity. |
14_SUBSEQUENT_EVENTS
14. SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2013 | |
Subsequent Events [Abstract] | ' |
SUBSEQUENT EVENTS | ' |
The Company has evaluated subsequent events from the balance sheet date and determined there were no subsequent events requiring disclosure. |
1_SUMMARY_OF_SIGNIFICANT_ACCOU1
1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (Policies) | 12 Months Ended | ||
Dec. 31, 2013 | |||
Summary Of Significant Accounting Principles | ' | ||
DESCRIPTION OF BUSINESS | ' | ||
World Surveillance Group Inc. (the “Company”) designs, develops, markets, and sells, autonomous lighter-than-air (LTA) aerostats and unmanned aerial systems (UAS) capable of carrying payloads that provide semi-persistent intelligence, surveillance and reconnaissance (ISR), security and/or wireless communications from air to ground solutions at low and mid altitudes. The Company’s business focuses primarily on the design and development of innovative aerostats and UAS that provide situational awareness and other communications capabilities via the integration of wireless capabilities and customer payloads. The Company’s aerostats and airships, when integrated with cameras, electronics systems and other high technology payloads, are designed for use by government-related and commercial entities that require real-time ISR or communications support for military, homeland defense, border control, drug interdiction, natural disaster relief, maritime and environmental missions. | |||
The Company’s wholly owned subsidiary Global Telesat Corp. (GTC), provides mobile voice and data communications services globally via satellite to the U.S. government, defense industry and commercial users. GTC specializes in services related to the Globalstar satellite constellation, including satellite telecommunications voice airtime, tracking devices and services, and ground station construction. GTC has an e-commerce mobile satellite solutions portal and is an authorized reseller of satellite telecommunications equipment and services offered by other leading satellite network providers such as Inmarsat, Iridium, Globalstar and Thuraya. GTC also has a new subscription based online tracking portal called GTCTrack, designed to attract new satellite and GSM tracking customers by offering an easy-to-use interface and compatibility with a wide range of devices. GTC’s equipment is installed in various ground stations across Africa, Asia, Australia, Europe and South America. | |||
The Company’s wholly owned subsidiary Lighter Than Air Systems Corp. (LTAS), provides critical aerial and land-based surveillance and communications solutions to government and commercial customers. LTAS systems are designed and developed in-house utilizing proprietary technologies and processes that result in compact, rapidly deployable aerostat solutions and mast-based ISR systems. The LTAS systems have been proven to fulfill critical requirements of the military and law enforcement in the U.S. and internationally. | |||
BASIS OF PRESENTATION | ' | ||
The accompanying consolidated financial statements of World Surveillance Group Inc. and its subsidiaries were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the assets, liabilities, revenues and expenses of all majority-owned subsidiaries over which the Company exercises control and, where applicable entities for which the Company has a controlling financial interest or is the primary beneficiary. | |||
All material intercompany accounts and transactions are eliminated in consolidation. | |||
The preparation of financial statements in accordance with U.S. GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The Company’s consolidated financial statements include amounts that are based on management’s best estimates and judgments. Actual results could differ from those estimates. | |||
RECLASSIFICATIONS | ' | ||
Certain 2012 amounts have been reclassified to conform to the 2013 presentation. | |||
GOING CONCERN | ' | ||
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. However, as reflected in the accompanying consolidated financial statements, the Company incurred a loss from operations of $2,733,084 and negative cash flows from operations of $359,156 for the year ended December 31, 2013. The Company had a working capital deficit of $16,598,286 and total stockholders’ deficit of $13,496,100 at December 31, 2013. The Company had an accumulated deficit of $152,412,557 at December 31, 2013. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to raise additional funds either through investments or by generating revenue from the sale of the Company’s products to continue its business operations and implement its strategic plan, which includes, among other things, continued development of its aerostats and UAS, the pursuit or continued development of strategic relationships and expansion of the Company’s subsidiaries’ businesses. The Company’s business plan, which if successfully implemented, will allow it to sell its products for a profit, which in turn will reduce the Company’s dependence on raising additional funds from outside sources. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. The Company anticipates a net loss to continue for at least the next several quarters if not for all of the year 2014. | |||
Additional cash will be needed to support our ongoing operations until such time that operations provide sufficient cash flow to cover expenditures. We are currently pursuing both short and long-term financing options from private investors as well as through institutional investors. We are also working to commercialize our aerostats, Argus One airship, and subsidiaries’ products to begin generating revenues from customers. We are already generating revenue from our aerostats, mast-based products and GTC products. The costs associated with our strategic plan are variable and contingent on our ability to raise capital or begin generating revenue from customer contracts, but we expect to need funding of approximately $3 million over the next 12 months. We are currently in litigation with La Jolla Cove Investors and do not expect any future financing under those agreements. We continue to have discussions with various entities relating to funding, but there can be no assurance that such funding will be received in the amounts required, on a timely basis, or at all. While we believe we will be able to continue to raise capital from various funding sources in such amounts sufficient to sustain operations at our current levels through at least December 31, 2014, if we are not able to do so and if we are not able to generate revenue through the sale of our products, we would likely need to modify our strategy or cut back or terminate some of our operations. If we are able to raise additional funds through the issuance of equity securities, substantial dilution to existing shareholders may result. However, if our plans are not achieved and/or if significant unanticipated events occur or if we are unable to obtain the necessary additional funding on favorable terms or at all, we will likely have to modify our business plan and reduce, delay or discontinue some or all of our operations to continue as a going concern or seek a buyer for all or a portion of our assets. As of the date hereof, we continue to raise capital to sustain our current operations. | |||
REVENUE RECOGNITION | ' | ||
The Company recognizes revenue when all four of the following criteria are met: 1) persuasive evidence of an arrangement exists; 2) delivery has occurred and title has transferred or services have been rendered; 3) our price to the buyer is fixed or determinable; and 4) collectability is reasonably assured. The Company records unearned contract revenues and subscription fees as deferred revenues and their associated costs of sales as prepaid expenses. Deferred revenue from contracts and their related costs are recognized upon completion and fulfillment of the contractual obligation using the completed contract method. During 2012, the Company recognized $200,000 in contract revenue, previous recorded as deferred revenue. Deferred revenues from subscription fees and their related costs are amortized over the subscription term. | |||
INCOME TAXES | ' | ||
The Company accounts for income taxes using the asset and liability approach. Under this approach, deferred income taxes are recognized based on the tax effects of temporary differences between the financial statement and tax bases of assets and liabilities, as measured by current enacted tax rates. Valuation allowances are recorded to reduce the deferred tax assets to an amount that will more likely than not be realized. | |||
U.S. GAAP requires that, in applying the liability method, the financial statement effects of an uncertain tax position be recognized based on the outcome that is more likely than not to occur. Under this criterion the most likely resolution of an uncertain tax position should be analyzed based on technical merits and on the outcome that will likely be sustained under examination. There were no adjustments related to uncertain tax positions recognized during the years ended December 31, 2013 and 2012, respectively. | |||
FAIR VALUE MEASUREMENTS | ' | ||
The Company’s financial instruments include cash, accounts payable, notes payable. The carrying values for the current financial assets and liabilities approximate fair value due to their short maturity. | |||
BASIC AND DILUTED NET LOSS PER COMMON SHARE | ' | ||
Basic and diluted net loss per common share has been computed by dividing the net loss by the weighted average number of shares of common stock outstanding during each period. Whenever losses are reported, the weighted average number of common shares outstanding excludes common stock equivalents because their inclusion would result in a diluted loss per share less than the basic loss per share and therefore would be anti-dilutive. Whenever net income is reported, the weighted average number of common shares outstanding will include common stock equivalents that are in-the-money. If all outstanding options, warrants and convertible shares were converted or exercised as of December 31, 2013, the shares outstanding would be 802,338,749. | |||
PROPERTY AND EQUIPMENT | ' | ||
Property and equipment are carried at historical cost less accumulated depreciation. Depreciation is based on the estimated service lives of the depreciable assets and is calculated using the straight-line method. Expenditures that increase the value or productive capacity of assets are capitalized. Fully depreciated assets are retained in the property and equipment, and accumulated depreciation accounts until they are removed from service. When property and equipment are retired, sold or otherwise disposed of, the asset’s carrying amount and related accumulated depreciation are removed from the accounts and any gain or loss is included in operations. Repairs and maintenance are expensed as incurred. | |||
The estimated useful lives of property and equipment are generally as follows: | |||
· | Appliqués and ground stations | 15 – 25 years | |
· | Machinery and equipment | 3 – 12 years | |
· | Office furniture and fixtures | 3 – 10 years | |
· | Computer hardware and software | 3 – 7 years | |
· | Transportation vehicles | 3 – 6 years | |
LONG LIVED ASSETS | ' | ||
The Company evaluates the fair value of long-lived assets on an annual basis or whenever events or changes in circumstances indicate that its carrying amounts may not be recoverable. Accordingly, any impairment of value is recognized when the carrying amount of a long-lived asset exceeds its fair value. The Company’s evaluations have not indicated any impairment of fair values. | |||
SHARE-BASED COMPENSATION | ' | ||
The Company offers share-based compensation programs to its officers, directors and employees that consist of employee stock options, common stock and restricted stock awards. Common stock and restricted stock awards are issued at the closing price of the Company’s common stock on the date of grant. The Company recognizes compensation expense ratably over the vesting periods for restricted stock awards using the grant date fair value of the stock awarded. The Black-Scholes option pricing model is used to value stock options, and compensation expense is recognized ratably over the requisite service vesting period. Stock options typically have contractual terms of three to seven years. Share-based compensation for employees and non-employees is reflected in the appropriate functional expense category, primarily general and administrative, and research and development. Share-based compensation incurred during the years ended December 31, 2013 and 2012 was $991,893 and $1,983,008, respectively. |
1_SUMMARY_OF_SIGNIFICANT_ACCOU2
1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (Tables) | 12 Months Ended | ||
Dec. 31, 2013 | |||
Summary Of Significant Accounting Principles | ' | ||
Estimated Useful Lives of Property and Equipment | ' | ||
The estimated useful lives of property and equipment are generally as follows: | |||
· | Appliqués and ground stations | 15 – 25 years | |
· | Machinery and equipment | 3 – 12 years | |
· | Office furniture and fixtures | 3 – 10 years | |
· | Computer hardware and software | 3 – 7 years | |
· | Transportation vehicles | 3 – 6 years |
3_ACQUISITIONS_Tables
3. ACQUISITIONS (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Business Combination, Description [Abstract] | ' | ||||||||||||
Summary of Original and Revised Allocation Acquisition Purchase Price | ' | ||||||||||||
Original | Allocation Adjustments | Amended Allocation | |||||||||||
Allocation | |||||||||||||
Current assets | $ | 703,220 | $ | 7,195 | $ | 710,415 | |||||||
Property and equipment | 1,357 | 2,556 | 3,913 | ||||||||||
Goodwill | 479,585 | 328,239 | 807,824 | ||||||||||
Due to selling shareholder | 0 | (350,000 | ) | (350,000 | ) | ||||||||
Current liabilities assumed | (261,662 | ) | 12,010 | (249,652 | ) | ||||||||
Total Purchase Price | $ | 922,500 | $ | 0 | $ | 922,500 |
5_PROPERTY_AND_EQUIPMENT_Table
5. PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Property and Equipment | ' | ||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Appliqués | $ | 2,755,732 | $ | 2,755,732 | |||||
Office furniture and fixtures | 134,654 | 6,904 | |||||||
2,769,197 | 2,762,636 | ||||||||
Less: accumulated depreciation | -497,233 | -309,670 | |||||||
$ | 2,271,964 | $ | 2,452,966 |
6_OTHER_ACCRUED_LIABILITIES_Ta
6. OTHER ACCRUED LIABILITIES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Unsecured short term promissory notes | ' | ||||||||
Accrued Liabilities | ' | ||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Payroll liabilities | $ | 1,908,171 | $ | 1,494,883 | |||||
Professional fees | 10,000 | 10,000 | |||||||
Accrued legal claims payable | 354,684 | 334,540 | |||||||
Accrued cash true-up from conversion | 353,873 | 176,831 | |||||||
Accrued interest on debenture | 31,133 | 18,243 | |||||||
GTC acquisition payable | 75,000 | 75,000 | |||||||
Other | 80,092 | 22,588 | |||||||
OTHER ACCRUED LIABILITIES | $ | 2,812,953 | $ | 2,132,085 |
7_NOTES_PAYABLE_Tables
7. NOTES PAYABLE (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes Payable [Abstract] | ' | ||||||||
Notes Payable | ' | ||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Unsecured promissory notes | $ | 5,997,030 | $ | 5,997,030 | |||||
Unsecured short-term promissory notes | 150,000 | 0 | |||||||
Convertible debenture | 267,000 | 0 | |||||||
Accrued interest | 3,087,053 | 2,654,350 | |||||||
NOTES PAYABLE | $ | 9,501,083 | $ | 8,651,380 |
8_DERIVATIVE_LIABILITIES_Table
8. DERIVATIVE LIABILITIES (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Derivative Liability [Abstract] | ' | ||||||||||||||||
Warrant to Purchase Common Stock | ' | ||||||||||||||||
Derivative Liabilities | |||||||||||||||||
Warrants | Warrants | Warrants | Weighted | ||||||||||||||
Class A | Class B | & Purchase Rights | Average | ||||||||||||||
Outstanding at December 31, 2012 | 8,327,462 | 8,327,462 | 20,033,021 | $ | 0.234 | ||||||||||||
Warrants Granted | 0 | 0 | 972,381 | 0.21 | |||||||||||||
Warrants Expired | (8,327,462 | ) | (8,327,462 | ) | -2,377,167 | 0.256 | |||||||||||
Outstanding at December 31, 2013 | 0 | 0 | 18,628,235 | $ | 0.21 |
9_SHAREBASED_COMPENSATION_Tabl
9. SHARE-BASED COMPENSATION (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Share-based Compensation [Abstract] | ' | ||||||||||||||||
Schedule of stock option activity | ' | ||||||||||||||||
2013 | 2012 | ||||||||||||||||
Shares | Weighted | Shares | Weighted | ||||||||||||||
average | average | ||||||||||||||||
exercise | exercise | ||||||||||||||||
price | price | ||||||||||||||||
Outstanding at beginning of year | 68,650,000 | $ | 0.046 | 40,916,667 | $ | 0.067 | |||||||||||
Granted | 15,300,000 | 0.023 | 0 | 0 | |||||||||||||
Exchanged for salary conversion | 40,355,693 | 0.013 | 22,316,667 | 0.023 | |||||||||||||
Exchanged for rescinded stock | 12,000,000 | 0.009 | 14,000,000 | 0.015 | |||||||||||||
Exercised | 0 | 0 | 0 | 0 | |||||||||||||
Forfeited / expired / cancelled | (11,722,222 | ) | 0.086 | (8,583,334 | ) | 0.073 | |||||||||||
Outstanding at end of year | 124,583,471 | $ | .025 | 68,650,000 | $ | .046 | |||||||||||
Options exercisable at end of year | 119,583,471 | $ | 0.026 | 63,358,333 | $ | 0.048 | |||||||||||
Weighted average remaining contractual term | 5.60 years | 4.55 years | |||||||||||||||
Stock Options Outstanding and Exercisable | ' | ||||||||||||||||
Options Outstanding and Exercisable | |||||||||||||||||
Exercise prices | Number | Weighted average | Weighted | ||||||||||||||
outstanding | remaining | Average | |||||||||||||||
contractual | Exercise | ||||||||||||||||
terms | price | ||||||||||||||||
(years) | |||||||||||||||||
$0.01 | 12,000,000 | 7 | 0.0096 | ||||||||||||||
$0.01 | 400,000 | 2.87 | 0.011 | ||||||||||||||
$0.01 | 40,355,693 | 6.73 | 0.013 | ||||||||||||||
$0.02 | 11,000,000 | 5.75 | $ | 0.015 | |||||||||||||
$0.02 | 250,000 | 2.17 | 0.016 | ||||||||||||||
$0.02 | 250,000 | 2.37 | 0.021 | ||||||||||||||
$0.02 | 22,316,667 | 5.87 | 0.023 | ||||||||||||||
$0.02 | 12,000,000 | 6.58 | 0.0238 | ||||||||||||||
$0.03 | 400,000 | 2.58 | 0.0275 | ||||||||||||||
$0.05 | 4,444,444 | .34 | 0.045 | ||||||||||||||
$0.07 | 1,500,000 | .11 | 0.07 | ||||||||||||||
$0.08 | 10,250,000 | 3.25 | 0.075 | ||||||||||||||
$0.08 | 1,500,000 | .27 | 0.08 | ||||||||||||||
$0.09 | 2,916,667 | .27 | 0.09 | ||||||||||||||
119,583,471 | 5.59 | $ | 0.026 |
10_INCOME_TAXES_Tables
10. INCOME TAXES (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||||||
Schedule of Deferred Tax Assets and Liabilities | ' | ||||||||||||
2013 | 2013 | 2012 | |||||||||||
Changes | |||||||||||||
Deferred tax assets: | |||||||||||||
Net operating loss carry-forwards | $ | 18,245,910 | $ | 496,209 | $ | 17,749,701 | |||||||
Valuation allowance | (18,245,910 | ) | (496,209 | ) | (17,749,701 | ) | |||||||
Net deferred tax asset | $ | — | $ | — | $ | — | |||||||
Schedule of Effective Income Tax Rate Reconciliation | ' | ||||||||||||
2013 | 2012 | ||||||||||||
Income tax benefit computed at federal statutory rate | $ | (496,209 | ) | $ | (504,428 | ) | |||||||
Deferred income taxes | 496,209 | 504,428 | |||||||||||
$ | — | $ | — |
11_PER_SHARE_INFORMATION_Table
11. PER SHARE INFORMATION: (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Earnings Per Share [Abstract] | ' | ||||||||
Computation of Earnings Per Share Basic and Diluted | ' | ||||||||
Years Ended December 31, | |||||||||
2013 | 2012 | ||||||||
Numerator: | |||||||||
Net loss | $ | (3,417,205 | ) | $ | (3,362,853 | ) | |||
Denominator: | |||||||||
Weighted-average common shares outstanding | 632,009,690 | 420,841,556 | |||||||
Net loss per share: | |||||||||
Basic and diluted | $ | (0.01 | ) | $ | (0.01 | ) |
1_Estimated_Useful_Lives_of_Pr
1. Estimated Useful Lives of Property and Equipment (Detail) | 12 Months Ended |
Dec. 31, 2013 | |
Appliques [Member] | Minimum [Member] | ' |
Property, Plant and Equipment [Line Items] | ' |
Property and equipment, estimated useful life | '15 years |
Appliques [Member] | Maximum [Member] | ' |
Property, Plant and Equipment [Line Items] | ' |
Property and equipment, estimated useful life | '25 years |
Machinery and Equipment [Member] | Minimum [Member] | ' |
Property, Plant and Equipment [Line Items] | ' |
Property and equipment, estimated useful life | '3 years |
Machinery and Equipment [Member] | Maximum [Member] | ' |
Property, Plant and Equipment [Line Items] | ' |
Property and equipment, estimated useful life | '12 years |
Furniture and Fixtures [Member] | Minimum [Member] | ' |
Property, Plant and Equipment [Line Items] | ' |
Property and equipment, estimated useful life | '3 years |
Furniture and Fixtures [Member] | Maximum [Member] | ' |
Property, Plant and Equipment [Line Items] | ' |
Property and equipment, estimated useful life | '10 years |
Equipment Computer Hardware and Software [Member] | Minimum [Member] | ' |
Property, Plant and Equipment [Line Items] | ' |
Property and equipment, estimated useful life | '3 years |
Equipment Computer Hardware and Software [Member] | Maximum [Member] | ' |
Property, Plant and Equipment [Line Items] | ' |
Property and equipment, estimated useful life | '7 years |
Transportation vehicles | Minimum [Member] | ' |
Property, Plant and Equipment [Line Items] | ' |
Property and equipment, estimated useful life | '3 years |
Transportation vehicles | Maximum [Member] | ' |
Property, Plant and Equipment [Line Items] | ' |
Property and equipment, estimated useful life | '6 years |
Recovered_Sheet1
1. Summary of Significant Accounting Principles (Detail Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
SummaryOfSignificantAccountingPoliciesLineItems [Line Items] | ' | ' |
Working capital deficit | ($16,598,286) | ' |
Share based compensation expense | $991,893 | $1,983,008 |
3_Acquisitions_Detail
3. Acquisitions (Detail) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 |
Lighter Than Air Systems Corp | Lighter Than Air Systems Corp | Lighter Than Air Systems Corp | |||
Initial Allocation | Allocation Adjustment | Amended Allocation | |||
Business Acquisition [Line Items] | ' | ' | ' | ' | ' |
Current assets | ' | ' | $703,220 | $7,195 | $710,415 |
Property and equipment | ' | ' | 1,357 | 2,556 | 3,913 |
Goodwill | 807,824 | 0 | 479,585 | 328,239 | 807,824 |
Due to selling shareholder | ' | ' | 0 | -350,000 | -350,000 |
Current liabilities assumed | ' | ' | -261,662 | 12,010 | -249,652 |
Total Purchase Price | ' | ' | $922,500 | $0 | $922,500 |
4_Related_Party_Transactions_D
4. Related Party Transactions (Detail Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
DisclosureRelatedPartyTransactionsAdditionalInformationAbstract | ' | ' |
Accounts receivable from related party | $59,833 | $48,220 |
Revenue from related parties | $478,582 | $632,992 |
Revenue from related parties percentage | 75.00% | 71.00% |
Percentage of handling fees | ' | 10.00% |
5_Property_and_Equipment_Detai
5. Property and Equipment (Detail) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Property, Plant and Equipment [Line Items] | ' | ' |
Property and equipment, gross | $2,769,197 | $2,762,636 |
Less: accumulated depreciation | -497,233 | -309,670 |
Property and equipment, net | 2,271,964 | 2,452,966 |
Appliques [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property and equipment, gross | 2,755,732 | 2,755,732 |
Office Furniture and Equipment [Member] | ' | ' |
Property, Plant and Equipment [Line Items] | ' | ' |
Property and equipment, gross | $134,654 | $6,904 |
6_Other_Accrued_liabilities_De
6. Other Accrued liabilities (Detail) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Earnings Per Share Basic and Diluted Numerator [Abstract] | ' | ' |
Payroll liabilities | $1,908,171 | $1,494,883 |
Professional fees | 10,000 | 10,000 |
Accrued legal claims payable | 354,684 | 334,540 |
Accrued cash true-up from conversion | 353,873 | 176,831 |
Accrued interest on debenture | 31,133 | 18,243 |
GTC acquisition payable | 75,000 | 75,000 |
Other | 80,092 | 22,588 |
OTHER ACCRUED LIABILITIES | $2,812,953 | $2,132,085 |
7_Notes_Payable_Detail
7. Notes Payable (Detail) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
DisclosureNotesPayableAbstract | ' | ' |
Unsecured promissory notes | $5,997,030 | $5,997,030 |
Unsecured short-term promissory notes | 150,000 | 0 |
Convertible debenture | 267,000 | 0 |
Accrued interest | 3,087,053 | 2,654,350 |
NOTES PAYABLE | $9,501,083 | $8,651,380 |
7_Notes_Payable_Detail_Narrati
7. Notes Payable (Detail Narrative) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
DisclosureNotesPayableAdditionalInformationAbstract | ' | ' |
Unsecured promissory notes included in notes payable total | $5,997,030 | $5,997,030 |
8_Warrants_to_Purchase_Common_
8. Warrants to Purchase Common Stock (Detail) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Class of Warrant or Right Outstanding, Weighted Average Exercise Price [Roll Forward ] | ' |
Outstanding at December 31, 2012 | $0.23 |
Warrants Granted | $0.21 |
Warrants Expired | $0.26 |
Outstanding at December 31, 2013 | $0.21 |
Class A Warrants [Member] | Derivative Financial Instruments Liabilities [Member] | ' |
Class of Warrant or Right Outstanding [Roll Forward ] | ' |
Outstanding at December 31, 2012 | 8,327,462 |
Warrants Granted | 0 |
Warrants Expired | -8,327,462 |
Outstanding at December 31, 2013 | 0 |
Class B Warrants [Member] | Derivative Financial Instruments Liabilities [Member] | ' |
Class of Warrant or Right Outstanding [Roll Forward ] | ' |
Outstanding at December 31, 2012 | 8,327,462 |
Warrants Granted | 0 |
Warrants Expired | -8,327,462 |
Outstanding at December 31, 2013 | 0 |
Warrants Purchase Rights [Member] | ' |
Class of Warrant or Right Outstanding [Roll Forward ] | ' |
Outstanding at December 31, 2012 | 20,033,021 |
Warrants Granted | 972,381 |
Warrants Expired | -2,377,167 |
Outstanding at December 31, 2013 | 18,628,235 |
9_SHAREBASED_COMPENSATION_Sche
9. SHARE-BASED COMPENSATION - Schedule of stock option activity (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Share-based Compensation [Abstract] | ' | ' |
Outstanding at beginning of year | 68,650,000 | 40,916,667 |
Granted | 15,300,000 | 0 |
Exchanged for salary conversion | $40,355,693 | $22,316,667 |
Exchanged for rescinded stock | $12,000,000 | $14,000,000 |
Exercised | $0 | $0 |
Forfeited / expired / cancelled | -11,722,222 | -8,583,334 |
Outstanding at end of year | 124,583,471 | 68,650,000 |
Options exercisable at end of year | 119,583,471 | 63,358,333 |
Weighted average remaining contractual term | '5 years 7 months 6 days | '4 years 6 months 18 days |
Weighted average exercise price | ' | ' |
Outstanding at beginning of year | $0.05 | $0.07 |
Granted | $0.02 | $0 |
Exchanged for salary conversion | $0.01 | $0.02 |
Exchanged for rescinded stock | $0.01 | $0.02 |
Exercised | $0 | $0 |
Forfeited / expired / cancelled | $0.09 | $0.07 |
Outstanding at end of year | $0.03 | $0.05 |
Options Outstanding and Exercisable, weighted Average Exercise price | $0.03 | $0.05 |
9_Summary_of_Stock_Options_Out
9. Summary of Stock Options Outstanding and Exercisable (Detail) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Options Outstanding and Exercisable, Weighted average remaining contractual terms (years) | '5 years 7 months 2 days | ' |
Options Outstanding and Exercisable, weighted Average Exercise price | $0.03 | $0.05 |
Exercise Price One [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Options Outstanding and Exercisable ,Exercise prices | $0.01 | ' |
Options outstanding and exercisable at end of year, Shares | 12,000,000 | ' |
Options Outstanding and Exercisable, Weighted average remaining contractual terms (years) | '7 years | ' |
Options Outstanding and Exercisable, weighted Average Exercise price | $0.01 | ' |
Exercise Price Two [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Options Outstanding and Exercisable ,Exercise prices | $0.01 | ' |
Options outstanding and exercisable at end of year, Shares | 400,000 | ' |
Options Outstanding and Exercisable, Weighted average remaining contractual terms (years) | '2 years 10 months 13 days | ' |
Options Outstanding and Exercisable, weighted Average Exercise price | $0.01 | ' |
Exercise Price Three [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Options Outstanding and Exercisable ,Exercise prices | $0.01 | ' |
Options outstanding and exercisable at end of year, Shares | 40,355,693 | ' |
Options Outstanding and Exercisable, Weighted average remaining contractual terms (years) | '6 years 8 months 23 days | ' |
Options Outstanding and Exercisable, weighted Average Exercise price | $0.01 | ' |
Exercise Price Four [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Options Outstanding and Exercisable ,Exercise prices | $0.02 | ' |
Options outstanding and exercisable at end of year, Shares | 11,000,000 | ' |
Options Outstanding and Exercisable, Weighted average remaining contractual terms (years) | '5 years 9 months | ' |
Options Outstanding and Exercisable, weighted Average Exercise price | $0.02 | ' |
Exercise Price Five [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Options Outstanding and Exercisable ,Exercise prices | $0.02 | ' |
Options outstanding and exercisable at end of year, Shares | 250,000 | ' |
Options Outstanding and Exercisable, Weighted average remaining contractual terms (years) | '2 years 2 months 1 day | ' |
Options Outstanding and Exercisable, weighted Average Exercise price | $0.02 | ' |
Exercise Price Six [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Options Outstanding and Exercisable ,Exercise prices | $0.02 | ' |
Options outstanding and exercisable at end of year, Shares | 250,000 | ' |
Options Outstanding and Exercisable, Weighted average remaining contractual terms (years) | '2 years 4 months 13 days | ' |
Options Outstanding and Exercisable, weighted Average Exercise price | $0.02 | ' |
Exercise Price Seven [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Options Outstanding and Exercisable ,Exercise prices | $0.02 | ' |
Options outstanding and exercisable at end of year, Shares | 22,316,667 | ' |
Options Outstanding and Exercisable, Weighted average remaining contractual terms (years) | '5 years 10 months 13 days | ' |
Options Outstanding and Exercisable, weighted Average Exercise price | $0.02 | ' |
Exercise Price Eight [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Options Outstanding and Exercisable ,Exercise prices | $0.02 | ' |
Options outstanding and exercisable at end of year, Shares | 12,000,000 | ' |
Options Outstanding and Exercisable, Weighted average remaining contractual terms (years) | '6 years 6 months 29 days | ' |
Options Outstanding and Exercisable, weighted Average Exercise price | $0.02 | ' |
Exercise Price Nine [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Options Outstanding and Exercisable ,Exercise prices | $0.03 | ' |
Options outstanding and exercisable at end of year, Shares | 400,000 | ' |
Options Outstanding and Exercisable, Weighted average remaining contractual terms (years) | '2 years 6 months 29 days | ' |
Options Outstanding and Exercisable, weighted Average Exercise price | $0.03 | ' |
Exercisepriceten [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Options Outstanding and Exercisable ,Exercise prices | $0.05 | ' |
Options outstanding and exercisable at end of year, Shares | 4,444,444 | ' |
Options Outstanding and Exercisable, Weighted average remaining contractual terms (years) | '4 months 2 days | ' |
Options Outstanding and Exercisable, weighted Average Exercise price | $0.05 | ' |
Exercise price eleven [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Options Outstanding and Exercisable ,Exercise prices | $0.07 | ' |
Options outstanding and exercisable at end of year, Shares | 1,500,000 | ' |
Options Outstanding and Exercisable, Weighted average remaining contractual terms (years) | '1 month 10 days | ' |
Options Outstanding and Exercisable, weighted Average Exercise price | $0.07 | ' |
Exercise price twelve [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Options Outstanding and Exercisable ,Exercise prices | $0.08 | ' |
Options outstanding and exercisable at end of year, Shares | 10,250,000 | ' |
Options Outstanding and Exercisable, Weighted average remaining contractual terms (years) | '3 years 3 months | ' |
Options Outstanding and Exercisable, weighted Average Exercise price | $0.08 | ' |
Exercise price thirteen [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Options Outstanding and Exercisable ,Exercise prices | $0.08 | ' |
Options outstanding and exercisable at end of year, Shares | 1,500,000 | ' |
Options Outstanding and Exercisable, Weighted average remaining contractual terms (years) | '3 months 7 days | ' |
Options Outstanding and Exercisable, weighted Average Exercise price | $0.08 | ' |
Exercise price fourteen [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Options Outstanding and Exercisable ,Exercise prices | $0.09 | ' |
Options outstanding and exercisable at end of year, Shares | 2,916,667 | ' |
Options Outstanding and Exercisable, Weighted average remaining contractual terms (years) | '3 months 7 days | ' |
Options Outstanding and Exercisable, weighted Average Exercise price | $0.09 | ' |
10_Deferred_Tax_Assets_and_Lia
10. Deferred Tax Assets and Liabilities (Detail) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Tax Disclosure [Abstract] | ' | ' |
Net operating loss carry-forwards | $18,245,910 | $17,749,701 |
Change in deferred tax asset due to operating loss carryforward | 496,209 | ' |
Valuation allowance | -18,245,910 | -17,749,701 |
Change in Valuation allowance | -496,209 | ' |
Net deferred tax asset | 0 | 0 |
Change in net deferred tax asset | $0 | ' |
10_Reconciliation_of_Income_Be
10. Reconciliation of Income Benefit to Income Tax Benefit (Detail) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Tax Disclosure [Abstract] | ' | ' |
Income tax benefit computed at federal statutory rate | ($496,209) | ($504,428) |
Deferred income taxes | 496,209 | 504,428 |
Income tax expense | $0 | $0 |
11_PER_SHARE_INFORMATION_Detai
11. PER SHARE INFORMATION (Detail) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Numerator: | ' | ' |
Net loss | ($3,417,205) | ($3,362,853) |
Denominator: | ' | ' |
Weighted-average common shares outstanding | 632,009,690 | 420,841,556 |
Net loss per share: | ' | ' |
Basic and diluted | ($0.01) | ($0.01) |
12_COMMITMENTS_Details_Narrati
12. COMMITMENTS (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Commitments Details Narrative | ' | ' |
Rent expense | $119,139 | $120,727 |
Current future minimum rental payments | $37,625 | ' |