Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 25, 2015 | Jun. 30, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | WISDOM HOMES OF AMERICA, INC. | ||
Entity Central Index Key | 1281198 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Common Stock, Shares Outstanding | 57,702,105 | ||
Entity Public Float | $1,491,684 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2014 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (Audited) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
CURRENT ASSETS | ||
Cash and cash equivalents | $410,828 | $82,725 |
Accounts receivable | 9,334 | |
Inventory | 1,201,693 | |
Note receivables | 450,758 | 1,200,000 |
Other current assets | 410,094 | 37,365 |
Current assets - discontinued operations | 82,590 | |
TOTAL CURRENT ASSETS | 2,473,373 | 1,412,014 |
Property and equipment, net | 54,434 | 12,047 |
Intangible assets: | ||
Domain names | 84,363 | 420,862 |
Advertising rights | 58,560 | |
Note receivables noncurrent | 968,924 | 472,982 |
Other assets | 3,100 | 92,072 |
Other assets - discontinued operations | 973,044 | |
TOTAL ASSETS | 3,642,754 | 3,383,021 |
CURRENT LIABILITIES | ||
Accounts payable | 282,220 | 190,099 |
Accrued liabilities | 1,430,891 | 1,906,018 |
Note payable | 710,908 | 196,087 |
Note payable - related party | ||
Current liabilities - discontinued operations | 240,102 | 297,261 |
TOTAL CURRENT LIABILITIES | 2,664,121 | 2,589,465 |
LONG TERM LIABILITIES | ||
Other accrued liabilities | 118,750 | 118,750 |
Flooring Credit Line | 1,219,241 | |
Note payable | 484,096 | 95,519 |
Note payable - related party | 161,250 | 161,250 |
Noncurrent liabilities - discontinued operations | 400,000 | |
TOTAL LONG TERM LIABILITIES | 1,983,337 | 775,519 |
TOTAL LIABILITIES | 4,647,458 | 3,364,984 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, $0.001 par value: 20,000,000 shares authorized; zero shares issued and outstanding at December 31, 2014; zero shares issued and outstanding at December 31, 2013; | ||
Common stock, $0.001 par value: 200,000,000 shares authorized; 50,677,105 shares issued and outstanding at December 31, 2014, 39,368,772 shares issued and outstanding at December 31, 2012, | 50,677 | 39,369 |
Paid-in capital | -9,888,444 | -10,717,336 |
Retained earnings | 8,718,657 | 10,696,004 |
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | -1,119,110 | 18,037 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $3,528,348 | $3,383,021 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Audited) (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, Authorized | 20,000,000 | 20,000,000 |
Preferred stock, Issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, Authorized | 200,000,000 | 200,000,000 |
Common stock, Issued | 50,677,105 | 39,368,772 |
Common stock, outstanding | 50,677,105 | 39,368,772 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (Audited) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
REVENUE | ||
Sales | $1,046,487 | |
Total revenue | 1,046,487 | |
OPERATING EXPENSES | ||
Cost of sales | 863,179 | |
Selling, general and administrative expenses | 1,968,557 | 3,112,169 |
Total operating expenses | 2,831,736 | 3,112,169 |
Operating Loss | -1,785,249 | -3,112,169 |
Other Income (Expense) | ||
Gain on sale of ManufacturedHomes.com | 847,351 | |
Loss on bad debt | -71,265 | -188,147 |
Interest income | 17,928 | |
Interest expense | -353,303 | -36,160 |
Total other income (expense) | 440,711 | -224,307 |
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | -1,344,538 | -3,336,476 |
Provision for Income Taxes | -176,000 | -1,400,250 |
LOSS FROM CONTINUING OPERATIONS | -1,168,538 | -1,936,226 |
(Loss) income from discontinued operations, net of $16,000 tax provision and $9,000 tax benefit for the years ended December 31, 2014 and 2013, respectively. | -808,809 | 240,384 |
NET LOSS | ($1,977,347) | ($1,695,842) |
Loss per share, Basic and Diluted | ||
Loss from continuing operations | ($0.03) | ($0.04) |
Loss from discontinued operations | ($0.02) | $0.01 |
Total loss per share | ($0.04) | ($0.04) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | 45,639,023 | 43,731,102 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Operations (Audited) (Parenthetical) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Condensed Consolidated Statements Of Operations Audited | ||
Loss from discontinued operations | $16,000 | $9,000 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Cash Flows (Audited) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities: | ||
Net loss | ($1,977,347) | ($1,695,842) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 5,902 | 6,103 |
Amortization | 3,082 | |
Stock-based compensation | 840,200 | 230,175 |
Gain on sale of ManufacturedHomes.com | -847,351 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | -75,629 | -9,334 |
Inventories | 17,548 | |
Prepaid expenses and deposits | -517,729 | 402,944 |
Other assets & note receivables | 1,585,303 | 1,076,410 |
Accounts payable and accrued liabilities | 225,394 | -639,028 |
Net cash used in operating activities | -740,627 | -628,572 |
Cash flows used in investing activities: | ||
Purchases of property and equipment | -34,181 | -13,032 |
Sales of intangible assets | 57,908 | |
Net cash used in investing activities | -34,181 | 44,876 |
Cash flows from financing activities: | ||
Payments on note payable | -552,089 | -136,461 |
Proceeds from note payable | 1,655,000 | 288,500 |
Net cash provided by financing activities | 1,102,911 | 152,039 |
Net increase (decrease) in cash and cash equivalents | 328,103 | -431,657 |
Cash and cash equivalents at beginning of period | 82,725 | 514,382 |
Cash and cash equivalents at end of period | 410,828 | 82,725 |
Non-cash investing and financing activity: | ||
Shares issued pursuant to stock based compensation | 725,000 | 230,175 |
Shares issued pursuant to conversion of accounts payable | 59,000 | 11,125 |
Shares issued pursuant to conversion of debt | 54,183 | |
Shares issued as additional interest expense | $56,200 |
Condensed_Consolidated_Stateme3
Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Audited) (USD $) | Preferred Stock | Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated (Deficit) Earnings | Total |
Beginning balance Amount at Dec. 31, 2012 | $80,549 | ($42,581) | ($11,011,418) | $12,391,846 | $1,418,396 | |
Beginning balance shares at Dec. 31, 2012 | 80,549,563 | -42,581,596 | ||||
Issuance of common stock, stock-based compensation, shares | 60,000 | |||||
Issuance of common stock, stock-based compensation, amount | 60 | 26,940 | 27,000 | |||
Issuance of common stock, stock-based compensation, shares 1 | 945,000 | |||||
Issuance of common stock, stock-based compensation, amount 1 | 945 | 202,230 | 203,175 | |||
Issuance of common stock, conversion of debt, shares | 328,380 | |||||
Issuance of common stock, conversion of debt, Amount | 328 | 53,854 | 54,183 | |||
Issuance of common stock, conversion of accounts payable, Shares | 67,425 | |||||
Issuance of common stock, conversion of accounts payable, Amount | 67 | 11,058 | 11,125 | |||
Treasury stock, retirements, shares | -42,581,596 | 42,581,596 | ||||
Treasury stock, retirements, amount | -42,581 | 42,581 | ||||
Net loss from continuing operations | -1,695,842 | -1,695,842 | ||||
Ending balance amount at Dec. 31, 2013 | 39,369 | -10,717,336 | 10,696,004 | 18,037 | ||
Ending balance shares at Dec. 31, 2013 | 39,368,772 | |||||
Issuance of common stock, stock-based compensation, shares | 9,558,333 | |||||
Issuance of common stock, stock-based compensation, amount | 9,558 | 715,442 | 725,000 | |||
Issuance of common stock, stock issued as interest expense, shares | 750,000 | |||||
Issuance of common stock, stock issued as interest expense, amount | 750 | 55,450 | 56,200 | |||
Issuance of common stock, conversion of accounts payable, Shares | 1,000,000 | |||||
Issuance of common stock, conversion of accounts payable, Amount | 1,000 | 58,000 | 59,000 | |||
Net loss from continuing operations | -1,977,347 | -1,977,347 | ||||
Ending balance amount at Dec. 31, 2014 | $50,677 | ($9,888,444) | $8,718,657 | ($1,119,110) | ||
Ending balance shares at Dec. 31, 2014 | 50,677,105 |
1_General
1. General | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Note 1. General | Nature of Business |
The Company, together with its wholly owned subsidiaries, is engaged in opening and operating manufactured home retail centers, currently in Texas. Its manufactured home operations are primarily conducted through its wholly owned subsidiary, Wisdom Manufactured Homes of America, Inc., however, the Company does maintain other wholly-owned subsidiaries which have little or no activity, each of which is incorporated or qualified to do business in the states in which it does so. | |
Wisdom Homes of America, Inc. was formed on July 14, 2003 in the State of Nevada as Tora Technologies, Inc. On November 21, 2006, it changed its name to Makeup.com Limited, on January 29, 2010, it changed its name to LC Luxuries Limited, on November 5, 2010, it changed its name to General Cannabis, Inc., and on January 6, 2012, it changed its name to SearchCore, Inc. On March 3, 2015, the Company changed its name to Wisdom Homes of America, Inc. | |
Principal Services | |
The Company’s principal service is opening and operating manufactured home retail centers, also known as model home retail centers. Its primary customers are homebuyers who generally purchase manufactured homes to place on their own homesites, although periodically customers will request assistance in locating a homesite in the areas where the Company has its retail centers. The Company generally operates its retail sales centers by having inventory on the retail center lots, although customers can order homes that are shipped directly from the factory to their homesite. Most of the Company’s sales generally are to customers living within a radius of approximately one hundred miles from its retail centers. | |
In addition to Wisdom Manufactured Homes of America, Inc., the Company has the following wholly-owned subsidiaries which have little operations: | |
Alpine Creek, Inc. | |
White Mountain River, Inc. | |
Wisdom Home Loans of America, Inc. | |
Wisdom Homes of America, Inc. (TX). | |
The Company has the following wholly-owned subsidiaries which have no operations: | |
General Health Solutions, Inc. | |
General Management Solutions, Inc. | |
General Marketing Solutions, Inc. | |
General Processing Corporation | |
Sportify, Inc. | |
VerticalCore Management, Inc. | |
VerticalCore Media, Inc. | |
VerticalCore Merchant, Inc. | |
VerticalCore Technologies, Inc. | |
Currently, the Company has no imminent or specific plans for any of these entities and they are held as corporations in good standing. | |
Manufactured Homes Retail Centers | |
The Company owns and operates manufactured home retail centers. In February 2014, the Company opened its first retail center in Rhome, Texas. Its second retail center in Tyler, Texas, was opened in April 2014, its third retail center in Jacksboro, Texas, in May 2014 and its fourth retail center in Mt. Pleasant, Texas, in December 2014. The retail centers are operated by the Company’s wholly owned subsidiary, Wisdom Manufactured Homes of America, Inc. | |
Sale of ManufacturedHomes.com Finder Site and other URL’s | |
On May 19, 2014, the Company sold the following domain names: www.ManufacturedHome.com, www.mManufacturedHomes.com, www.ManufacturedHouse.com, www.ManufacturedHomes.net, and www.ModularHomes.com. The domain names were sold to Platinum Technology Ventures, LLC, an entity owned and controlled by Brad Nelms, formerly the Company’s Chief Strategy Officer. As consideration for the sale of the domain names, the Company received a non-recourse secured promissory note in the amount of One Million Dollars ($1,000,000), and Platinum assumed all of its obligations under the Lease Agreement it had with Domain Capital, LLC, with the exception of the Company being responsible to make monthly lease payments for first six months after the closing of the transaction. The Company also received lifetime “gold” or equivalent membership levels on any manufactured home website owned or operated by Platinum. In connection with the transaction, Brad Nelms’ employment with the Company ceased. In order to assist Platinum in its operations, the Company agreed to loan it Ninety Thousand Dollars ($90,000) over six months. After making payments to Platinum in the sum of Forty Five Thousand Dollars ($45,000), on October 28, 2014, the Company entered into a Waiver and Mutual Release, pursuant to which both parties agreed to release one another from any and all rights and liabilities arising under the promissory note pertaining to the operating expense payments. Accordingly, the Company has no continuing obligation to make operating expense payments to Platinum, and Platinum has no obligation to repay the monies already paid. See Note 4. Asset Sale for more information. | |
Two additional domain names are subject to the Lease Agreement with Domain Capital, LLC, namely www.TravelTrailer.com and www.ToyHaulers.com. Upon satisfaction of the payment obligations under the Lease Agreement, those domains will be transferred back to the Company. |
2_Basis_Of_Presentation_And_Si
2. Basis Of Presentation And Significant Accounting Policies | 12 Months Ended | ||
Dec. 31, 2014 | |||
Notes to Financial Statements | |||
Note 2. Basis Of Presentation And Significant Accounting Policies | Basis of Presentation | ||
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). | |||
Reclassifications | |||
Certain prior year amounts in the accompanying consolidated financial statements have been reclassified to conform to the current year’s presentation. These reclassifications had no effect on the consolidated results of operations or financial position for any years presented. | |||
Principles of Consolidation | |||
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. | |||
Use of Estimates | |||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates are based on knowledge of current events and anticipated future events and accordingly, actual results may differ from those estimates. | |||
Risks related to cash | |||
The Company maintains cash in bank and deposit accounts, which at times may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents. | |||
Cash and Cash equivalents | |||
The Company considers only highly liquid investments such as money market funds and commercial paper with maturities of 90 days or less at the date of their acquisition as cash and cash equivalents. | |||
Fair Value of Financial Instruments | |||
The accounting standards regarding disclosures about fair value of financial instruments defines financial instruments and required fair value disclosure of those instruments. This accounting standard defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. Receivables, investments, payables, short and long term debt and warrant liabilities qualified as financial instruments. Management believes the carrying amounts of receivables, payables and debt are a reasonable estimate of fair value because of the short period of time between the origination of such instruments, their expected realization, and if applicable, their stated interest rate is equivalent to interest rates currently available. The three levels are defined as follows: | |||
Level 1 | Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. | ||
Level 2 | Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. | ||
Level 3 | Inputs to the valuation methodology are unobservable and significant to the fair value. | ||
The Company analyzes all financial instruments with features of both liabilities and equity under the accounting standards regarding accounting for certain financial instruments with characteristics of both liabilities and equity, accounting for derivative instruments and hedging activities, accounting for derivative financial instruments indexed to, and potentially settled in, a company’s own stock, and the accounting standard regarding determining whether an instrument (or embedded feature) is indexed to an entity’s own stock. The accounting standard specifies that a contract that would otherwise meet the definition of a derivative but is both (a) indexed to the Company’s own stock and (b) classified in stockholders’ equity in the statement of financial position would not be considered a derivative financial instrument. This standard provides a two-step model to be applied in determining whether a financial instrument or an embedded feature is indexed to an issuer’s own stock and thus able to qualify for this accounting standard scope exception. All warrants issued by the Company are denominated in U.S. dollars. | |||
Accounts Receivable | |||
Accounts receivable are recorded at the invoice amount and do not bear interest. | |||
Advertising Cost | |||
The Company expenses advertising costs when incurred. Advertising expense for the years ended December 31, 2014 and 2013 was approximately $40,000 and approximately $73,000, respectively. | |||
Allowance for Doubtful Accounts | |||
Allowance for doubtful accounts is defined as a company's estimate of the amount of probable credit losses in the Company's existing accounts receivable. The Company does not maintain an allowance for doubtful accounts based upon management’s review of the Company’s revenue structure whereby substantially all receivables are confirmed before they are booked as revenue. The Company reviews its allowance for doubtful accounts policy periodically. The Company does not have any off-balance-sheet exposure related to its customers. | |||
Property and Equipment | |||
Property and equipment are recorded at cost and depreciated using the straight-line method over the useful lives of the assets, generally from six to seven years. Property and equipment at December 31, 2014 and December 31, 2013 are presented net of accumulated depreciation of approximately $9,000 and approximately $3,000, respectively. | |||
Intangible Assets | |||
In accordance with Goodwill and Other Intangible Assets, intangible assets that are determined not to have an indefinite useful life are subject to amortization. The Company amortizes intangible assets using the straight-line method over their estimated useful lives. | |||
Impairment of Long-Lived and Intangible Assets | |||
In accordance with Accounting for the Impairment or Disposal of Long-Lived Assets, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. The Company assesses the recoverability of the long-lived and intangible assets by comparing the carrying amount to the estimated future undiscounted cash flow associated with the related assets. No impairment of intangible assets was recognized during the year ended December 31, 2014 or year ended December 31, 2013. | |||
Stock-Based Compensation | |||
The Company accounts for stock-based compensation in accordance with the provisions of Share-Based Payment, which addresses the accounting for equity-based compensation and which requires that the cost of all equity-based compensation arrangements, be reflected in the financial statements over the vesting period based on the estimated fair value of the awards. During the years ended December 31, 2014 and December 31, 2013, the Company had approximately $725,000 and approximately $230,000, respectively, in stock-based compensation expense related to issuances of shares of the Company’s common stock to consultants. During the year ended December 31, 2014, the Company issued shares of its common stock as additional interest expense in the amount of approximately $56,000. During the year ended December 31, 2014, the Company issued shares of its common stock in full satisfaction of accounts payable owed to a creditor by the Company in the amount of approximately $59,000. | |||
Revenue Recognition | |||
The Company recognizes revenue in accordance with ASC 605, “Revenue Recognition,” by recognizing as revenue the fees it charges customers as referenced below because persuasive evidence of an arrangement exists, the fees it charges are substantially fixed or determinable during the period that it provides the services, the Company and its customers understand the specific nature and terms of the agreed upon transactions, and collectability is reasonably assured and services have been rendered. | |||
The Company and its wholly owned subsidiaries recognize revenue as follows: | |||
Manufactured Home Retail Centers – the Company generates revenues through its manufactured home retail centers operated by Wisdom Manufactured Homes Of America, Inc., which it started in January 2014. The Company anticipates opening and/or acquiring additional retail centers in 2015 and branding them under the name Wisdom Manufactured Homes Of America, Inc. The Company purchases factory built houses and sells them to end users, and also anticipates structuring the sale of used manufactured homes. The Company recognizes revenue from manufactured homes sold generally when (i) the customer has entered into a binding sales agreement with the Company, (ii) the manufactured home has been delivered and installed at the Customer’s homesite, (iii) the Customer has accepted the home and title has transferred and (iv) collectability of either cash payment from the customer or prearranged financing by the customer are reasonably assured. | |||
Income Taxes | |||
The Company follows Accounting for Income Taxes which requires recognition of deferred income tax liabilities and assets for the expected future tax consequences of temporary differences between the income tax basis and financial reporting basis of assets and liabilities. Provision for income taxes consists of taxes currently due plus deferred taxes. | |||
The charge for taxation is based on the results for the year as adjusted for items that are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is accounted for using the balance sheet liability method in respect to temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences, and deferred tax assets are recognized to the extent it is probable that taxable profit will be available against which deductible temporary differences can be utilized. | |||
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also recorded in equity. | |||
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. | |||
Uncertain tax positions | |||
The Company recognizes uncertain tax positions based on a benefit recognition model. Provided that the tax position is deemed more likely than not of being sustained, the Company recognizes the largest amount of tax benefit that is greater than 50% likely of being ultimately realized upon settlement. The tax position is derecognized when it is no longer more likely than not of being sustained. The Company classifies income tax-related interest and penalties as interest expense and SGA expense, respectively, on the Consolidated Statement of Operations. | |||
Recent Accounting Pronouncements | |||
In April 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-08 Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. ASU No. 2014-08 changes the requirements for reporting discontinued operations in that a discontinued operation may include a component of an entity, a group of components of an entity, or a business or non-profit activity. In addition, a disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has or will have a major effect on an entity’s operations and financial results when certain conditions are met. For public company entities, ASU No. 2014-08 is effective for all disposals (or classifications as held for sale) of components of an entity that occur within annual periods beginning on or after December 15, 2014, and interim periods within those years. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued or available for issuance. Adoption of this standard had no significant impact on the Company’s consolidated financial statements. | |||
In July 2012, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2012-02, “Intangibles – Goodwill and Other (topic 350): Testing Indefinite-Lived Intangible Assets for Impairment” (“ASU 2012-02”). ASU 2012-02 states that an entity has the option first to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangibles asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount in accordance with Codification subtopic 350-30, Intangibles – Goodwill and Other, General Intangibles Other than Goodwill. The amendments in this ASU are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the most recent annual or interim period have not yet been issued. The Company elected early adoption of this update and it had no impact on its financial statements. | |||
In July 2013, the FASB issued ASU No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” ASU 2013-11 provides explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The guidance is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013, with an option for early adoption. The Company adopted this guidance at the beginning of its first quarter of fiscal year 2014, and adoption of this standard had no significant impact on its consolidated financial statements and disclosures. | |||
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 amends the guidance for revenue recognition to replace numerous, industry specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016, and early adoption is prohibited. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company is currently assessing the impact the adoption of ASU 2014-09 will have on its consolidated financial statements and disclosures. | |||
In December 2011, the Financial Accounting Standards Board, or FASB, issued an accounting standards update to require disclosure of information about the effect of rights of offset with certain financial instruments on an entity’s financial position. In January 2013, the FASB issued an accounting standards update that clarifies the aforementioned offsetting disclosure requirements. The disclosure requirements are only applicable to rights of offset of certain derivative instruments, repurchase agreements and reverse purchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with standards set forth by the FASB Codification subject to master netting arrangements or similar agreements. Adoption of this standard had no significant impact on the Company’s consolidated financial statements. | |||
In February 2013, the FASB issued an accounting standards update that requires presentation for reclassification adjustments from accumulated other comprehensive income into net income in a single note or on the face of the financial statements. The Company has adopted the amendments in this standard effective in the first quarter of 2013. The adoption of this standard had an immaterial effect on the Company’s consolidated financial statements and as such, the required presentation is not included herein. | |||
In July 2013, the FASB issued an accounting standards update that specifies that unrecognized tax benefits should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward. When a net operating loss carryforward, a similar tax loss or tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes or the entity does not intend to use the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. This amendment is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this accounting standards update did not have significant impact on the Company’s consolidated financial statements. | |||
FASB issued an accounting standards update amending ASC 220 to improve the comparability, consistency and transparency of reporting of comprehensive income. It amends existing guidance by allowing only two options for presenting the components of net income and other comprehensive income: (1) in a single continuous financial statement, statement of comprehensive income or (2) in two separate but consecutive financial statements, consisting of an income statement followed by a separate statement of other comprehensive income. Also, items that are reclassified from other comprehensive income to net income must be presented on the face of the financial statements. ASU No. 2011-05 requires retrospective application, and it is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted. In December 2011, FASB issued ASU 2011-12. ASU 2011-12 indefinitely deferred the provisions of ASU 2011-05 requiring the presentation of reclassification adjustments on the face of the financial statements for items reclassified from other comprehensive income to net income. The adoption of this standard did not have a material impact on the Company’s financial statements. | |||
FASB issued an accounting standards update amending ASC 820, which is effective for interim and annual periods beginning after December 31, 2011, to achieve common fair value measurement and disclosure requirements between GAAP and IFRS. This amendment changes the wording used to describe fair value and requires additional disclosures. The adoption of this amendment did not have a material impact on the Company’s financial statements. | |||
In September 2011, the FASB issued an amendment to an existing accounting standard, which provides an option to perform a qualitative assessment to determine whether further impairment testing on goodwill is necessary. Specifically, an entity has the option to first assess qualitative factors to determine whether it is necessary to perform the current two-step test. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required. This standard is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of this standard did not have a material impact on the Company’s financial statements. | |||
During May 2009 and February 2010, the FASB issued a new authoritative pronouncement regarding recognized and non-recognized subsequent events. This guidance establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. The adoption of this guidance had no impact on the Company’s results of operations or financial position. | |||
Other Recently Issued, but Not Yet Effective Accounting Pronouncements | |||
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements. |
3_Equity_Transactions
3. Equity Transactions | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Note 3. Equity Transactions | At December 31, 2014 the total number of shares of the Company’s common stock that were issued was 55,677,105 which number of shares includes 5,000,000 shares that are issued but not outstanding and which are held in escrow. As such, at December 31, 2014, the total number of shares of the Company’s common stock that were issued and outstanding was 50,677,105. At December 31, 2013 the total number of shares of the Company’s common stock that were issued and outstanding was 39,368,772. |
Stock-based Compensation | |
On February 28, 2014, the Company issued a total of five million five hundred thousand (5,500,000) shares of its common stock, restricted in accordance with Rule 144, to a total of five (5) individuals and entities who had rendered services to it prior to December 31, 2013. These shares were used to satisfy an aggregate debt of Four Hundred and Forty Thousand Dollars ($440,000) owed to service providers. | |
On September 8, 2014, the Company entered into a Consulting Agreement with a third party to provide consulting and advice related to potential partnerships, strategic contacts, joint ventures, corporate restructuring, and other business relationships, for a period of six months. Pursuant to the agreement, the Company agreed to issue to the consultant 3,333,333 shares of its common stock. | |
On September 9, 2014, the Company issued 350,000 shares of its common stock, restricted in accordance with Rule 144, to a third party for services rendered pursuant to a professional services agreement. | |
On September 11, 2014, the Company issued 250,000 shares of its common stock, restricted in accordance with Rule 144, to a third-party for services rendered pursuant to a memorandum of understanding. | |
On November 14, 2014, the Company issued a total of three hundred and seventy five (375,000) shares of its common stock to a third-party as consideration for services to be rendered pursuant to an Investors Relations Agreement. Ninety three thousand seven hundred and fifty (93,750) of those shares shall be earned and delivered upon execution of the Agreement. The remaining shares will be earned and delivered on a monthly basis in consideration for services rendered during the previous month. | |
Stock Issued But Not Outstanding & Stock Issued As Interest Expense | |
On March 26, 2014, the Company entered into, with a third party investor, a 20% convertible secured promissory note with a maturity date of April 26, 2015 and in the principal amount of $100,000 (the “DeLue Note”). As collateral, the Company placed 2,500,000 shares of its common stock into escrow on April 4, 2014, which shares are not included in the shares issued and outstanding. Finally, as an incentive to the third party investor to enter into the DeLue Note, the Company agreed to issue 300,000 shares of its common stock, which it did on April 4, 2014, and which were recorded as additional interest expense of $22,200. | |
Stock Issued But Not Outstanding | |
On March 28, 2014, the Company entered into, with a third party investor, a 20% convertible secured promissory note with a maturity date of April 28, 2015 and in the principal amount of $100,000 (the “Backman Note”). As collateral, the Company placed 2,500,000 shares of its common stock into escrow on April 4, 2014, which shares are not included in the shares issued and outstanding. | |
Stock Issued For Conversion Of Accounts Payable | |
On September 17, 2014, the Company issued 1,000,000 shares of its common stock, restricted in accordance with Rule 144, to Merriman Capital, Inc., an investment banking firm, in satisfaction of an invoice for services rendered in the amount of $59,000, or $0.059 per share. | |
Stock Issued As Interest Expense | |
On December 26, 2014, the Company entered into three (3) Secured Promissory Note and Stock Purchase Agreements, by and between the Company and its wholly owned subsidiary, White Mountain River, Inc., a Texas corporation, on the one hand, and third-party investors, on the other hand. Pursuant to the Agreements, the investors tendered an aggregate of Two Hundred Thousand Dollars ($200,000) in exchange for (i) secured 15% promissory notes issued by White Mountain, but convertible into its common stock in certain circumstances, and (ii) an aggregate of two hundred thousand (200,000) shares of its common stock. The Company guaranteed the notes. |
4_Asset_Sale
4. Asset Sale | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Notes to Financial Statements | |||||
Note 4. Asset Sale | ManufacturedHomes.com | ||||
On May 19, 2014, the Company sold the following domain names: www.ManufacturedHome.com, www.ManufacturedHomes.com www.ManufacturedHouse.com, www.ManufacturedHomes.net, and www.ModularHomes.com. The domain names were sold to Platinum Technology Ventures, LLC, an entity owned and controlled by Brad Nelms, formerly the Company’s Chief Strategy Officer. As consideration for the sale of the domain names, the Company received a nonrecourse secured promissory note in the amount of One Million Dollars ($1,000,000), and Platinum assumed all of its obligations under the Lease Agreement it had with Domain Capital, LLC, with the exception of the Company being responsible to make monthly lease payments for first six months after the closing of the transaction. The Company also received lifetime “gold” or equivalent membership levels on any manufactured home website owned or operated by Platinum. In connection with the transaction, Brad Nelms’ employment with the Company ceased. As a result of its sale of the manufactured home domain names and associated intellectual property, the Company has terminated employees that previously worked in its Las Vegas, Nevada, office in connection with the development and operation of these domain names, and did not renew its lease for the Las Vegas office, which expired in April 2014. In order to assist Platinum in its operations, the Company agreed to loan it Fifteen Thousand Dollars ($15,000) per month for six (6) months, for an aggregate loan of Ninety Thousand Dollars ($90,000). Platinum is obligated to begin repaying this loan seven (7) months after it was issued, and its repayment obligations will continue for the following six (6) months. After making payments to Platinum in the sum of Forty Five Thousand Dollars ($45,000), on October 28, 2014, the Company entered into a Waiver and Mutual Release, pursuant to which both parties agreed to release one another from any and all rights and liabilities arising under the promissory note pertaining to the operating expense payments. Accordingly, the Company has no continuing obligation to make operating expense payments to Platinum, and Platinum has no obligation to repay the monies already paid. | |||||
The sale price was approximately $1,061,600. The sale price was determined based upon the nonrecourse secured promissory note in the original amount of $1 million, lifetime “gold” or equivalent membership levels on any manufactured home website owned or operated with a fair value of $61,600 (the “Advertising Rights”), and the assumption of $122,200 in leaseback obligations related to the domain names. | |||||
After making payments to Platinum in the sum of Forty Five Thousand Dollars ($45,000), on October 28, 2014, the Company entered into a Waiver and Mutual Release, pursuant to which both parties agreed to release one another from any and all rights and liabilities arising under the promissory note pertaining to the operating expense payments. Accordingly, the Company has no continuing obligation to make operating expense payments to Platinum, and Platinum has no obligation to repay the monies already paid. | |||||
In conjunction with the sale of ManufacturedHomes.com, the Company discontinued the operations of VerticalCore Solutions, Inc. (“VCS”), VerticalCore Technologies, Inc. (“VCT”), and VerticalCore Media, Inc. (“VCM”), which previously oversaw the operations of ManufacturedHomes.com and its then Las Vegas office. For comparative purposes, all prior periods presented have been restated to reflect the reclassification of these entities to discontinued operations on a consistent basis. The Company does not expect any continuing cash flows from VCS, VCT nor VCM’s discontinued operations. See Note 11. Discontinued Operations for more information. | |||||
Pursuant to ASC 205-20-55: A discontinued operation arises upon the complete or near-complete disposal of a component of an entity. A component comprises (a) operations, and (b) cash flows, that can be clearly distinguished from those of the remainder of the entity and may be (1) a reportable segment, (2) a reporting unit, or (3) an asset group, provided that: | |||||
· | The operations and cash flows of the component have been or will be eliminated from the entity's ongoing operations, and | ||||
· | The entity will have no significant continuing involvement in the component after disposition. | ||||
The evaluation that should be made is (1) whether or not the operations and cash flows of a disposed component have been eliminated from the entity's ongoing operations, and (2) whether the types of continuing involvement in the operations of the disposed component are deemed significant. | |||||
The evaluation of whether operations and cash flows have been eliminated depends on whether: | |||||
-1 | operations will continue and cash flows are expected to be generated; and | ||||
-2 | the cash flows, based on their nature and significance, are considered direct or indirect. | ||||
If continuing direct cash flows are not eliminated, the component's operations should not be presented as a discontinued operation. Generally, direct cash flows are those associated with revenue-producing and cost-generating activities of a disposed component. Revenue-producing cash inflows and cost-generating cash outflows should be considered direct if, after the disposal transaction, they are expected to be recognized by the ongoing entity as a result of: (1) migration from the disposed component; and (2) the continuation of activities between such entity and the disposed component. | |||||
If expected continuing cash inflows and outflows are considered direct, an evaluation of their significance should be based on a comparison of the ongoing entity's expected continuing cash flows after the disposal transaction and the cash flows that would have been expected to be generated by the disposed component had the disposal transaction not taken place. If continuing cash flows are deemed direct, the results of operations of the disposal component should not be reported as a discontinued operation. | |||||
Pursuant to ASC 360-10-40: A gain or loss not previously recognized that results from the sale of a long-lived asset (disposal group) shall be recognized at the date of sale. | |||||
The Company does not expect to retain direct cash flows from this component resulting from the sale of the Company’s finder site ManufacturedHomes.com and related intellectual property. The Company’s finder site technology and telemarketing component and operations were effectively sold and it does not expect to generate revenue from this component. | |||||
As a result of the foregoing analysis, the cash flows from this component were eliminated and the component's operations were presented as discontinued operations. The Company recognized a gain on the sale of the disposal group at the date of the sale. The sale of ManufacturedHomes.com marks the Company’s complete exit from the finder site business. | |||||
Summary of Transaction | |||||
The following table summarizes the total sale price of $1,061,600: | |||||
Promissory note | $ | 1,000,000 | |||
ManufacturedHomes.com Advertising Rights | 61,600 | ||||
Total consideration | $ | 1,061,600 | |||
The following table summarizes the net assets sold: | |||||
Domain Assets | $ | 336,500 | |||
Assumption of leaseback obligation | (122,200 | ) | |||
Net Assets | $ | 214,300 | |||
The following table summarizes the disposition with a total gain on sale of $847,300: | |||||
Total consideration | $ | 1,061,600 | |||
Net assets sold | (214,300 | ) | |||
Gain on sale | $ | 847,300 |
5_Inventory
5. Inventory | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Note 5. Inventory | The inventory balance at December 31, 2014 was approximately $1,202,000 which consisted of 27 manufactured homes located at its retail lots which were stated at the lower of cost (average) or market, and 4 homesites. The manufactured homes are located at the Company’s Tyler, Texas, Mt. Pleasant, Texas, and Jacksboro, Texas, retail centers. The homesites are located at the Strawberry Addition in the City of Arp, Texas. At December 31, 2013, the Company did not have any inventory. |
6_Note_receivables
6. Note receivables | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Note 6. Note receivables | Current Note Receivables |
At December 31, 2014, the Company had recorded approximately $384,200 note receivable which represented the current portion of a $3,000,000 note receivable pursuant to the sale of the Company’s finder site WeedMaps.com. On December 11, 2012, the Company entered into an Agreement and Plan of Reorganization, pursuant to which it sold its finder site WeedMaps.com. Pursuant to the terms of the sale and as partial consideration the Company received a Secured Promissory Note in the original principal amount of Three Million Dollars ($3,000,000). Pursuant to the Note, the Company will receive (1) Two Hundred Fifty Thousand Dollars ($250,000) on January 15, 2013 (which payment date was extended to January 31, 2013), which payment was received; One Hundred Thousand Dollars ($100,000) each month beginning on February 25, 2013 and continuing on the twenty fifth (25th) of each month thereafter for a total of twenty eight (28) months, which payments for February through December 2014 were received; and Sixteen Thousand Five Hundred Dollars ($16,500) on July 25, 2015. On November 5, 2014, the Company entered into a First Amended to Secured Promissory Note pursuant to which, the Company received a principal payment of One Hundred Thousand Dollars ($100,000) on November 4, 2014, which represented the payment that would otherwise have been due on May 25, 2015. In consideration for accelerating this payment, the Company agreed to waive the final payment of Sixteen Thousand Five Hundred Dollars ($16,500) that would have been due on July 25, 2015. All other payment obligations under the Note remain unchanged. | |
At December 31, 2014, the Company had recorded approximately $66,200, note receivable which represented the current portion of a $1,000,000 non-recourse promissory note pursuant to the sale of the Company’s website ManufacturedHomes.com and related intellectual property. See Note 4 Asset Sale for more information. | |
Noncurrent Note Receivables | |
At December 31, 2014, the Company had recorded a $940,000 note receivable which represented the noncurrent portion of a $1,000,000 non-recourse promissory note pursuant to the sale of the Company’s website ManufacturedHomes.com and related intellectual property. See Note 4 Asset Sale for more information. | |
At December 31, 2014, the Company had recorded approximately $29,000 note receivable pursuant to the sale of an unimproved homesite which accrues interest of 9% per annum and has a maturity date of November 15, 2039. |
7_Other_Current_Assets
7. Other Current Assets | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Note 7. Other Current Assets | At December 31, 2014, the Company had recorded approximately $17,800 in prepaid insurance, approximately $8,700 in prepaid filing fees, approximately $82,000 in deposits, approximately $146,700 in Prepaid consulting fees, and approximately $154,900 in other. |
8_Property_And_Equipment
8. Property And Equipment | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Notes to Financial Statements | ||||||||
Note 8. Property And Equipment | Property and equipment are recorded at cost and depreciated using the straight-line method over the useful lives of the assets, generally from six to seven years. Property and equipment at December 31, 2014 and December 31, 2013 consist of the following: | |||||||
December 31, | December 31, | |||||||
Property and Equipment | 2014 | 2013 | ||||||
Furniture and Computer Equipment | $ | 63,657 | $ | 15,367 | ||||
Less: Accumulated Depreciation | (9,222 | ) | (3,320 | ) | ||||
Property and Equipment, net | $ | 54,435 | $ | 12,047 | ||||
For the year ended December 31, 2014 depreciation expense was $5,900. For the year ended December 31, 2013 depreciation expense was $6,100. |
9_Intangible_Assets
9. Intangible Assets | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Notes to Financial Statements | |||||||||
Note 9. Intangible Assets | Intangible assets consist of a suite of domain names. The domain names have been determined to have an indefinite useful life based primarily on the renewability of the domain name. Intangible assets with an indefinite life are not subject to amortization, but will be subject to periodic evaluation for impairment. | ||||||||
Intangible asset amounts at December 31, 2014 and December 31, 2013 are as follows: | |||||||||
December 31, | December 31, | ||||||||
Intangible Assets | 2014 | 2013 | |||||||
Domain names | $ | 84,363 | $ | 420,862 | |||||
Advertising rights | 61,642 | — | |||||||
Subtotal | $ | 146,005 | $ | 420,862 | |||||
Accumulated amortization | (3,082 | ) | — | ||||||
Total intangible Assets | $ | 142,923 | $ | 420,862 | |||||
See Note 11. Discontinued Operations for a discussion regarding the other intangible assets whose operations have been discontinued. | |||||||||
Summary of the Company’s premium and non premium domain names | Amount | ||||||||
ToyHaulers.com* | $ | 31,168 | |||||||
TravelTrailer.com* | 51,167 | ||||||||
Various other nonpremium domain names | 2,028 | ||||||||
Total premium and non premium domain names | $ | 84,363 | |||||||
______________ | |||||||||
* These domain names have been pledged as collateral in connection with a financing sale-leaseback with Domain Capital. See Domain Capital under Note 13. Notes Payable for more information. |
10_Other_Assets
10. Other Assets | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Note 10. Other Assets | At December 31, 2014 the balance of other assets included $3,100 in rent deposits. |
11_Discontinued_Operations
11. Discontinued Operations | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Note 11. Discontinued Operations | Karate.com and Rodeo.com |
During the quarter ended December 31, 2013, the Company entered into a definitive plan to sell the premium domain names Karate.com and Rodeo.com. The Company entered into a definitive plan to sell Karate.com and Rodeo.com because during the quarter ended December 31, 2013, management decided to focus the Company’s efforts and resources on expanding its operations in the manufactured housing industry. At December 31, 2013 the Company reclassed Karate.com and Rodeo.com, which had a net book value of $100,000 which amount comprised of $500,000 in domain names and $400,000 in debt, to discontinued operations. | |
On April 3, 2014, the Company entered into an Assignment Agreement with a third party entity (the “Assignee”) pursuant to which it assigned and transferred to the Assignee the premium domain names Karate.com and Rodeo.com, which had a book value of $500,000, along with the associated $400,000 in debt. At April 3, 2014, the Company recorded a $100,000 loss on assignment associated with the transaction. | |
General Management Solutions, Inc. | |
The Company discontinued the operations of General Management Solutions, Inc. (“GMS”), which previously oversaw and provided all of the human resource issues for employees including hiring, terminating, and employee benefits. GMS has been a corporation in good standing with no operations since the end of 2012. For comparative purposes, all prior periods presented have been restated to reflect the reclassification of this entity to discontinued operations on a consistent basis. The Company does not expect any continuing cash flows from GMS discontinued operations. | |
The liabilities of discontinued operations related to GMS at December 31, 2014, consists of $11,373 in accounts payable and $20,603 in accrued liabilities recorded as Current liabilities - discontinued operations. | |
General Health Solutions, Inc. | |
The Company discontinued the operations of General Health Solutions, Inc., which constituted its entire Medical Clinic Management segment. The Company discontinued the operations of General Health Solutions because the company exited the medicinal cannabis industry at the end of 2012. | |
During February 2012, the Company committed to a definitive plan to terminate the Management Agreement (“Agreement”) and services associated with the Agreement, which resulted in General Health Solutions, Inc., the Company’s Medical Clinic Management segment, being reported as discontinued operations. For comparative purposes, all prior periods presented have been restated to reflect the reclassification of this segment to discontinued operations on a consistent basis. Following the closure of the clinics during the first quarter 2012, the Company does not expect any continuing cash flows from discontinued operations. | |
The assets and liabilities of the Company’s discontinued operations related to General Health Solutions at December 31, 2014, consists of $182,600 in notes payable recorded as Current liabilities - discontinued operations. | |
VerticalCore Merchant, Inc. - Tattoo.com | |
On January 21, 2013, the Company entered into a Management Agreement with Tattoo Interactive, LLC pursuant to which it performed various marketing, promotion, and website management services with respect to the domain name known as Tattoo.com and the commercial website located at that domain. The Agreement has an initial term of twelve (12) months and automatically renewed for successive one (1) year terms unless terminated in accordance with its terms. On February 5, 2014, the Company received a fully signed copy of a First Amendment to Management Agreement (the “First Amended Agreement”) dated as of January 27, 2014, pursuant to which Tattoo Interactive no longer had an obligation to reimburse the Company for any expenses or costs related to the Management Services as of January 1, 2014. The First Amended Agreement would automatically terminate on April 30, 2014 (the “Initial Term”) unless a separate written agreement was executed by the parties (if so extended, the “Extended Initial Term”). On April 30, 2014, the First Amended Agreement automatically terminated pursuant to term of the First Amendment to Management Agreement dated as of January 27, 2014 and the Company did not pursue a further amendment or extension. | |
The company discontinued the operations of VerticalCore Merchant, Inc. (“VCM”), which previously performed the operations related to Tattoo.com, as a result of the automatic termination of the First Amendment to Management Agreement dated as of January 27, 2014. | |
For comparative purposes, all prior periods presented have been restated to reflect the reclassification of this entity to discontinued operations on a consistent basis. The Company does not expect any continuing cash flows from VCM’s discontinued operations. | |
The liabilities of the Company’s discontinued operations related to VCM at December 31, 2014, consists of $25,500 in accrued liabilities recorded as Current liabilities - discontinued operations. | |
Sportify, Inc. | |
On March 5, 2014, Sports Asylum, Inc. changed its name to Sportify, Inc. | |
During the quarter ended December 31, 2013, the Company entered into a definitive plan to sell the assets related to Sportify.com, which includes the web software, trademarks, non-premium sports-related domain names and goodwill associated with its acquisition of Sportify, Inc. The transaction did not materialize and consequently the assets were not sold. Sportify, Inc. owns and operates the intellectual property associated with www.Sportify.com. The Company entered into a definitive plan to sell the assets related to Sportify because during the quarter ended December 31, 2013, management decided to focus the Company’s efforts and resources on expanding its operations in the manufactured housing industry. At December 31, 2013, the Company reclassed the assets, which had a net book value of $456,000, which amount comprised of $100,000 in sports related non-premium domain names, $10,000 in Sportify.com premium domain name, $1,000 in trademarks, $59,000 in goodwill, $430,000 in web software and $143,000 in accumulated amortization, to discontinued operations. At December 31, 2014, there were no assets or liabilities related to Sportify. For comparative purposes, all prior periods presented have been restated to reflect the reclassification of this entity to discontinued operations on a consistent basis. The Company does not expect any continuing cash flows from Sportify’s discontinued operations. | |
Wisdom Home Loans of America, Inc., VerticalCore Media, Inc., and VerticalCore Technologies, Inc. | |
On March 12, 2014 VerticalCore Solutions, Inc. changed its name to Wisdom Home Loans of America, Inc. | |
In conjunction with the sale of ManufacturedHomes.com, the Company discontinued the operations of Wisdom Home Loans of America, Inc. (“WHLOA”), VerticalCore Technologies, Inc. (“VCT”), and VerticalCore Media, Inc. (“VCM”), which previously oversaw the operations of ManufacturedHomes.com and its then Las Vegas office. See Note 4. Asset Sale for more information. | |
For comparative purposes, all prior periods presented have been restated to reflect the reclassification of these entities to discontinued operations on a consistent basis. The Company does not expect any continuing cash flows from WHLOA, VCT nor VCM discontinued operations. | |
Wisdom Home Loans of America, Inc. – At December 31, 2014, there were no assets or liabilities related to WHLOA. | |
VerticalCore Media, Inc. – At December 31, 2014, there were no assets or liabilities related to VCM. | |
VerticalCore Technologies, Inc. - At December 31, 2014, there were no assets or liabilities related to VCT. |
12_Accrued_Liabilities
12. Accrued Liabilities | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Notes to Financial Statements | |||||||||
Note 12. Accrued Liabilities | Accrued liabilities at December 31, 2014 and December 31, 2013 are comprised of the following: | ||||||||
December 31, | December 31, | ||||||||
Accrued liabilities | 2014 | 2013 | |||||||
Tax payable | $ | 1,098,000 | 1,196,000 | ||||||
Deferred tax liability short term | — | 146,000 | |||||||
Obligations on stock based compensation | 73,500 | 440,000 | |||||||
Obligations on consulting agreements | 55,000 | 27,000 | |||||||
Payroll liabilities | 145,734 | 97,018 | |||||||
Customer deposits | 19,821 | — | |||||||
Other | 38,836 | — | |||||||
Total accrued liabilities | $ | 1,430,891 | $ | 1,906,018 | |||||
At December 31, 2014, the Company had $1,098,000 in federal and state taxes payable which represent amounts due and payable for the years ended December 31, 2011 and 2012. |
13_Notes_Payable
13. Notes Payable | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Notes to Financial Statements | ||||||||
Note 13. Notes Payable | Abrams | |||||||
On September 8, 2014, the Company entered into a Securities Purchase Agreement and issued a Convertible Promissory Note. The Note is in the original principal amount of $35,000, pays interest at the rate of 8% per annum, and has a maturity date of September 7, 2015. The Company may prepay the Note at any time for a premium of 120% of the principal amount and any accrued and unpaid interest. The Note is convertible into its common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 62% multiplied by the Market Price (as defined herein) (representing a discount rate of 38%), but no more than $0.06 per share. “Market Price” means the lowest Trading Price (as defined below) for the Common Stock during the five Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means, for any security as of any date, the VWAP value as posted on Bloomberg. The “Fixed Conversion Price” shall mean $0.0005. The shares of common stock issuable upon conversion of the Note will be restricted securities as defined in Rule 144 promulgated under the Securities Act of 1933. The purchase and sale of the Note closed on September 9, 2014, the date that the purchase price was delivered to the Company. At December 31, 2014, the Company had $35,875 in accrued interest and principal recorded as a current note payable. | ||||||||
On November 20, 2014, the Company entered into a Promissory Note and Stock Purchase Agreement, pursuant to which the Company issued, a senior promissory note in the principal amount of Fifty Thousand Dollars ($50,000) and fifty thousand (50,000) shares of its common stock. The Note has an interest of rate of 15% per annum and has a maturity date of January 20, 2016. The Company accounts for debt discount according to ASC 470-20 Debt With Conversion And Other Options. No debt discount associated with the Convertible Note was recorded because the fair value of the common stock at the commitment date ($0.095) was less than the effective conversion price of the conversion feature ($0.20). As such, there was no intrinsic value associated with the conversion feature and thus no debt discount was recognized. | ||||||||
Adar Bay | ||||||||
On June 27, 2014, the Company entered into a Securities Purchase Agreement with Adar Bays, LLC, pursuant to which it sold to Adar two (2) 8% convertible notes, each in the principal amount of $35,000 (the “Notes”). The first of the two notes (the “First Note”) was paid for by Adar at the Closing, while the second of the two notes (the “Second Note”) was paid for the issuance of an offsetting $35,000 note issued by the Company to the Buyer (the “Buyer Note”), provided that prior to conversion of the Second Note, the Buyer must have paid off the Buyer Note. Each of the Notes have a maturity date of June 30, 2015 and is convertible after 180 days into common stock at 58% of the lowest trading price of the common stock for the ten (10) prior trading days, with a floor of $0.0001 per share. The shares of common stock issuable upon conversion of the Note will be restricted securities as defined in Rule 144 promulgated under the Securities Act of 1933. The First Note can be prepaid by the Company at a premium as follows: (a) between 0 and 90 days after issuance – 130% of the principal amount; (b) between 91 and 150 days after issuance – 140% of the principal amount; and (c) between 151 and 180 days after issuance – 150% of the principal amount. The Second Note cannot be prepaid; however, if the First Note is prepaid, the Second Note shall be automatically cancelled, as will the Buyer Note. The Buyer Note has a maturity of February 28, 2015 and bears interest at the rate of 8% per annum. The purchase and sale of the Notes closed on June 30, 2014, the date that the purchase price was delivered to the Company. On December 26, 2014, the Company repaid the promissory note to Adar Bays, LLC. The Company repaid the entire principal balance of the Notes plus accrued interest and a prepayment premium, in the total amount of Fifty Three Thousand Nine Hundred Fifteen Dollars and Fifty Six Cents ($53,915.56). | ||||||||
Asher Enterprises | ||||||||
On January 3, 2014, the Company repaid the promissory note to Asher Enterprises, Inc. that, on July 11, 2013, it entered into in connection with a Securities Purchase Agreement, pursuant to which it sold to Asher a 8% Convertible Promissory Note in the original principal amount of $53,000 (the “Note”). The Company repaid the entire principal balance of the Note, plus accrued interest and a prepayment premium, in the amount of $70,840. | ||||||||
On January 6, 2014, the Company entered into a Securities Purchase Agreement with Asher Enterprises, Inc., pursuant to which the Company sold to Asher a 8% Convertible Promissory Note in the original principal amount of $63,000 (the “Note”). The Note had a maturity date of October 8, 2014, and is convertible after 180 days into its common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 58% multiplied by the Market Price (representing a discount rate of 42%). “Market Price” means the average of the lowest three (3) Trading Prices for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means the closing bid price on the applicable day. The “Fixed Conversion Price” shall mean $0.00005. The shares of common stock issuable upon conversion of the Note will be restricted securities as defined in Rule 144 promulgated under the Securities Act of 1933. The Note can be prepaid by the Company at a premium as follows: (a) between 31 and 60 days after issuance – 114% of the principal amount; (b) between 61 and 90 days after issuance – 120% of the principal amount; (c) between 91 and 120 days after issuance – 124% of the principal amount; (d) between 121 and 180 days after issuance – 130% of the principal amount. The purchase and sale of the Note closed on January 10, 2014, the date that the purchase price was delivered to the Company. On July 8, 2014, the Company repaid the promissory note to Asher Enterprises, Inc. The Company repaid the entire principal balance of the Note, plus accrued interest and a prepayment premium, in the amount of Eighty Four Thousand Four Hundred Dollars ($84,400.00). | ||||||||
On February 19, 2014, the Company repaid the promissory note to Asher Enterprises, Inc. that, on August 22, 2013, it entered into in connection with a Securities Purchase Agreement, pursuant to which it sold to Asher a 8% Convertible Promissory Note in the original principal amount of $35,500 (the “Note”). The Company repaid the entire principal balance of the Note, plus accrued interest and a prepayment premium, in the amount of $43,897. | ||||||||
On February 24, 2014, the Company entered into a Securities Purchase Agreement with Asher Enterprises, Inc., pursuant to which the Company sold to Asher a 8% Convertible Promissory Note in the original principal amount of $53,000 (the “Note”). The Note had a maturity date of November 26, 2014, and is convertible after 180 days into its common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 58% multiplied by the Market Price (representing a discount rate of 42%). “Market Price” means the average of the lowest three (3) Trading Prices for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means the closing bid price on the applicable day. The “Fixed Conversion Price” shall mean $0.00005. The shares of common stock issuable upon conversion of the Note will be restricted securities as defined in Rule 144 promulgated under the Securities Act of 1933. The Note can be prepaid by the Company at a premium as follows: (a) between 0 and 30 days after issuance – 109% of the principal amount; (b) between 31 and 60 days after issuance – 114% of the principal amount; (c) between 61 and 90 days after issuance – 120% of the principal amount; (d) between 91 and 120 days after issuance – 124% of the principal amount; (e) between 121 and 180 days after issuance – 130% of the principal amount. The purchase and sale of the Note closed on February 28, 2014, the date that the purchase price was delivered to the Company. On August 25, 2014, the Company repaid the promissory note to Asher Enterprises, Inc. The Company repaid the entire principal balance of the Note, plus accrued interest and a prepayment premium, in the amount of Seventy One Thousand Dollars ($71,000). | ||||||||
On May 1, 2014, the Company entered into Securities Purchase Agreements with Asher Enterprises, Inc., pursuant to which it sold to Asher, or its affiliates, 8% Convertible Promissory Notes in the original principal amount of $47,500 (the “Note”). The Note has a maturity date of February 5, 2015, and is convertible after one hundred and eighty (180) days into common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 58% multiplied by the Market Price (representing a discount rate of 42%). “Market Price” means the average of the lowest six (3) Trading Prices for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means the closing bid price on the applicable day. The “Fixed Conversion Price” shall mean $0.00005. The shares of common stock issuable upon conversion of the Notes will be restricted securities as defined in Rule 144 promulgated under the Securities Act of 1933. The Notes can be prepaid by the Company at a premium as follows: (a) between 31 and 60 days after issuance - 114% of the principal amount; (b) between 61 and 90 days after issuance - 120% of the principal amount; (c) between 91 and 120 days after issuance - 124% of the principal amount; (d) between 121 and 180 days after issuance - 130% of the principal amount. The issuance of the Note was exempt from the registration requirements of the Securities Act of 1933 pursuant to Rule 506 of Regulation D promulgated thereunder. The purchaser was an accredited and sophisticated investor, familiar with the Company’s operations, and there was no solicitation. On October 27, 2014, the Company repaid the promissory note to Asher Enterprises, Inc. The Company repaid the entire principal balance of the Note, plus accrued interest and a prepayment premium, in the amount of Sixty Eight Thousand Two Hundred and Seventeen Dollars and Eighty One Cents ($68,217.81). | ||||||||
On May 28, 2014, the Company repaid the promissory note to Asher Enterprises, Inc. that, on December 12, 2013, it entered into in connection with a Securities Purchase Agreement, pursuant to which it sold to Asher a 8% Convertible Promissory Note in the original principal amount of $63,000 (the “Note”). The Company repaid the entire principal balance of the Note, plus accrued interest and a prepayment premium, in the amount of Eighty Four Thousand Fifty Four Dollars and Eight Cents ($84,054.08). | ||||||||
Auctus Private Equity Fund | ||||||||
On December 15, 2014, the Company entered into a Securities Purchase Agreement with Auctus Private Equity Fund, LLC, pursuant to which the Company sold to Auctus a 8% Convertible Promissory Note in the original principal amount of $55,000 (the “Note”). The Note has a maturity date of September 16, 2015, and is convertible after 180 days into its common stock at the greater of (i) the Variable Conversion Price and (ii) $0.0001. The “Variable Conversion Price” shall mean 48% multiplied by the Market Price (representing a discount rate of 52%). “Market Price” means the average of the lowest Trading Price for the Common Stock during the fifteen (15) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means the closing bid price on the applicable day. The shares of common stock issuable upon conversion of the Note will be restricted securities as defined in Rule 144 promulgated under the Securities Act of 1933. The Note can be prepaid by the Company at a premium as follows: (a) between 0 and 30 days after issuance – 115% of the principal amount and any accrued and unpaid interest; (b) between 31 and 60 days after issuance – 120% of the principal amount and any accrued and unpaid interest; (c) between 61 and 90 days after issuance – 125% of the principal amount and any accrued and unpaid interest; (d) between 91 and 120 days after issuance – 130% of the principal amount and any accrued and unpaid interest; and (e) between 121 days and 180 days after issuance – 135% of the principal amount and any accrued and unpaid interest. The purchase and sale of the Note closed on December 16, 2014, the date that the purchase price was delivered to the Company. | ||||||||
Backman Notes | ||||||||
On March 28, 2014, the Company entered into, with a third party investor, a 20% convertible secured promissory note with a maturity date of April 28, 2015 and in the principal amount of $100,000 (the “Note”), which is convertible into common stock at $0.08 per share and which is collateralized by up to $15,000 on a monthly basis by the $100,000 in monthly payments which the Company receives pursuant to its sale of WeedMaps Media, Inc. if not paid in full within six months of the date of the Note. Furthermore, as further collateral, the Company placed 2,500,000 shares of its common stock into escrow. | ||||||||
On December 26, 2014, the Company entered into a Secured Promissory Note and Stock Purchase Agreement with a third party investor. Pursuant to the Agreement, the investor tendered fifty thousand dollars ($50,000) in exchange for (i) secured 15% promissory note, with a maturity date of February 26, 2016, issued by its wholly owned subsidiary, White Mountain River, Inc., but convertible into its common stock in certain circumstances, and (ii) two hundred thousand (200,000) shares of its common stock. The Company guaranteed payment of the Note, which is secured by any and all assets purchased using the proceeds therefrom. The issuance of the note and shares was exempt from registration pursuant to Rule 506 of Regulation D promulgated under the Securities Act of 1933. The Company accounts for debt discount according to ASC 470-20 Debt With Conversion And Other Options. No debt discount associated with the Convertible Note was recorded because the fair value of the common stock at the commitment date ($0.08) was less than the effective conversion price of the conversion feature ($0.20). As such, there was no intrinsic value associated with the conversion feature and thus no debt discount was recognized. | ||||||||
Buckles Note | ||||||||
On November 20, 2014, the Company entered into a Promissory Note and Stock Purchase Agreement, pursuant to which the Company issued, a senior promissory note in the principal amount of Fifty Thousand Dollars ($50,000) and fifty thousand (50,000) shares of its common stock. The Note has an interest of rate of 15% per annum and has a maturity date of January 20, 2016. The Company accounts for debt discount according to ASC 470-20 Debt With Conversion And Other Options. No debt discount associated with the Convertible Note was recorded because the fair value of the common stock at the commitment date ($0.095) was less than the effective conversion price of the conversion feature ($0.20). As such, there was no intrinsic value associated with the conversion feature and thus no debt discount was recognized. | ||||||||
Caesar Capital | ||||||||
On September 8, 2014, the Company entered into a Securities Purchase Agreement and issued a Convertible Promissory Note. The Note is in the original principal amount of $35,000, pays interest at the rate of 8% per annum, and has a maturity date of September 7, 2015. The Note may be prepaid by the Company at any time for a premium of 120% of the principal amount and any accrued and unpaid interest. The Note is convertible into its common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 62% multiplied by the Market Price (as defined herein) (representing a discount rate of 38%), but no more than $0.06 per share. “Market Price” means the lowest Trading Price (as defined below) for the Common Stock during the five Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means, for any security as of any date, the VWAP value as posted on Bloomberg. The “Fixed Conversion Price” shall mean $0.0005. The shares of common stock issuable upon conversion of the Note will be restricted securities as defined in Rule 144 promulgated under the Securities Act of 1933. The purchase and sale of the Note closed on September 9, 2014, the date that the purchase price was delivered to the Company. | ||||||||
On November 20, 2014, the Company entered into a Promissory Note and Stock Purchase Agreement, pursuant to which the Company issued, a senior promissory note in the principal amount of Fifty Thousand Dollars ($50,000) and fifty thousand (50,000) shares of its common stock. The Note has an interest of rate of 8% per annum and has a maturity date of January 20, 2016. The Company accounts for debt discount according to ASC 470-20 Debt With Conversion And Other Options. No debt discount associated with the Convertible Note was recorded because the fair value of the common stock at the commitment date ($0.095) was less than the effective conversion price of the conversion feature ($0.20). As such, there was no intrinsic value associated with the conversion feature and thus no debt discount was recognized. | ||||||||
DeLue Notes | ||||||||
On March 26, 2014, the Company entered into, with a third party investor, a 20% convertible secured promissory note with a maturity date of April 26, 2015 and in the principal amount of $100,000 (the “Convertible Note”), which is convertible into the Company’s common stock at $0.08 per share and which is collateralized by up to $15,000 on a monthly basis by the $100,000 in monthly payments which the Company receives pursuant to its sale of WeedMaps Media, Inc. if not paid in full within six months of the date of the Note. Furthermore, as further collateral, the Company placed 2,500,000 shares of its common stock into escrow. Finally, as an incentive to the third party investor to enter into the Note, the Company issued 300,000 shares of its common stock. The Company accounts for debt discount according to ASC 470-20 Debt With Conversion And Other Options. No debt discount associated with the Convertible Note was recorded because the fair value of the common stock at the commitment date ($0.05) was less than the effective conversion price of the conversion feature ($0.07). As such, there was no intrinsic value associated with the conversion feature and thus no debt discount was recognized. | ||||||||
On December 26, 2014, the Company entered into a Secured Promissory Note and Stock Purchase Agreement with a third party investor. Pursuant to the Agreement, the investor tendered one hundred thousand dollars ($100,000) in exchange for a secured 15% promissory note which has a maturity date of February 22, 2016 and is issued by its wholly owned subsidiary, White Mountain River, Inc., but convertible into its common stock in certain circumstances. The Company guaranteed payment of the Note, which is secured by any and all assets purchased using the proceeds therefrom. The issuance of the note and shares was exempt from registration pursuant to Rule 506 of Regulation D promulgated under the Securities Act of 1933. In connection with the transaction, on January 20, 2015, the Company entered into a Consulting Agreement with Robert S. DeLue pursuant to which the Company issued him three hundred thousand (300,000) shares of its common stock. | ||||||||
Domain Capital | ||||||||
On August 9, 2013, the Company entered into a sale-leaseback agreement with Domain Capital, LLC, pursuant to which it transferred its interest in the following domains to Domain Capital in exchange for One Hundred and Fifty-Thousand Dollars ($150,000.00): www.ManufacturedHome.com, www.ManufacturedHomes.com, www.ManufacturedHouse.com, www.ManufacturedHomes.net, www.ModularHomes.com, www.TravelTrailer.com, and www.ToyHaulers.com (the Domains). That same day, the Company entered into a Lease Agreement with Domain Capital, pursuant to which it is leasing the Domains at a cost of Five Thousand One Hundred and Ninety-Nine Dollars and Eighty Cents ($5,199.80) per month. The initial term of the Lease Agreement is thirty-six (36) months, and the sum of the lease payments due over the initial term are equal to the consideration it received for the Domains (i.e., $150,000.00) plus interest of 15%. The transactions closed on August 15, 2013, the date that the purchase price was delivered to the Company. At the termination of the Lease Agreement, pursuant to the terms of a Buyback Agreement, the Company can exercise an option to re-purchase the Domains for a total purchase price of one dollar ($1.00), assuming it is not in default under the Lease Agreement at that time. The proceeds the Company received from Domain Capital were used to satisfy outstanding debts related to its acquisition of the following domains, with the balance allocated to working capital: www.ModularHomes.com, www.TravelTrailer.com, and www.ToyHaulers.com | ||||||||
On May 19, 2014, the Company sold the following domain names: www.ManufacturedHome.com, www.ManufacturedHomes.com www.ManufacturedHouse.com, www.ManufacturedHomes.net, and www.ModularHomes.com. Pursuant to the terms of the sale, the buyer assumed all of the Company’s obligations under the Lease Agreement the Company had with Domain Capital, LLC. See Note 4. Asset Sale for more information. | ||||||||
Elkins Trust Note | ||||||||
On December 22, 2014, the Company entered into a Secured Promissory Note and Stock Purchase Agreement with a third party investor. Pursuant to the Agreement, the investor tendered fifty thousand dollars ($50,000) in exchange for (i) secured 15% promissory note, with a maturity date of February 22, 2016, issued by its wholly owned subsidiary, White Mountain River, Inc., but convertible into its common stock in certain circumstances. The Company guaranteed payment of the Note, which is secured by any and all assets purchased using the proceeds therefrom. The issuance of the note and shares was exempt from registration pursuant to Rule 506 of Regulation D promulgated under the Securities Act of 1933. | ||||||||
Geist Note | ||||||||
On November 20, 2014, the Company entered into a Promissory Note and Stock Purchase Agreement pursuant to which the Company issued a senior promissory note in the principal amount of Fifty Thousand Dollars ($50,000) and fifty thousand (50,000) shares of its common stock. The Note has an interest of rate of 15% per annum and has a maturity date of January 20, 2016. The Company accounts for debt discount according to ASC 470-20 Debt With Conversion And Other Options. No debt discount associated with the Convertible Note was recorded because the fair value of the common stock at the commitment date ($0.095) was less than the effective conversion price of the conversion feature ($0.20). As such, there was no intrinsic value associated with the conversion feature and thus no debt discount was recognized. | ||||||||
JARVCO Note | ||||||||
On November 4, 2014, the Company entered into a Promissory Note, pursuant to which the Company issued a promissory note in the principal amount of Twenty Seven Thousand Dollars ($27,000) in exchange for 4 homesites located in the Strawberry Addition in the City of Arp, Texas. The Note has an interest of rate of 7% per annum and has a maturity date of February 2, 2015. | ||||||||
KBM Worldwide Inc. | ||||||||
On June 2, 2014, the Company entered into Securities Purchase Agreements with KBM Worldwide Inc., pursuant to which it sold to KBM Worldwide, or its affiliates, an 8% Convertible Promissory Note in the original principal amount of $63,000 (the “Note”). The Note has a maturity date of March 15, 2015, and is convertible after one hundred and eighty (180) days into common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 58% multiplied by the Market Price (representing a discount rate of 42%). “Market Price” means the average of the lowest six (3) Trading Prices for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means the closing bid price on the applicable day. The “Fixed Conversion Price” shall mean $0.00005. The shares of common stock issuable upon conversion of the Note will be restricted securities as defined in Rule 144 promulgated under the Securities Act of 1933. The Note can be prepaid by the Company at a premium as follows: (a) between 31 and 60 days after issuance - 114% of the principal amount; (b) between 61 and 90 days after issuance - 120% of the principal amount; (c) between 91 and 120 days after issuance - 124% of the principal amount; (d) between 121 and 180 days after issuance - 130% of the principal amount. The issuance of the Note was exempt from the registration requirements of the Securities Act of 1933 pursuant to Rule 506 of Regulation D promulgated thereunder. The purchaser was an accredited and sophisticated investor, familiar with the Company’s operations, and there was no solicitation. On December 4, 2014, the Company repaid the promissory note to KBM Worldwide, Inc. The Company repaid the entire principal balance of the Note plus accrued interest and a prepayment premium, in the total amount of Eighty Four Thousand Three Hundred Seventy One Dollars and Sixty Seven Cents ($84,371.67). | ||||||||
On July 9, 2014, the Company entered into Securities Purchase Agreements with KBM Worldwide Inc., pursuant to which it sold to KBM Worldwide, or its affiliates, an 8% Convertible Promissory Note in the original principal amount of $53,000 (the “Note”). The Note has a maturity date of April 14, 2015, and is convertible after one hundred and eighty (180) days into common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 58% multiplied by the Market Price (representing a discount rate of 42%). “Market Price” means the average of the lowest six (3) Trading Prices for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means the closing bid price on the applicable day. The “Fixed Conversion Price” shall mean $0.00005. The shares of common stock issuable upon conversion of the Note will be restricted securities as defined in Rule 144 promulgated under the Securities Act of 1933. The Note can be prepaid by the Company at a premium as follows: (a) between 31 and 60 days after issuance - 114% of the principal amount; (b) between 61 and 90 days after issuance - 120% of the principal amount; (c) between 91 and 120 days after issuance - 124% of the principal amount; (d) between 121 and 180 days after issuance - 130% of the principal amount. The issuance of the Note was exempt from the registration requirements of the Securities Act of 1933 pursuant to Rule 506 of Regulation D promulgated thereunder. The purchaser was an accredited and sophisticated investor, familiar with the Company’s operations, and there was no solicitation. On January 9, 2015, the Company repaid the promissory note to KBM Worldwide, Inc. The Company repaid the entire principal balance of the Note plus accrued interest and a prepayment premium, in the total amount of Seventy One Thousand and Fifteen Dollars ($71,015.00). | ||||||||
On August 26, 2014, the Company entered into Securities Purchase Agreements with KBM Worldwide Inc., pursuant to which it sold to KBM Worldwide, or its affiliates, an 8% Convertible Promissory Note in the original principal amount of $47,500 (the “Note”). The Note has a maturity date of May 28, 2015, and is convertible after one hundred and eighty (180) days into common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 58% multiplied by the Market Price (representing a discount rate of 42%). “Market Price” means the average of the lowest six (3) Trading Prices for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means the closing bid price on the applicable day. The “Fixed Conversion Price” shall mean $0.00005. The shares of common stock issuable upon conversion of the Note will be restricted securities as defined in Rule 144 promulgated under the Securities Act of 1933. The Note can be prepaid by the Company at a premium as follows: (a) between 31 and 60 days after issuance - 114% of the principal amount; (b) between 61 and 90 days after issuance - 120% of the principal amount; (c) between 91 and 120 days after issuance - 124% of the principal amount; (d) between 121 and 180 days after issuance - 130% of the principal amount. The issuance of the Note was exempt from the registration requirements of the Securities Act of 1933 pursuant to Rule 506 of Regulation D promulgated thereunder. The purchaser was an accredited and sophisticated investor, familiar with the Company’s operations, and there was no solicitation. On February 26, 2015, the Company repaid the promissory note to KBM Worldwide, Inc. The Company repaid the entire principal balance of the Note plus accrued interest and a prepayment premium, in the total amount of Sixty Three Thousand Six Hundred Forty Four Dollars and Eighty Cents ($63,644.80). | ||||||||
On October 20, 2014, the Company entered into a Securities Purchase Agreement with KBM Worldwide, Inc., pursuant to which the Company sold to KBM Worldwide a 8% Convertible Promissory Note in the original principal amount of $83,000 (the “Note”). The Note has a maturity date of July 22, 2015, and is convertible after 180 days into its common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 58% multiplied by the Market Price (representing a discount rate of 42%).“Market Price” means the average of the lowest three (3) Trading Prices for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means the closing bid price on the applicable day. The “Fixed Conversion Price” shall mean $0.00005. The shares of common stock issuable upon conversion of the Note will be restricted securities as defined in Rule 144 promulgated under the Securities Act of 1933. The Note can be prepaid by the Company at a premium as follows: (a) between 0 and 30 days after issuance – 109% of the principal amount and any accrued and unpaid interest; (b) between 31 and 60 days after issuance – 114% of the principal amount and any accrued and unpaid interest; (c) between 61 and 90 days after issuance – 120% of the principal amount and any accrued and unpaid interest; (d) between 91 and 120 days after issuance – 124% of the principal amount and any accrued and unpaid interest; and (e) between 121 days and 180 days after issuance – 130% of the principal amount and any accrued and unpaid interest. The purchase and sale of the Note closed on October 28, 2014, the date that the purchase price was delivered to the Company. | ||||||||
On November 10, 2014, the Company entered into a Securities Purchase Agreement with KBM Worldwide, Inc., pursuant to which the Company sold to KBM Worldwide a 8% Convertible Promissory Note in the original principal amount of $54,000 (the “Note”). The Note has a maturity date of August 12, 2015, and is convertible after 180 days into its common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 58% multiplied by the Market Price (representing a discount rate of 42%). “Market Price” means the average of the lowest three (3) Trading Prices for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means the closing bid price on the applicable day. The “Fixed Conversion Price” shall mean $0.00005. The shares of common stock issuable upon conversion of the Note will be restricted securities as defined in Rule 144 promulgated under the Securities Act of 1933. The Note can be prepaid by the Company at a premium as follows: (a) between 0 and 30 days after issuance – 109% of the principal amount and any accrued and unpaid interest; (b) between 31 and 60 days after issuance – 114% of the principal amount and any accrued and unpaid interest; (c) between 61 and 90 days after issuance – 120% of the principal amount and any accrued and unpaid interest; (d) between 91 and 120 days after issuance – 124% of the principal amount and any accrued and unpaid interest; and (e) between 121 days and 180 days after issuance – 130% of the principal amount and any accrued and unpaid interest. The purchase and sale of the Note closed on November 14, 2014, the date that the purchase price was delivered to the Company. | ||||||||
On December 9, 2014, the Company entered into a Securities Purchase Agreement with KBM Worldwide, Inc., pursuant to which the Company sold to KBM Worldwide a 8% Convertible Promissory Note in the original principal amount of $63,500 (the “Note”). The Note has a maturity date of September 10, 2015, and is convertible after 180 days into its common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 58% multiplied by the Market Price (representing a discount rate of 42%). “Market Price” means the average of the lowest three (3) Trading Prices for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means the closing bid price on the applicable day. The “Fixed Conversion Price” shall mean $0.00005. The shares of common stock issuable upon conversion of the Note will be restricted securities as defined in Rule 144 promulgated under the Securities Act of 1933. The Note can be prepaid by the Company at a premium as follows: (a) between 0 and 30 days after issuance – 109% of the principal amount and any accrued and unpaid interest; (b) between 31 and 60 days after issuance – 114% of the principal amount and any accrued and unpaid interest; (c) between 61 and 90 days after issuance – 120% of the principal amount and any accrued and unpaid interest; (d) between 91 and 120 days after issuance – 124% of the principal amount and any accrued and unpaid interest; and (e) between 121 days and 180 days after issuance – 130% of the principal amount and any accrued and unpaid interest. The purchase and sale of the Note closed on December 11, 2014, the date that the purchase price was delivered to the Company. | ||||||||
On December 30, 2014, the Company entered into a Securities Purchase Agreement with KBM Worldwide, Inc., pursuant to which the Company sold to KBM Worldwide a 8% Convertible Promissory Note in the original principal amount of $45,000 (the “Note”). The Note has a maturity date of October 2, 2015, and is convertible after 180 days into its common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 51% multiplied by the Market Price (representing a discount rate of 49%). “Market Price” means the average of the lowest three (3) Trading Prices for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means the closing bid price on the applicable day. The “Fixed Conversion Price” shall mean $0.00005. The shares of common stock issuable upon conversion of the Note will be restricted securities as defined in Rule 144 promulgated under the Securities Act of 1933. The Note can be prepaid by the Company at a premium as follows: (a) between 0 and 90 days after issuance – 130% of the principal amount and any accrued and unpaid interest; (b) between 91 and 150 days after issuance – 135% of the principal amount and any accrued and unpaid interest; and (c) between 151 and 180 days after issuance – 140% of the principal amount and any accrued and unpaid interest. The purchase and sale of the Note closed on December 31, 2014, the date that the purchase price was delivered to the Company. | ||||||||
LG Capital Funding | ||||||||
On May 16, 2014, the Company entered into a Securities Purchase Agreement with LG Capital Funding, LLC (“LG Capital”), pursuant to which it sold to LG Capital an 8% Convertible Promissory Note in the original principal amount of $105,000 (the “Note”). The Note has a maturity date of May 16, 2015, and is convertible after 180 days into common stock at a forty two percent (42%) discount from the lowest trading price of the common stock, as reported by any exchange upon which the common stock is then traded, for the ten (10) trading days prior to the Company’s receipt of notice from the Note holder to exercise this conversion feature. The conversion price shall be subject to a minimum conversion price of $0.0001 per share (the “floor price”), but in the event that the floor price is triggered, the conversion discount shall increase from forty two percent (42%) to fifty two (52%), calculated against the floor price. Interest accrued on the Note shall be payable in shares of common stock, calculated using the same conversion formula. The Note can be prepaid at a premium as follows: (a) between 0 and 90 days after issuance – 120% of the principal amount; (b) between 91 and 150 days after issuance – 130% of the principal amount; (c) between 151 and 180 days after issuance – 140% of the principal amount. There is no right to prepay the Note after 180 days. The purchase and sale of the Note closed on May 19, 2014, the date that the purchase price was delivered to the Company. On November 5, 2014, the Company repaid the promissory note to LG Capital Funding, LLC. The Company repaid the entire principal balance of the Note, plus accrued interest and a prepayment premium in the amount of One Hundred and Fifty Thousand Nine Hundred Twelve Dollars ($150,912). | ||||||||
On October 29, 2014, the Company entered into a Securities Purchase Agreement with LG Capital Funding, LLC (“LG Capital”), pursuant to which the Company sold to LG Capital an 8% Convertible Promissory Note in the original principal amount of $105,000 (the “Note”). The Note has a maturity date of October 29, 2015, and is convertible after 180 days into its common stock at a forty two percent (42%) discount from the lowest trading price of its common stock, as reported by any exchange upon which its common stock is then traded, for the ten (10) trading days prior to its receipt of notice from the Note holder to exercise this conversion feature. The conversion price shall be subject to a minimum conversion price of $0.0001 per share (the “floor price”), but in the event that the floor price is triggered, the conversion discount shall increase from forty two percent (42%) to fifty two (52%), calculated against the floor price. Interest accrued on the Note shall be payable in shares of its common stock, calculated using the same conversion formula. The Note can be prepaid by the Company at a premium as follows: (a) between 0 and 90 days after issuance – 120% of the principal amount; (b) between 91 and 150 days after issuance – 130% of the principal amount; (c) between 151 and 180 days after issuance – 140% of the principal amount. There is no right to prepay the Note after 180 days. The purchase and sale of the Note closed on October 31, 2014, the date that the purchase price was delivered to the Company. | ||||||||
Typenex Co-Investment, LLC | ||||||||
On July 18, 2014, the Company entered into a Securities Purchase Agreement with Typenex Co-Investment, LLC, pursuant to which it sold to Typenex a 10% Convertible Promissory Note in the original principal amount of $85,500 (the “Note”), which reflected an original issue discount of $7,500 and legal fees of $3,000. The Note has a maturity date of June 23, 2015, and is convertible after 180 days into common stock at $0.075 per share (the “Conversion Price”). The Conversion Price is subject to adjustment downward if the Company issues its common stock at a lower price prior to any conversion. The shares of common stock issuable upon conversion of the Note will be restricted securities as defined in Rule 144 promulgated under the Securities Act of 1933. The Note can be prepaid by at a premium of 125% of the principal amount and any accrued and unpaid interest. The purchase and sale of the Note closed on July 23, 2014, the date that the purchase price was delivered to the Company. | ||||||||
Below is a summary of note payable amounts which include accrued interest: | ||||||||
Notes payable - current portion | December 31, | December 31, | ||||||
2014 | 2013 | |||||||
Abrams Notes | $ | 35,875 | $ | - | ||||
Asher Enterprises | - | 152,000 | ||||||
Auctus Private Equity Fund | 55,192 | - | ||||||
Backman Notes | 115,233 | - | ||||||
Caesar Capital Group | 35,875 | - | ||||||
DeLue Notes | 113,781 | - | ||||||
Domain Capital | - | 44,087 | ||||||
JARVCO Note | 25,981 | - | ||||||
KBM Worldwide | 351,557 | - | ||||||
LG Capital | 106,450 | - | ||||||
Typenex Co-Investments | 89,388 | - | ||||||
Total notes payable – current portion | $ | 929,332 | $ | 196,087 | ||||
Notes payable - noncurrent portion | December 31, | 31-Dec | ||||||
2014 | ,2013 | |||||||
Abrams Notes | $ | 51,007 | $ | - | ||||
Backman Notes | 50,185 | - | ||||||
Buckles Note | 50,842 | - | ||||||
Caesar Capital Group | 50,986 | - | ||||||
DeLue Notes | 100,370 | - | ||||||
Domain Capital | - | 95,519 | ||||||
Elkins Trust Note | 50,185 | - | ||||||
Geist Note | 50,904 | - | ||||||
Total notes payable - noncurrent portion | $ | 404,479 | $ | 95,519 |
14_Notes_Payable_Related_Party
14. Notes Payable - Related Party | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Note 14. Notes Payable - Related Party | Sportify Note |
On December 31, 2012, the Company entered into a Securities Purchase Agreement by and among it, on the one hand, and Sportify, Inc., a Nevada corporation, and its shareholders, Sabas Carrillo (“Carrillo”), an individual, and James Pakulis (“Pakulis”), an individual and one of the Company’s officers and directors, on the other hand. Pursuant to the agreement, upon the closing of the transaction, the Company purchased 100% of the issued and outstanding equity interests of Sportify in exchange for (a) the cancellation of a previous Secured Promissory Note issued to Sportify, entered into on or about August 22, 2012 and with an outstanding principal balance of Two Hundred Eighty Five Thousand Dollars ($285,000) and (b) Two Hundred Fifteen Thousand Dollars ($215,000) represented by promissory notes in the original principal amount of One Hundred Sixty One Thousand Two Hundred Fifty Dollars ($161,250) to Pakulis and Fifty Six Thousand Seven Hundred Fifty Dollars ($53,750) to Carrillo. The closing of the purchase took place on December 31, 2012. On July 11, 2013, the Company entered into a First Amendment to Promissory Note with each of Pakulis and Carrillo to extend the date that it will begin making payments thereunder from June 30, 2013 to September 30, 2013, and extended the maturity date of the notes by a corresponding six months. On November 8, 2013, effective as of September 30, 2013, the Company entered into a Second Amendment to Promissory Note with each of Pakulis and Carrillo to extend the date that it will begin making payments thereunder from September 30, 2013 to December 31, 2013, and extended the maturity date of the notes by a corresponding six months. On October 25, 2013, Carrillo converted the $53,750 outstanding balance of his note, plus $11,125 in accounts receivable for services rendered, into 395,805 shares of our common stock. On March 19, 2014, effective as of December 31, 2013, the Company entered into a Third Amendment to Promissory Note with Pakulis to extend the date that it will begin making payments thereunder from December 31, 2013 to January 1, 2015, and extended the maturity date of the notes by a corresponding twelve months. On March 10, 2015, effective as of December 31, 2014, the Company entered into a Fourth Amendment to Promissory Note with Pakulis to extend the date that it will begin making payments thereunder from January 1, 2015, to January 1, 2017, and extended the maturity date of the note to December 15, 2018. |
15_Other_Long_Term_Accrued_Lia
15. Other Long Term Accrued Liabilities | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Note 15. Other Long Term Accrued Liabilities | At December 31, 2014, the Company had a balance of $118,750 in noncurrent tax payable. |
16_Inventory_Flooring_Credit_L
16. Inventory Flooring Credit Line | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Note 16. Inventory Flooring Credit Line | On May 12, 2014, the Company entered into a consignment agreement (the “Consignment Agreement”) and Indemnification Agreement with a third-party Inventory Financing Company (the “Inventory Financer”), pursuant to which the Inventory Financer will consign new and used manufactured home inventory to the Company’s wholly owned subsidiary, Wisdom Manufactured Homes Of America, Inc. (“WMHOA”). Per the Consignment Agreement, WMHOA is to pay the Inventory Financer a monthly fee of one percent (1%) of the agreed consignment price for fees incurred during the prior calendar month, or prorated for any partial month. Fees for consigned property begin to accrue from (i) the date used inventory is consigned or (ii) in the case of new inventory, from the date the property is ready to ship and WMHOA has been notified of its readiness for shipment. |
The consignment price for used inventory shall be One Thousand Dollars ($1,000) greater than the Inventory Financer’s acquisition price for a singlewide manufactured home and Fifteen Hundred Dollars ($1,500) greater for a multisection home. The consignment price for new inventory shall be equal to the Inventory Financer’s invoice price. WMHOA shall reduce the outstanding balance of consigned property by One Thousand Dollars ($1,000) per year, due on the anniversary of each respective consignment, and after the first anniversary of any consigned property, the monthly consignment fee with respect to such property shall increase from 1% to 1.4%. In the event any mobile home is consigned for eleven hundred (1,100) days or more, the entire balance owing shall be immediately due and payable. All money received by WMHOA for the purpose of selling a mobile home consigned by the Inventory Financer to WMHOA shall be held in trust for the benefit of the Inventory Financer until the entire outstanding balance owed for the consigned property is satisfied. Furthermore, the Inventory Financer shall have a security interest in all manufactured homes that have been financed by the Inventory Financer or for which the Inventory Financer has advanced any funds or incurred any obligation which has enabled WMHOA to acquire the manufactured homes. | |
The Consignment Agreement shall be effective for a term of five (5) years or for so long as there are manufactured homes consigned to WMHOA by the Inventory Financer. During the term of the Consignment Agreement, WMHOA will maintain insurance on all manufactured homes consigned to it by Legal, and shall be responsible for any home that is destroyed or suffers more than Fifteen Hundred Dollars ($1,500) in damage. For a period of three (3) years following the termination of the Consignment Agreement, WMHOA shall not operate, own, mange, or in any way be affiliated with a mobile home sales facility within twenty (20) miles of WMHOA’s facility located at 4888 FM 2264, Rhome, Texas, 76078. | |
On May 12, 2014, the Company entered into an addendum to the Consignment Agreement. Pursuant thereto, so long as WMHOA is current on all amounts owed to the Inventory Financer and maintains a consignment inventory of at least four (4) manufactured homes during the previous month, the consignment fee owed to the Inventory Financer shall be reduced from 1% to 0.8% per month, and prorated for any partial month. This reduced rate shall be in addition to a Ten Dollar ($10) monthly administration fee and does not pertain to any consigned inventory that has been held on consignment for more than one (1) year. | |
On May 21, 2014, the Company paid the Inventory Financer a Fifty Thousand Dollar ($50,000) security deposit, which the Inventory Financer can use to setoff past due amounts owed pursuant to the Consignment Agreement, should any exist in the future. In two (2) years, if WMHOA is in compliance with the Consignment Agreement and current on all amounts due and owing to the Inventory Financer thereunder, if any, the security deposit will be refunded to WMHOA. During November 2014, the Company paid the Inventory Financer an additional Twenty Five Thousand Dollar ($25,000) security deposit in connection with the opening of the Mt. Pleasant retail center. | |
During October 2014, the Company was offered by the Inventory Financer a no-interest financing program pursuant to which this one-time financing program effectively increased its flooring line by approximately $1 million. | |
At December 31, 2014, the Company had recorded $1,219,241 in the flooring credit line. |
17_Income_Per_Common_Share
17. Income Per Common Share | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Note 17. Income Per Common Share | Income per common share is based on the weighted average number of common shares outstanding. The Company complies with Earnings Per Share, which requires dual presentation of basic and diluted earnings per share on the face of the statements of operations. Basic per share earnings or loss excludes dilution and is computed by dividing income (loss) available to common stockholders by the weighted-average common shares outstanding for the period. Diluted per share earnings or loss reflect the potential dilution that could occur if convertible preferred stock or debentures, options and warrants were to be exercised or converted or otherwise result in the issuance of common stock that is then shared in the earnings of the entity. |
As of December 31, 2014, there were 285,000 common stock purchase warrants outstanding that were not included in the computation of diluted EPS because to do so would have been antidilutive for the period presented. |
18_Income_Taxes
18. Income Taxes | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Notes to Financial Statements | ||||||||||
Note 18. Income Taxes | Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. Significant components of the Company's tax provisions and deferred tax assets as of December 31, 2014 and December 31, 2013 are as follows: | |||||||||
The components of tax provision: | ||||||||||
December 31, | December 31, | |||||||||
2014 | 2013 | |||||||||
Current | ||||||||||
Federal | $ | (98,000 | ) | $ | (475,000 | ) | ||||
State | - | 70,750 | ||||||||
(98,000 | ) | (404,250 | ) | |||||||
Deferred | ||||||||||
Federal | (36,000 | ) | (651,000 | ) | ||||||
State | 94,000 | (268,000 | ) | |||||||
58,000 | (919,000 | ) | ||||||||
Change in valuation allowance | (120,000 | ) | (77,000 | ) | ||||||
Total provision | $ | (160,000 | ) | $ | (1,400,250 | ) | ||||
The total tax benefit for the year ended December 31, 2014 is $160,000 of which $176,000 corresponds to current operations and $16,000 (tax provision) corresponds to discontinued operations. The total tax provision for the year ended December 31, 2013 is $1,391,250 of which $1,400,250 corresponds to current operations and $9,000 (tax benefit) corresponds to discontinued operations. | ||||||||||
The components of deferred tax assets and liabilities: | ||||||||||
December 31, | December 31, | |||||||||
2014 | 2013 | |||||||||
Deferred income tax assets: | ||||||||||
State taxes | $ | 129,000 | $ | 129,000 | ||||||
Net operating losses | 425,000 | 357,000 | ||||||||
Depreciation | - | 137,000 | ||||||||
Accruals and other | - | - | ||||||||
554,000 | 623,000 | |||||||||
Deferred income tax liabilities: | ||||||||||
Depreciation | (12,000 | ) | - | |||||||
Installment gain | (367,000 | ) | (390,000 | ) | ||||||
175,000 | 233,000 | |||||||||
Valuation allowance | (175,000 | ) | (295,000 | ) | ||||||
Net deferred tax assets/(liabilities) | $ | - | $ | (62,000 | ) | |||||
For the years ended December 31, 2014 and 2013, a reconciliation of the federal statutory tax rate to the Company's effective tax rate is as follows: | ||||||||||
Effective Tax Rate | December 31, | December 31, | ||||||||
2014 | 2013 | |||||||||
Federal statutory | 0 | % | 34 | % | ||||||
State and local, net of federal | 0 | % | 2.17 | % | ||||||
Permanent and other items | (7.33 | )% | 0.8 | % | ||||||
Installment gain | 1.13 | % | 8.53 | % | ||||||
Return to provision | 4.82 | % | 0.68 | % | ||||||
Net operating loss | 3.34 | % | ||||||||
Change in Valuation allowance | 5.9 | % | (0.85 | )% | ||||||
Total effective tax rate | 7.87 | % | 45.33 | % | ||||||
The ultimate realization of deferred tax assets depends upon the generation of future taxable income during the periods in which those temporary differences become deductible. Based upon the Company's loss for the year ended December 31, 2014, the Company has provided a valuation allowance in the amount of $175,000 against its deferred tax assets. The amount of deferred tax assets considered realizable could change if future taxable income is realized. At both December 31, 2014 and December 31, 2013, the Company had U.S. federal tax net operating loss carryforwards (“NOLs”) of approximately $1,125,000 and $554,000, respectively, which begin to expire in 2021. The NOLs are subject to limitations under IRC Section 382 of the Internal Revenue Code (“Section 382”). |
19_Related_Party_Transactions
19. Related Party Transactions | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Note 19. Related Party Transactions | All material intercompany transactions have been eliminated upon consolidation of the Company’s entities. During the year ended December 31, 2014, cash transfers, equity and accounts between the Company and its subsidiaries have been eliminated upon consolidation. |
See Note 14. Notes Payable- Related Party for information regarding a Securities Purchase Agreement entered into on December 31, 2012, with Sportify, Inc., a Nevada corporation, and its shareholders, Sabas Carrillo, an individual, and James Pakulis, an individual and one of the Company’s officers and directors. |
20_Commitment_And_Contingencie
20. Commitment And Contingencies | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Notes to Financial Statements | |||||||||
Note 20. Commitment And Contingencies | The Company’s executive offices are located in Tyler, Texas, at 500 N Northeast Loop 323, Tyler, Texas. The parcel is approximately a 1.8-acre tract of land. Pursuant to the terms of the lease, rent is $2,500 per month for 37 months. The Company is confident that this commercial space will provide adequate space to meet its needs and provide for future growth. | ||||||||
During February 2014, the Company entered into a new lease at 4888 FM 2264, Rhome, TX. The parcel is approximately a 2-acre tract of land. Pursuant to the terms of the lease, rent is $1,300 per month for 24 months. | |||||||||
On May 7, 2014, the Company signed a Memorandum of Understanding pursuant to which it would agree to take over Heritage Mobile Homes, a manufactured home retail center located in Jacksboro, Texas. Pursuant to the Memorandum of Understanding, the Company will assume the office and lot lease for $1,108 per month. The lot is currently leased on a month-to-month basis. | |||||||||
On July 1, 2014, the Company entered into a Lease Agreement for a two-acre lot, including office and parking, in Mt. Pleasant, Texas. The base rent is $2,500 per month, and the lease is for a period of 24 months. | |||||||||
Set forth below is a summary of current obligations as of December 31, 2014 comprised exclusively of the rental lease obligations to make future payments due by the period indicated below: | |||||||||
Rhome, Texas Retail Center | Minimum | Monthly | |||||||
Payments | Base Rent | ||||||||
2015 | $ | 15,600 | $ | 1,300 | |||||
2016 | $ | 1,300 | $ | 1,300 | |||||
Tyler, Texas Retail Center | Minimum | Monthly | |||||||
Payments | Base Rent | ||||||||
2015 | $ | 30,000 | $ | 2,500 | |||||
2016 | $ | 30,000 | $ | 2,500 | |||||
2017 | $ | 12,500 | $ | 2,500 | |||||
Jacksboro, Texas Retail Center | Minimum | Monthly | |||||||
Payments | Base Rent | ||||||||
2015 | $ | 13,296 | $ | 1,108 | |||||
Mt. Pleasant, Texas Retail Center | Minimum | Monthly | |||||||
Payments | Base Rent | ||||||||
2015 | $ | 30,000 | $ | 2,500 | |||||
2016 | $ | 15,000 | $ | 2,500 |
21_Warrants
21. Warrants | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||
Note 21. Warrants | As of December 31, 2014, there were 285,000 common stock purchase warrants outstanding. The following table summarizes information about common stock warrants outstanding at December 31, 2014. | ||||||||||||||||||||||
Outstanding | Exercisable | ||||||||||||||||||||||
Exercise | Number | Weighted Average Remaining | Weighted | Number | Weighted | ||||||||||||||||||
Price | Outstanding | Contractual Life (years) | Exercise | Exercisable | Average | ||||||||||||||||||
Price | Exercise | ||||||||||||||||||||||
Average | Price | ||||||||||||||||||||||
$ | 0.075 | 285,000 | 4.69 | 0.075 | 285,000 | 0.075 |
22_Subsequent_Events
22. Subsequent Events | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Note 22. Subsequent Events | The Company evaluated its December 31, 2014 financial statements for subsequent events through March 25, 2014, the date the financial statements were available to be issued. |
Corporate Name Change | |
On March 3, 2015, the Company changed its name from SearchCore, Inc. to Wisdom Homes of America, Inc. The name change was unanimously approved by our Board of Directors on December 22, 2014, and by a majority of our outstanding shares of common stock at our annual shareholder meeting held on March 3, 2015. | |
Stock Based Compensation | |
On January 7, 2015, the Company approved the issuance of an aggregate of 1,050,000 shares of its common stock, effective as of December 31, 2014, restricted in accordance with Rule 144, to seven (7) individuals and entities for services valued at $73,500. | |
On January 7, 2015, the Company approved the issuance of an aggregate of 975,000 shares of its common stock, effective as of January 2, 2015, restricted in accordance with Rule 144, to five (5) individuals and entities for services valued at $68,250. | |
On February 6, 2015, the Company issued an aggregate of 650,000 shares of its common stock, effective as of December 31, 2014, restricted in accordance with Rule 144, to an entity for services valued at $45,500. | |
KBM Worldwide, Inc. | |
On January 9, 2015, the Company repaid the promissory note to KBM Worldwide, Inc., that on July 9, 2014, the Company entered into in connection with a Securities Purchase Agreement, pursuant to which the Company sold KBM Worldwide an 8% Convertible Promissory Note in the principal amount of Fifty Three Thousand Dollars ($53,000) (the “Note”). The Company repaid the entire principal balance of the Note plus accrued interest and a prepayment premium, in the total amount of Seventy One Thousand and Fifteen Dollars ($71,015.00). | |
On February 26, 2015, the Company repaid the promissory note to KBM Worldwide, Inc., that on August 26, 2014, the Company entered into in connection with a Securities Purchase Agreement, pursuant to which the Company sold KBM Worldwide an 8% Convertible Promissory Note in the principal amount of Forty Seven Thousand Five Hundred Dollars ($47,500) (the “Note”). The Company repaid the entire principal balance of the Note plus accrued interest and a prepayment premium, in the total amount of Sixty Three Thousand Six Hundred Forty Four Dollars and Eighty Cents ($63,644.80). | |
Vista Capital Investments, LLC | |
On January 22, 2015, the Company entered into a Securities Purchase Agreement with Vista Capital Investments, LLC, pursuant to which the Company sold to Vista a 12% Convertible Promissory Note in the original principal amount of $55,000 (the “Note”) with a $5,000 original issue discount. The Note has a maturity date of January 22, 2016, and is convertible after 120 days into its common stock at 90% of the Market Price of its common stock (representing a discount rate of 10%). “Market Price” means the lowest traded price for the Common Stock during the twenty (20) trading days before the conversion. The shares of common stock issuable upon conversion of the Note will be restricted securities as defined in Rule 144 promulgated under the Securities Act of 1933. The Note can be prepaid by the Company up to 180 days after issuance at 120% of the principal amount and any accrued and unpaid interest. In connection with the sale of the Note, the Company also issued to Vista warrants to acquire 1,736,111 shares of its common stock at an exercise price of $0.075 per share (subject to adjustment). The warrants are exercisable for a period of five (5) years and contain a cashless exercise provision at the option of the holder. | |
Acquisition of Homesites | |
On January 29, 2015, the Company entered into an agreement to purchase eleven (11) homesites in exchange for issuing a seventy six thousand dollar ($76,000) promissory note which carries 7% interest per annum and payable over 360 equal month payments beginning on March 1, 2015. The homesites are located at the Strawberry Addition in the City of Arp, Texas. | |
Exclusive Option to Improve and Sell 25 Homesites | |
On January 29, 2015, the Company received a signed copy of an Exclusive Option to Improve and Sell by and between its wholly-owned subsidiary, Wisdom Manufactured Homes Of America, Inc., and American National Credit Corporation. Pursuant to the Agreement, the Company has the exclusive option to improve and sell, at a pre-agreed upon price, twenty five (25) unimproved building homesites in Sherman, Texas that are owned by American National. The Company’s intention is to put a manufactured home on the homesites and sell them through a licensed real estate broker. The costs to improve the homesites will be split between the parties. | |
LG Capital Funding, LLC | |
On February 24, 2015, the Company entered into a Securities Purchase Agreement with LG Capital Funding, LLC (“LG Capital”), pursuant to which the Company sold to LG Capital an 8% Convertible Promissory Note in the original principal amount of $105,000 (the “Note”). The Note has a maturity date of February 24, 2016, and is convertible after 170 days into its common stock at a forty two percent (42%) discount from the lowest trading price of its common stock, as reported by any exchange upon which its common stock is then traded, for the ten (10) trading days prior to its receipt of notice from the Note holder to exercise this conversion feature. The conversion price shall be subject to a minimum conversion price of $0.0001 per share (the “floor price”), but in the event that the floor price is triggered, the conversion discount shall increase from forty two percent (42%) to fifty two (52%), calculated against the floor price. Interest accrued on the Note shall be payable in shares of its common stock, calculated using the same conversion formula. The Note can be prepaid by the Company at a premium as follows: (a) between 0 and 90 days after issuance – 120% of the principal amount; (b) between 91 and 150 days after issuance – 130% of the principal amount; (c) between 151 and 180 days after issuance – 140% of the principal amount. There is no right to prepay the Note after 180 days. The purchase and sale of the Note closed on February 27, 2015, the date that the purchase price was delivered to the Company. | |
Fourth Amendment to Sportify Note | |
On December 31, 2012, the Company entered into a Securities Purchase Agreement by and among it, on the one hand, and Sportify, Inc., a Nevada corporation, and its shareholders, Sabas Carrillo (“Carrillo”), an individual, and James Pakulis (“Pakulis”), an individual and one of the Company’s officers and directors, on the other hand. Pursuant to this agreement, upon the closing of the transaction, the Company purchased 100% of the issued and outstanding equity interests of Sportify in exchange for (a) the cancellation of a previous Secured Promissory Note issued to Sportify, entered into on or about August 22, 2012, and with an outstanding principal balance of Two Hundred Eighty Five Thousand Dollars ($285,000) and (b) Two Hundred Fifteen Thousand Dollars ($215,000) represented by promissory notes in the original principal amount of One Hundred Sixty One Thousand Two Hundred Fifty Dollars ($161,250) to Pakulis and Fifty Six Thousand Seven Hundred Fifty Dollars ($53,750) to Carrillo. The closing took place on December 31, 2012. On March 10, 2015, effective as of December 31, 2014, the Company entered into a Fourth Amendment to Promissory Note with Pakulis to extend the date that it will begin making payments thereunder from January 1, 2015, to January 1, 2017, and extended the maturity date of the note to December 15, 2018. |
2_Basis_Of_Presentation_And_Si1
2. Basis Of Presentation And Significant Accounting Policies (Policies) | 12 Months Ended | ||
Dec. 31, 2014 | |||
Basis Of Presentation And Significant Accounting Policies Policies | |||
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). | ||
Reclassifications | Certain prior year amounts in the accompanying consolidated financial statements have been reclassified to conform to the current year’s presentation. These reclassifications had no effect on the consolidated results of operations or financial position for any years presented. | ||
Principles of Consolidation | The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. | ||
Use of Estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates are based on knowledge of current events and anticipated future events and accordingly, actual results may differ from those estimates. | ||
Risks related to cash | The Company maintains cash in bank and deposit accounts, which at times may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents. | ||
Cash and Cash equivalents | The Company considers only highly liquid investments such as money market funds and commercial paper with maturities of 90 days or less at the date of their acquisition as cash and cash equivalents. | ||
Fair Value of Financial Instruments | The accounting standards regarding disclosures about fair value of financial instruments defines financial instruments and required fair value disclosure of those instruments. This accounting standard defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. Receivables, investments, payables, short and long term debt and warrant liabilities qualified as financial instruments. Management believes the carrying amounts of receivables, payables and debt are a reasonable estimate of fair value because of the short period of time between the origination of such instruments, their expected realization, and if applicable, their stated interest rate is equivalent to interest rates currently available. The three levels are defined as follows: | ||
Level 1 | Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. | ||
Level 2 | Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. | ||
Level 3 | Inputs to the valuation methodology are unobservable and significant to the fair value. | ||
The Company analyzes all financial instruments with features of both liabilities and equity under the accounting standards regarding accounting for certain financial instruments with characteristics of both liabilities and equity, accounting for derivative instruments and hedging activities, accounting for derivative financial instruments indexed to, and potentially settled in, a company’s own stock, and the accounting standard regarding determining whether an instrument (or embedded feature) is indexed to an entity’s own stock. The accounting standard specifies that a contract that would otherwise meet the definition of a derivative but is both (a) indexed to the Company’s own stock and (b) classified in stockholders’ equity in the statement of financial position would not be considered a derivative financial instrument. This standard provides a two-step model to be applied in determining whether a financial instrument or an embedded feature is indexed to an issuer’s own stock and thus able to qualify for this accounting standard scope exception. All warrants issued by the Company are denominated in U.S. dollars. | |||
Accounts Receivable | Accounts receivable are recorded at the invoice amount and do not bear interest. | ||
Advertising Cost | The Company expenses advertising costs when incurred. Advertising expense for the years ended December 31, 2014 and 2013 was approximately $40,000 and approximately $73,000, respectively. | ||
Allowance for Doubtful Accounts | Allowance for doubtful accounts is defined as a company's estimate of the amount of probable credit losses in the Company's existing accounts receivable. The Company does not maintain an allowance for doubtful accounts based upon management’s review of the Company’s revenue structure whereby substantially all receivables are confirmed before they are booked as revenue. The Company reviews its allowance for doubtful accounts policy periodically. The Company does not have any off-balance-sheet exposure related to its customers. | ||
Property and Equipment | Property and equipment are recorded at cost and depreciated using the straight-line method over the useful lives of the assets, generally from six to seven years. Property and equipment at December 31, 2014 and December 31, 2013 are presented net of accumulated depreciation of approximately $9,000 and approximately $3,000, respectively. | ||
Intangible Assets | In accordance with Goodwill and Other Intangible Assets, intangible assets that are determined not to have an indefinite useful life are subject to amortization. The Company amortizes intangible assets using the straight-line method over their estimated useful lives. | ||
Impairment of Long-Lived and Intangible Assets | In accordance with Accounting for the Impairment or Disposal of Long-Lived Assets, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. The Company assesses the recoverability of the long-lived and intangible assets by comparing the carrying amount to the estimated future undiscounted cash flow associated with the related assets. No impairment of intangible assets was recognized during the year ended December 31, 2014 or year ended December 31, 2013. | ||
Stock-Based Compensation | The Company accounts for stock-based compensation in accordance with the provisions of Share-Based Payment, which addresses the accounting for equity-based compensation and which requires that the cost of all equity-based compensation arrangements, be reflected in the financial statements over the vesting period based on the estimated fair value of the awards. During the years ended December 31, 2014 and December 31, 2013, the Company had approximately $725,000 and approximately $230,000, respectively, in stock-based compensation expense related to issuances of shares of the Company’s common stock to consultants. During the year ended December 31, 2014, the Company issued shares of its common stock as additional interest expense in the amount of approximately $56,000. During the year ended December 31, 2014, the Company issued shares of its common stock in full satisfaction of accounts payable owed to a creditor by the Company in the amount of approximately $59,000. | ||
Revenue Recognition | The Company recognizes revenue in accordance with ASC 605, “Revenue Recognition,” by recognizing as revenue the fees it charges customers as referenced below because persuasive evidence of an arrangement exists, the fees it charges are substantially fixed or determinable during the period that it provides the services, the Company and its customers understand the specific nature and terms of the agreed upon transactions, and collectability is reasonably assured and services have been rendered. | ||
Income Taxes | Manufactured Home Retail Centers – the Company generates revenues through its manufactured home retail centers operated by Wisdom Manufactured Homes Of America, Inc., which it started in January 2014. The Company anticipates opening and/or acquiring additional retail centers in 2015 and branding them under the name Wisdom Manufactured Homes Of America, Inc. The Company purchases factory built houses and sells them to end users, and also anticipates structuring the sale of used manufactured homes. The Company recognizes revenue from manufactured homes sold generally when (i) the customer has entered into a binding sales agreement with the Company, (ii) the manufactured home has been delivered and installed at the Customer’s homesite, (iii) the Customer has accepted the home and title has transferred and (iv) collectability of either cash payment from the customer or prearranged financing by the customer are reasonably assured. | ||
Uncertain tax positions | The Company follows Accounting for Income Taxes which requires recognition of deferred income tax liabilities and assets for the expected future tax consequences of temporary differences between the income tax basis and financial reporting basis of assets and liabilities. Provision for income taxes consists of taxes currently due plus deferred taxes. | ||
The charge for taxation is based on the results for the year as adjusted for items that are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is accounted for using the balance sheet liability method in respect to temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences, and deferred tax assets are recognized to the extent it is probable that taxable profit will be available against which deductible temporary differences can be utilized. | |||
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also recorded in equity. | |||
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. | |||
Recent Accounting Pronouncements | The Company recognizes uncertain tax positions based on a benefit recognition model. Provided that the tax position is deemed more likely than not of being sustained, the Company recognizes the largest amount of tax benefit that is greater than 50% likely of being ultimately realized upon settlement. The tax position is derecognized when it is no longer more likely than not of being sustained. The Company classifies income tax-related interest and penalties as interest expense and SGA expense, respectively, on the Consolidated Statement of Operations. | ||
Other Recently Issued, but Not Yet Effective Accounting Pronouncements | Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements. |
4_Asset_Sale_Tables
4. Asset Sale (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Notes to Financial Statements | |||||
Total sales price | The following table summarizes the total sale price of $1,061,600: | ||||
Promissory note | $ | 1,000,000 | |||
ManufacturedHomes.com Advertising Rights | 61,600 | ||||
Total consideration | $ | 1,061,600 | |||
Net assets sold | The following table summarizes the net assets sold: | ||||
Domain Assets | $ | 336,500 | |||
Assumption of leaseback obligation | (122,200 | ) | |||
Net Assets | $ | 214,300 | |||
Disposition with a total gain on sale | The following table summarizes the disposition with a total gain on sale of $847,300: | ||||
Total consideration | $ | 1,061,600 | |||
Net assets sold | (214,300 | ) | |||
Gain on sale | $ | 847,300 |
9_Property_And_Equipment_Table
9. Property And Equipment (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Property And Equipment Tables | ||||||||
Property and equipment | Property and equipment at December 31, 2014 and December 31, 2013 consist of the following: | |||||||
December 31, | December 31, | |||||||
Property and Equipment | 2014 | 2013 | ||||||
Furniture and Computer Equipment | $ | 63,657 | $ | 15,367 | ||||
Less: Accumulated Depreciation | (9,222 | ) | (3,320 | ) | ||||
Property and Equipment, net | $ | 54,435 | $ | 12,047 |
9_Intangible_Assets_Tables
9. Intangible Assets (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Intangible Assets Tables | |||||||||
Intangible assets acquisitions and impairments as a result of discontinued operations | Intangible asset amounts at December 31, 2014 and December 31, 2013 are as follows: | ||||||||
December 31, | December 31, | ||||||||
Intangible Assets | 2014 | 2013 | |||||||
Domain names | $ | 84,363 | $ | 420,862 | |||||
Advertising rights | 61,642 | — | |||||||
Subtotal | $ | 146,005 | $ | 420,862 | |||||
Accumulated amortization | (3,082 | ) | — | ||||||
Total intangible Assets | $ | 142,923 | $ | 420,862 | |||||
Amortization amount attributed to discontinued operations | Summary of the Company’s premium and non premium domain names | Amount | |||||||
ToyHaulers.com* | $ | 31,168 | |||||||
TravelTrailer.com* | 51,167 | ||||||||
Various other nonpremium domain names | 2,028 | ||||||||
Total premium and non premium domain names | $ | 84,363 |
12_Accrued_Liabilities_Tables
12. Accrued Liabilities (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Accrued Liabilities Tables | |||||||||
Accrued liabilities | Accrued liabilities at December 31, 2014 and December 31, 2013 are comprised of the following: | ||||||||
December 31, | December 31, | ||||||||
Accrued liabilities | 2014 | 2013 | |||||||
Tax payable | $ | 1,098,000 | 1,196,000 | ||||||
Deferred tax liability short term | — | 146,000 | |||||||
Obligations on stock based compensation | 73,500 | 440,000 | |||||||
Obligations on consulting agreements | 55,000 | 27,000 | |||||||
Payroll liabilities | 145,734 | 97,018 | |||||||
Customer deposits | 19,821 | — | |||||||
Other | 38,836 | — | |||||||
Total accrued liabilities | $ | 1,430,891 | $ | 1,906,018 |
13_Note_Payable_Tables
13. Note Payable (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Note Payable Tables | ||||||||
Note payable | Below is a summary of note payable amounts which include accrued interest: | |||||||
Notes payable - current portion | December 31, | December 31, | ||||||
2014 | 2013 | |||||||
Abrams Notes | $ | 35,875 | $ | - | ||||
Asher Enterprises | - | 152,000 | ||||||
Auctus Private Equity Fund | 55,192 | - | ||||||
Backman Notes | 115,233 | - | ||||||
Caesar Capital Group | 35,875 | - | ||||||
DeLue Notes | 113,781 | - | ||||||
Domain Capital | - | 44,087 | ||||||
JARVCO Note | 25,981 | - | ||||||
KBM Worldwide | 351,557 | - | ||||||
LG Capital | 106,450 | - | ||||||
Typenex Co-Investments | 89,388 | - | ||||||
Total notes payable – current portion | $ | 929,332 | $ | 196,087 | ||||
Notes payable - noncurrent portion | December 31, | 31-Dec | ||||||
2014 | ,2013 | |||||||
Abrams Notes | $ | 51,007 | $ | - | ||||
Backman Notes | 50,185 | - | ||||||
Buckles Note | 50,842 | - | ||||||
Caesar Capital Group | 50,986 | - | ||||||
DeLue Notes | 100,370 | - | ||||||
Domain Capital | - | 95,519 | ||||||
Elkins Trust Note | 50,185 | - | ||||||
Geist Note | 50,904 | - | ||||||
Total notes payable - noncurrent portion | $ | 404,479 | $ | 95,519 |
18_Income_Taxes_Tables
18. Income Taxes (Tables) | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Income Taxes Tables | ||||||||||
Components of tax provision | Significant components of the Company's tax provisions and deferred tax assets as of December 31, 2014 and December 31, 2013 are as follows: | |||||||||
The components of tax provision: | ||||||||||
December 31, | December 31, | |||||||||
2014 | 2013 | |||||||||
Current | ||||||||||
Federal | $ | (98,000 | ) | $ | (475,000 | ) | ||||
State | - | 70,750 | ||||||||
(98,000 | ) | (404,250 | ) | |||||||
Deferred | ||||||||||
Federal | (36,000 | ) | (651,000 | ) | ||||||
State | 94,000 | (268,000 | ) | |||||||
58,000 | (919,000 | ) | ||||||||
Change in valuation allowance | (120,000 | ) | (77,000 | ) | ||||||
Total provision | $ | (160,000 | ) | $ | (1,400,250 | ) | ||||
Components of deferred tax asset (liability) | The components of deferred tax assets and liabilities: | |||||||||
December 31, | December 31, | |||||||||
2014 | 2013 | |||||||||
Deferred income tax assets: | ||||||||||
State taxes | $ | 129,000 | $ | 129,000 | ||||||
Net operating losses | 425,000 | 357,000 | ||||||||
Depreciation | - | 137,000 | ||||||||
Accruals and other | - | - | ||||||||
554,000 | 623,000 | |||||||||
Deferred income tax liabilities: | ||||||||||
Depreciation | (12,000 | ) | - | |||||||
Installment gain | (367,000 | ) | (390,000 | ) | ||||||
175,000 | 233,000 | |||||||||
Valuation allowance | (175,000 | ) | (295,000 | ) | ||||||
Net deferred tax assets/(liabilities) | $ | - | $ | (62,000 | ) | |||||
Reconciliation of the federal statutory tax rate | For the years ended December 31, 2014 and 2013, a reconciliation of the federal statutory tax rate to the Company's effective tax rate is as follows: | |||||||||
Effective Tax Rate | December 31, | December 31, | ||||||||
2014 | 2013 | |||||||||
Federal statutory | 0 | % | 34 | % | ||||||
State and local, net of federal | 0 | % | 2.17 | % | ||||||
Permanent and other items | (7.33 | )% | 0.8 | % | ||||||
Installment gain | 1.13 | % | 8.53 | % | ||||||
Return to provision | 4.82 | % | 0.68 | % | ||||||
Net operating loss | 3.34 | % | ||||||||
Change in Valuation allowance | 5.9 | % | (0.85 | )% | ||||||
Total effective tax rate | 7.87 | % | 45.33 | % |
20_Commitment_And_Contingencie1
20. Commitment And Contingencies (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Commitment And Contingencies Tables | |||||||||
Rental lease obligation | Set forth below is a summary of current obligations as of December 31, 2014 comprised exclusively of the rental lease obligations to make future payments due by the period indicated below: | ||||||||
Rhome, Texas Retail Center | Minimum | Monthly | |||||||
Payments | Base Rent | ||||||||
2015 | $ | 15,600 | $ | 1,300 | |||||
2016 | $ | 1,300 | $ | 1,300 | |||||
Tyler, Texas Retail Center | Minimum | Monthly | |||||||
Payments | Base Rent | ||||||||
2015 | $ | 30,000 | $ | 2,500 | |||||
2016 | $ | 30,000 | $ | 2,500 | |||||
2017 | $ | 12,500 | $ | 2,500 | |||||
Jacksboro, Texas Retail Center | Minimum | Monthly | |||||||
Payments | Base Rent | ||||||||
2015 | $ | 13,296 | $ | 1,108 | |||||
Mt. Pleasant, Texas Retail Center | Minimum | Monthly | |||||||
Payments | Base Rent | ||||||||
2015 | $ | 30,000 | $ | 2,500 | |||||
2016 | $ | 15,000 | $ | 2,500 |
21_Warrants_Tables
21. Warrants (Tables) | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||
Warrants Tables | |||||||||||||||||||||||
Common stock warrants outstanding | As of December 31, 2014, there were 285,000 common stock purchase warrants outstanding. The following table summarizes information about common stock warrants outstanding at December 31, 2014. | ||||||||||||||||||||||
Outstanding | Exercisable | ||||||||||||||||||||||
Exercise | Number | Weighted Average Remaining | Weighted | Number | Weighted | ||||||||||||||||||
Price | Outstanding | Contractual Life (years) | Exercise | Exercisable | Average | ||||||||||||||||||
Price | Exercise | ||||||||||||||||||||||
Average | Price | ||||||||||||||||||||||
$ | 0.075 | 285,000 | 4.69 | 0.075 | 285,000 | 0.075 |
2_Basis_Of_Presentation_And_Si2
2. Basis Of Presentation And Significant Accounting Policies (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Basis Of Presentation And Significant Accounting Policies Details Narrative | ||
Advertising expense | $40,000 | $73,000 |
Property and equipment, net of accumulated depreciation | 9,000 | 3,000 |
Stock-based compensation expense | 725,000 | 230,000 |
Additional interest expense | 56,000 | |
Accounts payable owed to creditor | $59,000 |
3_Equity_Transactions_Details_
3. Equity Transactions (Details Narrative) | Dec. 31, 2014 | Dec. 31, 2013 |
Equity Transactions Details Narrative | ||
Common stock, Issued | 50,677,105 | 39,368,772 |
Common stock, outstanding | 50,677,105 | 39,368,772 |
4_Asset_Sale_Details
4. Asset Sale (Details) (USD $) | Dec. 31, 2014 |
Asset Sale Details | |
Promissory note | $1,000,000 |
ManufacturedHomes.com Advertising Rights | 61,600 |
Total consideration | $1,061,600 |
4_Asset_Sale_Details_1
4. Asset Sale (Details 1) (USD $) | Dec. 31, 2014 |
Asset Sale Details 1 | |
Domain Assets | $336,500 |
Assumption of leaseback obligation | -122,200 |
Net Assets | $214,300 |
4_Asset_Sale_Details_2
4. Asset Sale (Details 2) (USD $) | Dec. 31, 2014 |
Disposition gain on sale | |
Total consideration | $1,061,600 |
Net assets sold | -214,300 |
Gain on sale | $847,300 |
5_Inventory_Details_Narrative
5. Inventory (Details Narrative) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Inventory Details Narrative | ||
Inventory | $1,201,693 |
6_Note_receivables_Details_Nar
6. Note receivables (Details Narrative) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Notes receivable pursuant to the sale of unimproved homesite | $29,000 |
Accured interest rate on notes receivable | 9.00% |
Maturity date of notes receivable | 11/15/39 |
Current Note Receivables [Member] | |
Notes receivable | 384,200 |
Notes receivable, current portion | 3,000,000 |
Notes receivable representing the current portion non recourse promissory note | 66,200 |
Notes receivable current portion representing the current portion non recourse promissory note | 1,000,000 |
Noncurrent Note Receivables [Member] | |
Notes receivable | 940,000 |
Notes receivable, current portion | $1,000,000 |
7_Other_Current_Assets_Details
7. Other Current Assets (Details Narrative) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Other Current Assets Details Narrative | |
Prepaid insurance | $17,800 |
Prepaid filing fees | 8,700 |
Deposits | 82,000 |
Prepaid consulting fees | 146,700 |
Other | $154,900 |
8_Property_And_Equipment_Detai
8. Property And Equipment (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Property and Equipment | ||
Furniture and Computer Equipment | $63,657 | $15,367 |
Less: Accumulated Depreciation | -9,222 | -3,320 |
Property and Equipment, net | $54,435 | $12,047 |
8_Property_And_Equipment_Detai1
8. Property And Equipment (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Property And Equipment Details Narrative | ||
Depreciation expense | $5,900 | $6,100 |
9_Intangible_Assets_Details
9. Intangible Assets (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Subtotal | $146,005 | $420,862 |
Accumulated amortization | -3,082 | |
Total intangible Assets | 142,923 | 420,862 |
Domain Names [Member] | ||
Subtotal | 84,363 | 420,862 |
Advertising rights [Member] | ||
Subtotal | $61,642 |
9_Intangible_Assets_Details_1
9. Intangible Assets (Details 1) (USD $) | Dec. 31, 2014 |
Total premium and non premium domain names | $84,363 |
ToyHaulers.com [Member] | |
Total premium and non premium domain names | 31,168 |
TravelTrailer.com [Member] | |
Total premium and non premium domain names | 51,167 |
Various other nonpremium domain names [Member] | |
Total premium and non premium domain names | $2,028 |
10_Other_Assets_Details_Narrat
10. Other Assets (Details Narrative) (USD $) | Dec. 31, 2014 |
Other Assets Details Narrative | |
Rent deposits | $3,100 |
11_Discontinued_Operations_Det
11. Discontinued Operations (Details Narrative) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Domain names | $84,363 | $420,862 |
Accounts payable | 282,220 | 190,099 |
Rodeo.com/Karate.com promissory note | ||
Net book value | 100,000 | |
Domain names | 500,000 | |
Debt | 400,000 | |
General Management Solutions [Member] | ||
Accrued liabilities | 20,603 | |
Accounts payable | 11,373 | |
General Health Solutions [Member] | ||
Notes payable | 182,600 | |
VerticalCore Merchant [Member] | ||
Accrued liabilities | 25,500 | |
Sportify | ||
Net book value | 456,000 | |
Nonpremium domain names | 100,000 | |
Premium domain names | 10,000 | |
Trademark | 1,000 | |
Goodwill | 59,000 | |
Web software | 430,000 | |
Accumulated amortization | $143,000 |
12_Accrued_Liabilities_Details
12. Accrued Liabilities (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Accrued Liabilities Details | ||
Tax payable | $1,098,000 | $1,196,000 |
Deferred tax liability short term | 146,000 | |
Obligations on stock based compensation | 73,500 | 440,000 |
Obligations on marketing agreements | 55,000 | 27,000 |
Payroll liabilities | 145,734 | 97,018 |
Customer deposits | 19,821 | |
Other | 38,836 | |
Total accrued liabilities | $1,430,891 | $1,906,018 |
12_Accrued_Liabilities_Details1
12. Accrued Liabilities (Details Narrative) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Accrued Liabilities Details Narrative | ||
Federal and state taxes payable | $1,098,000 | $1,196,000 |
13_Note_Payable_Details
13. Note Payable (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Notes payable - current portion | $929,332 | $196,087 |
Notes payable - noncurrent portion | 404,479 | 95,519 |
Abrams Notes [Member] | ||
Notes payable - current portion | 35,875 | |
Notes payable - noncurrent portion | 51,007 | |
Asher Enterprises | ||
Notes payable - current portion | 152,000 | |
Auctus Private Equity Fund [Member] | ||
Notes payable - current portion | 55,192 | |
Backman Notes [Member] | ||
Notes payable - current portion | 115,233 | |
Notes payable - noncurrent portion | 50,185 | |
Buckles Note [Member] | ||
Notes payable - noncurrent portion | 50,842 | |
Caesar Capital Group [Member] | ||
Notes payable - current portion | 35,875 | |
Notes payable - noncurrent portion | 50,986 | |
DeLue Notes [Member] | ||
Notes payable - current portion | 113,781 | |
Notes payable - noncurrent portion | 100,370 | |
Domain Capital [Member] | ||
Notes payable - current portion | 44,087 | |
Notes payable - noncurrent portion | 95,519 | |
JARVCO Note [Member] | ||
Notes payable - current portion | 25,981 | |
KBM Worldwide [Member] | ||
Notes payable - current portion | 351,557 | |
LG Capital [Member] | ||
Notes payable - current portion | 106,450 | |
Elkins Trust Note [Member] | ||
Notes payable - noncurrent portion | 50,185 | |
Typenex Co-Investments [Member] | ||
Notes payable - current portion | 89,388 | |
Geist Note [Member] | ||
Notes payable - noncurrent portion | $50,904 |
13_Notes_Payable_Details_Narra
13. Notes Payable (Details Narrative) (USD $) | Dec. 31, 2014 |
Notes Payable Details Narrative | |
Note payable | $35,875 |
16_Inventory_Flooring_Credit_L1
16. Inventory Flooring Credit Line (Details Narrative) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Inventory Flooring Credit Line Details Narrative | ||
Flooring credit line | $1,219,241 |
17_Income_Per_Common_Share_Det
17. Income Per Common Share (Details Narrative) | Dec. 31, 2014 |
Income Per Common Share Details Narrative | |
Outstanding common stock purchase warrants | 285,000 |
18_Income_Taxes_Details
18. Income Taxes (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Current | ||
Federal | ($98,000) | ($475,000) |
State | 70,750 | |
Current total | -98,000 | -404,250 |
Deferred | ||
Federal | -36,000 | -651,000 |
State | 94,000 | -268,000 |
Deferred total | 58,000 | -919,000 |
Change in valuation allowance | -120,000 | -77,000 |
Total tax (benefit) provision | ($160,000) | ($1,400,250) |
18_Income_Taxes_Details_1
18. Income Taxes (Details 1) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Deferred income tax assets: | ||
State taxes | $129,000 | $129,000 |
Net operating losses | 425,000 | 357,000 |
Depreciation | 137,000 | |
Accruals and other | ||
Deferred income tax assets total | 554,000 | 623,000 |
Deferred income tax liabilities: | ||
Depreciation | -12,000 | |
Installment gain | -367,000 | -390,000 |
Deferred income tax liabilities total | 175,000 | 233,000 |
Valuation allowance | -175,000 | -295,000 |
Net deferred tax assets/(liabilities) | ($62,000) |
18_Income_Taxes_Details_2
18. Income Taxes (Details 2) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Taxes Details 2 | ||
Federal statutory | 0.00% | 34.00% |
State and local, net of federal | 0.00% | 2.17% |
Permanent and other items | -7.33% | 0.80% |
Installment gain | 1.13% | 8.53% |
Return to provision | 4.82% | 0.68% |
Net operating loss | 3.34% | |
Change in Valuation allowance | 5.90% | -0.85% |
Total effective tax rate | 7.87% | 45.33% |
18_Income_Taxes_Details_Narrat
18. Income Taxes (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Taxes Details Narrative | ||
Total tax benefit Corresponds to current operations | ($176,000) | ($1,400,250) |
From discountinued current operations | 160,000 | 1,391,250 |
(Tax provision) corresponds to discontinued operations | 16,000 | |
Total tax provision corresponds to current operations | 1,400,250 | |
(Tax benefit) corresponds to discontinued operations | 9,000 | |
U.S. federal tax net operating loss carryforwards | $1,125,000 | $554,000 |
Operating loss carryforwards expiration date | 2021 |
20_Commitment_And_Contingencie2
20. Commitment And Contingencies (Details) (USD $) | Dec. 31, 2014 |
Rhome, Texas Retail Center [Member] | Minimum Payments | |
2015 | $15,600 |
2016 | 1,300 |
Rhome, Texas Retail Center [Member] | Monthly Base Rent [Member] | |
2015 | 1,300 |
2016 | 1,300 |
Tyler, Texas Retail Center [Member] | Minimum Payments | |
2015 | 30,000 |
2016 | 30,000 |
2017 | 12,500 |
Tyler, Texas Retail Center [Member] | Monthly Base Rent [Member] | |
2015 | 2,500 |
2016 | 2,500 |
2017 | 2,500 |
Jacksboro, Texas Retail Center [Member] | Minimum Payments | |
2015 | 13,296 |
Jacksboro, Texas Retail Center [Member] | Monthly Base Rent [Member] | |
2015 | 1,108 |
Mt. Pleasant, Texas Retail Center [Member] | Minimum Payments | |
2015 | 30,000 |
2016 | 15,000 |
Mt. Pleasant, Texas Retail Center [Member] | Monthly Base Rent [Member] | |
2015 | 2,500 |
2016 | $2,500 |
21_Warrants_Details
21. Warrants (Details) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Warrant Outstanding [Member] | |
Exercise Price | $0.08 |
Number Outstanding | 285,000 |
Weighted Average Remaining Contractual Life (years) | 4 years 8 months 9 days |
Weighted Average Exercise Price | $0.08 |
Warrant Exercisable [Member] | |
Weighted Average Exercise Price | $0.08 |
Number Exercisable | 285,000 |
21_Warrants_Details_Narrative
21. Warrants (Details Narrative) | Dec. 31, 2014 |
Warrants Details Narrative | |
Outstanding common stock purchase warrants | 285,000 |