Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Apr. 15, 2014 | Jun. 30, 2013 | |
Document And Entity Information | ' | ' | ' |
Entity Registrant Name | 'FITT HIGHWAY PRODUCTS, INC. | ' | ' |
Entity Central Index Key | '0001164964 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' | ' |
Is Entity a Voluntary Filer? | 'No | ' | ' |
Is Entity's Reporting Status Current? | 'Yes | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Common Stock, Shares Outstanding | ' | 37,438,379 | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Entity public float | ' | ' | $728,938 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Current assets: | ' | ' |
Cash and cash equivalents | $585 | $7,268 |
Accounts receivable, net of allowance | 0 | 824 |
Inventories | 52,496 | 50,671 |
Prepaid and other | 4,232 | 4,741 |
Advances to related party | 0 | 247,700 |
Total current assets | 57,313 | 311,204 |
Property and equipment, net | 12,169 | 14,814 |
Investment securities of related party - available for sale | 0 | 7,000 |
Investment securities of related party - held to maturity | 0 | 315,000 |
Total assets | 69,482 | 648,018 |
Current liabilities: | ' | ' |
Accounts payable | 694,003 | 61,887 |
Accrued expenses | 324,522 | 257,249 |
Accrued compensation | 1,712,724 | 0 |
Notes payable | 1,650,000 | 1,311,747 |
Advances from related parties | 159,074 | 0 |
Total current liabilities | 4,540,323 | 1,630,883 |
Total liabilities | 4,540,323 | 1,630,883 |
Shareholders' deficit | ' | ' |
Preferred stock, $0.001 par value: 13,700,000 and 20,000,000 shares authorized, no shares issued and outstanding at December 31, 2013 and 2012, respectively | 0 | 0 |
Common stock, $0.001 par value: 150,000,000 shares authorized, 38,018,748 and 32,231,661 shares issued and outstanding at December 31, 2013 and 2012, respectively | 38,019 | 1,554 |
Additional paid-in capital | 213,876 | 1,860,007 |
Advances to shareholder | 0 | -544,667 |
Accumulated other comprehensive loss | 0 | -111,000 |
Accumulated deficit | -4,722,736 | -2,188,759 |
Total shareholders' deficit | -4,470,841 | -982,865 |
Total liabilities and shareholders' deficit | $69,482 | $648,018 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Statement of Financial Position [Abstract] | ' | ' |
Preferred stock par value | $0.00 | $0.00 |
Preferred stock shares authorized | 13,700,000 | 20,000,000 |
Preferred stock shares issued | 0 | 0 |
Preferred stock shares outstanding | 0 | 0 |
Common stock par value | $0.01 | $0.01 |
Common stock shares authorized | 150,000,000 | 150,000,000 |
Common stock shares issued | 38,018,748 | 32,231,661 |
Common stock shares outstanding | 38,018,748 | 32,231,661 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Statement [Abstract] | ' | ' |
Net sales | $39,315 | $29,924 |
Cost of goods sold: | ' | ' |
Cost of goods | 13,658 | 11,299 |
Inventory impairment | 29,200 | 0 |
Total cost of goods sold | 42,858 | 11,299 |
Gross profit (loss) | -3,543 | 18,625 |
Operating expenses: | ' | ' |
Selling and marketing | 276,444 | 57,448 |
General and administrative | 336,830 | 87,763 |
Fair value of contributed services | 233,616 | 280,340 |
Total operating expenses | 846,890 | 425,551 |
Operating loss | -850,433 | -406,926 |
Other (income) expense: | ' | ' |
Interest expense | 465,532 | 370,500 |
Interest income | -33,283 | -26,061 |
Loss on extinguishment of debt | -382,976 | 0 |
Loss before income taxes | -1,665,658 | -751,365 |
Income taxes | 800 | 800 |
Net loss | ($1,666,458) | ($752,165) |
Basic and diluted net loss per common share | ($0.05) | ($0.02) |
Weighted average number of common shares used in basic and diluted per share calculations | 33,627,167 | 31,995,703 |
CONSOLIDATED_STATEMENTS_OF_SHA
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY/DEFICIT (USD $) | Preferred Stock | Common Stock | Additional Paid-In Capital | Advances to Shareholder | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total |
Beginning balance, value at Dec. 31, 2011 | $0 | $31,590 | $1,231,231 | ($398,918) | ($55,500) | ($1,436,594) | ($628,191) |
Beginning balance, shares at Dec. 31, 2011 | 0 | 31,590,343 | ' | ' | ' | ' | ' |
Capital contributions | ' | ' | 308,500 | ' | ' | ' | 308,500 |
Fair value of contributed services | ' | ' | ' | ' | ' | ' | 280,340 |
Stock issued in connection with issuance of notes payable, shares | ' | 641,318 | ' | ' | ' | ' | ' |
Stock issued in connection with issuance of notes payable, value | ' | 642 | 9,258 | ' | ' | ' | 9,900 |
Advances to shareholder | ' | ' | ' | -145,749 | ' | ' | -145,749 |
Unrealized loss on available for sales securities | ' | ' | ' | ' | -55,500 | ' | -55,500 |
Net loss | ' | ' | ' | ' | ' | -752,165 | -752,165 |
Ending balance, value at Dec. 31, 2012 | 0 | 32,232 | 1,829,329 | -544,667 | -111,000 | -2,188,759 | -982,865 |
Ending balance, shares at Dec. 31, 2012 | 0 | 32,231,661 | ' | ' | ' | ' | ' |
Stock issued to non-employees for services and operating expenses, shares | ' | 526,599 | ' | ' | ' | ' | ' |
Stock issued to non-employees for services and operating expenses, shares | ' | 527 | 26,973 | ' | ' | ' | 27,500 |
Stock issued for compensation, shares | ' | 213,300 | ' | ' | ' | ' | ' |
Stock issued for compensation, value | ' | 213 | 83,037 | ' | ' | ' | 83,250 |
Capital contributions | ' | ' | 64,500 | ' | ' | ' | 64,500 |
Fair value of contributed services | ' | ' | 233,616 | ' | ' | ' | 233,616 |
Stock issued in connection with issuance of notes payable, shares | ' | 28,440 | ' | ' | ' | ' | ' |
Stock issued in connection with issuance of notes payable, value | ' | 29 | 4,971 | ' | ' | ' | 5,000 |
Unrealized gain on available for sale securities | ' | ' | ' | ' | 28,292 | ' | 28,292 |
Shares retained in Merger by FHWY shareholders and related liabilities assumed, shares | ' | 4,155,372 | ' | ' | ' | ' | ' |
Shares retained in Merger by FHWY shareholders and related liabilities assumed, value | ' | 4,155 | -2,934,232 | 544,667 | 82,708 | -867,519 | -3,170,221 |
Stock issued for extinguishment of debt, shares | ' | 863,376 | ' | ' | ' | ' | ' |
Stock issued for extinguishment of debt, value | ' | 863 | 905,682 | ' | ' | ' | 906,545 |
Net loss | ' | ' | ' | ' | ' | -1,666,458 | -1,666,458 |
Ending balance, value at Dec. 31, 2013 | $0 | $38,019 | $213,876 | $0 | $0 | ($4,722,736) | ($4,470,841) |
Ending balance, shares at Dec. 31, 2013 | 0 | 38,018,748 | ' | ' | ' | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Cash flows from operating activities: | ' | ' |
Net loss | ($1,666,458) | ($752,165) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Loss on extinguishment of debt | 382,976 | 0 |
Common stock issued for services and compensation | 110,750 | 0 |
Fair value of contributed services | 233,616 | 280,340 |
Depreciation | 5,786 | 2,228 |
Amortization of debt discount/debt accretion | 303,253 | 253,337 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | 824 | -824 |
Inventories | -1,825 | -50,671 |
Prepaid expenses | 510 | -1,531 |
Accounts payable | 131,572 | 11,531 |
Accrued expenses | 172,361 | 112,986 |
Accrued compensation | 106,081 | 0 |
Net cash used in operating activities | -220,554 | -144,769 |
Cash flows from investing activities: | ' | ' |
Capital expenditures | -3,015 | -14,310 |
Advances (repayments) to/from related party | 69,524 | -199,550 |
Advances to shareholder | -147,138 | -145,749 |
Net cash provided by investing activities | -80,629 | -359,609 |
Cash flows from financing activities: | ' | ' |
Proceeds from issuance of notes payable | 230,000 | 205,000 |
Proceeds from capital contributions | 64,500 | 298,500 |
Net cash provided by financing activities | 294,500 | 503,500 |
Net decrease in cash and cash equivalents | -6,683 | -878 |
Cash and cash equivalents at beginning of year | 7,268 | 8,146 |
Cash and cash equivalents at end of year | 585 | 7,268 |
Supplemental disclosure of cash flow information: | ' | ' |
Cash paid for interest | 562 | 266 |
Cash paid for income taxes | 0 | 0 |
Supplemental disclosure of non-cash investing and financing activities: | ' | ' |
Repayment of advances from related party in stock | 691,805 | 315,000 |
Conversion of notes payable and accrued interest | 906,545 | 0 |
Discount on notes payable | 128,000 | 9,900 |
Net liabilities assumed from reverse merger | $2,987,791 | $0 |
1_Business_and_Managements_Pla
1. Business and Management's Plan of Operation | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||||||||
Business and Management's Plan of Operation | ' | ||||||||
Business | |||||||||
Our business is the manufacturing (on an outsource basis), distribution and sale of energy drinks. We market three two-ounce energy shots named “F.I.T.T. Energy for Life” (the “FITT Energy Shot”), “F.I.T.T. Energy Extreme” and "F.I.T.T. Energy Rx". We have significant debt and our profitability and cash flow are dependent upon our success in marketing our three energy shot products. | |||||||||
Merger with FITT | |||||||||
In 2012, F.I.T.T Energy Products, Inc. (“FITT”) proposed negotiating a business combination with FITT Highway Products, Inc. (“FHWY”) and, on November 5, 2012, the FHWY Board of Directors approved commencing formal negotiations with FITT in this regard. On June 12, 2013, the Board, by unanimous written consent, recommended that FHWY stockholders approve the Company entering into a Merger and Reorganization Agreement (the “Merger Agreement”) with FITT and on June 12, 2013, holders of a majority of the voting power of all shares of our common and preferred stock entitled to vote, by written consent in lieu of a special meeting of our stockholders, approved the following action: entry into the Merger Agreement with FITT whereby FITT merged into the FHWY, with FHWY being the surviving entity (the “Merger”). The Merger Agreement, which was entered into on June 18, 2013, required that FITT obtain an independent valuation which would serve as the basis for a share exchange once all necessary approvals were obtained. A Definitive Information Statement on Schedule 14C (“DEF 14C”) was mailed to FHWY shareholders on October 8, 2013 and the Merger became effective on October 29, 2013. On October 29, 2013, FHWY issued 33,000,000 shares of common stock to the shareholders of FITT in the manner set out in the Merger Agreement. As such, the FITT shareholders owned approximately 89% of the post merged company as of the transaction date. FHWY and FITT are hereafter known collectively as the “Company”. During the year ended December 31, 2013, on a consolidated basis, net loss attributable to FHWY and FITT was approximately $100,900 and $1,565,600, or $0.00 and $0.05 per weighted average share. | |||||||||
For accounting purposes, this merger is being treated as a reverse-acquisition since control of our Company passed to the FITT shareholders. As a result of this accounting treatment, subsequent to October 29, 2013, the effective date of the reverse-acquisition, the historical financial statements of FITT, the accounting acquirer, are presented for all periods prior to the acquisition as a change in reporting entity. The financial statements of FITT Highway Products, Inc. are included from October 29, 2013. The assets acquired and liabilities assumed of FITT Highway Products, Inc. were recorded at fair value, which approximated the carrying value, on the acquisition date and included in the financial information post-merger. The following is pro-forma revenue and earnings information assuming both our Company and FITT had been combined as of January 1, 2012. Amounts have been rounded to the nearest thousand and are unaudited: | |||||||||
Years Ended | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Sales, net | $ | 39,000 | $ | 30,000 | |||||
Income (loss) before income taxes | $ | (2,338,000 | ) | $ | 1,129,000 | ||||
The following is a summary schedule of FHWY assets and liabilities assumed as of the Merger date. | |||||||||
Assets: | |||||||||
Property and equipment | $ | 127 | |||||||
Total Assets | 127 | ||||||||
Liabilities and redeemable preferred stock: | |||||||||
Accounts Payable | 500,544 | ||||||||
Accrued expenses | 9,981 | ||||||||
Accrued compensation | 1,606,643 | ||||||||
Notes payable | 218,500 | ||||||||
Related party advances | 337,250 | ||||||||
Redeemable preferred stock | 315,000 | ||||||||
Total liabilities and redeemable preferred stock | 2,987,918 | ||||||||
Net liabilities in excess of assets | $ | (2,987,791 | ) | ||||||
The shares retained in Merger by FHWY shareholders and related liabilities assumed included in the accompanying consolidated statement of stockholders deficit also includes the repayment of advances from our CEO (Note 5) and elimination shares held by FITT that were effectively cancelled as part of the Merger. | |||||||||
Management’s Plan of Operations | |||||||||
We are continuing our efforts to expand our distribution network, develop our sales and marketing programs, and increase brand awareness for the FITT Energy Shots. During the years ended December 31, 2013 and 2012, we generated significant losses in furtherance of our efforts in these areas, as these efforts required significant resources and capital. | |||||||||
In April 2012, we received a letter from Core-Mark International, a major national distributor, in which Core-Mark agreed to team up with us to distribute our energy product line to Core-Mark’s customer base. Core-Mark is one of the largest broad-line, full-service marketers and distributors of packaged consumer products in North America. Under this program, we have made sales to a distribution division of Core-Mark and they in turn have resold our products to their many customers. Core-Mark’s plan is to launch our products in California, Nevada and Arizona, then move across the country to other divisions. Our marketing program for sales into this market includes in-store display racks and signage, and also includes support by field sales reps and by various forms of media designed to drive the consumer to purchase the product at the retail outlets. | |||||||||
Our consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that might result from the outcome of this uncertainty. We are continuing to generate losses and to attempt to seek capital. In addition, we have significant debt. We intend to continue to attempt to compromise our remaining debt. These factors raise substantial doubt about our ability to continue as a going concern. If we are unable to generate positive cash flow from operations or raise adequate capital we may have to reduce or cease operations. | |||||||||
Management continues to seek capital through various sources. On June 10, 2013 we entered into a Financial Advisory & Investment Banking Agreement with CIM Securities, LLC (“CIM”). Under the agreement, CIM agreed to attempt to raise a maximum of $5.0 million for us on a best efforts basis. In July 2013, together with CIM, we produced a private placement memorandum for $1.5 million in bridge loan financing. Once the bridge loan financing was arranged, CIM was to turn its efforts to the $5.0 million offering. Unfortunately, CIM’s efforts have not been successful. |
2_Reverse_Stock_Split
2. Reverse Stock Split | 12 Months Ended |
Dec. 31, 2013 | |
Reverse Stock Split | ' |
2. Reverse Stock Split | ' |
On November 29, 2012, our Board executed a unanimous written consent authorizing and recommending that our stockholders approve a proposal to institute a one-for-sixty (1:60) reverse stock split. On the same day, holders of a majority of the voting power of all shares of our common and preferred stock entitled to vote, by written consent in lieu of a special meeting of our stockholders, approved the Board’s recommendation. The reverse split became effective February 15, 2013. All references to shares and per share information in these financial statements have been restated to give effect to the Reverse Split. |
3_Significant_Accounting_Polic
3. Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2013 | |
Accounting Policies [Abstract] | ' |
Significant Accounting Policies | ' |
Accounting policies refer to specific accounting principles and the methods of applying those principles to fairly present the company's financial position and results of operations in accordance with generally accepted accounting principles. The policies discussed below include those that management has determined to be the most appropriate in preparing the company's financial statements | |
Principles of Consolidation | |
The accompanying consolidated financial statements include the accounts of FITT Highway Products, Inc. and its wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. Management makes estimates and assumptions that affect the amounts reported in the consolidated financial statements and footnotes. Actual results could differ from those estimates. | |
Use of Estimates | |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Our significant estimates relate to the assessment of long-lived assets, contingencies related to pending or threatened litigation and the valuation of stock awards. | |
Concentrations of Credit Risks | |
We will invest any cash balances we may have through high-credit quality financial institutions. From time to time, we may maintain bank account levels in excess of FDIC insurance limits. If the financial institution in which we have our accounts has financial difficulties, any cash balances in excess of the FDIC limits could be at risk. | |
Accounts receivable at December 31, 2012 was from one customer. There were no accounts receivable at December 31, 2013. | |
Property and Equipment | |
Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of five years. Significant renewals and betterments are capitalized while maintenance and repairs are charged to expense as incurred. Leasehold improvements are amortized on the straight-line basis over the lesser of their estimated useful lives or the term of the related lease. | |
Fair Value of Financial Instruments | |
The Company follows the guidance of ASC 820 – Fair Value Measurement and Disclosure. Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of our Company. Unobservable inputs are inputs that reflect our Company’s assumptions about the factors market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value: | |
Level 1. Observable inputs such as quoted prices in active markets; | |
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and | |
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. | |
As of December 31, 2013 and 2012, we did not have any level 1, 2, or 3 assets or liabilities. Derivatives which include an embedded conversion feature on a note issued in 2014 (See Note 17 - Asher Debt) will be considered a level 2 instrument. | |
Debt Issued with Common Stock | |
Debt issued with common stock is accounted for under the guidelines established by ASC 470-20 – Accounting for Debt With Conversion or Other Options. We record the relative fair value of common stock related to the issuance of convertible debt as a debt discount or premium. The discount or premium is subsequently amortized to interest expense over the expected term of the convertible debt. | |
Convertible Debt | |
We account for free-standing derivative instruments and hybrid instruments that contain embedded derivative features in accordance with ASC Topic 815, Accounting for Derivative Instruments and Hedging Activities, as well as related interpretations of this topic. In accordance with this topic, derivative instruments and hybrid instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. We determine the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, giving consideration to all of the rights and obligations of each instrument. We record all of these liabilities at their fair value at issuance and adjust the liabilities quarterly to reflect changes in their fair value. Quarterly adjustments to the fair value of these liabilities generate non-cash expense if they increase and non-cash income if they decrease. | |
Income Taxes | |
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Due to historical net losses, a valuation allowance has been established to offset the deferred tax assets. | |
Revenue Recognition | |
We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured. Ownership of and title to our products pass to customers upon delivery of the products to customers. Net sales are determined after deducting promotional and other allowances in accordance with ASC 605-50. The Company's promotional and other allowances are calculated based on various programs with its distributors and retail customers, and accruals are established during the year for anticipated liabilities. These accruals are based on agreed upon terms, as well as the Company's historical experience with similar programs and require management's judgment with respect to estimating consumer participation and/or distributor and retail customer performance levels. Differences between such estimated expense and actual expenses for promotional and other allowance costs have historically been insignificant and are recognized in earnings in the period such differences are determined. | |
Net Loss per Share | |
Basic and diluted net loss attributable to common stockholders per share is calculated by dividing the net loss applicable to common stockholders by the weighted-average number of common shares outstanding during the period. At December 31, 2013 and 2012, we no outstanding options or warrants to purchase any of our common shares, respectively. | |
Stock-Based Compensation | |
We account for our stock-based compensation in accordance with ASC 718 – Stock Compensation. We account for all stock-based compensation using a fair-value method on the grant date and recognizes the fair value of each award as an expense over the requisite vesting period. | |
Accounting for Equity Instruments Issued to Non-Employees | |
We account for our equity-based payments to non-employees under ASC 505 – Equity. The fair value of the equity instrument issued or committed to be issued is used to measure the transaction, as this is more reliable than the fair value of the services received. The fair value is measured at the value of our common stock on the date the commitment for performance by the counterparty has been reached or the counterparty’s performance is complete. The fair value of the equity instrument is charged directly to the statement of operations and credited to common stock and/or additional paid-in capital as appropriate. | |
Recent Accounting Pronouncements | |
The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. We believe those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to our Company or (iv) are not expected to have a significant impact on us. | |
4_Inventories
4. Inventories | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
4. Inventories | ' | ||||||||
Inventories consist of the following: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Finished goods | $ | 51,905 | $ | 43,464 | |||||
Raw materials – boxes and labels | 591 | 7,207 | |||||||
$ | 52,496 | $ | 50,671 | ||||||
5_Advances_to_Related_Parties
5. Advances to Related Parties | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Related Party Transactions [Abstract] | ' | ||||||||
5. Advances to Related Parties | ' | ||||||||
To Related Parties | |||||||||
Advances to Related Parties are advances made to FHWY. In August 2010, we entered into the Operating Agreement with FHWY and have advanced them funds to cover their basic operating expenses and costs to be a public company such as legal, accounting, public filing and investor relations costs. With the finalization of the Merger, all advances to FHWY have been eliminated in consolidation. Activity during the years ended December 31, 2013 and 2012 consists of the following: | |||||||||
Year Ended 2013 | Year Ended 2012 | ||||||||
Balance beginning of period | $ | 247,700 | $ | 363,150 | |||||
Activity: | |||||||||
Net cash advances (repayments) | (70,548 | ) | 199,550 | ||||||
FHWY preferred shares issued to us | – | (315,000 | ) | ||||||
Eliminated upon finalization of Merger | (177,152 | ) | – | ||||||
Balance end of period | $ | – | $ | 247,700 | |||||
In May 2012, we were issued 105,000 shares of FHWY preferred stock, valued at $315,000, as a partial reduction of the debt FHWY owed FITT. With the finalization of the Merger, these preferred shares have been effectively cancelled. | |||||||||
To Shareholder | |||||||||
Advances to Shareholder consisted of monies advanced to our CEO, either personally or to a company he owns. No advances were made subsequent to the effective date of the Merger. Since August 2009, our CEO has been employed by FHWY under an employment agreement and has been paid an insignificant portion of his accrued salary to date. | |||||||||
During the fourth quarter of 2013, our CEO repaid the advances of $691,805, including annual interest of 6%, through an agreement to surrender 668,386 shares of common stock of our post-merged company which were beneficially owned by him as part of the Merger. The shares were valued at approximately $1.04, the volume weighted adjusted price of the common stock for the 20 trading days prior to his agreement to surrender the shares. Because the advances were repaid in shares of our common stock, we have recorded them within Shareholders’ Deficit in the accompanying consolidated balance sheet at December 31, 2012. | |||||||||
Advances to shareholder consist of the following: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Advances to our CEO | $ | – | $ | 493,682 | |||||
Accrued interest on advances | – | 50,985 | |||||||
$ | – | $ | 544,667 | ||||||
6_Property_and_Equipment
6. Property and Equipment | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
6. Property and Equipment | ' | ||||||||
Property and equipment consist of the following at December 31: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Furniture | $ | 6,536 | $ | – | |||||
Computers | 11,091 | 3,192 | |||||||
Software | 16,894 | 14,310 | |||||||
Less accumulated depreciation | (22,352 | ) | (2,688 | ) | |||||
$ | 12,169 | $ | 14,814 | ||||||
Depreciation expense was $5,786 and $2,228 for the years ended December 31, 2013 and 2012, respectively. |
7_Investment_Securities
7. Investment Securities | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Schedule of Investments [Abstract] | ' | ||||||||
7. Investment Securities | ' | ||||||||
Available for Sale | |||||||||
These securities represent shares of common stock of FHWY. During the periods presented, FHWY issued us shares of their common stock as a reduction in amounts they owed to us. We have used certain of these shares as incentive shares in combination with our issuance of promissory notes and as payment for consulting services provided to us prior to the Merger. Upon finalization of the Merger, these shares have been effectively cancelled. | |||||||||
Activity in investment securities available for sale during the years ended December 31, 2013 and 2012 consists of the following: | |||||||||
Year Ended 2013 | Year Ended 2012 | ||||||||
Shares beginning of period | 29,167 | 25,000 | |||||||
Activity: | |||||||||
Shares previously issued for services – not released | – | 4,167 | |||||||
Shares effectively cancelled upon Merger | (29,167 | ) | – | ||||||
Shares end of period | – | 29,167 | |||||||
Shares held have been valued at their fair market value based on the publicly traded market price of the shares, and the unrealized loss in share value recorded as Accumulated Other Comprehensive Loss in the accompanying Balance Sheet as of December 31, 2012. | |||||||||
Held to Maturity | |||||||||
Held to maturity investment securities at December 31, 2013 and 2012 represent 105,000 Series A preferred shares of FHWY, which were issued to us in May 2012 as a partial reduction of the debt they owed us. See Note 5. The Series A preferred stock has been designated with the following rights: | |||||||||
· | Voting rights – each share has ten votes. | ||||||||
· | Conversion – each share is convertible, at the holder’s option, into FHWY common shares on a one for one (1 for 1) basis. | ||||||||
· | Redemption – each share is redeemable ten years from the date of issuance, or sooner at the holder’s option, at the rate of $3.00 per share. | ||||||||
· | Liquidation – upon liquidation, dissolution or winding up of FHWY, whether voluntary or involuntary, each share shall be preferred in order of payment to the holders of FHWY common stock at a rate of $3.00 per Series A share. | ||||||||
· | Dividend rights – none. | ||||||||
Management and our Company had intended to hold these shares until their redemption date and thus they were classified as held to maturity. With the finalization of the Merger, these preferred shares have been effectively cancelled. |
8_Accrued_Expenses
8. Accrued Expenses | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
Accrued Expenses | ' | ||||||||
Accrued expenses consist of the following at: | |||||||||
2013 | 2012 | ||||||||
Accrued interest | $ | 312,057 | $ | 256,629 | |||||
Accrued royalties and commissions | 11,666 | 620 | |||||||
Other | 799 | – | |||||||
$ | 324,522 | $ | 257,249 | ||||||
Commitments and Contingencies | |||||||||
As stated in Note 5, we have made advances to our CEO, either personally or to a company he owns. We have treated the advances with the understanding that they would be repaid with interest. Subsequent to the Merger, our CEO agreed to pay back the advances, along with interest, with good and valuable shares of common stock of the post-merged company based on the fair value of the common stock on the date of settlement. Although we believe these advances have been appropriately accounted for, it is reasonably possible that a future examination by an external party may deem a portion of these advances to may compensatory. If such determination is made, the Company may be liable for employer payroll taxes on advances deemed compensatory. Based on our estimation, if such a determination is made, the corresponding liability could range from approximately $17,000 to approximately $50,000. |
9_Accrued_Compensation
9. Accrued Compensation | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Accrued Compensation | ' | ||||||||
Accrued Compensation | ' | ||||||||
Accrued compensation consists of the following at: | |||||||||
2013 | 2012 | ||||||||
Accrued officers (and former officers) compensation | $ | 912,343 | $ | – | |||||
Other accrued compensation | 330,599 | – | |||||||
Accrued payroll taxes – delinquent | 311,595 | – | |||||||
Accrued payroll taxes on accrued payroll (not yet due) | 158,187 | – | |||||||
$ | 1,712,724 | $ | – | ||||||
The majority of the December 31, 2013 amounts reflect obligations incurred with the finalization of the Merger. In addition, during the year ended December 31, 2013, we became delinquent with payroll taxes on payroll paid during the year in the amount of $24,140. | |||||||||
In October 2010, the IRS filed a federal tax lien against us in the amount of $136,678 related to past-due payroll taxes. |
10_Notes_Payable
10. Notes Payable | 12 Months Ended | |||||||||||
Dec. 31, 2013 | ||||||||||||
Debt Disclosure [Abstract] | ' | |||||||||||
Notes Payable | ' | |||||||||||
Notes payable consists of the following at: | ||||||||||||
December 31, | December 31, | |||||||||||
2013 | 2012 | |||||||||||
Convertible promissory notes – debt acquisition | $ | 200,000 | $ | – | ||||||||
Notes payable - original bridge | 170,000 | 245,000 | ||||||||||
Notes payable – bridge loan #1 | 405,000 | 580,000 | ||||||||||
Notes payable – bridge loan #2 | ||||||||||||
Notes payable – at maturity date | 350,000 | 510,000 | ||||||||||
Debt accretion – remaining on-issuance accretion | – | (22,015 | ) | |||||||||
Debt discount – remaining on-issuance discount | – | (1,238 | ) | |||||||||
Notes payable – bridge loan #3 | 500,000 | – | ||||||||||
Convertible promissory notes – service agreement | 20,000 | – | ||||||||||
Notes payable – other | 5,000 | – | ||||||||||
$ | 1,650,000 | $ | 1,311,747 | |||||||||
Convertible Promissory Notes – Debt Acquisition | ||||||||||||
During the first quarter of 2013 we entered into Debt Acquisition Agreements (“Debt Agreements”) with two parties affiliated with each other (the “Debt Funders”). Under the Debt Agreements, we issued convertible promissory notes totaling $150,000, $50,000 of which was subsequently converted to equity. The notes bear interest at 10% per annum and are repayable at two times the principal amount of the notes. Repayment is to be made by conversion into shares of our common stock based on a 20-day volume weighted average price with the minimum conversion price based on a market valuation for our company of $10 million the maximum based on a market valuation of $20 million. The due date by which the Debt Funders were to convert the notes is December 31, 2013, but such conversion has not yet been made. | ||||||||||||
Note Payable – Original Bridge | ||||||||||||
These notes payable bear interest from 10% to 12% per annum and are repayable from a pool of 10% of gross proceeds from the sales of the FITT Energy Shot. Although we have received sales proceeds from FITT Original, no payments have been made to date on these notes payable. As such, the notes payable are in default and have been recorded as current liabilities in the accompanying Balance Sheets for all periods presented. | ||||||||||||
Note Payable – Bridge Loan #1 | ||||||||||||
In August 2010, we initiated a Bridge Loan offering of up to $1.0 million of units of securities, each unit consisting of a 12% unsecured promissory note and 0.083 shares of common stock of FHWY for every dollar invested (“Bridge Loan #1”). In connection with this offering, we issued notes with face value totaling $580,000. The notes were repayable 12 months from the date of issue and repayment is to come from a pool of 10% of cash receipts from the sales of the FITT Original product. Although we have received sales proceeds from FITT Original, no payments have been made to date on these notes payable. As such, the Bridge Loan #1 notes payable are in default and have been recorded as current liabilities in the accompanying Balance Sheets for all periods presented. | ||||||||||||
Note Payable – Bridge Loan #2 | ||||||||||||
In November 2011, we initiated a Bridge Loan offering of up to $1.0 million of units of securities, each unit consisting of a 10% convertible promissory note (interest rate increasing to 18% upon an event of default) and 5.5 shares of our common stock for every dollar invested (“Bridge Loan #2”). During 2013 and 2012, we issued notes with face value cash proceeds totaling $0 and $205,000, respectively. The notes are repayable at two times the principal amount of the notes (total repayment amount of $510,000 for all notes) and mature at various dates, all of which are within twelve months of the date of issuance. In connection with the offering, in 2012 we issued noteholders 641,318 shares of our common stock. In the event we file a registration statement with the SEC and it is declared effective, we have the option to repay the original principal plus accrued interest in shares of our common stock calculated at the offering price within the registration. No payments have been made to date on these notes payable. As such, the Bridge Loan #2 notes payable are in default and have been recorded as current liabilities in the accompanying Balance Sheets for all periods presented. | ||||||||||||
The additional principal of $255,000 is being accreted on a straight-line basis over the respective term of each of the notes. We also recorded an initial discount on the notes of $11,275 ($9,900 for notes issued in 2012) based on the estimated fair market value of our common shares on the date of issuance. In connection with the debt discount and accretion, we charged the following to interest expense in the following periods: | ||||||||||||
Debt Discount | Accretion | Total | ||||||||||
Year Ended December 31, 2013 | $ | 31,239 | $ | 272,014 | $ | 303,253 | ||||||
Year Ended December 31, 2012 | $ | 9,922 | $ | 228,805 | $ | 238,727 | ||||||
As of December 31, 2013 there was no remaining unamortized discount. | ||||||||||||
Note Payable – Bridge Loan #3 | ||||||||||||
In December 2012 we initiated a Bridge Loan offering of up to $1.0 million of units of securities, each unit consisting of a 10% convertible promissory note(interest rate increasing to 18% upon an event of default). During the year ended December 31, 2013, we issued a note with face value totaling $250,000 in connection with the offering and received proceeds of $225,000. The note is repayable at two times the principal amount of the note (repayment amount of $500,000) and matured June 30, 2013. We have the option to repay the note in cash, shares of common stock of the merged entity, or a combination of cash and shares of common stock. Any portion of payment made in shares of our common stock are to be valued at the 20-day volume weighted adjusted market price of the stock of the merged entity. No payments have been made to date on these notes payable. As such, the Bridge Loan #3 notes payable are in default and have been recorded as current liabilities in the accompanying Balance Sheet as of December 31, 2013. | ||||||||||||
We recorded an initial discount of $25,000 on this note which we amortized through June 30, 2013, the effective maturity date of the note. The additional principal of $250,000 was accreted through the effective maturity date of June 30, 2013. | ||||||||||||
Convertible Promissory Notes – Service Agreement | ||||||||||||
During the first quarter of 2013, FHWY became obligated to issue convertible promissory notes totaling $20,000 to a company under a Service Agreement. The notes bear no interest and were to be repayable through a conversion into shares of our common stock. We have determined that the service provider has not performed any services under the agreement and the note is in dispute. | ||||||||||||
Note Payable - Other | ||||||||||||
On April 3, 2013, we issued a note payable in the amount of $5,000 together with 28,440 shares of our restricted common stock. The note, which carries an interest rate of 10% per annum, matured on October 3, 2013. We recorded an initial discount on this note of $5,000 based on the estimated fair market value of our common shares on the date of issuance. The debt discount was amortized over the 6-month term of the note and was $5,000 for the year ended December 31, 2013. See Note 17 for subsequent conversion of this note. | ||||||||||||
Debt Conversions | ||||||||||||
On December 19, 2013, a creditor holding notes payable with repayment amounts totaling $410,000 converted his notes and related accrued interest into 863,376 shares of common stock. The notes converted consisted of the following: | ||||||||||||
Notes payable - original bridge | $ | 75,000 | ||||||||||
Notes payable – bridge loan #1 | 175,000 | |||||||||||
Notes payable – bridge loan #2 | 160,000 | |||||||||||
$ | 410,000 | |||||||||||
We valued the shares issued upon conversion at their fair market value as of December 19, 2013, the date of issuance. During the fourth quarter of 2013, we recorded a loss on extinguishment of debt totaling $382,976 in connection with this transaction. |
11_Related_Parties
11. Related Parties | 12 Months Ended |
Dec. 31, 2013 | |
Related Party Transactions [Abstract] | ' |
Related Parties | ' |
The balance at December 31, 2013 represents $144,074 advanced by our CEO, either personally or through a company he owns and $15,000 advanced by a shareholder. Also see Note 5 for additional information regarding related parties transactions. |
12_Commitments_and_Contingenci
12. Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
10. Commitments and Contingencies | ' |
We lease our current office space in Mission Viejo, California on a month-to-month basis and have no other non-cancellable operating leases. The monthly payment under the lease is $2,000. Rent expense under operating leases amounted to $4,000 and zero, respectively, for the years ended December 31, 2013 and 2012 as pre-merger expenses were contained in fair value of contributed services. |
13_Litigation
13. Litigation | 12 Months Ended |
Dec. 31, 2013 | |
Litigation | ' |
Litigation | ' |
Oswald & Yap | |
On January 13, 2012, a complaint was filed against FHWY in the Superior Court of the State of California, County of Orange, by Oswald & Yap LLP (“Oswald”). The complaint, which was for unpaid legal services in the amount of $40,734, also named our CEO and FITT as defendants. Our CEO, as an individual, and FITT, as a company, were never a party to any agreement with Oswald. Effective October 17, 2012, we entered into an Agreement for Use of Stipulation for Judgment under which we agreed to pay Oswald $25,000 no later than December 17, 2012 and Oswald agreed to release all defendants, but we were unable to make the required payment. | |
On October 12, 2012, attorneys for our CEO and FITT filed a Motion for Summary Judgment, essentially requesting they be dismissed from the case. On January 30, 2013 FHWY, along with our CEO and FITT, reached a settlement with Oswald whereby Oswald would drop litigation against all defendants and release them from any and all obligations, and the defendants agreed not to attempt to collect from Oswald legal fees and costs related to this matter. |
14_Capital_Stock
14. Capital Stock | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Equity [Abstract] | ' | ||||||||
Capital Stock | ' | ||||||||
Preferred Stock | |||||||||
We have authorized the issuance of a total of 20,000,000 shares of our preferred stock, each share having a par value of $0.001. On May 15, 2012, our Board of Directors agreed to issue 105,000 shares of our preferred stock, designated as Series A, to FITT as a reduction of $315,000 in debt we owed them. Upon finalization of the Merger, these shares were cancelled. | |||||||||
Common Stock | |||||||||
We have authorized the issuance of 150,000,000 shares of our common stock, each share having a par value of $0.001. | |||||||||
Common Stock to Consultants and Advisors for Services | |||||||||
During 2013, we issued 526,599 shares of common stock, valued at $27,500 in payment for services relating to retail distribution, product representation and strategic counseling. No shares were issued for services during 2012. The fair value of the issued shares was determined based on the closing stock price on the date of issuance or commitment, and the shares were earned on their respective vesting dates. | |||||||||
We have recorded expenses for shares issued for services rendered in the accompanying Statements of Operations for December 31, 2013 and 2012 as follows: | |||||||||
2013 | 2012 | ||||||||
Selling and marketing | $ | 20,000 | $ | – | |||||
General and administrative | 7,500 | – | |||||||
Total | $ | 27,500 | $ | – | |||||
Common Stock Issued for Compensation | |||||||||
During 2013, we hired a Director of Sales and a Retail Business Manager. As part of the employment arrangements, we issued the individuals a total of 214,555 shares of our common stock and recorded selling and marketing expense of $83,250 in connection with the share issuances based on our determination of the fair market value of the shares. | |||||||||
Warrants | |||||||||
A summary of the status of warrants for the years ended December 31, 2013 and 2012 is as follows: | |||||||||
Warrants | Weighted-Average | ||||||||
Outstanding | Exercise Price | ||||||||
Warrants outstanding, December 31, 2011 | 4,736 | $ | 88.8 | ||||||
Granted | – | – | |||||||
Exercised | – | – | |||||||
Cancelled | (4,736 | ) | 88.8 | ||||||
Warrants outstanding, December 31, 2012 | – | $ | – | ||||||
Granted | – | – | |||||||
Exercised | – | – | |||||||
Cancelled | – | – | |||||||
Warrants outstanding, December 31, 2013 | – | $ | – | ||||||
Stock Options | |||||||||
During the years ended December 31, 2013 and 2012, there were no stock options outstanding and there was no expense related to stock options. | |||||||||
On June 29, 2007, our Board of Directors adopted the 2007 Equity Incentive Plan (the “2007 Plan”). The 2007 Plan provides for the grant of equity awards to our directors, officers, other employees, consultants, independent contractors and agents, including stock options to purchase shares of our common stock, stock appreciation rights (“SARs”), restricted stock, restricted stock units, bonus stock and performance shares. Up to 13,889 shares of our common stock may be issued pursuant to awards granted under the 2007 Plan, subject to adjustment in the event of stock splits and other similar events. The 2007 Plan is administered by our Board of Directors, and expires ten years after adoption, unless terminated earlier by the Board. As of December 31, 2013, no stock option grants have been made under the 2007 Plan. |
15_Income_Taxes
15. Income Taxes | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
13. Income Taxes | ' | ||||||||
Reconciliations of the U.S. federal statutory rate to the actual tax rate are as follows for the years ended December 31: | |||||||||
2013 | 2012 | ||||||||
Federal tax at statutory rate | 34 | % | 34 | % | |||||
Permanent differences: | |||||||||
State income taxes, net of federal benefit | 5.8 | % | 5.8 | % | |||||
Fair value of contributed services | -5.6 | % | -14.9 | % | |||||
Loss on extinguishment of debt | -9.2 | % | – | ||||||
Amortization of debt discount and accretion of debt | -7.3 | % | -13.4 | % | |||||
Interest income on shareholder advances | 0.8 | % | 1.4 | % | |||||
Common stock issued for employee services | -2 | % | – | ||||||
Non-deductible entertainment | -0.1 | % | -0.2 | % | |||||
Temporary differences: | |||||||||
Accrued liabilities and other | – | -0.1 | % | ||||||
Change in valuation allowance | -16.5 | % | -12.7 | % | |||||
Total provision | -0.1 | % | -0.1 | % | |||||
The major components of the deferred taxes are as follows at December 31: | |||||||||
Asset (Liability) | |||||||||
2013 | 2012 | ||||||||
Current: | |||||||||
Reserves and accruals | $ | 195,880 | $ | 102,021 | |||||
Noncurrent: | |||||||||
Net operating losses | 330,413 | 149,062 | |||||||
Valuation allowance | (526,293 | ) | (251,083 | ) | |||||
Net deferred tax asset | $ | – | $ | – | |||||
Based on federal tax returns filed or to be filed through December 31, 2013, we had available approximately $26,416,000 in U.S. tax net operating loss carryforwards, pursuant to the Tax Reform Act of 1986, which assesses the utilization of a Company’s net operating loss carryforwards resulting from retaining continuity of its business operations and changes within its ownership structure. Net operating loss carryforwards expire in 20 years for federal income tax reporting purposes. For Federal income tax purposes, the net operating losses begin to expire in 2026. State net operating loss carryforwards through December 31, 2013 are approximately $24,067,000 and begin to expire in 2014. | |||||||||
With the finalization of the Merger, we have experienced a change in ownership as defined in Section 382 of the Internal Revenue Code. As a result, our net operating loss carryforwards for federal income tax reporting will be significantly limited based on the fair value of our Company on the date of change in ownership. Such change is expected to provide benefit to us only upon the attainment of profitability. | |||||||||
During the years ended December 31, 2013 and 2012, our valuation allowance increased by approximately $275,210 and $95,716, respectively. | |||||||||
The United States Federal return years 2010 through 2013 are still subject to tax examination by the United States Internal Revenue Service, however, we do not currently have any ongoing tax examinations. We are subject to examination by the California Franchise Tax Board for the years 2010 through 2012 and currently does not have any ongoing tax examinations. |
16_Agreements
16. Agreements | 12 Months Ended |
Dec. 31, 2013 | |
Agreements | ' |
Agreements | ' |
2013 AGREEMENTS | |
Agreement with Andrew Loza | |
On January 5, 2013, we entered into a Consulting Agreement with Andrew Loza, an individual with significant experience in product representation and strategic alliances. The agreement called for Mr. Loza to provide services in the areas of corporate strategies and retail distribution networks. The agreement has a term of 12 months and is cancelable on 180 days’ notice. In connection with the agreement, we agreed to make monthly payments to Mr. Loza of $5,000 and to issue him 426,599 shares of common stock. The common stock, which was fully vested on January 5, 2013, the date of issuance, was valued at the estimated fair market value of our stock of $0.018 per share. For the year ended December 31, 2013 we recorded general and administrative expenses totaling $67,500 ($60,000 in cash and $7,500 in stock) as a result of this transaction. | |
Agreement with Anna Rawson | |
On March 12, 2013, we entered into a Consulting Agreement with Anna Rawson, an individual with extensive experience in the area of product representation, including product endorsement in radio and television interviews as well as public appearances at corporate events. The agreement called for Ms. Rawson to provide a variety of services including a photo and video shoot, a social media campaign, a media interview campaign and public appearances. In connection with the agreement, we issued Ms. Rawson 100,000 shares of our common stock. The common stock, which was fully vested on March 12, 2013, the date of issuance, was valued at the estimated fair market value of our stock of $0.20 per share. For the year ended December 31, 2013 we recorded marketing expense totaling $20,000 as a result of this transaction. |
17_Subsequent_Events
17. Subsequent Events | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Subsequent Events [Abstract] | ' | ||||
Subsequent Events | ' | ||||
Asher Debt | |||||
On January 6, 2014 we issued a convertible promissory note to Asher Enterprises, Inc. in the amount of $42,500. The note bears interest at 8% per annum and matures on October 8, 2014. Any amount of principal or interest which is not paid by the maturity date will bear interest at 22% per annum from the maturity date. The note is convertible into common stock beginning 180 days from the date of the note at a conversion price of 58% of the market price of our stock. The note has a ratchet provision, which adjusts the conversion price in the event of a capital raise at a lower amount per share than the conversion price. The conversion feature will be accounted for as a derivative liability upon the passage of time and the note becoming convertible if not extinguished as defined above. Derivative accounting applies upon the conversion feature being available to the holder, as it is variable and does not have a floor as to the number of common shares in which could be converted. | |||||
Agreement with Greenome Development | |||||
We have agreed to provisions in a March 28, 2014 Letter of Intent (“LOI”) from Greenome Development Group Inc. (“Greenome”) to sell to Greenome 80% of our outstanding common stock. The purchase price for the shares is $400,000 including any funds necessary to mitigate debt to Greenome’s satisfaction. $50,000 of the purchase price was received in April 2014 and an additional $150,000 is due on April 15, 2014. The final $200,000 is due upon conclusion of debt mitigation to Greenome’s satisfaction and the closing of a formal stock purchase agreement. We agreed to be responsible for the following SEC filings: (1) Form 10-K for the year ending December 31, 2013, (2) Form 10-Q for the three months ending March 31, 2014 and (3) Form 10-Q for the three months ending June 30, 2014. Completion of this transaction will also be subject to shareholder approval. Under the LOI, we agreed to use our best efforts to keep the outstanding common shares at approximately 38,000,000 shares. | |||||
Debt Conversion | |||||
Subsequent to December 31, 2013, a creditor holding notes payable with repayment amounts totaling $55,000 converted his notes and related accrued interest into 115,637 shares of common stock of our merged company. The notes converted consisted of the following: | |||||
Notes payable – bridge loan #1 | $ | 50,000 | |||
Notes payable – other | 5,000 | ||||
$ | 55,000 | ||||
Employee Advance | |||||
Effective January 14, 2014 an employee repaid certain advances previously made to him in the amount of $27,551 through an agreement to surrender 27,350 shares of common stock of our post-merged company which were beneficially owned by him. The shares were valued at the volume weighted adjusted price of the common stock for the 20 trading days prior to his agreement to surrender the shares. |
3_Significant_Accounting_Polic1
3. Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
Accounting Policies [Abstract] | ' |
Principles of Consolidation | ' |
Principles of Consolidation | |
The accompanying consolidated financial statements include the accounts of FITT Highway Products, Inc. and its wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. Management makes estimates and assumptions that affect the amounts reported in the consolidated financial statements and footnotes. Actual results could differ from those estimates. | |
Use of Estimates | ' |
Use of Estimates | |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Our significant estimates relate to the assessment of long-lived assets, contingencies related to pending or threatened litigation and the valuation of stock awards. | |
Concentrations of Credit Risks | ' |
Concentrations of Credit Risks | |
We will invest any cash balances we may have through high-credit quality financial institutions. From time to time, we may maintain bank account levels in excess of FDIC insurance limits. If the financial institution in which we have our accounts has financial difficulties, any cash balances in excess of the FDIC limits could be at risk. | |
Accounts receivable at December 31, 2012 was from one customer. There were no accounts receivable at December 31, 2013. | |
Property and Equipment | ' |
Property and Equipment | |
Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of five years. Significant renewals and betterments are capitalized while maintenance and repairs are charged to expense as incurred. Leasehold improvements are amortized on the straight-line basis over the lesser of their estimated useful lives or the term of the related lease. | |
Fair Value of Financial Instruments | ' |
Fair Value of Financial Instruments | |
The Company follows the guidance of ASC 820 – Fair Value Measurement and Disclosure. Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of our Company. Unobservable inputs are inputs that reflect our Company’s assumptions about the factors market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value: | |
Level 1. Observable inputs such as quoted prices in active markets; | |
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and | |
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. | |
As of December 31, 2013 and 2012, we did not have any level 1, 2, or 3 assets or liabilities. Derivatives which include an embedded conversion feature on a note issued in 2014 (See Note 17 - Asher Debt) will be considered a level 2 instrument. | |
Debt Issued with Common Stock | ' |
Debt Issued with Common Stock | |
Debt issued with common stock is accounted for under the guidelines established by ASC 470-20 – Accounting for Debt With Conversion or Other Options. We record the relative fair value of common stock related to the issuance of convertible debt as a debt discount or premium. The discount or premium is subsequently amortized to interest expense over the expected term of the convertible debt. | |
Convertible Debt | ' |
Convertible Debt | |
We account for free-standing derivative instruments and hybrid instruments that contain embedded derivative features in accordance with ASC Topic 815, Accounting for Derivative Instruments and Hedging Activities, as well as related interpretations of this topic. In accordance with this topic, derivative instruments and hybrid instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. We determine the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, giving consideration to all of the rights and obligations of each instrument. We record all of these liabilities at their fair value at issuance and adjust the liabilities quarterly to reflect changes in their fair value. Quarterly adjustments to the fair value of these liabilities generate non-cash expense if they increase and non-cash income if they decrease. | |
Income Taxes | ' |
Income Taxes | |
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Due to historical net losses, a valuation allowance has been established to offset the deferred tax assets. | |
Revenue Recognition | ' |
Revenue Recognition | |
We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured. Ownership of and title to our products pass to customers upon delivery of the products to customers. Net sales are determined after deducting promotional and other allowances in accordance with ASC 605-50. The Company's promotional and other allowances are calculated based on various programs with its distributors and retail customers, and accruals are established during the year for anticipated liabilities. These accruals are based on agreed upon terms, as well as the Company's historical experience with similar programs and require management's judgment with respect to estimating consumer participation and/or distributor and retail customer performance levels. Differences between such estimated expense and actual expenses for promotional and other allowance costs have historically been insignificant and are recognized in earnings in the period such differences are determined. | |
Net Loss per Share | ' |
Net Loss per Share | |
Basic and diluted net loss attributable to common stockholders per share is calculated by dividing the net loss applicable to common stockholders by the weighted-average number of common shares outstanding during the period. At December 31, 2013 and 2012, we no outstanding options or warrants to purchase any of our common shares, respectively. | |
Stock-Based Compensation | ' |
Stock-Based Compensation | |
We account for our stock-based compensation in accordance with ASC 718 – Stock Compensation. We account for all stock-based compensation using a fair-value method on the grant date and recognizes the fair value of each award as an expense over the requisite vesting period. | |
Accounting for Equity Instruments Issued to Non-Employees | ' |
Accounting for Equity Instruments Issued to Non-Employees | |
We account for our equity-based payments to non-employees under ASC 505 – Equity. The fair value of the equity instrument issued or committed to be issued is used to measure the transaction, as this is more reliable than the fair value of the services received. The fair value is measured at the value of our common stock on the date the commitment for performance by the counterparty has been reached or the counterparty’s performance is complete. The fair value of the equity instrument is charged directly to the statement of operations and credited to common stock and/or additional paid-in capital as appropriate. | |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements | |
The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. We believe those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to our Company or (iv) are not expected to have a significant impact on us. |
1_Business_and_Managements_Pla1
1. Business and Managements Plan of Operation (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||||||||
Pro-forma revenue and earnings information | ' | ||||||||
Years Ended | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Sales, net | $ | 39,000 | $ | 30,000 | |||||
Income (loss) before income taxes | $ | (2,338,000 | ) | $ | 1,129,000 | ||||
The following is a summary schedule of FHWY assets and liabilities assumed as of the Merger date. | |||||||||
Assets: | |||||||||
Property and equipment | $ | 127 | |||||||
Total Assets | 127 | ||||||||
Liabilities and redeemable preferred stock: | |||||||||
Accounts Payable | 500,544 | ||||||||
Accrued expenses | 9,981 | ||||||||
Accrued compensation | 1,606,643 | ||||||||
Notes payable | 218,500 | ||||||||
Related party advances | 337,250 | ||||||||
Redeemable preferred stock | 315,000 | ||||||||
Total liabilities and redeemable preferred stock | 2,987,918 | ||||||||
Net liabilities in excess of assets | $ | (2,987,791 | ) | ||||||
4_Inventories_Tables
4. Inventories (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Schedule of inventory | ' | ||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Finished goods | $ | 51,905 | $ | 43,464 | |||||
Raw materials – boxes and labels | 591 | 7,207 | |||||||
$ | 52,496 | $ | 50,671 | ||||||
5_Advances_to_Related_Parties_
5. Advances to Related Parties (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Related Party Transactions [Abstract] | ' | ||||||||
Schedule of advances | ' | ||||||||
Year Ended 2013 | Year Ended 2012 | ||||||||
Balance beginning of period | $ | 247,700 | $ | 363,150 | |||||
Activity: | |||||||||
Net cash advances (repayments) | (70,548 | ) | 199,550 | ||||||
FHWY preferred shares issued to us | – | (315,000 | ) | ||||||
Eliminated upon finalization of Merger | (177,152 | ) | – | ||||||
Balance end of period | $ | – | $ | 247,700 | |||||
Advances to Shareholder | ' | ||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Advances to our CEO | $ | – | $ | 493,682 | |||||
Accrued interest on advances | – | 50,985 | |||||||
$ | – | $ | 544,667 |
6_Property_and_Equipment_Table
6. Property and Equipment (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Schedule of property and equipment | ' | ||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Furniture | $ | 6,536 | $ | – | |||||
Computers | 11,091 | 3,192 | |||||||
Software | 16,894 | 14,310 | |||||||
Less accumulated depreciation | (22,352 | ) | (2,688 | ) | |||||
$ | 12,169 | $ | 14,814 |
7_Investment_Securities_Tables
7. Investment Securities (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Schedule of Investments [Abstract] | ' | ||||||||
Schedule of securites available for sale | ' | ||||||||
Year Ended 2013 | Year Ended 2012 | ||||||||
Shares beginning of period | 29,167 | 25,000 | |||||||
Activity: | |||||||||
Shares previously issued for services – not released | – | 4,167 | |||||||
Shares effectively cancelled upon Merger | (29,167 | ) | – | ||||||
Shares end of period | – | 29,167 |
8_Accrued_Expenses_Tables
8. Accrued Expenses (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
Accrued Expenses | ' | ||||||||
2013 | 2012 | ||||||||
Accrued interest | $ | 312,057 | $ | 256,629 | |||||
Accrued royalties and commissions | 11,666 | 620 | |||||||
Other | 799 | – | |||||||
$ | 324,522 | $ | 257,249 |
9_Accrued_Compensation_Tables
9. Accrued Compensation (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Accrued Compensation | ' | ||||||||
Accrued Compensation | ' | ||||||||
2013 | 2012 | ||||||||
Accrued officers (and former officers) compensation | $ | 912,343 | $ | – | |||||
Other accrued compensation | 330,599 | – | |||||||
Accrued payroll taxes – delinquent | 311,595 | – | |||||||
Accrued payroll taxes on accrued payroll (not yet due) | 158,187 | – | |||||||
$ | 1,712,724 | $ | – |
10_Notes_Payable_Tables
10. Notes Payable (Tables) | 12 Months Ended | |||||||||||
Dec. 31, 2013 | ||||||||||||
Debt Disclosure [Abstract] | ' | |||||||||||
Notes Payable | ' | |||||||||||
December 31, | December 31, | |||||||||||
2013 | 2012 | |||||||||||
Convertible promissory notes – debt acquisition | $ | 200,000 | $ | – | ||||||||
Notes payable - original bridge | 170,000 | 245,000 | ||||||||||
Notes payable – bridge loan #1 | 405,000 | 580,000 | ||||||||||
Notes payable – bridge loan #2 | ||||||||||||
Notes payable – at maturity date | 350,000 | 510,000 | ||||||||||
Debt accretion – remaining on-issuance accretion | – | (22,015 | ) | |||||||||
Debt discount – remaining on-issuance discount | – | (1,238 | ) | |||||||||
Notes payable – bridge loan #3 | 500,000 | – | ||||||||||
Convertible promissory notes – service agreement | 20,000 | – | ||||||||||
Notes payable – other | 5,000 | – | ||||||||||
$ | 1,650,000 | $ | 1,311,747 | |||||||||
Interest expense | ' | |||||||||||
Debt Discount | Accretion | Total | ||||||||||
Year Ended December 31, 2013 | $ | 31,239 | $ | 272,014 | $ | 303,253 | ||||||
Year Ended December 31, 2012 | $ | 9,922 | $ | 228,805 | $ | 238,727 | ||||||
Debt conversions | ' | |||||||||||
Notes payable - original bridge | $ | 75,000 | ||||||||||
Notes payable – bridge loan #1 | 175,000 | |||||||||||
Notes payable – bridge loan #2 | 160,000 | |||||||||||
$ | 410,000 |
14_Capital_Stock_Tables
14. Capital Stock (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Equity [Abstract] | ' | ||||||||
Expenses for the issuance of shares for services and operating expenses | ' | ||||||||
2013 | 2012 | ||||||||
Selling and marketing | $ | 20,000 | $ | – | |||||
General and administrative | 7,500 | – | |||||||
Total | $ | 27,500 | $ | – | |||||
Warrants outstanding | ' | ||||||||
Warrants | Weighted-Average | ||||||||
Outstanding | Exercise Price | ||||||||
Warrants outstanding, December 31, 2011 | 4,736 | $ | 88.8 | ||||||
Granted | – | – | |||||||
Exercised | – | – | |||||||
Cancelled | (4,736 | ) | 88.8 | ||||||
Warrants outstanding, December 31, 2012 | – | $ | – | ||||||
Granted | – | – | |||||||
Exercised | – | – | |||||||
Cancelled | – | – | |||||||
Warrants outstanding, December 31, 2013 | – | $ | – |
15_Income_Taxes_Tables
15. Income Taxes (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
Reconciliation of tax rate | ' | ||||||||
2013 | 2012 | ||||||||
Federal tax at statutory rate | 34 | % | 34 | % | |||||
Permanent differences: | |||||||||
State income taxes, net of federal benefit | 5.8 | % | 5.8 | % | |||||
Fair value of contributed services | -5.6 | % | -14.9 | % | |||||
Loss on extinguishment of debt | -9.2 | % | – | ||||||
Amortization of debt discount and accretion of debt | -7.3 | % | -13.4 | % | |||||
Interest income on shareholder advances | 0.8 | % | 1.4 | % | |||||
Common stock issued for employee services | -2 | % | – | ||||||
Non-deductible entertainment | -0.1 | % | -0.2 | % | |||||
Temporary differences: | |||||||||
Accrued liabilities and other | – | -0.1 | % | ||||||
Change in valuation allowance | -16.5 | % | -12.7 | % | |||||
Total provision | -0.1 | % | -0.1 | % | |||||
Deferred taxes | ' | ||||||||
Asset (Liability) | |||||||||
2013 | 2012 | ||||||||
Current: | |||||||||
Reserves and accruals | $ | 195,880 | $ | 102,021 | |||||
Noncurrent: | |||||||||
Net operating losses | 330,413 | 149,062 | |||||||
Valuation allowance | (526,293 | ) | (251,083 | ) | |||||
Net deferred tax asset | $ | – | $ | – |
1_Business_and_Managements_Pla2
1. Business and Managements Plan of Operation (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ' |
Sales, net | $39,300 | $29,900 |
Income (loss) before income taxes | -2,338,000 | 1,129,000 |
Property and equipment | 127 | ' |
Accounts payable | 500,544 | ' |
Accrued expenses | 9,981 | ' |
Accrued compensation | 1,606,643 | ' |
Notes payable | 218,500 | ' |
Related party advances | 317,250 | ' |
Redeemable preferred stock | 315,000 | ' |
Total liabilities and redeemable preferred stock | 2,987,918 | ' |
Net liabilities in excess of assets | ($2,987,791) | ' |
4_Inventories_Details
4. Inventories (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Inventory Disclosure [Abstract] | ' | ' |
Finished goods | $51,905 | $43,464 |
Raw materials - boxes and labels | 591 | 7,207 |
Inventory, total | $52,496 | $50,671 |
5_Advances_to_Related_Parties_1
5. Advances to Related Parties (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Related Party Transactions [Abstract] | ' | ' |
Advances to related parties, beginning balance | $247,700 | $363,150 |
Net cash advances (repayments) | -70,548 | 199,550 |
FHWY preferred shares issued to us | 0 | -315,000 |
Elimination upon finalization of Merger | -177,152 | 0 |
Advances to related parties, ending balance | $0 | $247,700 |
5_Advances_to_Related_Parties_2
5. Advances to Related Parties (Details-Advances) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Advances to shareholder | $0 | $544,667 |
Advances to CEO | ' | ' |
Advances to shareholder | 0 | 493,682 |
Accrued interest on advances | ' | ' |
Advances to shareholder | $0 | $50,985 |
6_Propery_and_Equipment_Detail
6. Propery and Equipment (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Property, Plant and Equipment [Abstract] | ' | ' |
Furniture | $6,536 | $0 |
Computers | 11,091 | 3,192 |
Software | 16,894 | 14,310 |
Less accumulated depreciation | -22,352 | -2,688 |
Property and equipment, net | $12,169 | $14,814 |
6_Property_and_Equipment_Detai
6. Property and Equipment (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Property, Plant and Equipment [Abstract] | ' | ' |
Depreciation expense | $5,786 | $2,228 |
7_Investment_Securities_Detail
7. Investment Securities (Details) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Schedule of Investments [Abstract] | ' | ' | ' |
Securiites available for sale, shares beginning of period | 0 | 29,167 | 25,000 |
Shares previously issued for services - not released | ' | 4,167 | ' |
Shares effectively cancelled upon Merger | -29,167 | 4,167 | ' |
Shares ending balance | 0 | 29,167 | 25,000 |
8_Accrued_Expenses_Details
8. Accrued Expenses (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Payables and Accruals [Abstract] | ' | ' |
Accrued interest | $312,057 | $256,629 |
Accrued royalties and commissions | 11,666 | 620 |
Other | 799 | 0 |
Accrued Liabilities | $324,522 | $257,249 |
9_Accrued_Compensation_Details
9. Accrued Compensation (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Accrued Compensation | ' | ' |
Accrued officers (and former officers) compensation | $912,343 | $0 |
Other accrued compensation | 330,599 | 0 |
Accrued payroll taxes - delinquent | 311,595 | 0 |
Accrued payroll taxes on accrued payroll (not yet due) | 158,187 | 0 |
Total accrued compensation | $1,712,724 | $0 |
9_Accrued_Compensation_Details1
9. Accrued Compensation (Details Narrative) (USD $) | Dec. 31, 2013 |
Accrued Compensation | ' |
Delinquent payroll taxes | $24,140 |
10_Notes_Payable_Details
10. Notes Payable (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Notes payble | $1,650,000 | $1,311,747 |
Convertible promissory notes - debt acquisition | ' | ' |
Notes payble | 200,000 | 0 |
Notes payable - transferred | ' | ' |
Notes payble | 170,000 | 245,000 |
Notes payable - bridge loan 1 | ' | ' |
Notes payble | 405,000 | 580,000 |
Debt Discount - remaining on-issuance discount | ' | ' |
Notes payble | 0 | 0 |
Notes payable - bridge loan 2 | ' | ' |
Notes payble | 350,000 | 510,000 |
Debt accretion - remaining on-issuance accretion | ' | ' |
Notes payble | 0 | -22,015 |
Debt discount - remaining on-issuance discount | ' | ' |
Notes payble | 0 | -1,238 |
Notes payable - bridge loan 3 | ' | ' |
Notes payble | 500,000 | 0 |
Convertible promissory notes - service agreement | ' | ' |
Notes payble | 20,000 | 0 |
Notes payable - other | ' | ' |
Notes payble | $5,000 | $0 |
10_Notes_Payable_Details_Narra
10. Notes Payable (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Debt Disclosure [Abstract] | ' | ' |
Debt discount | $1,238 | $9,922 |
Debt accretion | 22,015 | 228,805 |
Interest expense | $23,253 | $238,727 |
11_Related_Parties_Details_Nar
11. Related Parties (Details Narrative) (USD $) | Dec. 31, 2013 |
CEO | ' |
Due to related party | $144,143 |
Shareholder | ' |
Due to related party | $15,000 |
12_Commitments_and_Contingenci1
12. Commitments and Contingencies (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Commitments and Contingencies Disclosure [Abstract] | ' | ' |
Rent expense | $24,000 | $23,750 |
14_Capital_Stock_DetailsExpens
14. Capital Stock (Details-Expenses for shares issued) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Expenses for shares issued | $27,500 | $0 |
Selling and Marketing Expense [Member] | ' | ' |
Expenses for shares issued | 20,000 | 0 |
General and Administrative Expense [Member] | ' | ' |
Expenses for shares issued | $7,500 | $0 |
14_Capital_Stock_DetailsWarran
14. Capital Stock (Details-Warrants outstanding) (Warrant [Member], USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Warrant [Member] | ' | ' | ' |
Warrants Outstanding | ' | ' | ' |
Warrants outstanding, beginning balance | 0 | 4,736 | ' |
Warrants granted | ' | ' | ' |
Warrants exercised | ' | ' | ' |
Warrants cancelled | ' | -4,736 | ' |
Warrants outstanding, ending balance | 0 | 0 | ' |
Weighted Average Exercise Price | ' | ' | ' |
Warrants cancelled | ' | $88.80 | ' |
Warrants outstanding weighted average exercise price | 0 | 0 | 88.8 |
15_Income_Taxes_DetailsReconci
15. Income Taxes (Details-Reconcilation of tax rate) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Tax Disclosure [Abstract] | ' | ' |
Federal tax at statutory rate | 34.00% | 34.00% |
Permanent differences: | ' | ' |
State income taxes, net of federal benefit | 5.80% | 5.80% |
Fair value of contributed services | -5.60% | -14.90% |
Loss on extinguishment of debt | -9.20% | 0.00% |
Amortization of debt discount and accretion of debt | -7.30% | -13.40% |
Interest income on shareholder advances | 0.80% | 1.40% |
Common stock issued for employee services | -2.00% | 0.00% |
Non-deductible entertainment | -0.10% | -0.20% |
Temporary differences: | ' | ' |
Accrued liabilities and other | 0.00% | -0.10% |
Change in valuation allowance | -16.50% | -12.70% |
Total provision | -0.10% | -0.10% |
15_Income_Taxes_DetailsDeferre
15. Income Taxes (Details-Deferred income taxes) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Income Tax Disclosure [Abstract] | ' | ' |
Reserves and accruals | $195,880 | $102,021 |
Net operating losses | 330,413 | 149,062 |
Valuation allowance | -526,293 | -251,083 |
Deferred tax assets | $0 | $0 |
15_Income_Taxes_Details_Narrat
15. Income Taxes (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Tax Disclosure [Abstract] | ' | ' |
Net operating loss carryforward | $26,416,000 | ' |
Operating loss carryforward expiration date | 31-Dec-26 | ' |
State operating loss carryforward | 24,067,000 | ' |
Increase in valuation allowance | $275,210 | $95,716 |
16_Agreements_Details_Narrativ
16. Agreements (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
General and administrative expense | $336,830 | $87,763 |
Loza | ' | ' |
General and administrative expense | 67,500 | ' |
Rawson | ' | ' |
Marketing expense | $20,000 | ' |