Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 14, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | WISDOM HOMES OF AMERICA, INC. | |
Entity Central Index Key | 1,281,198 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer | No | |
Is Entity a Voluntary Filer | No | |
Is Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 146,594,770 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,015 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 2,497 | $ 410,828 |
Inventory | 1,932,910 | 1,201,693 |
Note receivables | 84,083 | 450,758 |
Other current assets | 431,672 | 410,094 |
TOTAL CURRENT ASSETS | 2,451,162 | 2,473,373 |
Property and equipment, net | 76,086 | 54,434 |
Intangible assets: | ||
Domain names | 84,363 | 84,363 |
Advertising rights | 53,937 | 58,560 |
Note receivables noncurrent | 878,659 | 968,924 |
Other assets | 78,100 | 3,100 |
TOTAL ASSETS | 3,622,307 | 3,642,754 |
CURRENT LIABILITIES | ||
Accounts payable | 337,369 | 282,220 |
Accrued liabilities | 1,573,642 | 1,430,891 |
Note payable | 1,686,517 | $ 929,332 |
Notes payable - related party | 56,865 | |
Current liabilities - discontinued operations | 245,442 | $ 240,102 |
TOTAL CURRENT LIABILITIES | 3,899,835 | 2,882,545 |
LONG TERM LIABILITIES | ||
Other accrued liabilities | 118,750 | 118,750 |
Flooring Credit Line | 1,889,568 | 1,219,241 |
Note payable | 130,309 | 404,479 |
Note payable - related party | 161,250 | 161,250 |
TOTAL LONG TERM LIABILITIES | 2,299,877 | 1,903,720 |
TOTAL LIABILITIES | $ 6,199,712 | $ 4,786,265 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, $0.001 par value: 20,000,000 shares authorized; zero shares issued and outstanding at September 30, 2015; zero shares issued and outstanding at December 31, 2014; | ||
Common stock, $0.001 par value: 300,000,000 shares authorized; 77,185,304 shares issued and outstanding at September 30, 2015, 50,677,105 shares issued and outstanding at December 31, 2014, | $ 77,185 | $ 50,677 |
Paid-in capital | (8,945,457) | (9,888,444) |
Retained earnings | 6,290,867 | 8,694,256 |
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | (2,577,405) | (1,143,511) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 3,622,307 | $ 3,642,754 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2015 | Dec. 31, 2014 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, Authorized | 20,000,000 | 20,000,000 |
Preferred stock, Issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, Authorized | 300,000,000 | 300,000,000 |
Common stock, Issued | 77,185,304 | 50,677,105 |
Common stock, outstanding | 77,185,304 | 50,677,105 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
REVENUE | ||||
Sales | $ 72,725 | $ 351,543 | $ 1,327,538 | $ 401,916 |
Total revenue | 72,725 | 351,543 | 1,327,538 | 401,916 |
OPERATING EXPENSES | ||||
Cost of sales | 231,674 | 276,523 | 1,238,359 | 301,770 |
Selling, general and administrative expenses | 302,054 | 664,248 | 2,101,210 | 1,234,192 |
Total operating expenses | 533,728 | 940,771 | 3,339,569 | 1,535,962 |
Operating Loss | (461,003) | $ (589,228) | (2,012,031) | (1,134,046) |
Other Income (Expense) | ||||
Other income | 8,238 | 8,238 | 847,351 | |
Interest income | 2,377 | $ 5,173 | 23,321 | 13,522 |
Interest expense | (133,877) | (76,268) | (406,581) | (164,837) |
Total other income (expense) | (123,262) | (71,095) | (375,022) | 696,036 |
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | $ (584,265) | (660,323) | $ (2,387,053) | (438,010) |
Provision for Income Taxes | (97,000) | (257,000) | ||
INCOME (LOSS) FROM CONTINUING OPERATIONS | $ (584,265) | (563,323) | $ (2,387,053) | (181,010) |
Loss from discontinued operations, net of zero provision and $3,000 tax benefit for the nine months ended September 30, 2015 and 2014, respectively, and net of zero tax provision and $2,000 tax benefit for the three months ended September 30, 2015 and 2014, respectively. | (5,394) | (45,083) | (16,336) | (343,686) |
NET INCOME (LOSS) | $ (589,659) | $ (608,406) | $ (2,403,389) | $ (524,696) |
Income (loss) per share, Basic and Diluted | ||||
Income (loss) from continuing operations | $ (0.01) | $ (0.01) | $ (0.04) | $ 0 |
Income (loss) from discontinued operations | 0 | (0.01) | ||
Total income (loss) per share | $ (0.01) | $ (0.01) | $ (0.04) | $ (0.01) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | 71,982,254 | 45,897,576 | 61,174,751 | 44,041,849 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Condensed Consolidated Statements Of Operations | ||||
Loss from discontinued operations | $ 2,000 | $ 2,000 | $ 3,000 | $ 3,000 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Cash flows from operating activities: | |||||
Net loss | $ (589,659) | $ (608,406) | $ (2,403,389) | $ (524,696) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||
Depreciation | 9,994 | 3,889 | $ 5,900 | ||
Amortization | 4,623 | 1,541 | |||
Stock-based compensation | $ 818,440 | 717,200 | |||
Gain on sale of ManufacturedHomes.com | $ (847,351) | ||||
Shares issued in satisfaction of debt | $ 151,055 | ||||
Changes in operating assets and liabilities: | |||||
Accounts receivable | $ (21,666) | ||||
Inventories | $ 28,127 | 29,533 | |||
Prepaid expenses and deposits | 69,905 | (293,924) | |||
Other assets & note receivables | 389,315 | 904,676 | |||
Accounts payable and accrued liabilities | 137,633 | (397,760) | |||
Net cash used in operating activities | (794,297) | (428,558) | |||
Cash flows used in investing activities: | |||||
Purchases of property and equipment | (31,646) | (21,136) | |||
Net cash used in investing activities | (31,646) | (21,136) | |||
Cash flows provided by financing activities: | |||||
Payments on note payable | (528,638) | (390,880) | |||
Proceeds from note payable | 889,385 | 822,500 | |||
Proceeds from note payable - related party | 56,865 | 41,497 | |||
Net cash provided by financing activities | 417,612 | 473,117 | |||
Net decrease in cash and cash equivalents | (408,331) | 23,423 | |||
Cash and cash equivalents at beginning of period | 410,828 | 93,152 | 93,152 | ||
Cash and cash equivalents at end of period | $ 2,497 | $ 116,575 | 2,497 | 116,575 | $ 410,828 |
Non-cash investing and financing activity: | |||||
Shares issued pursuant to stock based compensation | 818,440 | 695,000 | |||
Shares issued pursuant to conversion of debt | $ 151,055 | 59,000 | |||
Shares issued as additional interest expense | $ 22,200 |
1. General
1. General | 9 Months Ended |
Sep. 30, 2015 | |
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. Corporate Name Change On March 3, 2015, the Company changed its name from SearchCore, Inc. to Wisdom Homes of America, Inc. and increased the authorized common stock from 200 million shares to 300 million shares. The name change and increase in authorized common stock were unanimously approved by the Board of Directors on December 22, 2014, and by a majority of its outstanding shares of common stock at the annual shareholder meeting held on March 3, 2015. Chief Financial Officer Appointment On September 24, 2015, Munjit Johal resigned as one of the members of our Board of Directors, and as our Chief Financial Officer. Mr. Johal's resignation did not involve any disagreement with the Company or other management relating to the Company's operations, policies, practices or otherwise. James Pakulis will take over as interim Chief Financial Officer until a replacement can be identified. 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 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 Home 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. |
2. Basis Of Presentation And Si
2. Basis Of Presentation And Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2015 | |
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. Advertising Cost The Company expenses advertising costs when incurred. Advertising expense for the nine months ended September 30, 2015 and 2014 was approximately $58,000 and approximately $21,000, 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. Inventory Inventory is stated at the lower of cost or market. Cost is determined under the first-in, first-out method. The cost of a manufactured home in inventory is removed from inventory and recorded as a component of cost of sales at the time revenue is recognized. 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 September 30, 2015, and December 31, 2014, are presented net of accumulated depreciation of approximately $19,000 and approximately $9,000, respectively. Intangible Assets In accordance with Goodwill and Other Intangible Assets Impairment of Long-Lived and Intangible Assets In accordance with Accounting for the Impairment or Disposal of Long-Lived Assets Stock-Based Compensation The Company accounts for stock-based compensation in accordance with the provisions of Share-Based Payment Revenue Recognition The Company recognizes revenue in accordance with ASC 605, " Revenue Recognition The Company and its wholly owned subsidiaries recognize revenue as follows: Manufactured Home Retail Centers Income Taxes The Company follows Accounting for Income 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 June, 2014, the FASB issued Accounting Standards Update No. 2014-12, Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The amendments in the ASU require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718, Compensation - Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Entities may apply the amendments in this ASU either: (a) prospectively to all awards granted or modified after the effective date; or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this ASU as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. In addition, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. The Company is currently assessing the impact this standard will have on its consolidated financial statements and required disclosures. In November, 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity In April, 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. 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. 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 In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) 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 a 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 | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 3. Equity Transactions | At September 30, 2015, the total number of shares of the Company's common stock that were issued was 82,185,304, which number of shares includes 5,000,000 shares that are issued but not outstanding and which are held in escrow. As such, at September 30, 2015, the total number of shares of the Company's common stock that were issued and outstanding was 77,185,304. 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 included 5,000,000 shares that are issued but not outstanding and which were 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. Common Stock 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 had a maturity date of June 23, 2015, and was convertible after 180 days into common stock at $0.075 per share (the "Conversion Price"). The Conversion Price was subject to adjustment downward if the Company issued its common stock at a lower price prior to any conversion. On April 22, 2015, May 22, 2015, June 22, 2015, and August 20, 2015 the Company converted $14,583.75, $14,488.46, $14,373.22, and $10,296.64 of the Note into 378,799, 812,224, 1,271,032, and 2,958,804 shares of the Company's common stock, respectively. 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 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. On April 27, 2015, we repaid $75,000 of the promissory note to LG Capital. The remaining outstanding principal amount of the Note, in the amount of $53,000, plus accrued interest of $4,165.48, was sold by LG Capital to Carebourn Capital, L.P. On May 6, 2015 and June 9, 2015, the Company converted $16,500 and $30,300 of the Note into 500,000, and 1,500,000 shares of the Company's common stock, respectively. On December 30, 2014, we entered into a Securities Purchase Agreement with KBM Worldwide, Inc., pursuant to which we sold to KBM 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 our 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 of49%). "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 us 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 us. On July 7, 2015 and July 20, 2015 the Company converted $10,000 and $17,500 along with $1,800 in accrued but unpaid interest, of the Note into 653,595 and 1,892,157 shares of the Company's common stock, respectively. On January 22, 2015, we entered into a Securities Purchase Agreement with Vista Capital Investments, LLC, pursuant to which we 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 our common stock at 90% of the Market Price of our 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 us up to 180 days after issuance at 120% of the principal amount and any accrued and unpaid interest. On July 29, 2015 and August 11, 2015 the Company converted $7,425 and $10,675 of the Note into 750,000 and 3,500,000 shares of the Company's common stock, respectively. On February 24, 2015, we entered into a Securities Purchase Agreement with LG Capital Funding, LLC ("LG Capital"), pursuant to which we 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 our common stock at a forty two percent (42%) discount from the lowest trading price of our common stock, as reported by any exchange upon which our common stock is then traded, for the ten (10) trading days prior to our 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 our common stock, calculated using the same conversion formula. The Note can be prepaid by us 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 us. On August 28, 2015, the Company converted $3,000 of the Note along with $119.67 of accrued but unpaid interest into 1,629,921 shares of the Company's common stock. 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 authorized the issuance of 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. On April 15, 2015, we renewed a Consulting Agreement, which the Company had entered into on September 8, 2014, 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, we agreed to issue to the consultant 2,436,667 shares of our common stock, restricted in accordance with Rule 144, valued at $200,000. On April 23, 2015, in connection with the execution of a Consulting Agreement dated April 20, 2015, we agreed to issue 300,000 shares of our common stock, restricted in accordance with Rule 144, valued at $21,000, to one individual. On May 15, 2015, we issued 5,100,000 shares of our common stock, restricted in accordance with Rule 144, valued at $392,190, to two individuals for services rendered, including 5,000,000 shares to Brent Nelms, the President of our subsidiary, Wisdom Manufactured Homes of America, Inc. On or about July 6, 2015, we entered into a Consulting Agreement with Brighton Capital, Ltd. Pursuant to that agreement, we issued 150,000 shares of our common stock to Brighton in consideration for services rendered to us. In connection with the issuance, the Company record $18,000 in stock based compensation expense. |
4. Inventory
4. Inventory | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 4. Inventory | The inventory balance at September 30, 2015, was approximately $1,933,000, which consisted of 44 manufactured homes located at its retail lots which were stated at the lower of cost (average) or market, and 17 homesites. The inventory balance at September 30, 2014 was $1,363,665 which consisted of 25 manufactured homes located at our retail lots and 7 manufactured homes on order which were stated at the lower of cost (average) or market. 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, and at the Hills of Oliver Creek Development in the City of Rhome, Texas. |
5. Note receivables
5. Note receivables | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 5. Note receivables | Current Note Receivables At September 30, 2015, the Company had recorded a $83,518 note receivable which represented the current portion, including interest, of a $1,000,000 non-recourse promissory note pursuant to the sale of the Company's website, ManufacturedHomes.com, and related intellectual property. At September 30, 2015, the Company had recorded $565 note receivable which represented the current portion, including interest, of a $29,250 promissory note pursuant to the sale of an unimproved homesite which accrues interest of 9% per annum and has a maturity date of November 15, 2039. Noncurrent Note Receivables At September 30, 2015, the Company had recorded a $850,000 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. At September 30, 2015, the Company had recorded a $28,659 note receivable which represented the current portion, including interest, of a $29,250 promissory note pursuant to the sale of an unimproved homesite which accrues interest of 9% per annum and has a maturity date of November 15, 2039. |
6. Other Current Assets
6. Other Current Assets | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 6. Other Current Assets | At September 30, 2015, the Company had recorded approximately $13,100 in prepaid insurance, approximately $27,600 in deposits, approximately $6,000 in prepaid consulting fees, approximately $374,300 in loan proceeds, and approximately $10,600 in other. |
7. Property And Equipment
7. Property And Equipment | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 7. 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 September 30, 2015, and December 31, 2014, consist of the following: September 30, December 31, Property and Equipment 2015 2014 Furniture and Computer Equipment $ 95,302 $ 63,657 Less: Accumulated Depreciation (19,216 ) (9,222 ) Property and Equipment, net $ 76,086 $ 54,435 For the nine months ended September 30, 2015, depreciation expense was $9,994. For the year ended December 31, 2014, depreciation expense was $5,900. |
8. Intangible Assets
8. Intangible Assets | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 8. 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 September 30, 2015, and December 31, 2014, are as follows: September 30, December 31, Intangible Assets 2015 2014 Domain names $ 84,363 $ 84,363 Advertising rights 61,642 61,642 Subtotal $ 146,005 $ 146,005 Accumulated amortization (7,705 ) (3,082 ) Total intangible Assets $ 138,300 $ 142,923 Summary of the Company's premium and non-premium domain names Amount ToyHaulers.com* $ 31,168 TravelTrailer.com* 51,167 Various other non-premium 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. |
9. Other Assets
9. Other Assets | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 9. Other Assets | At September 30, 2015, the balance of other assets included $3,100 in rent deposits and $75,000 in deposits. |
10. Discontinued Operations
10. Discontinued Operations | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 10. Discontinued Operations | 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 September 30, 2015, 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 of increasing costs associated with managing the clinics and the recent increased competition in the medicinal cannabis clinic industry. A major factor in the success of managing the medicinal cannabis clinics is running successful online Pay Per Click ("PPC") advertising campaigns. In PPC campaigns targeting is key, and factors that determine the pricing pertaining to certain key words depend heavily on the number of advertisers bidding on those certain key words. Taken together, i) the Company's increasing success with its technology in its Marketing and Media Segment and ii) the increasing costs of PPC campaigns coupled with the increasing number of sole-practitioner doctors now offering medicinal cannabis recommendation letters as part of their medical practice offerings, which places downward pressure on pricing, led the Company to decide to discontinue the operations of General Health Solutions, which composed its entire Medical Clinic Management Segment and focus its efforts instead on its technology in its Marketing and Media Segment. 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 September 30, 2015, consists of $196,966 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 agreed to perform 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 had 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 September 30, 2015, consists of $16,500 in accrued liabilities recorded as Current liabilities - discontinued operations |
11. Accrued Liabilities
11. Accrued Liabilities | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 11. Accrued Liabilities | Accrued liabilities at September 30, 2015, and December 31, 2014, are comprised of the following: September 30, December 31, Accrued liabilities 2015 2014 Tax payable $ 1,098,000 $ 1,098,000 Obligations on stock based compensation — 73,500 Obligations on consulting agreements 30,000 55,000 Obligations on land development 100,000 Payroll liabilities 145,734 145,734 Customer deposits 191,097 19,821 Insurance 6,724 Other 2,087 38,836 Total accrued liabilities $ 1,573,642 $ 1,430,891 At September 30, 2015, 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. |
12. Notes Payable
12. Notes Payable | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 12. Notes Payable | Adar Bays, LLC On June 18, 2015, the Company entered into a Securities Purchase Agreement with Adar Bays, LLC, pursuant to which the Company sold to Adar Bays a 8% convertible note in the principal amount of $40,000 (the "Note"). The Note has a maturity date of June 18, 2016, and is convertible after 180 days into the Company's common stock at 58% of the lowest trading price of the Company's common stock for the ten (10) prior trading days (including the day upon which a notice of conversion is received), with a floor of $0.0001 per share. If the floor price is triggered, the discount at which Adar Bays may convert the Note increases to 48% of the lowest trading price. 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 – 120% of the principal amount; (b) between 91 and 150 days after issuance – 130% of the principal amount; and (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 June 22, 2015, the date that the purchase price was delivered to the Company. The issuance of the Note was exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(a)(2) thereof. The purchaser was an accredited and sophisticated investor, familiar with the Company's operations, and there was no solicitation. American National Credit On January 20, 2015, the Company entered into an agreement to purchase one (1) homesite for the purchase price of $27,500. The Company made a $1,500 down payment and issued a twenty six thousand dollar ($26,000) promissory note which carries 10% interest per annum and is payable over 360 equal monthly payments beginning on February 26, 2015. The homesite is located at the Hills of Oliver Creek Development, in the City of Rhome, Texas. Auctus Private Equity Fund On July 1, 2015, we repaid the promissory note to Auctus Private Equity Fund, LLC, that on December 15, 2014, we entered into in connection with a Securities Purchase Agreement, pursuant to which we sold Auctus an 8% Convertible Promissory Note in the principal amount of $55,000. We repaid the entire principal balance of the Note plus accrued interest and a prepayment premium, in the total amount of $83,175.97. On July 9, 2015, we entered into a Securities Purchase Agreement with Auctus Fund, LLC ("Auctus"), pursuant to which we sold to Auctus a 10% Convertible Promissory Note in the original principal amount of Fifty Five Thousand Dollars ($55,000) (the "Note"). The Note has a maturity date of April 9, 2016, and is immediately convertible into our common stock at a forty two percent (42%) discount from the lowest trading price of our common stock, as reported by any exchange upon which our common stock is then traded, for the fifteen (15) trading days prior to our receipt of notice from the Note holder to exercise this conversion feature. The conversion price shall be subject to a minimum conversion price of $0.00005 per share. The Note can be prepaid by us at a premium as follows: (a) between 0 and 30 days after issuance – 115% of the principal amount; (b) between 31 and 60 days after issuance – 120% of the principal amount; (c) between 61 and 90 days after issuance – 125% of the principal amount; (d) between 91 and 120 days after issuance – 130% of the principal amount; (e) between 121 and 150 days after issuance – 135% of the principal amount; (f) between 151 days 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 July 10, 2015, the date that the purchase price was delivered to us. 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 May 5, 2015, and effective as of April 28, 2015, the Company entered into a First Amendment to 20% Convertible Secured Promissory Note pursuant to which the parties extended the maturity date of the Note from April 28, 2015, to April 30, 2016. The transaction closed on May 15, 2015, the day the executed amendment was delivered to the Company. Then, on May 19, 2015, the Company entered into a Second Amendment to 20% Convertible Secured Promissory Note pursuant to which the parties reduced the maturity date of the Note from April 30, 2016, to October 31, 2015. This transaction closed on May 20, 2015, the day the executed amendment was delivered to the Company. Carebourn Capital, L.P. On April 27, 2015, the Company entered into a Securities Purchase Agreement with Carebourn Capital, L.P. ("Carebourn"), pursuant to which the Company sold to Carebourn a 10% Convertible Promissory Note in the original principal amount of $85,500 (the "Note"). The Note has a maturity date of January 27, 2016, and is convertible after 180 days into the Company's common stock at a forty two percent (42%) discount from the average of the three lowest trading prices of the Company's common stock, as reported by any exchange upon which the Company's 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"). 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; (b) between 31 and 60 days after issuance – 120% of the principal amount; (c) between 61 and 90 days after issuance – 125% of the principal amount; (d) between 91 and 120 days after issuance – 130% of the principal amount; (e) between 121 and 150 days after issuance – 135% of the principal amount; and (f) 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 April 29, 2015, the date that the purchase price was delivered to the Company. The issuance of the Note was exempt from the registration requirements under the Securities Act of 1933 pursuant to Rule 506 of Regulation D thereof. The purchaser was an accredited and sophisticated investor, familiar with the Company's operations, and there was no solicitation. On May 22, 2015, the Company entered into a Securities Purchase Agreement with Carebourn Capital, L.P. ("Carebourn"), pursuant to which the Company sold to Carebourn a 10% Convertible Promissory Note in the original principal amount of $25,000 (the "Note"). The Note has a maturity date of February 22, 2016, and is convertible after 180 days into the Company's common stock at a forty two percent (42%) discount from the average of the three (3) lowest trading prices of the Company's common stock, as reported by any exchange upon which the Company's 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"). 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; (b) between 31 and 60 days after issuance – 120% of the principal amount; (c) between 61 and 90 days after issuance – 125% of the principal amount; (d) between 91 and 120 days after issuance – 130% of the principal amount; (e) between 121 and 150 days after issuance – 135% of the principal amount; and (f) 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 22, 2015, the date that the purchase price was delivered to the Company. The issuance of the Note was exempt from the registration requirements under the Securities Act of 1933 pursuant to Rule 506 of Regulation D thereof. The purchaser was an accredited and sophisticated investor, familiar with the Company's operations, and there was no solicitation. On June 26, 2015, the Company entered into a Securities Purchase Agreement with Carebourn Capital, L.P. ("Carebourn"), pursuant to which the Company sold to Carebourn a 10% Convertible Promissory Note in the original principal amount of $30,500 (the "Note"). The Note has a maturity date of June 26, 2016, and is convertible after 180 days into the Company's common stock at a forty two percent (42%) discount from the average of the three (3) lowest trading prices of the Company's common stock, as reported by any exchange upon which the Company's 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"). 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; (b) between 31 and 60 days after issuance – 120% of the principal amount; (c) between 61 and 90 days after issuance – 125% of the principal amount; (d) between 91 and 120 days after issuance – 130% of the principal amount; (e) between 121 and 150 days after issuance – 135% of the principal amount; and (f) 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 June 26, 2015, the date that the purchase price was delivered to the Company. The issuance of the Note was exempt from the registration requirements under the Securities Act of 1933 pursuant to Rule 506 of Regulation D thereof. The purchaser was an accredited and sophisticated investor, familiar with the Company's operations, and there was no solicitation. 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 On May 5, 2015, and effective as of April 26, 2015, the Company entered into a First Amendment to 20% Convertible Secured Promissory Note pursuant to which the parties extended the maturity date of the Note from April 26, 2015, to October 31, 2015. The transaction closed on May 15, 2015, the day the executed amendment was delivered to the Company. GW Holdings Group, LLC On June 17, 2015, the Company entered into a Securities Purchase Agreement with GW Holdings Group, LLC, pursuant to which the Company sold to GW Group a 8% convertible note in the principal amount of $30,000 (the "Note"). The Note has a maturity date of June 17, 2016, and is convertible after 180 days into the Company's common stock at 58% of the lowest trading price of the Company's common stock for the ten (10) prior trading days (including the day upon which a notice of conversion is received), 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 Note can be prepaid by the Company at a premium as follows: (a) between 0 and 90 days after issuance – 125% of the principal amount; (b) between 91 and 150 days after issuance – 135% of the principal amount; and (c) between 151 and 180 days after issuance – 145% of the principal amount. There is no right to prepay the Note after 180 days. The purchase and sale of the Note closed on June 19, 2015, the date that the purchase price was delivered to the Company. The issuance of the Note was exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(a)(2) thereof. The purchaser was an accredited and sophisticated investor, familiar with the Company's operations, and there was no solicitation. JARVCO Note On January 29, 2015, the Company entered into an agreement to purchase eleven (11) homesites in exchange for issuing a promissory note in the principal amount of Seventy Six Thousand Dollars ($76,000), which accrues interest at seven percent (7%) per annum and is payable over 360 equal monthly payments beginning on March 1, 2015. The homesites are located at the Strawberry Addition in the City of Arp, Texas. JMJ Financial On July 20, 2015, we issued a $200,000 Convertible Note (the "Note") to JMJ Financial. The Note contains a ten percent (10%) original issue discount, and is to be funded in tranches at the sole discretion of JMJ. The first tranche was for $20,000. The Note has a maturity date of two years from the funding of each tranche and is convertible at the lesser of $0.02 or 60% of the lowest trade price in the 25 trading days before conversion. Each tranche is subject to a onetime interest charge of 12% 90 days after its funding. The Note can be prepaid by us only during the first 90 days following the issuance of each funding tranche. The purchase and sale of the Note closed on July 23, 2015, the date that the purchase price was delivered to us. KBM Enterprises, LLC 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). On April 28, 2015, the Company repaid the promissory note to KBM Enterprises, LLC, that on October 20, 2014, the Company entered into in connection with a Securities Purchase Agreement, pursuant to which the Company sold KBM Enterprises an 8% Convertible Promissory Note in the principal amount of $83,000. The Company repaid the entire principal balance of the Note plus accrued interest and a prepayment premium, in the total amount of $111,192.71. On May 12, 2015, the Company repaid the promissory note to KBM Enterprises, LLC, that on November 10, 2014, the Company entered into in connection with a Securities Purchase Agreement, pursuant to which the Company sold KBM Enterprises an 8% Convertible Promissory Note in the principal amount of $54,000. The Company repaid the entire principal balance of the Note plus accrued interest and a prepayment premium, in the total amount of $72,330.41. On June 12, 2015, the Company repaid the promissory note to KBM Enterprises, LLC, that on December 9, 2014, the Company entered into in connection with a Securities Purchase Agreement, pursuant to which the Company sold KBM Enterprises an 8% Convertible Promissory Note in the principal amount of $63,500. The Company repaid the entire principal balance of the Note plus accrued interest and a prepayment premium, in the total amount of $85,096.96. 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. On April 27, 2015, the Company repaid $75,000 of the promissory note to LG Capital Funding, LLC, that on October 29, 2014, the Company entered into in connection with a Securities Purchase Agreement, pursuant to which the Company sold to LG Capital Funding, LLC an 8% Convertible Promissory Note in the principal amount of $105,000 (the "Note"). The remaining outstanding principal amount of the Note, in the amount of $53,000, plus accrued interest of $4,165.48, was sold by LG Capital to Carebourn Capital, L.P. On June 4, 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 $78,750 (the "Note"). The Note has a maturity date of June 4, 2016, and is convertible after 180 days into the Company's common stock at a forty two percent (42%) discount from the lowest trading price of the Company's common stock, as reported by any exchange upon which the Company's 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 percent (52%), calculated against the floor price. Interest accrued on the Note shall be payable in shares of the Company's 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 June 5, 2015, the date that the purchase price was delivered to the Company. The issuance of the Note was exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(a)(2) thereof. The purchaser was an accredited and sophisticated investor, familiar with the Company's operations, and there was no solicitation. Oakmore Opportunity Fund I LP On June 23, 2015, the Company entered into a Securities Purchase Agreement with Oakmore Opportunity Fund I LP ("Oakmore"), pursuant to which the Company sold to Oakmore a 8% Convertible Promissory Note in the original principal amount of $40,000 (the "Note"). The Note has a maturity date of June 23, 2016, and is convertible after 180 days into the Company's common stock at a forty two percent (42%) discount from the average of the three (3) lowest trading prices of the Company's common stock, as reported by any exchange upon which the Company's 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 $0.00005 per share (the "floor price"), but in the event that the Company's common stock becomes "chilled" by the Deposit Trust Corporation, the conversion discount shall increase from forty two percent (42%) to fifty two percent (52%) for as long as the Company's common stock is chilled, calculated against the floor price. 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; (b) between 91 and 120 days after issuance – 135% of the principal amount; (c) between 121 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 June 30, 2015, the date that the purchase price was delivered to the Company. The issuance of the Note was exempt from the registration requirements under the Securities Act of 1933 pursuant to Rule 506 of Regulation D thereof. The purchaser was an accredited and sophisticated investor, familiar with the Company's operations, and there was no solicitation. Rock Capital On July 1, 2015, we entered into a Securities Purchase Agreement with Rock Capital, LLC ("Rock Capital"), pursuant to which we sold to Rock Capital an 8% Convertible Promissory Note in the original principal amount of Thirty Seven Thousand Five Hundred Dollars ($37,500) (the "Note"). The Note has a maturity date of April 1, 2016, and is convertible after 180 days into our common stock at a forty two percent (42%) discount from the lowest trading price of our common stock, as reported by any exchange upon which our common stock is then traded, for the ten (10) trading days prior to our receipt of notice from the Note holder to exercise this conversion feature. The conversion price shall be subject to a minimum conversion price of $0.00005 per share (the "floor price"). The Note can be prepaid by us at a premium as follows: (a) between 0 and 90 days after issuance – 125% of the principal amount; (b) between 91 and 150 days after issuance – 135% of the principal amount; and (c) between 151 and 180 days after issuance – 145% of the principal amount. There is no right to prepay the Note after 180 days. The purchase and sale of the Note closed on July 4, 2015, the date that the purchase price was delivered to us. Service Trading Company, LLC On June 4, 2015, the Company entered into a Securities Purchase Agreement with Service Trading Company, LLC, ("Service Trading"), pursuant to which the Company sold to Service Trading an 8% Convertible Promissory Note in the original principal amount of $31,500 (the "Note"). The Note has a maturity date of June 4, 2016, and is convertible after 180 days into the Company's common stock at a forty two percent (42%) discount from the lowest trading price of the Company's common stock, as reported by any exchange upon which the Company's 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 percent (52%), calculated against the floor price. Interest accrued on the Note shall be payable in shares of the Company's 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 June 9, 2015, the date that the purchase price was delivered to the Company. The issuance of the Note was exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(a)(2) thereof. The purchaser was an accredited and sophisticated investor, familiar with the Company's operations, and there was no solicitation. Vis Vires Group, Inc. On April 6, 2015, the Company entered into a Securities Purchase Agreement with Vis Vires Group, Inc., pursuant to which the Company sold to Vires a 8% Convertible Promissory Note in the original principal amount of $90,000 (the "Note"). The Note has a maturity date of January 9, 2016, and is convertible after 180 days into the Company's 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 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 April 9, 2015, the date that the purchase price was delivered to the Company. The issuance of the Note was exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(a)(2) thereof. The purchaser was an accredited and sophisticated investor, familiar with the Company's operations, and there was no solicitation. On April 29, 2015, the Company entered into a Securities Purchase Agreement with Vis Vires Group, Inc., pursuant to which the Company sold to Vires a 8% Convertible Promissory Note in the original principal amount of $53,500 (the "Note"). The Note has a maturity date of February 1, 2016, and is convertible after 180 days into the Company's 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 90 days after issuance – 130% of the principal amount and any accrued and unpaid interest; (b) between 91 and 120 days after issuance – 135% of the principal amount and any accrued and unpaid interest; and (c) between 121 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 May 5, 2015, the date that the purchase price was delivered to the Company. The issuance of the Note was exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(a)(2) thereof. The purchaser was an accredited and sophisticated investor, familiar with the Company's operations, and there was no solicitation. On June 8, 2015, the Company entered into a Securities Purchase Agreement with Vis Vires Group, Inc., pursuant to which the Company sold to Vires a 8% Convertible Promissory Note in the original principal amount of $43,500 (the "Note"). The Note has a maturity date of March 10, 2016, and is convertible after 180 days into the Company's 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 90 days after issuance – 130% of the principal amount and any accrued and unpaid interest; (b) between 91 and 120 days after issuance – 135% of the principal amount and any accrued and unpaid interest; and (c) between 121 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 June 15, 2015, the date that the purchase price was delivered to the Company. The issuance of the Note was exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(a)(2) thereof. The purchaser was an accredited and sophisticated investor, familiar with the Company's operations, and there was no solicitation. 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. Below is a summary of note payable amounts which include accrued interest: Notes payable - current portion September 30, 2015 December |
13. Notes Payable - Related Par
13. Notes Payable - Related Party | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 13. Notes Payable - Related Party | From April 2015 through September 2015, Mr. James Pakulis, who is a member of the Company's Board of Directors and serves as its Chief Executive Office, loaned the Company $56,865. The Company recorded the amount as a demand note, which carries imputed interest. At September 30, 2015, accrued but unpaid interest totaled $265. 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 Three 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 the Company's 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. |
14. Other Long Term Accrued Lia
14. Other Long Term Accrued Liabilities | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 14. Other Long Term Accrued Liabilities | At September 30, 2015, and December 31, 2014, the Company had a balance of $118,750 in noncurrent tax payable. |
15. Inventory Flooring Credit L
15. Inventory Flooring Credit Line | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 15. 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 the Inventory Financer, 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 September 30, 2015, the Company had recorded $ 1,889,568 in the flooring credit line. |
16. Income Per Common Share
16. Income Per Common Share | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 16. 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 As of September 30, 2015, there were 2,064,957 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. |
17. Income Taxes
17. Income Taxes | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 17. 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 September 30, 2015, and December 31, 2014 are as follows: The components of tax provision: September 30, 2015 December 31, 2014 Current Federal $ - $ (98,000 ) State - - - (98,000 ) Deferred Federal (810,000 ) (36,000 ) State - 94,000 (810,000 ) 58,000 Change in valuation allowance 810,000 (120,000 ) Total provision $ - $ (160,000 ) The total tax provision for the nine months ended September 30, 2014, is zero. 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 components of deferred tax assets and liabilities: September 30, 2015 December 31, 2014 Deferred income tax assets: State taxes $ 129,000 $ 129,000 Net operating losses 1,181,000 425,000 Depreciation - - Accruals and other - - 1,310,000 554,000 Deferred income tax liabilities: Depreciation (17,000 ) (12,000 ) Installment gain (308,000 ) (367,000 ) 985,000 175,000 Valuation allowance (985,000 ) (175,000 ) Net deferred tax assets/(liabilities) $ - $ - 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 nine months ended September 30, 2015, the Company has provided a valuation allowance in the amount of $985,000 against its deferred tax assets. The amount of deferred tax assets considered realizable could change if future taxable income is realized. At both September 30, 2015, and December 31, 2014, the Company had U.S. federal tax net operating loss carryforwards ("NOLs") of approximately $3,473,403 and $1,125,000, respectively, which begin to expire in 2021. The NOLs are subject to limitations under IRC Section 382 of the Internal Revenue Code ("Section 382"). |
18. Related Party Transactions
18. Related Party Transactions | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 18. Related Party Transactions | All material intercompany transactions have been eliminated upon consolidation of the Company's entities. During the nine months ended September 30, 2015, cash transfers, equity and accounts between the Company and its subsidiaries have been eliminated upon consolidation. See Note 13. Notes Payable- Related Party See Note 13. Notes Payable- Related Party |
19. Commitment And Contingencie
19. Commitment And Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 19. 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. 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. The Company has consolidated the Jacksboro and Rhome retail centers into the Mount Pleasant retail center. Leases associated with the Jacksboro and Rhome centers have been terminated without penalty to the Company. Set forth below is a summary of current obligations as of September 30, 2015, comprised exclusively of the rental lease obligations to make future payments due by the period indicated below: Tyler, Texas Retail Center Minimum Payments Monthly Base Rent 2015 $ 7,500 $ 2,500 2016 $ 30,000 $ 2,500 2017 $ 12,500 $ 2,500 Mt. Pleasant, Texas Retail Center Minimum Payments Monthly Base Rent 2015 $ 7,500 $ 2,500 2016 $ 15,000 $ 2,500 |
20. Warrants
20. Warrants | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 20. Warrants | As of September 30, 2015, there were 2,064,957 common stock purchase warrants outstanding. The following table summarizes information about common stock warrants outstanding at September 30, 2015. Outstanding Exercisable Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (years) Weighted Exercise Price Average Number Exercisable Weighted Average Exercise Price $ 0.065 328,846 0.63 $ 0.010 328,846 $ 0.010 0.075 1,736,111 3.62 0.063 1,736,111 0.063 $0.065-$0.075 2,064,957 4.25 $ 0.073 2,064,957 $ 0.073 |
21. Subsequent Events
21. Subsequent Events | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Note 21. Subsequent Events | The Company evaluated its September 30, 2015 financial statements for subsequent events through November 22, 2015, the date the financial statements were available to be issued. Issuance of Series A Convertible Preferred Stock to James Pakulis On November 16, 2015, upon the filing of a Certificate of Designation of the Rights, Privileges, and Preferences of Series A Convertible Preferred Stock with the State of Nevada, we issued 10,000,000 shares of Series A Convertible Preferred Stock to James Pakulis, our sole officer and director, in exchange for the cancellation of accrued compensation in the amount of $13,000. Each share of Series A Convertible Preferred Stock is has 100 votes and is convertible into one share of our common stock. Further, we cannot effect a sale of all or substantially all of our assets, or a transaction that will result in a change of control, without the consent of a majority of the holders of the Series A Convertible Preferred Stock. The issuance was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, the shareholder was accredited and familiar with our operations, and there was no solicitation in connection with the offering. Carebourn Capital Subsequent to the quarter ending September 30, 2015, the Company issued 13,914,302 shares of its common stock to Carebourn Capital, L.P. in satisfaction of debt. LG Capital Funding, Subsequent to the quarter ending September 30, 2015, the Company issued 3,920,614 shares of its common stock to LG Capital Funding, LLC in satisfaction of debt. Typenex Co-Investment Subsequent to the quarter ending September 30, 2015, the Company issued 6,787,945 shares of its common stock to Typenex Co-Investment, LLC in satisfaction of debt. Vis Vires Group Subsequent to the quarter ending September 30, 2015, the Company issued 37,969,748 shares of its common stock to Vis Vires Group, Inc. in satisfaction of debt. Vista Capital Investments Subsequent to the quarter ending September 30, 2015, the Company issued 9,000,000 shares of its common stock to Vista Capital Investments, LLC in satisfaction of debt. Increase In Authorized Common Stock & Approval Of Reverse Split Effective on October 26, 2015, our authorized common stock was increased from 300,000,000 shares, par value $0.001, to 900,000,000 shares, par value $0.001. The increase in authorized was unanimously approved by our Board of Directors on August 20, 2015, and by a majority of our outstanding shares of common stock at a special shareholder meeting held on October 23, 2015. We held a Special Meeting of Shareholders on October 23, 2015, in Tyler, Texas. There were shareholders representing 57,136,360 votes present at the meeting, either in person or by proxy, which represented approximately 70.9% of the 80,555,383 total outstanding votes of the Company, so a quorum was present. The following agenda items set forth in the Company's 14A Proxy Statement on file with the Securities and Exchange Commission, were approved: 1. To approve an amendment to the Company's Articles of Incorporation to increase the authorized common stock from 300,000,000 shares, par value $0.001, to 900,000,000 shares, par value $0.001. The agenda item passed with votes as follows: For Against Abstain Percentage Approving 53,571,780 3,546,475 18,105 66.5 % 2. To approve an amendment to the Company's Articles of Incorporation to effectuate a reverse split of the Company's issued and outstanding shares of common stock, at a time to be chosen by the Board of Directors in their sole discretion but not later than the close of business on December 31, 2016, on a ratio to be determined by the Company's Board of Directors but not to exceed 1-for-50. The agenda item passed with votes as follows: For Against Abstain Percentage Approving 53,401,662 3,700,809 33,887 66.3 % A more detailed description of each agenda item at the Special Shareholders Meeting can be found in our Schedule 14A Proxy Statement filed with the Securities and Exchange Commission on September 28, 2015. |
2. Basis Of Presentation And 28
2. Basis Of Presentation And Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
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. |
Advertising Cost | The Company expenses advertising costs when incurred. Advertising expense for the nine months ended September 30, 2015 and 2014 was approximately $58,000 and approximately $21,000, 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. |
Inventory | Inventory is stated at the lower of cost or market. Cost is determined under the first-in, first-out method. The cost of a manufactured home in inventory is removed from inventory and recorded as a component of cost of sales at the time revenue is recognized. |
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 September 30, 2015, and December 31, 2014, are presented net of accumulated depreciation of approximately $19,000 and approximately $9,000, respectively. |
Intangible Assets | In accordance with Goodwill and Other Intangible Assets |
Impairment of Long-Lived and Intangible Assets | In accordance with Accounting for the Impairment or Disposal of Long-Lived Assets |
Stock-Based Compensation | The Company accounts for stock-based compensation in accordance with the provisions of Share-Based Payment |
Revenue Recognition | The Company recognizes revenue in accordance with ASC 605, " Revenue Recognition 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 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 June, 2014, the FASB issued Accounting Standards Update No. 2014-12, Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The amendments in the ASU require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718, Compensation - Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Entities may apply the amendments in this ASU either: (a) prospectively to all awards granted or modified after the effective date; or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this ASU as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. In addition, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. The Company is currently assessing the impact this standard will have on its consolidated financial statements and required disclosures. In November, 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity In April, 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. 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. 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 In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) 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 a 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. |
7. Property And Equipment (Tabl
7. Property And Equipment (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Property And Equipment Tables | |
Property and equipment | September 30, December 31, Property and Equipment 2015 2014 Furniture and Computer Equipment $ 95,302 $ 63,657 Less: Accumulated Depreciation (19,216 ) (9,222 ) Property and Equipment, net $ 76,086 $ 54,435 |
8. Intangible Assets (Tables)
8. Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Intangible Assets Tables | |
Intangible assets acquisitions and impairments as a result of discontinued operations | September 30, December 31, Intangible Assets 2015 2014 Domain names $ 84,363 $ 84,363 Advertising rights 61,642 61,642 Subtotal $ 146,005 $ 146,005 Accumulated amortization (7,705 ) (3,082 ) Total intangible Assets $ 138,300 $ 142,923 |
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 non-premium domain names 2,028 Total premium and non-premium domain names $ 84,363 |
11. Accrued Liabilities (Tables
11. Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Accrued Liabilities Tables | |
Accrued liabilities | September 30, December 31, Accrued liabilities 2015 2014 Tax payable $ 1,098,000 $ 1,098,000 Obligations on stock based compensation — 73,500 Obligations on consulting agreements 30,000 55,000 Obligations on land development 100,000 Payroll liabilities 145,734 145,734 Customer deposits 191,097 19,821 Insurance 6,724 Other 2,087 38,836 Total accrued liabilities $ 1,573,642 $ 1,430,891 |
12. Note Payable (Tables)
12. Note Payable (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Note Payable Tables | |
Note payable | Below is a summary of note payable amounts which include accrued interest: Notes payable - current portion September 30, 2015 December 31, 2014 Adar Bays Note $ 40,912 $ - Abrams Notes 93,335 35,875 Auctus Private Equity Fund Note 56,251 55,192 Backman Notes 267,625 115,233 Buckles Note 52,077 - Caesar Capital Group Notes 93,315 35,875 Carebourn Capital Notes 166,065 - DeLue Notes 216,871 113,781 Elkins Trust Note 55,795 - GW Holdings Note 30,690 - Geist Note 52,139 - JARVCO Notes 27,326 25,981 KBM Worldwide Notes - 351,557 LG Capital Notes 188,302 106,450 Oakmore Opportunity Fund Note 40,868 - Rock Capital Note 38,248 - Service Trading Company Note 32,315 - Typenex Co-Investments Notes - 89,388 Vis Vires Group Notes 193,383 - Vista Capital 41,000 - Total notes payable - current portion $ 1,686,517 $ 929,332 Notes payable - noncurrent portion September 30, 2015 December 31, 2014 Abrams Notes $ - $ 51,007 American National Note 27,274 - Backman Note - 50,185 Buckles Note - 50,842 Caesar Capital Group - 50,986 DeLue Notes - 100,370 Elkins Trust Note - 50,185 Geist Note - 50,904 JMJ Financial Note 24,445 - JARVCO Notes 78,590 - Total notes payable - noncurrent portion $ 130,309 $ 404,479 |
17. Income Taxes (Tables)
17. Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Income Taxes Tables | |
Components of tax provision | September 30, 2015 December 31, 2014 Current Federal $ - $ (98,000 ) State - - - (98,000 ) Deferred Federal (810,000 ) (36,000 ) State - 94,000 (810,000 ) 58,000 Change in valuation allowance 810,000 (120,000 ) Total provision $ - $ (160,000 ) |
Components of deferred tax asset (liability) | September 30, 2015 December 31, 2014 Deferred income tax assets: State taxes $ 129,000 $ 129,000 Net operating losses 1,181,000 425,000 Depreciation - - Accruals and other - - 1,310,000 554,000 Deferred income tax liabilities: Depreciation (17,000 ) (12,000 ) Installment gain (308,000 ) (367,000 ) 985,000 175,000 Valuation allowance (985,000 ) (175,000 ) Net deferred tax assets/(liabilities) $ - $ - |
19. Commitment And Contingenc34
19. Commitment And Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Commitment And Contingencies Tables | |
Rental lease obligation | Tyler, Texas Retail Center Minimum Payments Monthly Base Rent 2015 $ 7,500 $ 2,500 2016 $ 30,000 $ 2,500 2017 $ 12,500 $ 2,500 Mt. Pleasant, Texas Retail Center Minimum Payments Monthly Base Rent 2015 $ 7,500 $ 2,500 2016 $ 15,000 $ 2,500 |
20. Warrants (Tables)
20. Warrants (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Warrants Tables | |
Common stock warrants outstanding | Outstanding Exercisable Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (years) Weighted Exercise Price Average Number Exercisable Weighted Average Exercise Price $ 0.065 328,846 0.63 $ 0.010 328,846 $ 0.010 0.075 1,736,111 3.62 0.063 1,736,111 0.063 $0.065-$0.075 2,064,957 4.25 $ 0.073 2,064,957 $ 0.073 |
2. Basis Of Presentation And 36
2. Basis Of Presentation And Significant Accounting Policies (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Basis Of Presentation And Significant Accounting Policies Details Narrative | |||
Advertising expense | $ 58,000 | $ 21,000 | |
Property and equipment, net of accumulated depreciation | (19,216) | $ (9,222) | |
Stock-based compensation expense | $ 818,440 | $ 695,000 |
3. Equity Transactions (Details
3. Equity Transactions (Details Narrative) - shares | Sep. 30, 2015 | Dec. 31, 2014 |
Equity Transactions Details Narrative | ||
Issuance of common stock | 82,185,304 | 70,650,827 |
Shares held in escrow | 5,000,000 | 5,000,000 |
Common stock, Issued | 77,185,304 | 50,677,105 |
Common stock, outstanding | 77,185,304 | 50,677,105 |
4. Inventory (Details Narrative
4. Inventory (Details Narrative) | Sep. 30, 2015USD ($) |
Inventory Details Narrative | |
Inventory | $ 1,933,000 |
5. Note receivables (Details Na
5. Note receivables (Details Narrative) | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Maturity date of notes receivable | Nov. 15, 2039 |
Current Note Receivables [Member] | |
Notes receivable | $ 83,518 |
Notes receivable, current portion | 565 |
Notes receivable representing the current portion non recourse promissory note | 1,000,000 |
Notes receivable representing the current portion including interest non recourse promissory note | $ 29,250 |
Accured interest rate on notes receivable | 9.00% |
Noncurrent Note Receivables [Member] | |
Notes receivable | $ 850,000 |
Notes receivable, current portion | 28,659 |
Notes receivable representing the current portion non recourse promissory note | 1,000,000 |
Notes receivable representing the current portion including interest non recourse promissory note | $ 29,250 |
Accured interest rate on notes receivable | 9.00% |
6. Other Current Assets (Detail
6. Other Current Assets (Details Narrative) | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Other Current Assets Details Narrative | |
Prepaid insurance | $ 13,100 |
Deposits | 27,600 |
Prepaid consulting fees | 6,000 |
Loan proceeds | 374,300 |
Other | $ 10,600 |
7. Property And Equipment (Deta
7. Property And Equipment (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Property and Equipment | ||
Furniture and Computer Equipment | $ 95,302 | $ 63,657 |
Less: Accumulated Depreciation | (19,216) | (9,222) |
Property and Equipment, net | $ 76,086 | $ 54,435 |
7. Property And Equipment (De42
7. Property And Equipment (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Property And Equipment Details Narrative | |||
Depreciation expense | $ 9,994 | $ 3,889 | $ 5,900 |
8. Intangible Assets (Details)
8. Intangible Assets (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Subtotal | $ 146,005 | $ 146,005 |
Accumulated amortization | (7,705) | (3,082) |
Total intangible Assets | 138,300 | 142,923 |
Domain Names [Member] | ||
Subtotal | 84,363 | 84,363 |
Advertising rights [Member] | ||
Subtotal | $ 61,642 | $ 61,642 |
8. Intangible Assets (Details 1
8. Intangible Assets (Details 1) | Sep. 30, 2015USD ($) |
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 |
9. Other Assets (Details Narrat
9. Other Assets (Details Narrative) | Sep. 30, 2015USD ($) |
Other Assets Details Narrative | |
Rent deposits | $ 3,100 |
Deposits | $ 75,000 |
10. Discontinued Operations (De
10. Discontinued Operations (Details Narrative) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Accounts payable | $ 337,369 | $ 282,220 |
General Management Solutions [Member] | ||
Accounts payable | 11,373 | |
Accrued liabilities | 20,603 | |
General Health Solutions [Member] | ||
Notes payable | 196,966 | |
VerticalCore Merchant [Member] | ||
Accrued liabilities | $ 16,500 |
11. Accrued Liabilities (Detail
11. Accrued Liabilities (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Accrued Liabilities Details | ||
Tax payable | $ 1,098,000 | $ 1,098,000 |
Obligations on stock based compensation | 73,500 | |
Obligations on consulting agreements | $ 30,000 | 55,000 |
Obligations on land development | 100,000 | |
Payroll liabilities | 145,734 | 145,734 |
Customer deposits | 191,097 | 19,821 |
Insurance | 6,724 | |
Other | 2,087 | 38,836 |
Total accrued liabilities | $ 1,573,642 | $ 1,430,891 |
11. Accrued Liabilities (Deta48
11. Accrued Liabilities (Details Narrative) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Accrued Liabilities Details Narrative | ||
Federal and state taxes payable | $ 1,098,000 | $ 1,098,000 |
12. Note Payable (Details)
12. Note Payable (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Notes payable - current portion | $ 1,686,517 | $ 929,332 |
Notes payable - noncurrent portion | 103,892 | $ 404,479 |
Adar Bays Note [Member] | ||
Notes payable - current portion | 40,912 | |
Abrams Notes [Member] | ||
Notes payable - current portion | $ 93,335 | $ 35,875 |
Notes payable - noncurrent portion | 51,007 | |
Auctus Private Equity Fund [Member] | ||
Notes payable - current portion | $ 56,251 | 55,192 |
Backman Notes [Member] | ||
Notes payable - current portion | $ 267,625 | 115,233 |
Notes payable - noncurrent portion | $ 50,185 | |
Buckles Note [Member] | ||
Notes payable - current portion | $ 52,077 | |
Notes payable - noncurrent portion | $ 50,842 | |
Caesar Capital Group [Member] | ||
Notes payable - current portion | $ 93,315 | 35,875 |
Notes payable - noncurrent portion | $ 50,986 | |
Carebourn Capital Notes [Member] | ||
Notes payable - current portion | $ 166,065 | |
DeLue Notes [Member] | ||
Notes payable - current portion | $ 216,871 | $ 113,781 |
Notes payable - noncurrent portion | $ 100,370 | |
Elkins Trust Note [Member] | ||
Notes payable - current portion | $ 55,795 | |
Notes payable - noncurrent portion | $ 50,185 | |
GW Holdings Note [Member] | ||
Notes payable - current portion | $ 30,690 | |
Geist Note [Member] | ||
Notes payable - current portion | $ 52,139 | |
Notes payable - noncurrent portion | $ 50,904 | |
JARVCO Note [Member] | ||
Notes payable - current portion | $ 27,326 | $ 25,981 |
Notes payable - noncurrent portion | $ 78,590 | |
KBM Worldwide [Member] | ||
Notes payable - current portion | $ 351,557 | |
LG Capital [Member] | ||
Notes payable - current portion | $ 188,302 | $ 106,450 |
Oakmore Opportunity Fund Note [Member] | ||
Notes payable - current portion | 40,868 | |
Service Trading Company Note [Member] | ||
Notes payable - current portion | $ 32,315 | |
Typenex Co-Investments [Member] | ||
Notes payable - current portion | $ 89,388 | |
Vis Vires Group Notes [Member] | ||
Notes payable - current portion | $ 193,383 | |
Vista Capital [Member] | ||
Notes payable - current portion | 41,000 | |
American National Note [Member] | ||
Notes payable - noncurrent portion | 27,274 | |
Rock Capital Note [Member] | ||
Notes payable - current portion | 38,248 | |
JMJ Financial Note [Member] | ||
Notes payable - noncurrent portion | $ 24,445 |
13. Notes Payable - Related P50
13. Notes Payable - Related Party (Details Narrative) | Sep. 30, 2015USD ($) |
Notes Payable - Related Party Details Narrative | |
Unpaid interest | $ 265 |
14. Other Long Term Accrued L51
14. Other Long Term Accrued Liabilities (Details Narrative) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Other Long Term Accrued Liabilities Details Narrative | ||
Noncurrent tax payable | $ 118,750 | $ 118,750 |
15. Inventory Flooring Credit52
15. Inventory Flooring Credit Line (Details Narrative) | Sep. 30, 2015USD ($) |
Inventory Flooring Credit Line Details Narrative | |
Flooring credit line | $ 1,889,568 |
16. Income Per Common Share (De
16. Income Per Common Share (Details Narrative) | Sep. 30, 2015shares |
Income Per Common Share Details Narrative | |
Outstanding common stock purchase warrants | 2,064,957 |
17. Income Taxes (Details)
17. Income Taxes (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Current | ||
Federal | $ (98,000) | |
State | ||
Current total | $ (98,000) | |
Deferred | ||
Federal | $ (810,000) | (36,000) |
State | 94,000 | |
Deferred total | $ (810,000) | 58,000 |
Change in valuation allowance | $ 810,000 | (120,000) |
Total provision | $ (160,000) |
17. Income Taxes (Details 1)
17. Income Taxes (Details 1) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Deferred income tax assets: | ||
State taxes | $ 129,000 | $ 129,000 |
Net operating losses | $ 1,181,000 | $ 425,000 |
Depreciation | ||
Accruals and other | ||
Deferred income tax assets total | $ 1,310,000 | $ 554,000 |
Deferred income tax liabilities: | ||
Depreciation | (17,000) | (12,000) |
Installment gain | (308,000) | (367,000) |
Deferred income tax liabilities total | 985,000 | 175,000 |
Valuation allowance | $ (985,000) | $ (175,000) |
Net deferred tax assets/(liabilities) |
17. Income Taxes (Details Narra
17. Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Income Taxes Details Narrative | |||||
Total tax benefit Corresponds to current operations | $ (97,000) | $ (257,000) | $ 160,000 | ||
(Tax provision) corresponds to discontinued operations | 16,000 | ||||
Total tax provision corresponds to current operations | 176,000 | ||||
valuation allowance against deferred tax assets | $ 985,000 | $ 985,000 | |||
U.S. federal tax net operating loss carryforwards | $ 3,473,403 | $ 3,473,403 | $ 1,125,000 | ||
Operating loss carryforwards expiration date | 2,021 |
19. Commitment And Contingenc57
19. Commitment And Contingencies (Details) | Sep. 30, 2015USD ($) |
Tyler, Texas Retail Center [Member] | Minimum Payments | |
2,015 | $ 15,000 |
2,016 | 30,000 |
2,017 | 12,500 |
Tyler, Texas Retail Center [Member] | Monthly Base Rent [Member] | |
2,015 | 2,500 |
2,016 | 2,500 |
2,017 | 2,500 |
Mt. Pleasant, Texas Retail Center [Member] | Minimum Payments | |
2,015 | 7,500 |
2,016 | 15,000 |
Mt. Pleasant, Texas Retail Center [Member] | Monthly Base Rent [Member] | |
2,015 | 2,500 |
2,016 | $ 2,500 |
20. Warrants (Details)
20. Warrants (Details) | 9 Months Ended |
Sep. 30, 2015$ / sharesshares | |
Exercise Price 0.065 [Member] | |
Number Outstanding | shares | 328,846 |
Weighted Average Remaining Contractual Life (years) | 7 months 17 days |
Weighted Exercise Price Average | $ 0.010 |
Number Exercisable | shares | 328,846 |
Weighted Average Exercise Price, Exercisable | $ 0.010 |
Exercise Price 0.075 [Member] | |
Number Outstanding | shares | 1,736,111 |
Weighted Average Remaining Contractual Life (years) | 3 years 7 months 13 days |
Weighted Exercise Price Average | $ 0.063 |
Number Exercisable | shares | 1,736,111 |
Weighted Average Exercise Price, Exercisable | $ 0.063 |
Exercise Price 0.065 - $0.075 [Member] | |
Number Outstanding | shares | 2,064,957 |
Weighted Average Remaining Contractual Life (years) | 4 years 3 months |
Weighted Exercise Price Average | $ 0.073 |
Number Exercisable | shares | 2,064,957 |
Weighted Average Exercise Price, Exercisable | $ 0.073 |
20. Warrants (Details Narrative
20. Warrants (Details Narrative) | Sep. 30, 2015shares |
Warrants Details Narrative | |
Outstanding common stock purchase warrants | 2,064,957 |