Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 30, 2015 | Jun. 30, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | Global Future City Holding Inc. | ||
Entity Central Index Key | 1164964 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Common Stock, Shares Outstanding | 38,063,410 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2014 | ||
Entity public float | $728,938 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current assets: | ||
Cash and cash equivalents | $155,271 | $585 |
Accounts receivable, net of allowance | 51,256 | 0 |
Inventories | 3,426 | 52,496 |
Prepaid expenses | 10,277 | 4,232 |
Total current assets | 220,230 | 57,313 |
Property and equipment, net | 6,059 | 12,169 |
Total assets | 226,289 | 69,482 |
Current liabilities: | ||
Accounts payable | 505,602 | 694,003 |
Accrued expenses and deposits | 526,238 | 324,522 |
Accrued compensation | 1,996,559 | 1,712,724 |
Notes payable | 1,100,000 | 1,650,000 |
Advances from related parties | 157,203 | 159,074 |
Total current liabilities | 4,285,602 | 4,540,323 |
Total liabilities | 4,285,602 | 4,540,323 |
Commitments and contingencies (Note 10) | ||
Shareholders' deficit | ||
Preferred stock, $0.001 par value: 20,000,000 shares authorized, no shares issued and outstanding | 0 | 0 |
Common stock, $0.001 par value: 150,000,000 shares authorized, 37,763,410 and 38,018,748 shares issued and outstanding at December 31, 2014 and 2013, respectively. | 37,763 | 38,019 |
Additional paid-in capital | 435,040 | 213,876 |
Accumulated deficit | -4,532,116 | -4,722,736 |
Total shareholders' deficit | -4,059,313 | -4,470,841 |
Total liabilities and shareholders' deficit | $226,289 | $69,482 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | ||
Preferred stock par value | $0.00 | $0.00 |
Preferred stock shares authorized | 20,000,000 | 20,000,000 |
Preferred stock shares issued | 0 | 0 |
Preferred stock shares outstanding | 0 | 0 |
Common stock par value | $0.00 | $0.00 |
Common stock shares authorized | 150,000,000 | 150,000,000 |
Common stock shares issued | 37,763,410 | 38,018,748 |
Common stock shares outstanding | 37,763,410 | 38,018,748 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Statement [Abstract] | ||
Net sales | $51,255 | $39,315 |
Cost of goods sold: | ||
Cost of goods | 45,924 | 13,658 |
Inventory impairment | 0 | 29,200 |
Total cost of goods sold | 45,924 | 42,858 |
Gross profit (loss) | 5,331 | -3,543 |
Operating expenses: | ||
Selling and marketing | 31,620 | 276,444 |
General and administrative | 674,157 | 570,446 |
Total operating expenses | 705,777 | 846,890 |
Operating loss | -700,446 | -850,433 |
Other (income) expense: | ||
Interest expense | 159,868 | 465,532 |
Interest income | 0 | -33,283 |
(Gain) loss on extinguishment of debt | -1,051,734 | 382,976 |
Income (loss) before income taxes | 191,420 | -1,665,658 |
Income taxes | 800 | 800 |
Net income (loss) | $190,620 | ($1,666,458) |
Basic net income (loss) per common share | $0.01 | ($0.05) |
Diluted net income (loss) per common share | $0.01 | ($0.05) |
Weighted average number of common shares used in basic per share calculations | 37,609,063 | 33,627,167 |
Weighted average number of common shares used in diluted per share calculations | 38,955,254 | 33,627,167 |
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, amount at Dec. 31, 2012 | $0 | $32,232 | $1,829,329 | ($544,667) | ($111,000) | ($2,188,759) | ($982,865) |
Beginning balance, shares at Dec. 31, 2012 | 0 | 32,231,661 | |||||
Stock issued to non-employees for services, shares | 526,599 | ||||||
Stock issued to non-employees for services, amount | 527 | 26,973 | 27,500 | ||||
Stock issued for compensation, shares | 213,300 | ||||||
Stock issued for compensation, amount | 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, amount | 29 | 4,971 | 5,000 | ||||
Unrealized gain on available for sale securities | 28,292 | 28,292 | |||||
Shares retained in Merger, shares | 4,155,372 | ||||||
Shares retained in Merger, amount | 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, amount | 863 | 905,682 | 906,545 | ||||
Net Income(loss) | -1,666,458 | -1,666,458 | |||||
Ending balance, amount 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 | |||||
Stock issued to non-employees for services, shares | 50,000 | ||||||
Stock issued to non-employees for services, amount | 50 | 12,450 | 12,500 | ||||
Fair value of contributed services | 0 | ||||||
Stock issued for extinguishment of debt, shares | 390,398 | ||||||
Stock issued for extinguishment of debt, amount | 390 | 235,569 | 235,959 | ||||
Stock returned for repayment of advances, shares | -695,736 | ||||||
Stock returned for repayment of advances, value | -696 | -26,855 | -27,551 | ||||
Net Income(loss) | 190,620 | 190,620 | |||||
Ending balance, amount at Dec. 31, 2014 | $0 | $37,763 | $435,040 | $0 | $0 | ($4,532,116) | ($4,059,313) |
Ending balance, shares at Dec. 31, 2014 | 0 | 37,763,410 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities: | ||
Net income (loss) | $190,620 | ($1,666,458) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
(Gain) loss on extinguishment of debt | -1,051,734 | 382,976 |
Common stock issued for services and compensation | 12,500 | 110,750 |
Fair value of contributed services | 0 | 233,616 |
Depreciation | 6,110 | 5,786 |
Amortization of debt discount/debt accretion | 2,500 | 303,253 |
Changes in operating assets and liabilities: | ||
Accounts receivable | -51,256 | 824 |
Inventories | 49,070 | -1,825 |
Prepaid expenses | -6,045 | 510 |
Accounts payable | 86,360 | 131,572 |
Accrued expenses | 147,148 | 172,361 |
Accrued compensation | 256,284 | 106,081 |
Net cash used in operating activities | -358,443 | -220,554 |
Cash flows from investing activities: | ||
Capital expenditures | 0 | -3,015 |
Advances (repayments) to/from related party | -1,871 | 69,524 |
Advances to shareholder | 0 | -147,138 |
Net cash used in investing activities | -1,871 | -80,629 |
Cash flows from financing activities: | ||
Proceeds from issuance of notes payable | 40,000 | 230,000 |
Proceeds from deposit on proposed business combination | 525,000 | 0 |
Payment to shareholder to facilitate proposed business combination | -50,000 | 0 |
Proceeds from capital contributions | 0 | 64,500 |
Net cash provided by financing activities | 515,000 | 294,500 |
Net increase (decrease) in cash and cash equivalents | 154,686 | -6,683 |
Cash and cash equivalents at beginning of year | 585 | 7,268 |
Cash and cash equivalents at end of year | 155,271 | 585 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 562 | 562 |
Cash paid for income taxes | 0 | 0 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Repayment of advances with common stock | 27,551 | 691,805 |
Conversion of notes payable and accrued interest | 70,479 | 906,545 |
Discount on notes payable | 2,500 | 128,000 |
Net liabilities assumed from reverse merger | $0 | $2,987,791 |
1_Business_and_Managements_Pla
1. Business and Management's Plan of Operation | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Business and Management's Plan of Operation | Business | ||||
Global Future City Holding Inc., formerly FITT Highway Products, Inc. (the “Company”), is in the business of 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". As discussed in Note 14, we have agreed to sell 80% of our common stock to Sky Rover Holdings Ltd. (“Sky Rover”). If we are successful in closing this transaction, our business will also include the marketing and promotion of an E-Gold coin (the “EDG”), a type of cryptoasset created by Sky Rover, to merchants and consumers. | |||||
If the Sky Rover transaction closes, we will continue to market and sell our FITT brand of energy shots while considering additional business alternatives, including among other things, a proposed business model where the Company shall establish four subsidiaries. The first subsidiary will market a mobile application (“IP Technology”). Because the price of EGD continuously fluctuates, the IP Technology provides merchants with proprietary software that enables these merchants to calculate how much Rewarded EGD (as defined below) a consumer is eligible to receive. The second subsidiary will operate an online store and various merchants that sell goods and services to consumers, and gives consumers a certain percentage for completing the task or for the purchased goods/services back in the form of EGD (“Rewarded EGD”) as part of a loyalty program. The third subsidiary will be a foreign company that will sell a set amount of EGD to foreign individuals and entities. The fourth subsidiary will continue to sell the Company’s current energy drinks while participating in giving away Rewarded EGD as well. The Company itself will provide marketing services to merchants that want to establish loyalty program(s) with its customers (collectively, the “Proposed Business Model”). | |||||
The Securities and Exchange Commission (“SEC”) has not deemed whether a form of digital currency or crypto asset itself is a security, due to this uncertainty, the Company has submitted a Request for No-Action Relief (the “No-Action Letter) on February 10, 2015 to the SEC to obtain clarification that the SEC will not recommend enforcement action against the Company and its related subsidiaries regarding the Proposed Business Model if they conduct themselves as described in the No-Action Letter. | |||||
If the Sky Rover transaction fails to close, the Company will continue to market and sell our FITT brand of energy shots. | |||||
Name Change | |||||
On October 16, 2014, our Board of Directors approved an agreement and plan to merge with our newly formed and wholly-owned subsidiary, Global Future City Holding Inc., a Nevada corporation, to effectuate a name change from FITT Highway Products, Inc. to Global Future City Holding Inc. Global was formed solely for the purpose of this name change and our Company would be the surviving entity following the merger. The Articles of Merger effectuating the merger and name change were filed with the Nevada Secretary of State on October 16, 2014 and became effective October 29, 2014. In connection with the name change, our ticker symbol was changed from FHWY to FTCY. | |||||
Merger with FITT | |||||
In 2012, F.I.T.T Energy Products, Inc. (“FITT”) proposed negotiating a business combination with us and, on November 5, 2012, our Board of Directors approved commencing formal negotiations with FITT in this regard. On June 12, 2013, the Board, by unanimous written consent, recommended that our 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 would be merged into the Company, with the Company 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 our shareholders on October 8, 2013 and the Merger became effective on October 29, 2013. On October 29, 2013, we 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. Global Future City Holding Inc. and FITT are hereafter known collectively as the “Company”. | |||||
For accounting purposes, this merger was 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 Global Future City Holding Inc. are included from October 29, 2013. The assets acquired and liabilities assumed of Global Future City Holding 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 for the year ended December 31, 2013 assuming both our Company and FITT had been combined as of January 1, 2013. Amounts have been rounded to the nearest thousand and are unaudited: | |||||
Sales, net | $ | 39,000 | |||
Loss before income taxes | $ | (2,338,000 | ) | ||
Management’s Plan of Operations | |||||
During the years ended December 31, 2014 and 2013, the Company has generated minimal revenue and had significant losses from operations. Given the Company’s lack of historical revenue, negative cash flows from operations, operating losses, and lack of significant capital to execute our business and marketing plan for the FITT Energy Drinks, there are factors present that indicate substantial doubt about the Company’s ability to continue as a going concern. Subsequent to year end, the Company has secured $3,000,000 in financing (see Note 14) that is expected to be used for working capital, repayment of certain debts, and investments into projects and/or inventory that Management expects will provide the Company with future revenues and the ability to obtain add-on financing if needed. In addition, the Company has agreements in place, such that if and when the Sky Rover transaction is closed, approximately $1,680,000 in accrued compensation and payroll taxes will be alleviated from the Company’s current liabilities, $845,000 in notes payable, plus the related interest thereon can be forced to convert if market conditions are met, and $400,000 in deposits from Sky Rover will no longer be subject to return, for total reductions in liabilities of $2.9 million before any cash is used to settle additional liabilities. Accordingly, we believe based on historical operating costs and planned future operating costs, that the capital received and resulting debt alleviation subsequent to year end will be sufficient to finance our working capital needs over the next 12 months. |
2_Reverse_Stock_Split
2. Reverse Stock Split | 12 Months Ended |
Dec. 31, 2014 | |
Reverse Stock Split | |
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 consolidated 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, 2014 | |
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 consolidated financial statements |
Principles of Consolidation | |
The accompanying consolidated financial statements include the accounts of Global Future City Holding 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 contingent events, the valuation of stock awards, reserves for right of return on revenues, and inventory valuation. | |
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, 2014 was from one customer. There were no accounts receivable at December 31, 2013. | |
Cash and Cash Equivalents | |
The Company considers all highly liquid investments with original maturities of 90 or less to be cash equivalents. | |
Allowances for Doubtful Accounts | |
The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make required payments. The Company considers the following factors when determining if collection of required payments is reasonably assured: customer credit-worthiness, past transaction history with the customer, and current economic industry trends. As of December 31, 2014 and 2013, there were no allowances for doubtful accounts. | |
Inventories | |
Inventories are valued at the lower of first-in, first-out, cost or market value (net realizable value). We regularly review our inventory quantities on hand and record a provision for excess and slow moving inventory based primarily on our estimated forecast of product demand and related product expiration dates. | |
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. | |
The Company's financial instruments consisted primarily of (level 1) accounts payable, accrued expenses and deposits, and notes payable. The carrying amounts of the Company's financial instruments generally approximate their fair values due to the short term nature of these instruments. | |
As of December 31, 2014 and 2013, we did not have any level 2 or 3 assets or liabilities. | |
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. | |
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 Income (Loss) per Share | |
The Company presents basic income (loss) per share (“EPS”) and diluted EPS on the face of the consolidated statement of operations. Basic loss per share is computed as net loss divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants, and other convertible securities. At December 31, 2014 and 2013, we had no outstanding options or warrants to purchase any of our common shares, respectively. As of December 31, 2014, the Company had certain debt with conversion features, which was convertible into approximately 1,346,191 shares of common stock. The Company added these dilutive shares to the denominator and added back approximately $18,000 of related interest in the numerator for weighted average diluted earnings per share. As of December 31, 2013, the Company had convertible debt; however, the effects of the convertible debt would have been anti-dilutive due to loss in the period. | |
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 | |
In May 2014, the FASB issued new accounting guidance regarding revenue recognition under GAAP. This new guidance will supersede nearly all existing revenue recognition guidance, and is effective for public entities for annual and interim periods beginning after December 31, 2016. Early adoption is not permitted. The Company is currently evaluating the impact of this new guidance on the Company's consolidated financial statements. | |
In August 2014, the FASB issued Accounting Standards Update No. 2014-15, "Presentation of Financial Statements—Going Concern", which requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early application is permitted. Management is still in the process of assessing the impact of ASU 2014-15 on the Company’s consolidated financial statements. | |
The FASB issues Accounting Standards Updates (“ASUs”) to amend the authoritative literature in ASC. There have been a number of ASUs to date, including those above, that amend the original text of ASC. Management believes that those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to us or (iv) are not expected to have a significant impact our financial statements. |
4_Inventories
4. Inventories | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Inventory Disclosure [Abstract] | |||||||||
Inventories | Inventories consist of the following at December 31: | ||||||||
2014 | 2013 | ||||||||
Finished goods | $ | 3,426 | $ | 51,905 | |||||
Raw materials – boxes and labels | – | 591 | |||||||
$ | 3,426 | $ | 52,496 |
5_Property_and_Equipment
5. Property and Equipment | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
5. Property and Equipment | Property and equipment consist of the following at December 31: | ||||||||
2014 | 2013 | ||||||||
Furniture | $ | 6,536 | $ | 6,536 | |||||
Computers | 11,091 | 11,091 | |||||||
Software | 16,894 | 16,894 | |||||||
Less accumulated depreciation | (28,462 | ) | (22,352 | ) | |||||
$ | 6,059 | $ | 12,169 | ||||||
Depreciation expense was $6,110 and $5,786 for the years ended December 31, 2014 and 2013, respectively. |
6_Accrued_Expenses
6. Accrued Expenses | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Payables and Accruals [Abstract] | |||||||||
Accrued Expenses | Accrued expenses consist of the following at December 31: | ||||||||
2014 | 2013 | ||||||||
Accrued interest | $ | 38,773 | $ | 312,057 | |||||
Accrued royalties and commissions | 11,666 | 11,666 | |||||||
Deposit on proposed business combination | 475,000 | – | |||||||
Other | 799 | 799 | |||||||
$ | 526,238 | $ | 324,522 | ||||||
During the fourth quarter of 2014, we reached settlement agreements with most all of our noteholders and we restructured their notes. The settlements included an agreement by the noteholders to forgo payment of nearly all of the interest which had been accrued but unpaid as of the dates of the each settlement agreement. See Note 8 for further information. | |||||||||
During 2014, we entered into agreements first with Greenome, then with Sky Rover under which we agreed to sell 80% of our outstanding common stock. As part of the agreements, we received advances from Greenome and Sky Rover to be used to mitigate debt, to acquire common stock from a major shareholder on their behalf, and to continue our operations. See Note 14 for further information with respect to these agreements. |
7_Accrued_Compensation
7. Accrued Compensation | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Accrued Compensation | |||||||||
Accrued Compensation | Accrued compensation consists of the following at December 31: | ||||||||
2014 | 2013 | ||||||||
Accrued officers compensation – CEO | $ | 1,053,187 | $ | 912,343 | |||||
Accrued other compensation – employee | 441,462 | 330,599 | |||||||
Accrued payroll taxes – delinquent | 316,044 | 311,595 | |||||||
Accrued payroll taxes on accrued payroll (not yet due) | 185,866 | 158,187 | |||||||
$ | 1,996,559 | $ | 1,712,724 | ||||||
In prior years, we made minimal payments to our employees and accrued most of their compensation. In addition, we have delinquent payroll taxes incurred mainly under previous management. In October 2010, the IRS filed a federal tax lien against us in the amount of $136,678 related to past-due payroll taxes. The Company has accrued estimated interest for non-payment of those past due payroll liabilities. | |||||||||
Accrued Officer’s Compensation - CEO | |||||||||
Settlement Agreement | |||||||||
In order to facilitate the investment by Sky Rover discussed in Note 1, on September 19, 2014 we entered into a Settlement Agreement with our CEO which will become effective once all closing conditions for the Sky Rover SPA have become effective as more fully described in Note 14. Under the Settlement Agreement, our CEO agreed to forgive all accrued but unpaid salary which amounted to $1,053,187 and any additional accrued salary though the closing date of the Stock Purchase Agreement. We did not accrue any compensation for our CEO during the fourth quarter of 2014 based on mutual agreement of the CEO and Sky Rover. In addition, our CEO gave up his right to any severance payment which would be due him under his employment agreement upon the closing of the Stock Purchase Agreement. For our part, we agreed to issue our CEO a promissory note for the amount of unpaid advances made to us by him in the amount of $142,203. The note will bear interest at 8% per annum and becomes due and payable one year from its effective date. Finally, the CEO will be allowed to retain no less than 2,000,000 of his currently held common shares. The terms of the Settlement Agreement with our CEO will only be effective and recorded if and when all closing conditions to the Sky Rover SPA have been met. | |||||||||
Advance Repayment | |||||||||
Prior to the Merger, FITT made advances to our CEO, either personally or to a company he owns, of $691,805, including annual interest of 6%. During the fourth quarter of 2013, our CEO repaid the advances 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. While the advances were formally relieved in fiscal 2013, the shares were surrendered during the first quarter 2014. | |||||||||
Although we believe these advances made to our CEO by FITT 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 be 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. Such amount could increase if penalties and interests are assessed. As of the date of filing, there are no examinations by eternal parties that would indicate our initial treatment was incorrect. | |||||||||
Accrued Other Compensation – Employee | |||||||||
Settlement Agreement | |||||||||
On November 10, 2014, we entered into a Settlement Agreement with a former employee who served as our Controller. The Settlement Agreement will become effective once all closing conditions for the Sky Rover SPA have become effective. Under the Settlement Agreement, the former employee agreed to forgive all accrued but unpaid salary which amounted to $441,462 and any additional accrued salary though the closing date of the Stock Purchase Agreement. In addition, our employee gave up his right to any severance payment which might be due him under his employment agreement upon the closing of the Stock Purchase Agreement. For our part, we agreed to repay our employee $3,699 for advances he had made to our Company and repay a relative of our former employee $15,984 for employee health insurance premiums she had made on behalf of our Company. Finally, the former employee will be allowed to retain no less than 300,000 shares of our common stock issued to him in the Merger with FITT. The terms of the Settlement Agreement with our employee will only be effective and recorded if and when all closing conditions to the Sky Rover SPA have been met. | |||||||||
Advance Repayment | |||||||||
Effective January 14, 2014 a former employee repaid certain advances made to him in 2013 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. |
8_Notes_Payable
8. Notes Payable | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Debt Disclosure [Abstract] | |||||||||
Notes Payable | Notes payable consists of the following at December 31: | ||||||||
2014 | 2013 | ||||||||
Convertible promissory notes – debt acquisition | $ | 100,000 | $ | 200,000 | |||||
Notes payable – original bridge | 120,000 | 170,000 | |||||||
Notes payable – bridge loan #1 | 355,000 | 405,000 | |||||||
Notes payable – bridge loan #2 | 200,000 | 350,000 | |||||||
Notes payable – bridge loan #3 | 250,000 | 500,000 | |||||||
Convertible promissory note – Asher/Goldenrise | 55,000 | – | |||||||
Convertible promissory notes – service agreement | 20,000 | 20,000 | |||||||
Notes payable – other | – | 5,000 | |||||||
Subtotal | 1,100,000 | 1,650,000 | |||||||
Less current portion | (1,100,000 | ) | (1,650,000 | ) | |||||
Long-term portion | $ | – | $ | – | |||||
Notes Payable Settlement Agreements | |||||||||
During the fourth quarter of 2014, we reached Settlement Agreements with most of our noteholders to restructure their notes. In the restructuring of our notes payable, which is one of our Company’s conditions for closing of the Sky Rover SPA, our noteholders agreed to a) forgo payment of nearly all of the interest which had been accrued but unpaid as of the dates of the each settlement agreement, b) a new interest rate of 10% per annum, c) a new maturity date of August 1, 2015 and d) a Company option to convert into free-trading shares of our common stock at any time our common stock has a closing bid price per share of $1.00 or more for 20 consecutive trading days after the closing of the SPA. Certain of noteholders also agreed to relinquish shares of our common stock they received with their original notes, contingent upon the Sky Rover SPA closing. If the Sky Rover SPA closes, the shares will be transferred to Sky Rover. Because the shares are contingent upon the closing, and until then remain in the name and possession of the note holders, the shares are considered contingent consideration and will be accounted for if and when the shares are transferred. In addition, holders of the convertible promissory notes – debt acquisition, notes payable – bridge loan #2 and notes payable – bridge loan #3 also agreed to forgo any additional principal payable under their notes. As a result of these settlements, we recorded gains on extinguishment of debt totaling $952,400 in 2014. After modification of the notes described above, all notes are now considered convertible. | |||||||||
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 bore interest at 10% per annum and were repayable at two times the principal amount of the notes. Repayment was 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 was December 31, 2013, but such conversion has not yet been made. In December 2014 we entered into Settlement Agreements with the holders of these notes, with the same terms as described under the above caption Notes Payable Settlement Agreements. Accordingly, these notes are no longer convertible at the option of the holder. | |||||||||
Note Payable – Original Bridge | |||||||||
The notes, which had an original face value totaling $245,000, bore interest from 10% to 12% per annum and were to be repayable from a pool of 10% of gross proceeds from the sales of the FITT Energy Shot. In December 2013, a noteholder converted $75,000 of this debt to equity. In the fourth quarter of 2014 we entered into Settlement Agreements with the holders of $120,000 face value of these notes, with the same terms as described under the above caption Notes Payable Settlement Agreements. In 2014, we facilitated a share purchase agreement between Greenome and a significant shareholder. Per the terms of the agreement (see Note 14), the Company was relieved of $50,000 in debt from the shareholder. | |||||||||
Note Payable – Bridge Loan #1 | |||||||||
This debt arose from an offering we initiated in 2010 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 FTCY for every dollar invested. In connection with this offering, we issued notes with face value totaling $580,000. During the three-month periods ended December 31, 2013 and March 31, 2014, respectively, noteholders converted $175,000 and $50,000 into equity, respectively. The notes were repayable 12 months from the date of issue and repayment was to come from a pool of 10% of cash receipts from the sales of the FITT Energy Shot. In the fourth quarter of 2014 we entered into Settlement Agreements with the holders of $345,000 face value of these notes, with the same terms as described under the above caption Notes Payable Settlement Agreements. | |||||||||
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 with repayment to be made at two times the principal amount of the notes. The notes matured at various dates, all of which are within twelve months of the date of issuance. In connection with this offering, we issued notes with principal amounts totaling $255,000 (repayment amounts totaling $510,000). The additional principal of $255,000 was accreted over the respective term of each of the notes. We also recorded an initial discount on the notes of $11,275 based on the estimated fair market value of our common shares on the date of issuance. In connection with the debt discount and accretion, during the years ended December 31, 2014 and 2013, we charged interest expense with zero and $303,253, respectively. As of December 31, 2013, there was no remaining unamortized discount. | |||||||||
During the three-month period ended December 31, 2013, $160,000 in repayment amounts were converted to equity. In the fourth quarter of 2014 we entered into Settlement Agreements with the holders of $150,000 face value of these notes, with the same terms as described under the above caption Notes Payable Settlement Agreements. | |||||||||
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 second quarter of 2013, we issued a note with face value totaling $250,000 in connection with the offering and received proceeds of $225,000. The note was repayable at two times the principal amount of the note (repayment amount of $500,000) and matured June 30, 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. | |||||||||
In the fourth quarter of 2014, we entered into Settlement Agreements with the holder of these notes, with the same terms as described under the above caption Notes Payable Settlement Agreements, with the exception that the modified note does not contain a conversion option. | |||||||||
Convertible Promissory Note – Asher/Goldenrise | |||||||||
On January 6, 2014 we issued a convertible promissory note to Asher Enterprises, Inc. (“Asher”) in the amount of $42,500. The note bore interest at 8% per annum and matured on October 8, 2014. Any amount of principal or interest which was not paid by the maturity date would bear interest at 22% per annum from the maturity date. The note was 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 had a ratchet provision, which adjusted the conversion price in the event of a capital raise at a lower amount per share than the conversion price. We recorded an on-issuance discount of $2,500 on this note which we were amortizing through October 8, 2014, the maturity date, and accelerated the amortization due to the note assumption by Goldenrise Development, Inc. (“Goldenrise”) as discussed below. During the year ended December 31, 2014, $2,500 was amortized to expense. | |||||||||
Prior to the date the note became convertible, we began negotiating the repayment of this note to Asher. On July 15, 2014, we formalized and entered into an Assignment Agreement with Asher and Goldenrise under which Asher agreed to assign the note to Goldenrise for consideration of $55,000. Also effective on July 15, 2014 and subsequent to the assignment, we amended the note to revise the principal amount to $55,000 and to modify the conversion feature so that the conversion price cannot be lower than $0.15 per share. The amendment also eliminated the note’s ratchet provision. As such, derivative accounting does not apply under the new terms. During the quarter ended September 30, 2014, we accounted for the July 15, 2014 assignment and amendment as an extinguishment of debt and recorded a loss on extinguishment of debt in the amount of $9,948. | |||||||||
Convertible Promissory Notes – Service Agreement | |||||||||
During the first quarter of 2013, we 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 carried an interest rate of 10% per annum and matured on October 3, 2013. During the second quarter of 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. In February 2014, this note was converted to equity. | |||||||||
Debt Conversions | |||||||||
In February 2014, a creditor holding notes payable with repayment amounts totaling $55,000 ($50,000 in Notes Payable- Bridge Loan #1 and $5,000 in Notes Payable – Other) converted his notes and related accrued interest into 115,637 shares of common stock of our merged company. Prior to conversion, these notes contained no stated conversion features. We valued the shares at their fair market value on the date of conversion and during the year ended December 31, 2014, we recorded a loss on extinguishment of debt totaling $33,594 in connection with this transaction. |
9_Related_Parties
9. Related Parties | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Related Party Transactions [Abstract] | |||||||||
Related Parties | Advances from related parties consist of the following at December 31: | ||||||||
2014 | 2013 | ||||||||
Advances from our CEO | $ | 142,203 | $ | 144,074 | |||||
Advances from Shareholder | 15,000 | 15,000 | |||||||
$ | 157,203 | $ | 159,074 | ||||||
Also see Note 7 for additional information regarding related parties transactions. |
10_Commitments_and_Contingenci
10. Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2014 | |
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 $24,109 and $4,000, respectively, for the years ended December 31, 2014 and 2013. |
11_Capital_Stock
11. Capital Stock | 12 Months Ended |
Dec. 31, 2014 | |
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 $0.0001. | |
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 2014, we issued 50,000 shares of common stock for services relating to investor relations and the development of shareholder awareness. The shares were valued at $12,500 which was our determination of the fair market value of the shares. We recorded general and administrative expense of $12,500 in connection with the share issuance. | |
During 2013, we issued 526,599 shares of common stock in payment for services relating to retail distribution, product representation and strategic counseling. The shares were valued at $27,500 which was our determination of the fair market value of the shares. We recorded selling and marketing expense of $20,000 and general and administrative expense of $7,500 in connection with the share issuances. | |
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 and Stock Options | |
During the years ended December 31, 2014 and 2013, there were no warrants or stock options outstanding and there was no expense related to warrants or 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, 2014, there have been no grants made under the 2007 Plan. |
12_Income_Taxes
12. Income Taxes | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
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: | ||||||||
2014 | 2013 | ||||||||
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% | |||||||
Gain/loss on extinguishment of debt | -191.20% | -9.20% | |||||||
Amortization of debt discount and accretion of debt | 0.50% | -7.30% | |||||||
Interest income on shareholder advances | – | 0.80% | |||||||
Common stock issued for employee services | – | -2.00% | |||||||
Non-deductible entertainment | 0.30% | -0.10% | |||||||
Temporary differences: | |||||||||
Accrued liabilities and other | 0.40% | – | |||||||
Change in valuation allowance | 150.50% | -16.50% | |||||||
Total provision | 0.40% | -0.10% | |||||||
The major components of the deferred taxes are as follows at December 31: | |||||||||
Asset (Liability) | |||||||||
2014 | 2013 | ||||||||
Current: | |||||||||
Reserves and accruals | $ | 309,724 | $ | 195,880 | |||||
Noncurrent: | |||||||||
Net operating losses | 504,644 | 330,413 | |||||||
Valuation allowance | (814,368 | ) | (526,293 | ) | |||||
Net deferred tax asset | $ | – | $ | – | |||||
Based on federal tax returns filed or to be filed through December 31, 2014, we had available approximately $26,749,000 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, 2014 are approximately $24,401,000 and begin to expire in 2013. We have relied on the issuance of common stock to fund certain operating expenses. | |||||||||
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, 2014 and 2013, our valuation allowance increased by $288,075 and $275,210, 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 2013 and currently does not have any ongoing tax examinations. |
13_Gain_Loss_on_Extinguishment
13. Gain (Loss) on Extinguishment of Debt | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Gain Loss On Extinguishment Of Debt | |||||||||
Gain (Loss) on Extinguishment of Debt | Gain (loss) on extinguishment of debt for the years ended December 31, 2014 and 2013 consist of: | ||||||||
2014 | 2013 | ||||||||
Notes payable settlement agreements | $ | 952,400 | $ | – | |||||
Conversions of notes payable | (33,594 | ) | (382,976 | ) | |||||
Assignment of Asher note payable | (9,948 | ) | – | ||||||
Settlement of accounts payable to legal counsel | 142,876 | – | |||||||
$ | 1,051,734 | $ | (382,976 | ) | |||||
On December 12 2014, our legal counsel agreed to convert our $274,761 accounts payable balance owed by us into 274,761 shares of our common stock. We valued the shares at the market price of our common stock on December 12, 2014, the date of issuance, and recorded a gain on extinguishment of debt of $142,876 in connection with this transaction. |
14_Agreements_with_Greenome_an
14. Agreements with Greenome and Sky Rover | 12 Months Ended | ||
Dec. 31, 2014 | |||
Agreements With Greenome And Sky Rover | |||
Agreements with Greenome and Sky Rover | Greenome Share Exchange Agreement | ||
On May 6, 2014, we entered into a Share Exchange Agreement (“SEA”) with Greenome under which we agreed to sell to Greenome 80% of our outstanding common stock at a purchase price of $400,000, $175,000 of which was payable at the closing. The SEA required that both Greenome and our Company meet certain conditions in order for a closing to take place. The SEA also required Greenome to make certain advance payments to us prior to the closing which were refundable under certain circumstances. Both parties eventually became aware that the closing conditions would be difficult to meet, and on September 19, 2014, we entered into a Financing Agreement with Greenome which also terminated the SEA. | |||
On May 30, 2014, on behalf of Greenome, we entered into a stock purchase transaction with a significant shareholder for the purchase of 9,669,575 shares of our common stock. Per the agreement, we were to receive funds as indicated above from Greenome, and remit a portion of those funds totaling $125,000 to the shareholder in the following tranches: $25,000 upon the signing of the agreement with the shareholder, $25,000 within ten days of the shares being turned over to an escrow agent, and $75,000 when the Company receives the final payment of $175,000 from Greenome as part of the SEA described above. In turn, the shareholder was to submit to an escrow agent, shares of our common stock totaling 9,669,575 shares. | |||
Greenome Financing Agreement | |||
Under the September 19, 2014 Financing Agreement, we agreed to raise up to $3.0 million through a private placement memorandum (“PPM”) and loan these funds to a subsidiary of Greenome (the “Greenome Sub”) under a promissory note bearing interest at the rate of 10% per annum (the “Greenome Loan”). The promissory note will mature twelve months from its inception and will be secured by the assets of the Greenome Sub. | |||
Greenome has already made $180,000 in advance payments to us under the SEA. The first $150,000 of the Greenome Loan proceeds will count towards the repayment of the amount advanced us by Greenome with the remainder of the advances forgiven. If the private placement is unsuccessful, the $150,000 will be formalized into a note payable. Accordingly, the Company has maintained the advanced amounts in accrued expenses and deposits in the accompanying balance sheets, which also includes advances from Sky Rover as noted below. | |||
Sky Rover Stock Purchase Agreement | |||
On September 19, 2014 we entered into the Sky Rover SPA under which we agreed to sell to Sky Rover 80% of our outstanding common stock at a purchase price of $400,000. Sky Rover is in the business of marketing, promoting, and selling of an E-Gold coin (the “EGD”), a type of cryptoasset created by Sky Rover, which is marketed to consumers and merchants. Under the agreement, Sky Rover will acquire 30,600,000 shares of our common stock, which will equal exactly 80% of the outstanding shares, for a purchase price of $400,000. $345,000 of the purchase price was received as of December 31, 2014 and included in accrued expenses and deposits in the accompanying balance sheet due to the possibility the Company will have to repay such amounts if the Company does not meet specific conditions as part of the SPA which are described below. The remaining purchase price was received subsequent to year end. Our Company’s conditions include the mitigation of certain of our debt and the restructure of our notes payable with the following features: | |||
• | New interest rates of no greater than 10% per annum | ||
• | New maturity dates no earlier than August 1, 2015 | ||
• | A forced conversion into free-trading shares of our common stock at any time our common stock has a closing bid price per share of $1.00 or more for 20 consecutive trading days after the closing as defined in the SPA | ||
For their part, Sky Rover’s only condition to close is that they have made the applicable payments required under the SPA. The transaction was to close no later than no later than December 31, 2014; however, the two parties verbally agreed to extend the deadline as needed in order to achieve the responsibilities of each party. On February 17, 2015, the agreement was amended for additional requirements. | |||
The Parties have cooperated and agreed to a proposed business model where if the closing conditions to the Agreement have been met, the Company shall establish four subsidiaries. The first subsidiary will market the IP Technology as defined below. The second subsidiary will operate an Online Store and various merchants that sell goods and services to consumers, and gives Rewarded EGD (as defined below) to consumers as part of a loyalty program. The third subsidiary will be a foreign company that will sell 4,000,000 E-Gold (“EGD”) to foreign individuals and entities. The fourth subsidiary will continue to sell the Company’s current energy drinks while participating in giving away Rewarded EGD as well. The Company itself will provide marketing services to merchants that want to establish loyalty program(s) with its customers (the “Proposed Business Model”). If we do not meet the conditions imposed on us by the agreement, we will be obligated to repay Sky Rover for monies received from them (50% in cash and 50% in common stock valued at $0.20 per share). If Sky Rover does not meet their condition, no monies received from them will need to be repaid. |
15_Other_Agreements
15. Other Agreements | 12 Months Ended |
Dec. 31, 2014 | |
Other Agreements | |
15.Other Agreements | The Scott Group Agreement |
On July 21, 2014, we entered into a Consulting Agreement with The Scott Group. Under the agreement, which has a term of sixty (60) days, The Scott Group will provide a variety of public relations services to assist us in increasing our investor base and shareholder awareness and in obtaining sponsorship from the brokerage community. In addition, The Scott Group will assist us with converting our debt. As compensation for the services, we agreed to pay The Scott Group $2,500 per month for the months of July and August 2014 and to issue them 50,000 shares of our common stock. We also extended the agreement through September 2014 for an additional payment of $2,500. For accounting purposes, we valued the common stock as of July 21, 2014, the date of issuance, and recorded a general and administrative expense of $20,000 ($7,500 cash and $12,500 in stock) during 2014. | |
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 $0.01 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. |
16_Subsequent_Events
16. Subsequent Events | 12 Months Ended |
Dec. 31, 2014 | |
Subsequent Events [Abstract] | |
Subsequent Events | Consulting Agreements |
Subsequent to December 31, 2014, we entered into consulting agreements with five (5) individuals under which the consultants agreed to provide, among other services, business development, executive recruitment, and brand development services for us. As consideration for their services, we issued a total of 300,000 common shares to the consultants, which shares were vested immediately on issuance. During the three months ended March 31, 2015, we will value the shares at the market price of our stock on the dates of issuance and record the appropriate expense. | |
EB-5 Regional Purchase | |
On March 27, 2015, the Company purchased Powerdyne Regional Center LLC, a designated EB-5 Regional Center approved by the U.S. Citizen and Immigration Service (“USCIS”). The aggregate purchase price for 100% of the membership interest of Powerdyne Regional Center is $250,000.00, of which $125,000.00 was funded on March 27, 2015. The balance will be paid in five quarterly installments of $25,000.00 with the payments due on April 1, 2015, July 1, 2015, October 1, 2015, January 1, 2016 and April 1, 2016. The Company filed a Current Report on Form 8-K with the Securities and Exchange Commission (“SEC”) on March 30, 2015 which describes the acquisition in detail. | |
Stock Purchase Agreement for 3 Million Dollars | |
The Company entered into a Stock Purchase Agreement on March 30, 2015 to purchase 6,000,000 shares of the Company’s common stock at a price of $0.50 per share for a total capital investment of $3,000,000. | |
3_Significant_Accounting_Polic1
3. Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation |
The accompanying consolidated financial statements include the accounts of Global Future City Holding 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 contingent events, the valuation of stock awards, reserves for right of return on revenues, and inventory valuation. | |
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, 2014 was from one customer. There were no accounts receivable at December 31, 2013. | |
Cash and Cash Equivalents | Cash and Cash Equivalents |
The Company considers all highly liquid investments with original maturities of 90 or less to be cash equivalents. | |
Allowances for Doubtful Accounts | Allowances for Doubtful Accounts |
The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make required payments. The Company considers the following factors when determining if collection of required payments is reasonably assured: customer credit-worthiness, past transaction history with the customer, and current economic industry trends. As of December 31, 2014 and 2013, there were no allowances for doubtful accounts. | |
Inventories | Inventories |
Inventories are valued at the lower of first-in, first-out, cost or market value (net realizable value). We regularly review our inventory quantities on hand and record a provision for excess and slow moving inventory based primarily on our estimated forecast of product demand and related product expiration dates. | |
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. | |
The Company's financial instruments consisted primarily of (level 1) accounts payable, accrued expenses and deposits, and notes payable. The carrying amounts of the Company's financial instruments generally approximate their fair values due to the short term nature of these instruments. | |
As of December 31, 2014 and 2013, we did not have any level 2 or 3 assets or liabilities. | |
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. | |
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 Income (Loss) per Share | Net Income (Loss) per Share |
The Company presents basic income (loss) per share (“EPS”) and diluted EPS on the face of the consolidated statement of operations. Basic loss per share is computed as net loss divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants, and other convertible securities. At December 31, 2014 and 2013, we had no outstanding options or warrants to purchase any of our common shares, respectively. As of December 31, 2014, the Company had certain debt with conversion features, which was convertible into approximately 1,346,191 shares of common stock. The Company added these dilutive shares to the denominator and added back approximately $18,000 of related interest in the numerator for weighted average diluted earnings per share. As of December 31, 2013, the Company had convertible debt; however, the effects of the convertible debt would have been anti-dilutive due to loss in the period. | |
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 |
In May 2014, the FASB issued new accounting guidance regarding revenue recognition under GAAP. This new guidance will supersede nearly all existing revenue recognition guidance, and is effective for public entities for annual and interim periods beginning after December 31, 2016. Early adoption is not permitted. The Company is currently evaluating the impact of this new guidance on the Company's consolidated financial statements. | |
In August 2014, the FASB issued Accounting Standards Update No. 2014-15, "Presentation of Financial Statements—Going Concern", which requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early application is permitted. Management is still in the process of assessing the impact of ASU 2014-15 on the Company’s consolidated financial statements. | |
The FASB issues Accounting Standards Updates (“ASUs”) to amend the authoritative literature in ASC. There have been a number of ASUs to date, including those above, that amend the original text of ASC. Management believes that those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to us or (iv) are not expected to have a significant impact our financial statements. |
1_Business_and_Managements_Pla1
1. Business and Management's Plan of Operation (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Pro-forma revenue and earnings information | ales, net | $ | 39,000 | ||
Loss before income taxes | $ | (2,338,000 | ) |
4_Inventories_Tables
4. Inventories (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Inventory Disclosure [Abstract] | |||||||||
Schedule of inventory | 2014 | 2013 | |||||||
Finished goods | $ | 3,426 | $ | 51,905 | |||||
Raw materials – boxes and labels | – | 591 | |||||||
$ | 3,426 | $ | 52,496 |
5_Property_and_Equipment_Table
5. Property and Equipment (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Schedule of property and equipment | 2014 | 2013 | |||||||
Furniture | $ | 6,536 | $ | 6,536 | |||||
Computers | 11,091 | 11,091 | |||||||
Software | 16,894 | 16,894 | |||||||
Less accumulated depreciation | (28,462 | ) | (22,352 | ) | |||||
$ | 6,059 | $ | 12,169 |
6_Accrued_Expenses_Tables
6. Accrued Expenses (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Payables and Accruals [Abstract] | |||||||||
Accrued Expenses | 2014 | 2013 | |||||||
Accrued interest | $ | 38,773 | $ | 312,057 | |||||
Accrued royalties and commissions | 11,666 | 11,666 | |||||||
Deposit on proposed business combination | 475,000 | – | |||||||
Other | 799 | 799 | |||||||
$ | 526,238 | $ | 324,522 |
7_Accrued_Compensation_Tables
7. Accrued Compensation (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Accrued Compensation | |||||||||
Accrued Compensation | 2014 | 2013 | |||||||
Accrued officers compensation – CEO | $ | 1,053,187 | $ | 912,343 | |||||
Accrued other compensation – employee | 441,462 | 330,599 | |||||||
Accrued payroll taxes – delinquent | 316,044 | 311,595 | |||||||
Accrued payroll taxes on accrued payroll (not yet due) | 185,866 | 158,187 | |||||||
$ | 1,996,559 | $ | 1,712,724 |
8_Notes_Payable_Tables
8. Notes Payable (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Debt Disclosure [Abstract] | |||||||||
Notes Payable | 2014 | 2013 | |||||||
Convertible promissory notes – debt acquisition | $ | 100,000 | $ | 200,000 | |||||
Notes payable – original bridge | 120,000 | 170,000 | |||||||
Notes payable – bridge loan #1 | 355,000 | 405,000 | |||||||
Notes payable – bridge loan #2 | 200,000 | 350,000 | |||||||
Notes payable – bridge loan #3 | 250,000 | 500,000 | |||||||
Convertible promissory note – Asher/Goldenrise | 55,000 | – | |||||||
Convertible promissory notes – service agreement | 20,000 | 20,000 | |||||||
Notes payable – other | – | 5,000 | |||||||
Subtotal | 1,100,000 | 1,650,000 | |||||||
Less current portion | (1,100,000 | ) | (1,650,000 | ) | |||||
Long-term portion | $ | – | $ | – |
9_Related_Parties_Tables
9. Related Parties (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Related Parties Tables | |||||||||
Advances from related parties | 2014 | 2013 | |||||||
Advances from our CEO | $ | 142,203 | $ | 144,074 | |||||
Advances from Shareholder | 15,000 | 15,000 | |||||||
$ | 157,203 | $ | 159,074 |
12_Income_Taxes_Tables
12. Income Taxes (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | |||||||||
Reconciliation of tax rate | 2014 | 2013 | |||||||
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% | |||||||
Gain/loss on extinguishment of debt | -191.20% | -9.20% | |||||||
Amortization of debt discount and accretion of debt | 0.50% | -7.30% | |||||||
Interest income on shareholder advances | – | 0.80% | |||||||
Common stock issued for employee services | – | -2.00% | |||||||
Non-deductible entertainment | 0.30% | -0.10% | |||||||
Temporary differences: | |||||||||
Accrued liabilities and other | 0.40% | – | |||||||
Change in valuation allowance | 150.50% | -16.50% | |||||||
Total provision | 0.40% | -0.10% | |||||||
Deferred taxes | Asset (Liability) | ||||||||
2014 | 2013 | ||||||||
Current: | |||||||||
Reserves and accruals | $ | 309,724 | $ | 195,880 | |||||
Noncurrent: | |||||||||
Net operating losses | 504,644 | 330,413 | |||||||
Valuation allowance | (814,368 | ) | (526,293 | ) | |||||
Net deferred tax asset | $ | – | $ | – |
13_Gain_Loss_on_Extinguishment1
13. Gain (Loss) on Extinguishment of Debt (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Gain Loss On Extinguishment Of Debt | |||||||||
Gain (loss) on extinguishment of debt | 2014 | 2013 | |||||||
Notes payable settlement agreements | $ | 952,400 | $ | – | |||||
Conversions of notes payable | (33,594 | ) | (382,976 | ) | |||||
Assignment of Asher note payable | (9,948 | ) | – | ||||||
Settlement of accounts payable to legal counsel | 142,876 | – | |||||||
$ | 1,051,734 | $ | (382,976 | ) |
1_Business_and_Managements_Pla2
1. Business and Management's Plan of Operation (Details) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Sales, net | $39,000 |
Loss before income taxes | ($2,338,000) |
4_Inventories_Details
4. Inventories (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Inventory Disclosure [Abstract] | ||
Finished goods | $3,426 | $51,905 |
Raw materials - boxes and labels | 0 | 591 |
Inventory, total | $3,426 | $52,496 |
5_Propery_and_Equipment_Detail
5. Propery and Equipment (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Less accumulated depreciation | ($28,462) | ($22,352) |
Property and equipment, net | 6,059 | 12,169 |
Furniture [Member] | ||
Less accumulated depreciation | 6,536 | 6,536 |
Computers [Member] | ||
Less accumulated depreciation | 11,091 | 11,091 |
Software [Member] | ||
Less accumulated depreciation | $16,894 | $16,894 |
5_Property_and_Equipment_Detai
5. Property and Equipment (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $6,110 | $5,786 |
6_Accrued_Expenses_Details
6. Accrued Expenses (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Payables and Accruals [Abstract] | ||
Accrued interest | $38,773 | $312,057 |
Accrued royalties and commissions | 11,666 | 11,666 |
Deposit on proposed business combination | 475,000 | 0 |
Other | 799 | 799 |
Accrued expenses | $526,238 | $324,522 |
7_Accrued_Compensation_Details
7. Accrued Compensation (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Total accrued compensation | $1,996,559 | $1,712,724 |
Accrued officers compensation - CEO | ||
Total accrued compensation | 1,053,187 | 912,343 |
Accrued officers compensation - Employee | ||
Total accrued compensation | 441,462 | 330,599 |
Accrued payroll taxes - delinquent | ||
Total accrued compensation | 316,044 | 311,595 |
Accrued payroll taxes on accrued payroll (not yet due) | ||
Total accrued compensation | $185,866 | $158,187 |
8_Notes_Payable_Details
8. Notes Payable (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Note payable balance | $1,100,000 | $1,650,000 |
Less current portion | -1,100,000 | -1,650,000 |
Long-term portion | 0 | 0 |
Convertible promissory notes - debt acquisition | ||
Note payable balance | 100,000 | 200,000 |
Original Bridge Loan | ||
Note payable balance | 120,000 | 170,000 |
Bridge Loan 1 | ||
Note payable balance | 355,000 | 405,000 |
Bridge Loan 2 | ||
Note payable balance | 200,000 | 350,000 |
Bridge Loan 3 | ||
Note payable balance | 250,000 | 500,000 |
Convertible promissory note - Asher/Goldenrise | ||
Note payable balance | 55,000 | 0 |
Convertible promissory note - Service agreement | ||
Note payable balance | 20,000 | 20,000 |
Notes payable - other | ||
Note payable balance | $0 | $5,000 |
8_Notes_Payable_Details_Narrat
8. Notes Payable (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Gain (loss) on extinguishment of debt | $1,051,734 | ($382,976) |
Settlement Agreements | ||
Gain (loss) on extinguishment of debt | 952,400 | |
Original Bridge Loan | ||
Note converted to equity | 75,000 | |
Bridge Loan 1 | ||
Note converted to equity | 50,000 | 175,000 |
Bridge Loan 2 | ||
Interest expense | 0 | 303,253 |
Note converted to equity | 160,000 | |
Convertible promissory note - Asher/Goldenrise | ||
Interest expense | 2,500 | |
Gain (loss) on extinguishment of debt | -9,948 | |
Notes payable - other | ||
Note converted to equity | 5,000 | |
Other debt conversions | ||
Gain (loss) on extinguishment of debt | ($33,594) | |
Stock issued for debt conversions, shares issued | 115,637 |
9_Related_Parties_Details
9. Related Parties (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Due to related party | $157,203 | $159,074 |
Chief Executive Officer [Member] | ||
Due to related party | 142,203 | 144,074 |
Shareholder [Member] | ||
Due to related party | $15,000 | $15,000 |
10_Commitments_and_Contingenci1
10. Commitments and Contingencies (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense | $24,109 | $4,000 |
11_Capital_Stock_Details_Narra
11. Capital Stock (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Common stock issued for services, value | $12,500 | $27,500 |
Stock issued for compensation, value | 83,250 | |
Warrants outstanding | 0 | |
Options outstanding | 0 | |
Shares Issued for Services | ||
Common stock issued for services, shares | 50,000 | 526,599 |
Common stock issued for services, value | 12,500 | 27,500 |
Shares Issued for Services | General and Administrative Expense [Member] | ||
Stock issuance costs | 12,500 | 700 |
Shares Issued for Services | Selling and Marketing Expense [Member] | ||
Stock issuance costs | 20,000 | |
Shares Issued for Compensation | ||
Stock issued for compensation, shares issued | 214,555 | |
Shares Issued for Compensation | Selling and Marketing Expense [Member] | ||
Stock issuance costs | $83,250 |
12_Income_Taxes_DetailsReconci
12. Income Taxes (Details-Reconcilation of tax rate) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Effective income tax reconciliation | ||
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 | 0.00% | 5.60% |
Gain/loss on extinguishment of debt | -191.20% | -9.20% |
Amortization of debt discount and accretion of debt | 0.50% | -7.30% |
Interest income on shareholder advances | 0.00% | 0.80% |
Common stock issued for employee services | 0.00% | -2.00% |
Non-deductible entertainment | 0.30% | -0.10% |
Temporary differences: | ||
Accrued liabilities and other | 0.40% | 0.00% |
Change in valuation allowance | 150.50% | -16.50% |
Total provision | 0.40% | -0.10% |
12_Income_Taxes_DetailsDeferre
12. Income Taxes (Details-Deferred income taxes) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Income Tax Disclosure [Abstract] | ||
Reserves and accruals | $309,724 | $195,880 |
Net operating losses | 504,644 | 330,413 |
Valuation allowance | -814,368 | -526,293 |
Deferred tax assets | $0 | $0 |
12_Income_Taxes_Details_Narrat
12. Income Taxes (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Increase in valuation allowance | $288,075 | $275,210 |
Federal [Member] | ||
Net operating loss carryforward | 26,749,000 | |
Operating loss carryforward expiration date | 31-Dec-26 | |
State [Member] | ||
Net operating loss carryforward | $24,401,000 |
13_Gain_Loss_on_Extinguishment2
13. Gain (Loss) on Extinguishment of Debt (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Gain (loss) on extinguishment of debt | $1,051,734 | ($382,976) |
Settlement Agreements | ||
Gain (loss) on extinguishment of debt | 952,400 | 0 |
Other debt conversions | ||
Gain (loss) on extinguishment of debt | -33,594 | -382,976 |
Assignment of Asher Note | ||
Gain (loss) on extinguishment of debt | -9,948 | 0 |
Settlement of Accounts Payable | ||
Gain (loss) on extinguishment of debt | $142,876 | $0 |
15_Other_Agreements_Details_Na
15. Other Agreements (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
General and administrative expense | $674,157 | $570,446 |
Selling and marketing expense | 31,620 | 276,444 |
Scott Group [Member] | ||
General and administrative expense | 20,000 | |
Loza | ||
General and administrative expense | 67,500 | |
Rawson | ||
Selling and marketing expense | $20,000 |
16_Subsequent_Events_Details_N
16. Subsequent Events (Details Narrative) (Consultants [Member], Subsequent Event [Member]) | 12 Months Ended |
Dec. 31, 2014 | |
Consultants [Member] | Subsequent Event [Member] | |
Common shares issued to the consultants | 300,000 |