Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Apr. 13, 2016 | Jun. 30, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | Global Future City Holding Inc. | ||
Entity Central Index Key | 1,164,964 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
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 | 48,617,029 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 | ||
Entity public float | $ 34,121,910 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 655,405 | $ 155,271 |
Accounts receivable, net of allowance | 0 | 51,256 |
Inventories on land | 0 | 3,426 |
Inventory deposits | 879,504 | 0 |
Deferred financing costs | 14,489 | 0 |
Prepaid expenses | 21,411 | 10,277 |
Total current assets | 1,570,809 | 220,230 |
Property and equipment, net | 249,325 | 6,059 |
Investment in Powerdyne, at cost | 250,000 | 0 |
Service contract - related party | 350,000 | 0 |
Other assets | 19,359 | 0 |
Total assets | 2,439,493 | 226,289 |
Current liabilities: | ||
Accounts payable | 326,700 | 505,602 |
Accrued expenses and deposits | 138,677 | 526,238 |
Accrued compensation | 211,905 | 1,996,559 |
Membership deposits and accrued benefits | 10,020 | 0 |
Deferred revenue | 600 | 0 |
Notes payable | 1,050,000 | 1,100,000 |
Advances from related parties | 89,359 | 157,203 |
Total current liabilities | 1,827,261 | 4,285,602 |
Total liabilities | $ 1,827,261 | $ 4,285,602 |
Commitments and contingent liabilities | ||
Shareholders' equity (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, 47,533,029 and 37,763,410 shares issued and outstanding at December 31, 2015 and 2014, respectively. | 47,533 | 37,763 |
Additional paid-in capital | 6,007,601 | 435,040 |
Accumulated deficit | (5,442,902) | (4,532,116) |
Total shareholders' equity (deficit) | 612,232 | (4,059,313) |
Total liabilities and shareholders' equity (deficit) | $ 2,439,493 | $ 226,289 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Preferred stock par value | $ .001 | $ 0.001 |
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 | $ .001 | $ 0.001 |
Common stock shares authorized | 150,000,000 | 150,000,000 |
Common stock shares issued | 47,533,029 | 37,763,410 |
Common stock shares outstanding | 47,533,029 | 37,763,410 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | ||
Net revenues | $ 0 | $ 51,255 |
Cost of net revenues | 0 | 45,924 |
Gross profit | 0 | 5,331 |
Operating expenses: | ||
Selling and marketing (includes stock-based expense of $65,000 and $0 in 2015 and 2014, respectively) | 102,915 | 31,620 |
General and administrative (includes stock-based expense of $0 and $12,500 in 2015 and 2014, respectively) | 1,036,108 | 674,157 |
Total operating expenses | 1,139,023 | 705,777 |
Operating loss | (1,139,023) | (700,446) |
Other income (expense): | ||
Interest expense | (104,799) | (159,868) |
Interest income | 13 | 0 |
Gain on extinguishment of debt | 333,823 | 1,051,734 |
Total other income (expense) | 229,037 | 891,866 |
Income (loss) before income taxes | (909,986) | 191,420 |
Provision for income taxes | 800 | 800 |
Net income (loss) | $ (910,786) | $ 190,620 |
Basic net income (loss) per common share | $ (0.02) | $ 0.01 |
Diluted net income (loss) per common share | $ (.02) | $ 0.01 |
Weighted average number of common shares used in basic per share calculations | 45,004,313 | 37,609,063 |
Weighted average number of common shares used in diluted per share calculations | 45,004,313 | 38,955,254 |
CONSOLIDATED STATEMENTS OF OPE5
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Selling and Marketing Expense [Member] | ||
Stock-based compensation expense | $ 65,000 | $ 0 |
General and Administrative Expense [Member] | ||
Stock-based compensation expense | $ 0 | $ 12,500 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY/DEFICIT - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Total |
Beginning balance, shares at Dec. 31, 2013 | 0 | 38,018,748 | |||
Beginning balance, amount at Dec. 31, 2013 | $ 0 | $ 38,019 | $ 213,876 | $ (4,722,736) | $ (4,470,841) |
Stock issued to non-employees for services, shares | 50,000 | ||||
Stock issued to non-employees for services, amount | $ 50 | 12,450 | 12,500 | ||
Stock returned for repayment of advances, shares | (695,736) | ||||
Stock returned for repayment of advances, value | $ (696) | (26,855) | (27,551) | ||
Stock issued for extinguishment of debt, shares | 390,398 | ||||
Stock issued for extinguishment of debt, amount | $ 390 | 235,569 | 235,959 | ||
Net liabilities assumed in acquisition | 0 | ||||
Net Income (loss) | 190,620 | 190,620 | |||
Ending balance, shares at Dec. 31, 2014 | 0 | 37,763,410 | |||
Ending balance, amount at Dec. 31, 2014 | $ 0 | $ 37,763 | 435,040 | (4,532,116) | (4,059,313) |
Sale of common stock, shares | 6,000,000 | ||||
Sale of common stock, amount | $ 6,000 | 2,994,000 | 3,000,000 | ||
Stock issued to non-employees for services, shares | 250,000 | ||||
Stock issued to non-employees for services, amount | $ 250 | 64,750 | 65,000 | ||
Stock issued for extinguishment of debt, shares | 25,000 | ||||
Stock issued for extinguishment of debt, amount | $ 25 | 47,075 | 47,100 | ||
Stock issued for conversion of debt, shares | 123,268 | ||||
Stock issued for conversion of debt, amount | $ 123 | 58,156 | 58,279 | ||
Stock issued in connection with Stock Purchase Agreement, shares | 3,371,351 | ||||
Stock issued in connection with Stock Purchase Agreement, amount | $ 3,372 | 396,628 | 400,000 | ||
Forgiven accrued compensation by officer and employee | 1,673,774 | 1,673,774 | |||
Capital contributions | 355,425 | 355,425 | |||
Net liabilities assumed in acquisition | (17,247) | (17,247) | |||
Net Income (loss) | (910,786) | (910,786) | |||
Ending balance, shares at Dec. 31, 2015 | 0 | 47,533,029 | |||
Ending balance, amount at Dec. 31, 2015 | $ 0 | $ 47,533 | $ 6,007,601 | $ (542,902) | $ 612,232 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (910,786) | $ 190,620 |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
(Gain) on extinguishment of debt | (333,823) | (1,051,734) |
Common stock issued for services and compensation | 65,000 | 12,500 |
Depreciation | 6,367 | 6,110 |
Amortization of debt discount/debt accretion | 0 | 2,500 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 51,256 | (51,256) |
Inventory and inventory deposits | (876,078) | 49,070 |
Prepaid expenses | (11,133) | (6,045) |
Service contract - related party | (350,000) | 0 |
Other assets | (19,359) | 0 |
Accounts payable | 77,298 | 86,360 |
Accrued expenses | 26,441 | 147,148 |
Accrued compensation | (56,880) | 256,284 |
Membership deposits and accrued benefits | 10,020 | 0 |
Deferred income | 600 | 0 |
Net cash used in operating activities | (2,321,077) | (358,443) |
Cash flows from investing activities: | ||
Capital expenditures | (249,634) | 0 |
Acquisition of Powerdyne EB-5 license | (200,000) | 0 |
Net cash used in investing activities | (449,634) | 0 |
Cash flows from financing activities: | ||
Sale of common stock | 3,000,000 | 0 |
Proceeds from capital contribution for acquisition of Powerdyne | 150,000 | 0 |
Proceeds from capital contributions | 188,178 | 0 |
Cash paid for deferred financing costs | (14,489) | 0 |
Repayments to related party | (52,844) | (1,871) |
Proceeds from issuance of notes payable | 0 | 40,000 |
Proceeds from deposit on proposed business combination | 0 | 525,000 |
Payment to shareholder to facilitate proposed business combination | 0 | (50,000) |
Net cash provided by financing activities | 3,270,845 | 513,129 |
Net increase (decrease) in cash and cash equivalents | 500,134 | 154,686 |
Cash and cash equivalents at beginning of year | 155,271 | 585 |
Cash and cash equivalents at end of year | 655,405 | 155,271 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 437 | 562 |
Cash paid for income taxes | 0 | 0 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Repayment of accounts payable and advances with common stock | 47,075 | 27,551 |
Conversion of notes payable and accrued interest | 58,279 | 70,479 |
Discount on convertible notes payable | 0 | 2,500 |
Forgiven accrued compensation | 1,673,774 | 0 |
Investment in Powerdyne with note payable | 250,000 | 0 |
Net liabilities assumed in GX-Life acquisition | $ 17,247 | $ 0 |
1. Business and Nature of Opera
1. Business and Nature of Operations | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Nature of Operations | Corporate History Our Company was incorporated in the State of Nevada on October 12, 2000 under the name Cogen Systems, Inc. We changed our name to Snocone Systems, Inc. on December 6, 2001. On April 1, 2005, Snocone Systems, Inc. and its wholly-owned subsidiary, WYD Acquisition Corp., a California corporation (the Merger Sub), merged with Whos Your Daddy, Inc. (WYD), an unrelated, privately held California corporation, whereby the Merger Sub merged with and into WYD. After the merger, WYD continued its corporate existence as a direct, wholly-owned subsidiary of Snocone Systems, Inc. under the laws of the State of California. On April 13, 2005, we changed our name to Whos Your Daddy, Inc. and, effective June 1, 2010, we changed our name to FITT Highway Products, Inc. Effective October 29, 2013, we merged with F.I.T.T. Energy Products, Inc. (FITT) whereby FITT merged into our Company, with our Company being the surviving entity. Effective October 29, 2014 the name of our Company was changed to Global Future City Holding Inc. and our trading symbol changed from FHWY to FTCY. Description of Business and Nature of Operations We are a holding company focused in the areas of consumer product sales (through a membership program) and EB-5 investments. With respect to consumer product sales, we entered this market space through our October 2015 acquisition of GX-Life Global, Inc. (GX-Life). See Note 3. Through GX-Life, we sell high quality consumer products such as personal care, wellness, and quality-of-life products under the brand, GX-Life, via direct sales to consumers and e-commerce channels. GX-Life is a business which has developed a robust, scalable network marketing platform that utilizes iMatrixs software to support direct selling opportunities throughout the world. During the three months ended March 31, 2016, we have received approximately $1,770,000 from new members enrolled in our GX-Life direct-selling membership program. Our direct-selling program includes a reward program featuring a digital currency (the GX Coin) we access through an agreement with Great Coin, Inc. (Great Coin). See Note 6. GX-Life, prior to our acquisition, was primarily owned by our CEO, Ning Liu, and our COO/CFO, Michael Dunn. Great Coin is currently owned by the same two individuals. In 2015, we purchased 100% of the membership interests in Powerdyne, an EB-5 Regional Center approved by the USCIS. See Note 3. As an EB-5 Regional Center, we intend to attract and pool investments from qualified foreign investors for the purpose of job creation within a defined geographic region. To date, we have not yet been involved with any EB-5 investment projects, but we are actively pursuing several opportunities. Due to the size, scope and complexity of these projects, we expect that it will take significant time for their vetting, funding and completion. We will continue to market and sell our previous product line, the F.I.T.T. brand of energy drinks, as part of our direct-selling business. Changes in Ownership Sky Rover Stock Purchase Agreement On April 17, 2015, our Company and Sky Rover Holdings, Ltd., a corporation formed under the laws of the Republic of Seychelles (Sky Rover) completed the closing of a Stock Purchase Agreement (the SPA) whereby certain unaffiliated parties that contributed cash, E-Gold coin (EGD) crypto-assets, and other consideration to complete the SPA (including the shares issued to Mr. Lei Pei as described below) (collectively, the Acquiring Shareholders) cumulatively acquired approximately 87.3% of the outstanding shares of stock of our Company in exchange for our receipt of $400,000 in cash and the contribution of 4,000,000 EGD to our wholly-owned subsidiary, Global Modern Enterprise Limited, a Hong Kong entity (the EGD Subsidiary). Additionally, Sky Rovers officer, Mr. Lei Pei, provided the initial down payment for the purchase of Powerdyne. In connection with the closing of the SPA, Mr. Lei Pei purchased 6,000,000 newly-issued shares of our common stock for $3,000,000 in cash in a separate transaction that closed on March 30, 2015, which was meant to provide working capital for our anticipated expansion programs. On August 17, 2015, Mr. Pei, resigned from our Company as its Chief Executive Officer, Chief Financial Officer and Chairman. In connection with the share purchase by Sky Rover, we intended to market and deploy the EGD through a reward program (Rewarded EGD). EGD is a crypto-asset rather than digital currency because unlike digital currency, users cannot purchase goods or services with EGD or use EGD as a medium of exchange. In order to ensure compliance with existing securities regulations, on February 10, 2015 we filed a Request for No-Action Relief (the No-Action Letter) with the Securities and Exchange Commission (SEC) to obtain clarification that the SEC will not recommend enforcement action against our Company and its related subsidiaries regarding our use of the EGD. Despite several inquiries made by our Company, we did not receive a substantive response from the SEC on the No-Action Letter. This led management to elect to rescind the previous contribution of EGD and to focus on the acquisition of GX-Life as described below. As a result, on October 9, 2015, we withdrew the No-Action Letter from consideration by the SEC. GX-Life Acquisition On October 2, 2015, we completed a Share Exchange Agreement with GX-Life, whereby we spun-off 100% of our ownership interest in the EGD Subsidiary (including 4,000,000 EGD) in exchange for 100% of the outstanding common stock of GX-Life. In a related transaction, on October 2, 2015, the former shareholders of GX-Life sold all of their interests in the EGD Subsidiary to the Acquiring Shareholders in the Sky Rover SPA in exchange for 21,280,000 shares of our Companys common stock previously acquired in the Sky Rover SPA. Collectively these two transactions are referred to as the GX-Life Transactions. As a result of the GX-Life Transactions, much of the Sky Rover SPA has been effectively unwound and the 4,000,000 EGD crypto-assets are no longer owned or controlled by our Company or any of our subsidiaries. The GX-Life Transactions effectuated a change in control of our Company, as the former shareholders of GX-Life, including Michael Dunn, Ning Liu and Tomoe Masuya, acquired 21,280,000 shares of our common stock representing an aggregate voting power of 45.9%. Form S-1 Registration Statement On May 8, 2015, we filed a Form S-1 Registration Statement under the Securities Act of 1933 (S-1) with the SEC for the initial registration of 10 million shares of our common stock, and the S-1 has been declared effective by the SEC. The offering is priced at $3.50 per share. Subsequent to December 31, 2015, we arranged for the sale of 1,000,000 shares under the S-1 for a total of $3,500,000. In that regard, we have received $999,975 to date and we are in the process of finalizing the remaining paperwork and funding with respect to the sale. Management Plans During 2015, our Company entered into various corporate transactions and started setting up our direct selling program. As such, no revenues were derived in 2015 and the Companys annual expenditures are greater than cash reserves at year end. Such conditions raise substantial doubt about our ability to continue as a going concern. In 2016 we have started generating revenues and have received substantial direct selling program membership deposits which help fund operations. In addition, through the date of issuance, we have raised approximately $3.5M through the sale of our common shares, approximately $1.0 million of which has been received as described above. Accordingly, based on anticipated future expenditures, cash on hand at year end, and receipts subsequent to year end, we believe any substantial doubt about our ability to continue as a going concern has been alleviated. |
2. Significant Accounting Polic
2. Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Accounting policies refer to specific accounting principles and the methods of app l ying t hose principles to fairly present our financial position and results of operations in accordan c e with generally accepted accounting principles . The policies discussed below include those that management has determined to be the most appropriate in preparing our consolidated financial statements Principles of Consolidation The accompanying consolidated financial statements include the accounts of Global Future City Holding Inc. and its wholly-owned subsidiaries. All significant intercompany accounts and transactions h ave been eliminated in consolidation . Management makes estimates and assumptions that affect the amounts reported in the consolidated financial statements and footnotes. Actual results could d i ffer 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 revenue recognition, inventory valuation, reserves for right of return on revenues, impairment of long-lived assets, and the valuation of stock compensation and 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, 2014 was from one customer. There was no accounts receivable at December 31, 2015. Cash and Cash Equivalents We consider all highly liquid investments with original maturities of 90 days or less to be cash equivalents. Allowances for Doubtful Accounts We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. We consider 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, 2015 and 2014, 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. Deferred Financing Costs The costs incurred in connection with the Form S-1 Registration Statement will be netted against the proceeds we expect to receive in connection therewith. Property and Equipment, net 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. Internal Use Software We incur software development costs to develop software programs to be used solely to meet our internal needs and cloud-based applications used to deliver our services. In accordance with ASC 350-40, Internal-Use Software, we capitalize development costs related to these software applications once the preliminary project stage is complete and it is probable that the project will be completed and the software will be used to perform the function intended. Impairment of Long-Lived Assets We review our long-lived assets in accordance with ASC 360-10-35, Impairment or Disposal of Long-Lived Assets. Under that directive, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Such group is tested for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. When such factors and circumstances exist, we compare the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. There were no impairments during the years ended December 31, 2015 and 2014. Fair Value of Financial Instruments We follow 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 Companys 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. Our financial instruments consisted primarily of (level 1) accounts payable, accrued expenses and deposits, accrued compensation, membership deposits and accrued benefits, deferred revenue and notes payable. The carrying amounts of our financial instruments generally approximate their fair values due to the short term nature of these instruments. As of December 31, 2015 and 2014, 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 Revenue from product sales are recorded when the products are shipped and title passes to independent members. Net revenues are determined after deducting promotional and other allowances in accordance with ASC 605-50. Product sales to members are made pursuant to a member agreement that provides for transfer of both title and risk of loss upon our delivery to the carrier that completes delivery to the members. This is commonly referred to as F.O.B. Shipping Point. Amounts received for unshipped product are recorded as deferred revenue. Our sales arrangements do not contain right of inspection or customer acceptance provisions other than general rights of return. We estimate and accrue a reserve for product returns based on our return policies and historical experience, with the expense recorded as a reduction to revenue. Cash receipts for enrollment packages include nonrefundable enrollment fees for all new members and an additional deposit for upgrading to VIP status if a member so chooses. The nonrefundable enrollment fee, is deferred and recognized over the term of the arrangement, generally twelve months. The VIP status upgrade is a deposit which is repayable to a member either in cash, product or convertible into GX Coins. There is no revenue associated with the VIP status upgrade deposit. Enrollment packages provide members access to both a personalized marketing website and a business management system. No upfront costs are deferred as the amount is nominal. Shipping and Handling Shipping and handling costs are recorded as a cost of net revenue and are expensed as incurred. Commissions Members of our direct-selling program primarily earn commissions based on total personal and group sales volume and also based on their VIP status. Members may also earn incentives, which may be both monetary and non-monetary in nature, based on meeting certain qualifications during a designated incentive period. We accrue commissions, including our estimate of costs associated with the incentives, when earned and pay commissions generally within the agree-to timeframe following the end of the applicable sales or incentive period. In some markets, we pay certain bonuses on purchases by up to three generations of personally enrolled members, as well as bonuses on commissions earned by up to three generations of personally enrolled members. From time to time, we make modifications and enhancements to our compensation plan to help motivate members, which can have an impact on member commissions. From time to time, we may also enter into agreements for business or market development, which may result in additional compensation to specific members. Net Income (Loss) per Share We present 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, 2015 and 2014, we had no outstanding options or warrants to purchase any of our common shares, respectively. As of December 31, 2014, we had certain debt with conversion features, which was convertible into approximately 1,346,191 shares of common stock. We 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, 2015, we 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 recognize 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 counterpartys 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 ASU No. 2014-09, Revenue from Contracts with Customers . In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial StatementsGoing 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 our consolidated financial statements. In April 2015, the FASB issued ASU No. 2015-05 Intangibles-Goodwill and Other-Internal-Use Software. The standard amended the existing accounting standards for intangible assets and provides explicit guidance to customers in determining the accounting for fees paid in a cloud computing arrangement, wherein the arrangements that do not convey a software license to the customer are accounted for as service contracts. The pronouncement is effective for reporting periods beginning after December 15, 2015. We early adopted ASU 2015-05 and applied service contract treatment to the Software License and Service Agreement (Note 6) as we do not have the right to take possession of the software, and thus the contract is deemed a service contract. In November 2015, the FASB issued ASU No. 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes, which requires deferred tax liabilities and assets to be classified as noncurrent in a classified statement of financial position. ASU 2015-17 will align the presentation of deferred income tax assets and liabilities with International Financial Reporting Standards. The new standard will be effective for fiscal years beginning after December 15, 2016, including interim periods within those annual years, and early application is permitted. The adoption of this standard is not expected to have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases, that requires organizations that lease assets, referred to as lessees, to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with lease terms of more than 12 months. ASU 2016-02 will also require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases and will include qualitative and quantitative requirements. The new standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those annual years, and early application is permitted. We are currently assessing the impact that this standard will have on our consolidated financial statements. The FASB issues 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. |
3. Acquisitions
3. Acquisitions | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
Acquisitions | Sky Rover Stock Purchase On September 19, 2014, we entered into the Sky Rover SPA. At closing, Sky Rover was to acquire 30,400,000 shares (the Shares) of our common stock which was to equal approximately 80% of the then outstanding shares of common stock of our Company. In consideration of the Shares, Sky Rover was to pay to us a total $400,000. On February 17, 2015, we amended the terms of the Sky Rover SPA (the Amended SPA). According to the terms of the Amended SPA, Sky Rover agreed to deposit 4,000,000 EGD into the EGD subsidiary. On April 17, 2015, our Company and Sky Rover completed the closing of the Sky Rover SPA. As a result, Sky Rovers designees received 33,240,000 shares of our common stock of which 3,371,351 were newly issued and 29,868,649 were conveyed by certain affiliated and unaffiliated existing shareholders to complete the transaction. Prior to the closing, Sky Rover advanced $539,885, consisting of the $400,000 purchase price and $139,885 towards reimbursement of certain corporate costs. The acquisition of the EGD is considered an asset purchase for accounting purposes based on the guidance of ASC 805 - Business Combinations. We recorded the value of the EGD as of the date of acquisition at $0 as its value was highly uncertain due to various restrictions on its use and our ability to exploit any value. GX-Life On October 2, 2015, we completed a Share Exchange Agreement with GX-Life, whereby we spun-off 100% of our ownership interest in the EGD Subsidiary (including 4,000,000 EGD), which we had valued at $0, in exchange for 100% of the outstanding common stock of GX-Life. In accordance with ASC 805, we have included the financial results of GX-Life in our consolidated financial statements as of the date of acquisition. The assets and liabilities of GX-Life assumed on the acquisition date were recorded at fair value, which approximated the carrying value, and are included in the consolidated financial information post-merger. Following is a summary of the assets and liabilities assumed as of the acquisition date: Assets: Cash $ 100 Deposits for inventory 491,988 Other deposits 5,700 Total assets 497,788 Liabilities: Accounts payable 19,298 Due to related parties 495,737 Total liabilities 515,035 Net liabilities assumed $ 17,247 Following is pro-forma revenue and earnings information for the year ended December 31, 2015 assuming both our Company and GX-Life had been combined as of September 1, 2015, the date of formation of GX-Life. Amounts are unaudited: Net revenue $ 0 Net loss (928,033 ) Acquisition of Powerdyne In March 2015, we acquired 100% of the membership interests in Powerdyne, an EB-5 Regional Center. We plan to raise funding for real estate development projects through the EB-5 Regional Center, a vehicle designated by the USCIS as eligible to receive immigrant investor capital to promote economic growth, improve regional productivity, create jobs, and increase domestic capital investment. The purchase price was $250,000, of which $150,000 was contributed by our former CEO Lei Pei. We paid an additional $50,000 and the remaining installments of $25,000 each are due on January 1, 2016 and April 1, 2016 (collectively Installment Payments). As collateral for the timely payment of the Installment Payments, we pledged and granted a security interest in the acquired membership interest of Powerdyne to the seller, until such time all Installment Payments have been made. The purchase of Powerdyne is considered an asset purchase for accounting purposes based on the guidance of ASC 805 - Business Combinations, as Powerdyne does not have features of a business nor does it have any operations. Through the Powerdyne acquisition, we acquired the right to issue licenses to projects such that the projects will benefit from its regional center approved status. We have included the capitalized amount as a separate line item in the accompanying consolidated balance sheet as of December 31, 2015. |
4. Inventories
4. Inventories | 12 Months Ended |
Dec. 31, 2015 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories on hand at December 31, 2014 consist of finished goods from our previous F.I.T.T. brand energy shots. Deposits for inventories at December 31, 2015 are down payments for products of our new direct-selling business which were shipped to us in the first quarter of 2016. |
5. Property and Equipment, net
5. Property and Equipment, net | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, net | Property and equipment, net consist of the following at December 31: 2015 2014 Furniture $ 103,515 $ 6,536 Computers 10,001 11,091 Software 62,610 16,894 Leasehold improvements 80,638 256,764 34,521 Less accumulated depreciation (7,439 ) (28,462 ) $ 249,325 $ 6,059 Property and equipment, net amounts shown above include $244,179 in items not placed into service until 2016, primarily as a result of our move into our current office facility. Depreciation expense was $6,367 and $6,110 for the years ended December 31, 2015 and 2014, respectively. |
6. Software License and Service
6. Software License and Services Agreement | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Software License and Services Agreement | As described in Note 1 under the caption Sky Rover Stock Purchase Agreement Under the Software License Agreement, which has a term of 10 years, members of our consumer product sales programs may elect to convert status or rewards points into GX Coins at agreed-to conversion rates. When a member converts status or reward points, we will record revenues, excluding the conversion fee payable to Great Coin, equal to 80% of the conversion amount, up to $4,000,000 in total conversion amounts, and 50% of the conversion amount thereafter. We have classified the $350,000 as a separate line item in our consolidated balance sheet and it will be amortized on a straight-line basis over the expected period of benefit. |
7. Accrued Expenses
7. Accrued Expenses | 12 Months Ended |
Dec. 31, 2015 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued expenses consist of the following at December 31: 2015 2014 Accrued interest $ 126,512 $ 38,773 Accrued royalties and commissions 11,366 11,666 Deposit on proposed business combination 475,000 Other 799 799 $ 138,677 $ 526,238 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 each settlement agreement. See Note 11 for further information. During 2014, we first entered into agreements 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 deposits 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 Notes 3 and 16 for further information with respect to these agreements. |
8. Accrued Compensation
8. Accrued Compensation | 12 Months Ended |
Dec. 31, 2015 | |
Accrued Compensation | |
Accrued Compensation | Accrued compensation consists of the following at December 31: 2015 2014 Accrued officers compensation former CEO $ $ 1,053,187 Accrued other compensation employee 441,462 Accrued payroll taxes delinquent 211,905 316,044 Accrued payroll taxes on accrued payroll (not yet due) 185,866 $ 211,905 $ 1,996,559 In prior years, we made minimal payments to our employees and accrued most of their compensation. In addition, we have delinquent Federal and State payroll taxes incurred mainly under previous management. In 2015 we made payments of $52,597 against the Federal obligation. Additionally, based on an accounting received from the Internal Revenue Service (IRS), we determined that our accrual for past-due Federal payroll taxes was overstated due to collections made, which were unknown to us, from other responsible parties along with lower than estimated interest and penalties. As a result, at December 31, 2015, we reduced our liability by $60,000, with $6,000 reducing interest expense accrued during 2015 and $54,000 recorded as a gain on extinguishment of debt. In January 2016, we received approval from the IRS for a 4-year payment plan to repay this obligation with the first payment scheduled for April 2016. While it is possible that the other responsible parties from whom the IRS made collections of approximately $20,000 could request reimbursement from our Company, we believe that possibility is unlikely and have recorded no liability for such an event. In 2014, in order to facilitate the investment by Sky Rover discussed in Note 1, we entered into settlement agreements with our former CEO and Controller under which they agreed to forgive all accrued but unpaid salary once all closing conditions of the Sky Rover SPA had been met. During the three months ended March 31, 2015, when all closing conditions of the Sky Rover SPA became effective, our former Chief Executive Officer and former Controller forgave all accrued compensation owed to them in accordance with settlement agreements which, along with the related accrued payroll taxes, totaled $1,673,774. This amount has been recorded as contributed capital in the accompanying consolidated financial statements due to the related party nature of the transaction. In 2013, we merged with a private company whose CEO was our former CEO. Prior to the merger, the private company had made advances to our former 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. Effective January 14, 2014 an 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. |
9. Membership Deposits and Accr
9. Membership Deposits and Accrued Benefits | 12 Months Ended |
Dec. 31, 2015 | |
Membership Deposits And Accrued Benefits | |
Membership Deposits and Accrued Benefits | Newly enrolled members in our direct-selling program may elect to increase their status to one of four VIP levels by providing us a cash deposit which is refundable at the end of one year. The deposit accrues reward points at the rate of 0.001 point per day per dollar of deposit, which is equivalent to an effective annual rate of 36.5%. A members deposited funds, plus any accrued reward points, are redeemable for cash, additional Company products, or GX Coins. At December 31, 2015, one member had made a $10,000 VIP deposit. |
10. Notes Payable
10. Notes Payable | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Notes Payable | Notes payable consists of the following at December 31: 2015 2014 Acquisition note - Powerdyne $ 50,000 $ Convertible promissory notes debt acquisition 100,000 100,000 Notes payable original bridge 120,000 120,000 Notes payable bridge loan #1 355,000 355,000 Notes payable bridge loan #2 175,000 200,000 Notes payable bridge loan #3 250,000 250,000 Convertible promissory note Asher/Goldenrise 55,000 Convertible promissory notes service agreement 20,000 Subtotal 1,050,000 1,100,000 Less current portion (1,050,000 ) (1,100,000 ) Long-term portion $ $ Notes Payable Settlement Agreements During the fourth quarter of 2014 and the first quarter of 2015, we reached settlements with most of our noteholders to restructure their notes (Settlement Agreements). In the restructuring of the notes payable, which was one of our Companys 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 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 the common stock has a closing bid price per share of $1.00 or more for 20 consecutive trading days after the closing of the Sky Rover SPA. Certain noteholders also agreed to relinquish to Sky Rover shares of their common stock they received with their original notes, contingent upon the Sky Rover SPA closing which occurred on April 17, 2015. In addition, holders of the restructured convertible promissory notes also agreed to forgo any additional principal (over and above the original principal) payable under their notes. As a result of these settlements, we recorded gains on extinguishment of debt totaling $952,400 in 2014 and $35,403 in 2015. Acquisition Note Powerdyne In connection with our acquisition of Powerdyne (see Note 3), we are required to make the following remaining Installment Payments of $25,000 due January 1, 2016, and April 1, 2016. As collateral for the timely payment of the Installment Payments, we pledged and granted a security interest in the acquired membership interest of Powerdyne to the seller, until such time all Installment Payments have been made. Subsequent to December 31, 2015, the remaining Installment Payments were made. 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. Prior to the Settlement Agreements discussed above, 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 $10 million and the maximum is 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 was never 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 Note Payable Original Bridge These notes had an original face value totaling $245,000. Prior to the Settlement Agreements discussed above, they bore interest from 10% to 12% per annum and were repayable from a pool of 10% of gross proceeds from the sales of certain F.I.T.T. energy drink products. In December 2013, a noteholder converted $75,000 of this debt to equity. In 2014, we facilitated a share purchase agreement between Greenome Development Group, Inc. (Greenome) and a significant shareholder. Per the terms of the agreement, we were relieved of $50,000 in debt from the shareholder. No payments have been made to date on these notes. 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 Note Payable Bridge Loan #1 In 2010, we initiated an offering to issue up to $1.0 million of units of securities, each unit consisting of a 12% unsecured promissory note and 0.083 shares of our common stock 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, the noteholders converted $175,000 and $50,000 into shares of common stock. 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 certain F.I.T.T. energy drink products. No payments have been made to date on these notes. In December 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 were within twelve months of the respective 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. As of December 31, 2014, there was no remaining unamortized discount. During the three-month period ended December 31, 2013, $80,000 in principal amounts ($160,000 in repayment amounts) were converted to equity. Prior to the Settlement Agreements discussed above, in the event we filed a registration statement with the SEC and it was declared effective, we had the option to repay the original principal plus accrued interest in shares of its common stock calculated at the offering price within the registration. No payments have been made to date on these notes payable. We entered into Settlement Agreements in the fourth quarter of 2014 with holders of $150,000 face value of these notes, and in the first quarter of 2015 with holders of $25,000 face value of these notes, all 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. We recorded an initial discount of $25,000 on this note which was 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. Prior to the Settlement Agreements discussed above, the note was repayable at two times the principal amount of the note (repayment amount of $500,000) and matured June 30, 2013. Our Company had 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 was 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. 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 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 shares of our common stock beginning 180 days from the date of the note at a conversion price of 58% of the market price of the common stock. The note included 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 initial discount of $2,500 which was through October 8, 2014, the maturity date, and accelerated the amortization as a result of the note assumption by Goldenrise Development, Inc. (Goldenrise) described below. During the years ended December 31, 2015 and 2014, $0 and $2,500, respectively was amortized to expense. On July 15, 2014, we 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 notes ratchet provision. As such, derivative accounting does not apply under the new terms. In connection with this transaction, we recorded a loss on extinguishment of debt 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 now determined that the service provider has not performed any services under the agreement and allowed for adequate time for the service provider to make good on their service obligation. Therefore, management believes the obligation is invalid. As a result, in 2015 we eliminated the note and recorded a gain on extinguishment of debt of $20,000. Debt Conversions In April 2015, Goldenrise converted its convertible promissory note into 123,268 shares of common stock in accordance with the terms of the note. |
11. Advances from Related Parti
11. Advances from Related Parties | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Advances from Related Parties | 2015 2014 Advances from our CFO (former CEO) $ 89,359 $ 142,203 Advances from Shareholder 15,000 $ 89,359 $ 157,203 |
12. Commitments and Contingenci
12. Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | On October 16, 2015, we entered into a lease agreement for 5,824 square feet of office space in Irvine, California. The lease has a minimum term of 60 months with monthly rents escalating from $14,676 in year one to $17,472 in year five. Tenant improvements made by the landlord were completed at the end of January 2016, at which time we moved into the space and our lease commenced. Annual rent expense for the years ended December 31, 2015 and 2014 was $33,335 and $22,109, respectively. Future minimum lease obligations as of December 31, 2015 are as follows: 2016 $ 161,436 2017 183,163 2018 191,493 2019 199,881 2020 208,907 Thereafter 17,472 Total minimum lease obligations $ 962,352 |
13. Capital Stock
13. Capital Stock | 12 Months Ended |
Dec. 31, 2015 | |
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. 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. Prior to the closing of the SPA with Sky Rover, Mr. Lei Pei purchased 6,000,000 newly-issued shares of our common stock for $3,000,000 in cash in a separate transaction that closed on March 30, 2015. Effective April 17, 2015 in connection with the closing of the Sky Rover SPA, Sky Rover's designees received 33,240,000 shares of our common stock of which 3,371,351 were newly issued and 29,868,649 were conveyed by certain affiliated and unaffiliated existing shareholders to complete the transaction. All shares were considered to be part of the $400,000 acquisition price to acquire the stock per the terms described in Note 3. Common Stock Issued for Services During 2015, we issued 250,000 shares of our common stock for consulting services related to marketing. The shares were valued at $65,000 which was our determination of the fair market value of the shares. We recorded selling and marketing expense of $65,000 in connection with the share issuances. 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. Common Stock Issued to Extinguish Debt During 2015, we entered into settlement agreements with two vendors under which we issued 25,000 shares of our common stock to settle $49,189 of outstanding amounts due. We recorded a gain of on extinguishment of debt of $2,089 on these settlements. In 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) agreed to settle the obligations by accepting 115,637 shares of our common stock. Prior to the settlement, these notes contained no stated conversion features. We valued the shares at their fair market value on the date of settlement and during the year ended December 31, 2014, we recorded a loss on extinguishment of debt totaling $33,594 in connection with this transaction. Also in 2014, we issued 274,761 shares of our common stock to our legal counsel to settle the $274,761 accounts payable balance owed to them. We valued the shares at their fair market value on the date of settlement and recorded a gain on extinguishment of debt of $142,876 in connection with this transaction. Contributed Capital During 2015, our former Chief Executive Officer, Michael Dunn and our former Controller forgave accrued compensation due to each of them. In connection with these transactions, we recorded contributed capital of $1,673,774. Also in 2015, we recorded the following transactions as contributed capital: Payments made by a former CEO, Lei Pei, for Powerdyne acquisition $ 175,000 Advances in connection with Sky Rover SPA for expenses incurred due to late closing of the Sky Rover SPA 139,885 Net receipts in connection with all outstanding issues with Mr. Lei Pei 40,540 $ 355,425 Warrants and Stock Options During the years ended December 31, 2015 and 2014, there were no warrants or stock options outstanding and there was no expense related to warrants or stock options. On December 30, 2015, we elected to withdraw and terminate our Option Plan for employees, officers, and consultants of our Company. At the time of cancellation, there were no options outstanding and 13,889 shares were remaining for future issuance. We will re-evaluate the implementation of an option plan in the future at the Board of Directors discretion. |
14. Income Taxes
14. Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Reconciliations of the U.S. federal statutory rate to the actual tax rate are as follows for the years ended December 31: 2015 2014 Federal tax at statutory rate 34.0% 34.0% Permanent differences: State income taxes, net of federal benefit 5.8% 5.8% Gain/loss on extinguishment of debt 4.6% -191.2% Amortization of debt discount and accretion of debt 0.5% Non-deductible entertainment -0.1% 0.3% Temporary differences: Accrued liabilities and other -0.1% 0.4% Change in valuation allowance -44.3% 150.5% Total provision -0.1% 0.4% The major components of the deferred taxes are as follows at December 31: Asset (Liability) 2015 2014 Current: Reserves and accruals $ 51,290 $ 309,724 Noncurrent: Net operating losses 1,166,436 504,644 Valuation allowance (1,217,726 ) (814,368 ) Net deferred tax asset $ $ Based on federal tax returns filed or to be filed through December 31, 2015, we had available approximately $28,410,000 in U.S. tax net operating loss carryforwards, pursuant to the Tax Reform Act of 1986, which assesses the utilization of a Companys 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, 2015 are approximately $26,062,000 and have begun to expire. With the finalization of our merger with FITT, we 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. Due to the Sky Rover and GX-Life transactions (Note 1) there has been a significant change in ownership. A change in ownership requires management to compute the annual limitation under Section 382 of the Internal Revenue Code. The amount of benefits we may receive from the operating loss carry forwards for income tax purposes is further dependent, in part, upon the tax laws in effect, our future earnings, and other future events, the effects of which cannot be determined. During the years ended December 31, 2015 and 2014, our valuation allowance increased by $403,358 and $288,075, respectively. The United States Federal return years 2011 through 2014 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 do not have any ongoing tax examinations. |
15. Gain (Loss) on Extinguishme
15. Gain (Loss) on Extinguishment of Debt | 12 Months Ended |
Dec. 31, 2015 | |
Extinguishment of Debt Disclosures [Abstract] | |
Gain (Loss) on Extinguishment of Debt | Gain (loss) on extinguishment of debts for the years ended December 31: 2015 2014 Notes payable: Settlement agreements with common stock (Note 13) $ $ (33,594 ) Settlement agreements without common stock (Note 10) 35,403 952,400 Write-off notes payable (Note 10) 20,000 Accounts payable and accrued expenses: Settlement agreements with common stock (Note 13) 2,089 142,876 Settlement agreements without common stock 105,012 Write-off accounts payable and accrued expenses 102,319 Past-due Federal payroll taxes (Note 8) 54,000 Forgiveness of advances from former related party 15,000 Assignment of Asher note payable (Note 10) (9,948 ) $ 333,823 $ 1,051,734 In 2015, prior to the closing of the Sky Rover SPA, we reached settlement agreements with numerous creditors holding $134,762 in accounts payable. In connection with the settlement agreements, we recorded gains on the extinguishment of debt in the amount of $105,012. In addition, we eliminated $102,319 in accounts payable and accrued expenses for which the statute of limitations for legal claims to be made for collections has passed. |
16. Agreements
16. Agreements | 12 Months Ended |
Dec. 31, 2015 | |
Agreements | |
Agreements | Greenome Share Exchange Agreement On May 6, 2014, we entered into a Share Exchange Agreement (SEA) with Greenome and agreed to sell to Greenome 80% of our outstanding common stock for a purchase price of $400,000. 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 $125,000 of those funds to the shareholder in several tranches. The SEA was terminated as described above; however, the terms of the agreement were effectively transferred from Greenome to Sky Rover per the Sky Rover SPA (Note 3). Final payment to the shareholder was made in February 2015 and the shares of common stock were transferred in accordance with the agreements. Greenome Financing Agreement On September 19, 2014, we entered into a financing agreement with Greenome, whereby we agreed to raise up to $3.0 million through a private placement memorandum then loan these funds to a subsidiary of Greenome under a promissory note bearing interest at the rate of 10% per annum. The note would mature twelve months from its inception and be secured by the assets of Greenome. No funds have been raised to date. In connection with the closing of the Sky Rover SPA, Greenome received 2,000,000 of our common shares as directed by Sky Rover and all obligations between our Company and Greenome, outside any future financing with Greenome, were deemed satisfied. Mo Feng Yi Consulting Agreement On November 24, 2015 we entered into a Consulting Agreement with Mo Feng Yi (Consultant), an individual with extensive contacts and business relationships in Asia. Under the agreement, which has a term of 6 months, Consultant agreed to provide various business and market development services for our direct-selling business. The agreement required us to pay Consultant $200,000 in 2015 in two equal installments for services provided. On February 23, 2016, we amended the agreement to provide for an additional payment of $100,000 in February 2016 for continued service. Alicia Xie Geiser Consulting Agreement On December 1, 2015 we entered into a Consulting Agreement with Alicia Xie Geiser (Consultant), an individual with extensive contacts and business relationships in Asia. Under the agreement, which has a term of 6 months, Consultant agreed to provide various business and market development services for our direct-selling business. The agreement requires us to pay Consultant $10,000 per month. During 2015, we recorded a general and administrative expense of $10,000 in connection with this agreement. |
17. Subsequent Events
17. Subsequent Events | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Private Consulting Group Consulting Agreement On February 26, 2016, we entered into a Consulting Agreement with Private Consulting Group (Consultant) under which Consultant agreed to provide business and financial consulting services including advice and assistance with our capital market positioning and identifying prospective institutional purchasers for our equity securities. The agreement has a term of seven (7) months and requires that we pay Consultant $10,000 per month and issue Consultant 50,000 restricted shares of our common stock. During 2016, we will value the shares based on their fair market value on the date of issue and record a general and administrative expense in the appropriate amount. iMatrix Software, Inc. Consulting Agreement On February 17, 2016, we entered into a Consulting Agreement with iMatrix Software, Inc. (Consultant) under which Consultant agreed to provide services to assist in developing and expanding our direct-selling business. The agreement has a term of 3 months and requires that we pay Consultant $18,000 per month and issue Consultant 3,000 registered and free-trading shares of our common stock. Mitchell Morrison Consulting Agreement On April 1, 2016, we entered into a Consulting Agreement with Mitchell Morrison (Consultant) under which Consultant agreed to provide business and financial consulting services including advice and assistance with our capital market positioning and identifying prospective institutional purchasers for our equity securities. The agreement has no stated term, is cancellable by either party on 30 days notice, and requires that we pay Consultant $15,000 on execution of the agreement and $10,000 per month. Employee Shares During the three months ended March 31, 2016, four of our employees earned a total of 31,000 of our free-trading common shares in accordance with employment arrangements they have with our Company. We will value the shares at the fair market values over the period of time they were earned and will charge our results of operations accordingly. Other Information Subsequent to December 31, 2015, we arranged for the sale of 1,000,000 shares under the S-1 for a total of $3,500,000. In that regard, we have received $999,975 to date and we are in the process of finalizing the remaining paperwork and funding with respect to the sale. In addition, during the three months ended March 31, 2016, we have received approximately $1,770,000 from new members enrolled in our GX-Life direct-selling membership program. |
2. Significant Accounting Pol25
2. Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
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 subsidiaries. All significant intercompany accounts and transactions h ave been eliminated in consolidation . Management makes estimates and assumptions that affect the amounts reported in the consolidated financial statements and footnotes. Actual results could d i ffer 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 revenue recognition, inventory valuation, reserves for right of return on revenues, impairment of long-lived assets, and the valuation of stock compensation and 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, 2014 was from one customer. There was no accounts receivable at December 31, 2015. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid investments with original maturities of 90 days or less to be cash equivalents. |
Allowances for Doubtful Accounts | Allowances for Doubtful Accounts We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. We consider 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, 2015 and 2014, 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. |
Deferred Financing Costs | Deferred Financing Costs The costs incurred in connection with the Form S-1 Registration Statement will be netted against the proceeds we expect to receive in connection therewith. |
Property and Equipment, net | Property and Equipment, net 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. |
Internal Use Software | Internal Use Software We incur software development costs to develop software programs to be used solely to meet our internal needs and cloud-based applications used to deliver our services. In accordance with ASC 350-40, Internal-Use Software, we capitalize development costs related to these software applications once the preliminary project stage is complete and it is probable that the project will be completed and the software will be used to perform the function intended. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets We review our long-lived assets in accordance with ASC 360-10-35, Impairment or Disposal of Long-Lived Assets. Under that directive, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Such group is tested for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. When such factors and circumstances exist, we compare the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. There were no impairments during the years ended December 31, 2015 and 2014. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments We follow 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 Companys 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. Our financial instruments consisted primarily of (level 1) accounts payable, accrued expenses and deposits, accrued compensation, membership deposits and accrued benefits, deferred revenue and notes payable. The carrying amounts of our financial instruments generally approximate their fair values due to the short term nature of these instruments. As of December 31, 2015 and 2014, 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 Revenue from product sales are recorded when the products are shipped and title passes to independent members. Net revenues are determined after deducting promotional and other allowances in accordance with ASC 605-50. Product sales to members are made pursuant to a member agreement that provides for transfer of both title and risk of loss upon our delivery to the carrier that completes delivery to the members. This is commonly referred to as F.O.B. Shipping Point. Amounts received for unshipped product are recorded as deferred revenue. Our sales arrangements do not contain right of inspection or customer acceptance provisions other than general rights of return. We estimate and accrue a reserve for product returns based on our return policies and historical experience, with the expense recorded as a reduction to revenue. Cash receipts for enrollment packages include nonrefundable enrollment fees for all new members and an additional deposit for upgrading to VIP status if a member so chooses. The nonrefundable enrollment fee, is deferred and recognized over the term of the arrangement, generally twelve months. The VIP status upgrade is a deposit which is repayable to a member either in cash, product or convertible into GX Coins. There is no revenue associated with the VIP status upgrade deposit. Enrollment packages provide members access to both a personalized marketing website and a business management system. No upfront costs are deferred as the amount is nominal. |
Shipping and Handling | Shipping and Handling Shipping and handling costs are recorded as a cost of net revenue and are expensed as incurred. |
Commissions | Commissions Members of our direct-selling program primarily earn commissions based on total personal and group sales volume and also based on their VIP status. Members may also earn incentives, which may be both monetary and non-monetary in nature, based on meeting certain qualifications during a designated incentive period. We accrue commissions, including our estimate of costs associated with the incentives, when earned and pay commissions generally within the agree-to timeframe following the end of the applicable sales or incentive period. In some markets, we pay certain bonuses on purchases by up to three generations of personally enrolled members, as well as bonuses on commissions earned by up to three generations of personally enrolled members. From time to time, we make modifications and enhancements to our compensation plan to help motivate members, which can have an impact on member commissions. From time to time, we may also enter into agreements for business or market development, which may result in additional compensation to specific members. |
Net Income (Loss) per Share | Net Income (Loss) per Share We present 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, 2015 and 2014, we had no outstanding options or warrants to purchase any of our common shares, respectively. As of December 31, 2014, we had certain debt with conversion features, which was convertible into approximately 1,346,191 shares of common stock. We 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, 2015, we 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 recognize 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 counterpartys 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 ASU No. 2014-09, Revenue from Contracts with Customers . In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial StatementsGoing 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 our consolidated financial statements. In April 2015, the FASB issued ASU No. 2015-05 Intangibles-Goodwill and Other-Internal-Use Software. The standard amended the existing accounting standards for intangible assets and provides explicit guidance to customers in determining the accounting for fees paid in a cloud computing arrangement, wherein the arrangements that do not convey a software license to the customer are accounted for as service contracts. The pronouncement is effective for reporting periods beginning after December 15, 2015. We early adopted ASU 2015-05 and applied service contract treatment to the Software License and Service Agreement (Note 6) as we do not have the right to take possession of the software, and thus the contract is deemed a service contract. In November 2015, the FASB issued ASU No. 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes, which requires deferred tax liabilities and assets to be classified as noncurrent in a classified statement of financial position. ASU 2015-17 will align the presentation of deferred income tax assets and liabilities with International Financial Reporting Standards. The new standard will be effective for fiscal years beginning after December 15, 2016, including interim periods within those annual years, and early application is permitted. The adoption of this standard is not expected to have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases, that requires organizations that lease assets, referred to as lessees, to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with lease terms of more than 12 months. ASU 2016-02 will also require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases and will include qualitative and quantitative requirements. The new standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those annual years, and early application is permitted. We are currently assessing the impact that this standard will have on our consolidated financial statements. The FASB issues 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. |
3. Acquisitions (Tables)
3. Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
Acquisition Assets and Liabilities | Assets: Cash $ 100 Deposits for inventory 491,988 Other deposits 5,700 Total assets 497,788 Liabilities: Accounts payable 19,298 Due to related parties 495,737 Total liabilities 515,035 Net liabilities assumed $ 17,247 |
Pro-forma revenue and earnings information | Net revenue $ 0 Net Loss (928,033 ) |
5. Property and Equipment, net
5. Property and Equipment, net (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | 2015 2014 Furniture $ 103,515 $ 6,536 Computers 10,001 11,091 Software 62,610 16,894 Leasehold improvements 80,638 256,764 34,521 Less accumulated depreciation (7,439 ) (28,462 ) $ 249,325 $ 6,059 |
7. Accrued Expenses (Tables)
7. Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | 2015 2014 Accrued interest $ 126,512 $ 38,773 Accrued royalties and commissions 11,366 11,666 Deposit on proposed business combination 475,000 Other 799 799 $ 138,677 $ 526,238 |
8. Accrued Compensation (Tables
8. Accrued Compensation (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accrued Compensation | |
Accrued Compensation | 2015 2014 Accrued officers compensation former CEO $ $ 1,053,187 Accrued other compensation employee 441,462 Accrued payroll taxes delinquent 211,905 316,044 Accrued payroll taxes on accrued payroll (not yet due) 185,866 $ 211,905 $ 1,996,559 |
10. Notes Payable (Tables)
10. Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Notes Payable | 2015 2014 Acquisition note - Powerdyne $ 50,000 $ Convertible promissory notes debt acquisition 100,000 100,000 Notes payable original bridge 120,000 120,000 Notes payable bridge loan #1 355,000 355,000 Notes payable bridge loan #2 175,000 200,000 Notes payable bridge loan #3 250,000 250,000 Convertible promissory note Asher/Goldenrise 55,000 Convertible promissory notes service agreement 20,000 Subtotal 1,050,000 1,100,000 Less current portion (1,050,000 ) (1,100,000 ) Long-term portion $ $ |
11. Advances from Related Par31
11. Advances from Related Parties (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Advances from related parties | 2015 2014 Advances from our CFO (former CEO) $ 89,359 $ 142,203 Advances from Shareholder 15,000 $ 89,359 $ 157,203 |
12. Commitments and Contingen32
12. Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum operating lease payments | 2016 $ 161,436 2017 183,163 2018 191,493 2019 199,881 2020 208,907 Thereafter 17,472 Total minimum lease obligations $ 962,352 |
13. Capital Stock (Tables)
13. Capital Stock (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Contributed capital | Payments made by a former CEO, Lei Pei, for Powerdyne acquisition $ 175,000 Advances in connection with Sky Rover SPA for expenses incurred due to late closing of the Sky Rover SPA 139,885 Net receipts in connection with all outstanding issues with Mr. Lei Pei 40,540 $ 355,425 |
14. Income Taxes (Tables)
14. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Reconciliation of tax rate | 2015 2014 Federal tax at statutory rate 34.0% 34.0% Permanent differences: State income taxes, net of federal benefit 5.8% 5.8% Gain/loss on extinguishment of debt 4.6% -191.2% Amortization of debt discount and accretion of debt 0.5% Non-deductible entertainment -0.1% 0.3% Temporary differences: Accrued liabilities and other -0.1% 0.4% Change in valuation allowance -44.3% 150.5% Total provision -0.1% 0.4% |
Deferred taxes | Asset (Liability) 2015 2014 Current: Reserves and accruals $ 51,290 $ 309,724 Noncurrent: Net operating losses 1,166,436 504,644 Valuation allowance (1,217,726 ) (814,368 ) Net deferred tax asset $ $ |
15. Gain (Loss) on Extinguish35
15. Gain (Loss) on Extinguishment of Debt (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Extinguishment of Debt Disclosures [Abstract] | |
Gain (loss) on extinguishment of debt | 2015 2014 Notes payable: Settlement agreements with common stock (Note 13) $ $ (33,594 ) Settlement agreements without common stock (Note 10) 35,403 952,400 Write-off notes payable (Note 10) 20,000 Accounts payable and accrued expenses: Settlement agreements with common stock (Note 13) 2,089 142,876 Settlement agreements without common stock 105,012 Write-off accounts payable and accrued expenses 102,319 Past-due Federal payroll taxes (Note 8) 54,000 Forgiveness of advances from related parties 15,000 Assignment of Asher note payable (Note 10) (9,948 ) $ 333,823 $ 1,051,734 |
2. Significant Accounting Pol36
2. Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2015 | |
Allowance for doubtful accounts | $ 0 | $ 0 |
Accounts Receivable [Member] | One customer [Member] | ||
Concentration percentage | 100.00% |
3. Acquisitions (Details - Acqu
3. Acquisitions (Details - Acquisition allocation) - GX-Life [Member] | Oct. 02, 2015USD ($) |
Assets: | |
Cash | $ 100 |
Deposits for inventory | 491,988 |
Other deposits | 5,700 |
Total assets | 497,788 |
Liabilities: | |
Accounts payable | 19,298 |
Due to related parties | 495,737 |
Total liabilities | 515,035 |
Net liabilities assumed | $ 17,247 |
3. Acquisitions (Details - Prof
3. Acquisitions (Details - Proforma) - GX-Life [Member] | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Net revenue | $ 0 |
Net loss | $ (928,033) |
5. Propery and Equipment, net (
5. Propery and Equipment, net (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Less accumulated depreciation | $ (7,439) | $ (28,462) |
Property and equipment, net | 249,325 | 6,059 |
Furniture [Member] | ||
Property and equipment, gross | 103,515 | 6,536 |
Computers [Member] | ||
Property and equipment, gross | 10,001 | 11,091 |
Software [Member] | ||
Property and equipment, gross | 62,610 | 16,894 |
Leasehold Improvements [Member] | ||
Property and equipment, gross | $ 80,638 | $ 0 |
5. Property and Equipment, ne40
5. Property and Equipment, net (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 6,367 | $ 6,110 |
6. Software License and Servi41
6. Software License and Services Agreement (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Technology license | $ 350,000 | $ 0 |
Great Coin [Member] | ||
Payment for software license | 350,000 | |
Technology license | $ 350,000 |
7. Accrued Expenses (Details)
7. Accrued Expenses (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Payables and Accruals [Abstract] | ||
Accrued interest | $ 126,512 | $ 38,773 |
Accrued royalties and commissions | 11,366 | 11,666 |
Deposit on proposed business combination | 0 | 475,000 |
Other | 799 | 799 |
Accrued expenses | $ 138,677 | $ 526,238 |
8. Accrued Compensation (Detail
8. Accrued Compensation (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Total accrued compensation | $ 211,905 | $ 1,996,559 |
Accrued officers compensation - Former CEO [Member] | ||
Total accrued compensation | 0 | 1,053,187 |
Accrued officers compensation - Employee [Member] | ||
Total accrued compensation | 0 | 411,462 |
Accrued payroll taxes - delinquent [Member] | ||
Total accrued compensation | 211,905 | 316,044 |
Accrued payroll taxes on accrued payroll (not yet due) [Member] | ||
Total accrued compensation | $ 0 | $ 185,866 |
8. Accrued Compensation (Deta44
8. Accrued Compensation (Details Narrative) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Gain on extinguishment of debt | $ 105,012 |
Payroll taxes [Member] | |
Payments for federal payroll taxes | 52,597 |
Decrease in federal tax liability | (60,000) |
Gain on extinguishment of debt | 54,000 |
Decrease in interest expense | $ (6,000) |
10. Notes Payable (Details)
10. Notes Payable (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Note payable balance | $ 1,050,000 | $ 1,100,000 |
Less current portion | (1,050,000) | (1,100,000) |
Long-term portion | 0 | 0 |
Acquisition note [Member] | ||
Note payable balance | 50,000 | 0 |
Convertible promissory notes - debt acquisition [Member] | ||
Note payable balance | 100,000 | 100,000 |
Original Bridge Loan [Member] | ||
Note payable balance | 120,000 | 120,000 |
Bridge Loan 1 [Member] | ||
Note payable balance | 355,000 | 355,000 |
Bridge Loan 2 [Member] | ||
Note payable balance | 175,000 | 200,000 |
Bridge Loan 3 [Member] | ||
Note payable balance | 250,000 | 250,000 |
Convertible promissory note - Asher/Goldenrise [Member] | ||
Note payable balance | 0 | 55,000 |
Convertible promissory note - Service agreement [Member] | ||
Note payable balance | $ 0 | $ 20,000 |
10. Notes Payable (Details Narr
10. Notes Payable (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Gain (loss) on extinguishment of debt | $ 333,823 | $ 1,051,734 |
Goldenrise [Member] | ||
Stock issued for convertible note | 123,268 | |
Settlement Agreements [Member] | ||
Gain (loss) on extinguishment of debt | $ 35,403 | 952,400 |
Convertible promissory note - Asher/Goldenrise [Member] | ||
Gain (loss) on extinguishment of debt | (9,948) | |
Interest expense | 0 | $ 2,500 |
Convertible promissory note - Service agreement [Member] | ||
Gain (loss) on extinguishment of debt | $ 20,000 |
11. Advances from Related Par47
11. Advances from Related Parties (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Due to related party | $ 89,359 | $ 157,203 |
Chief Financial Officer [Member] | ||
Due to related party | 89,359 | 142,203 |
Shareholder [Member] | ||
Due to related party | $ 0 | $ 15,000 |
12. Commitments and Contingen48
12. Commitments and Contingencies (Details) | Dec. 31, 2015USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Minimum lease obligation 2016 | $ 161,436 |
Minimum lease obligation 2017 | 183,163 |
Minimum lease obligation 2018 | 191,493 |
Minimum lease obligation 2019 | 199,881 |
Minimum lease obligation 2020 | 208,907 |
Minimum lease obligation thereafter | 17,472 |
Minimum lease obligation | $ 962,352 |
12. Commitments and Contingen49
12. Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense | $ 33,335 | $ 22,109 |
13. Capital Stock (Details - Co
13. Capital Stock (Details - Contributed capital) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Contributed capital | $ 355,425 |
Powerdyne Acquisition [Member] | |
Contributed capital | 175,000 |
Sky Rover expenses [Member] | |
Contributed capital | 139,885 |
Mr. Lei Pei [Member] | |
Contributed capital | $ 40,540 |
13. Capital Stock (Details Narr
13. Capital Stock (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Common stock issued for services, value | $ 65,000 | $ 12,500 |
Gain on extinguishment of debt | 105,012 | |
Accrued compensation forgiven | $ 1,673,774 | |
Warrants outstanding | 0 | |
Options outstanding | 0 | |
Notes payable [Member] | ||
Gain on extinguishment of debt | $ (33,594) | |
Stock issued to extinguish debt, shares | 115,637 | |
Stock issued to extinguish debt, value | $ 55,000 | |
Two Vendors [Member] | ||
Gain on extinguishment of debt | $ 2,089 | |
Stock issued to extinguish debt, shares | 25,000 | |
Stock issued to extinguish debt, value | $ 49,189 | |
Legal Counsel [Member] | ||
Common stock issued for services, shares | 274,761 | |
Common stock issued for services, value | $ 142,876 | |
Shares Issued for Services [Member] | ||
Common stock issued for services, shares | 250,000 | 50,000 |
Common stock issued for services, value | $ 65,000 | $ 12,500 |
Shares Issued for Services [Member] | General and Administrative Expense [Member] | ||
Stock issuance costs | $ 65,000 | |
Shares Issued for Services [Member] | Selling and Marketing Expense [Member] | ||
Stock issuance costs | $ 12,500 |
14. Income Taxes (Details-Recon
14. Income Taxes (Details-Reconcilation of tax rate) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
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% |
Gain/loss on extinguishment of debt | 4.60% | (191.20%) |
Amortization of debt discount and accretion of debt | 0.00% | 0.50% |
Non-deductible entertainment | (0.10%) | 0.30% |
Temporary differences: | ||
Accrued liabilities and other | (0.10%) | 0.40% |
Change in valuation allowance | (44.30%) | 150.50% |
Total provision | (0.10%) | 0.40% |
14. Income Taxes (Details-Defer
14. Income Taxes (Details-Deferred income taxes) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Income Tax Disclosure [Abstract] | ||
Reserves and accruals | $ 51,290 | $ 309,724 |
Net operating losses | 1,166,436 | 504,644 |
Valuation allowance | (1,217,726) | (814,368) |
Deferred tax assets | $ 0 | $ 0 |
14. Income Taxes (Details Narra
14. Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Increase in valuation allowance | $ 403,358 | $ 288,075 |
Federal [Member] | ||
Net operating loss carryforward | $ 28,410,000 | |
Operating loss carryforward expiration date | Dec. 31, 2026 | |
State [Member] | ||
Net operating loss carryforward | $ 26,062,000 |
15. Gain (Loss) on Extinguish55
15. Gain (Loss) on Extinguishment of Debt (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Gain (loss) on extinguishment of debt | $ 333,823 | $ 1,051,734 |
Notes payable [Member] | Settlement Agreements - With Common Stock [Member] | ||
Gain (loss) on extinguishment of debt | 0 | (33,594) |
Notes payable [Member] | Settlement Agreements - Without Common Stock [Member] | ||
Gain (loss) on extinguishment of debt | 35,403 | 952,400 |
Notes payable [Member] | Write-Off Notes Payable [Member] | ||
Gain (loss) on extinguishment of debt | 20,000 | 0 |
Accounts payable and accrued expenses [Member] | Settlement Agreements - With Common Stock [Member] | ||
Gain (loss) on extinguishment of debt | 2,089 | 142,876 |
Accounts payable and accrued expenses [Member] | Settlement Agreements - Without Common Stock [Member] | ||
Gain (loss) on extinguishment of debt | 105,012 | 0 |
Accounts payable and accrued expenses [Member] | Write-off accuonts payable and accrued expenses [Member] | ||
Gain (loss) on extinguishment of debt | 102,319 | 0 |
Past due Federal payroll taxes [Member] | ||
Gain (loss) on extinguishment of debt | 54,000 | 0 |
Forgiveness of advances from related parties [Member] | ||
Gain (loss) on extinguishment of debt | 15,000 | 0 |
Assignment of Asher Note [Member] | ||
Gain (loss) on extinguishment of debt | $ 0 | $ (9,948) |
15. Gain (Loss) on Extinguish56
15. Gain (Loss) on Extinguishment of Debt (Details Narrative) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Extinguishment of Debt Disclosures [Abstract] | |
Settlement agreements on accounts payable | $ 134,762 |
Gains on extinguishment of debt | 105,012 |
Accounts payable delinquent | $ 102,319 |