Nevada
|
20-5451302
|
|
(State or other jurisdiction of incorporation or
organization)
|
(I.R.S. Employer Identification No.)
|
Large accelerated filer o
|
Accelerated filer o
|
|
Non-accelerated filer o
|
Smaller reporting company x
|
June 30, 2013
|
December 31, 2012
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
CURRENT ASSETS
|
||||||||
Cash
|
$ | 7,579 | $ | 14,257 | ||||
Prepaid expenses
|
13,242 | 12,888 | ||||||
TOTAL CURRENT ASSETS
|
20,821 | 27,145 | ||||||
PROPERTY & EQUIPMENT, at cost
|
||||||||
Computer equipment
|
9,740 | 9,740 | ||||||
Furniture & fixtures
|
1,459 | 1,459 | ||||||
11,199 | 11,199 | |||||||
Less accumulated depreciation
|
(9,391 | ) | (7,663 | ) | ||||
NET PROPERTY AND EQUIPMENT
|
1,808 | 3,536 | ||||||
OTHER ASSETS
|
||||||||
Patents
|
1,784 | 1,584 | ||||||
TOTAL ASSETS
|
$ | 24,413 | $ | 32,265 | ||||
LIABILITIES AND SHAREHOLDERS' DEFICIT
|
||||||||
CURRENT LIABILITIES
|
||||||||
Accounts payable
|
$ | 218,626 | $ | 274,485 | ||||
Accrued expenses
|
3,407 | 16,244 | ||||||
Accrued interest, notes payable
|
53,910 | 22,408 | ||||||
Rent deposit
|
1,500 | - | ||||||
Unearned income
|
2,250 | - | ||||||
Promissory notes payable, other
|
5,000 | 5,000 | ||||||
Derivative liability
|
935,936 | 753,971 | ||||||
Convertible promissory notes, net of beneficial conversion feature of $113,950 and $0, respectively
|
92,550 | - | ||||||
Convertible promissory notes, net of discount of $367,352 and $644,521, respectively
|
312,245 | 86,182 | ||||||
TOTAL CURRENT LIABILITIES
|
1,624,778 | 1,158,290 | ||||||
SHAREHOLDERS' DEFICIT
|
||||||||
Preferred Stock, $0.001 par value,
|
||||||||
20,000,000 authorized common shares, no shares outstanding
|
- | - | ||||||
Common Stock, $0.001 par value;
|
||||||||
1,000,000,000 authorized common shares
|
||||||||
17,613,576 and 11,576,680 shares issued and outstanding, respectively
|
17,615 | 11,578 | ||||||
Additional paid in capital
|
10,198,199 | 9,814,227 | ||||||
Accumulated deficit during the development stage
|
(11,816,825 | ) | (10,951,830 | ) | ||||
TOTAL SHAREHOLDERS' DEFICIT
|
(1,601,011 | ) | (1,126,025 | ) | ||||
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT
|
$ | 24,413 | $ | 32,265 |
From Inception on
|
||||||||||||||||||||
August 25,2006
|
||||||||||||||||||||
Three Months Ended
|
Six Months Ended
|
through
|
||||||||||||||||||
June 30, 2013
|
June 30, 2012
|
June 30, 2013
|
June 30, 2012
|
June 30, 2013
|
||||||||||||||||
REVENUE
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
OPERATING EXPENSES
|
||||||||||||||||||||
General and administrative expenses
|
121,593 | 501,348 | 277,212 | 1,023,090 | 8,625,133 | |||||||||||||||
Research and development
|
(2,000 | ) | 27,798 | 439 | 126,544 | 1,245,808 | ||||||||||||||
Depreciation and amortization expense
|
864 | 5,671 | 1,728 | 11,697 | 111,148 | |||||||||||||||
TOTAL OPERATING EXPENSES
|
120,457 | 534,817 | 279,379 | 1,161,331 | 9,982,089 | |||||||||||||||
LOSS FROM OPERATIONS BEFORE OTHER INCOME/(EXPENSES)
|
(120,457 | ) | (534,817 | ) | (279,379 | ) | (1,161,331 | ) | (9,982,089 | ) | ||||||||||
OTHER INCOME/(EXPENSE)
|
||||||||||||||||||||
Interest income
|
- | - | - | - | 39,521 | |||||||||||||||
Rental income
|
4,500 | - | 6,750 | - | 6,750 | |||||||||||||||
Loss on sale of asset
|
- | - | - | - | (69,033 | ) | ||||||||||||||
Loss on foreign exchange
|
- | - | - | - | (2,327 | ) | ||||||||||||||
Impairment of intangible assets
|
- | - | - | - | (88,147 | ) | ||||||||||||||
Loss on settlement of debt
|
(27,536 | ) | (610 | ) | (27,536 | ) | (610 | ) | (28,241 | ) | ||||||||||
Gain on forgiveness of debt
|
20,000 | 102,000 | 20,000 | 102,000 | 122,000 | |||||||||||||||
Common stock issued for incentive fees
|
- | (521,400 | ) | - | (779,800 | ) | (1,079,800 | ) | ||||||||||||
Loss on change in derivative liability
|
(245,697 | ) | - | (237,146 | ) | - | (310,406 | ) | ||||||||||||
Penalties
|
- | - | - | - | (382 | ) | ||||||||||||||
Interest expense
|
(182,907 | ) | (7,044 | ) | (347,684 | ) | (9,319 | ) | (424,671 | ) | ||||||||||
TOTAL OTHER INCOME/(EXPENSES)
|
(431,640 | ) | (427,054 | ) | (585,616 | ) | (687,729 | ) | (1,834,736 | ) | ||||||||||
NET LOSS
|
$ | (552,097 | ) | $ | (961,871 | ) | $ | (864,995 | ) | $ | (1,849,060 | ) | $ | (11,816,825 | ) | |||||
BASIC AND DILUTED LOSS PER SHARE
|
$ | (0.04 | ) | $ | (0.09 | ) | $ | (0.07 | ) | $ | (0.18 | ) | ||||||||
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
|
||||||||||||||||||||
BASIC AND DILUTED
|
13,269,334 | 10,653,172 | 12,427,683 | 10,148,995 |
Deficit
|
||||||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||||||
Additional
|
during the
|
|||||||||||||||||||||||||||
Preferred stock
|
Common stock
|
Paid-in
|
Development
|
|||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Stage
|
Total
|
||||||||||||||||||||||
Balance at December 31, 2012 (audited)
|
- | $ | - | 11,576,680 | $ | 11,578 | $ | 9,814,227 | $ | (10,951,830 | ) | $ | (1,126,025 | ) | ||||||||||||||
Issuance of common stock for covnersion of promissory notes (prices ranging from $0.0066 - $0.0725 per share)
|
- | - | 6,036,896 | 6,037 | 165,797 | - | 171,834 | |||||||||||||||||||||
Beneficial conversion feature
|
- | - | - | - | 137,000 | - | 137,000 | |||||||||||||||||||||
Stock compensation cost
|
- | - | - | - | 81,175 | - | 81,175 | |||||||||||||||||||||
Net Loss for the six months ended June 30, 2013
|
- | - | - | - | - | (864,349 | ) | (864,349 | ) | |||||||||||||||||||
Balance at June 30, 2013
|
- | $ | - | 17,613,576 | $ | 17,615 | $ | 10,198,199 | $ | (11,816,179 | ) | $ | (1,600,365 | ) |
From Inception on
|
||||||||||||
August 25, 2006
|
||||||||||||
Six Months Ended
|
through
|
|||||||||||
June 30, 2013
|
June 30, 2012
|
June 30, 2013
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net loss
|
$ | (864,995 | ) | $ | (1,849,060 | ) | $ | (11,816,825 | ) | |||
Adjustment to reconcile net loss to net cash
|
||||||||||||
used in operating activities
|
||||||||||||
Depreciation expense
|
1,728 | 11,697 | 111,148 | |||||||||
Common stock issuance for services
|
- | 76,000 | 417,038 | |||||||||
Common stock issuance for incentive fees
|
- | 779,800 | 1,079,800 | |||||||||
Stock compensation cost
|
81,175 | 379,748 | 2,220,750 | |||||||||
Impairment of intangible assets
|
- | - | 88,147 | |||||||||
Loss on sale of asset
|
- | - | 69,033 | |||||||||
Payment of debt with promissory notes
|
66,150 | - | 66,150 | |||||||||
(Gain)/loss on settlement of debt
|
27,536 | 610 | 28,241 | |||||||||
Gain on forgiveness of debt
|
(20,000 | ) | (102,000 | ) | (122,000 | ) | ||||||
Amortization of debt discount and beneficial conversion feature recorded as interest expense
|
311,530 | - | 356,472 | |||||||||
Loss on change in derivative liability
|
237,146 | - | 310,405 | |||||||||
Changes in Assets and Liabilities
|
||||||||||||
(Increase) Decrease in:
|
||||||||||||
Prepaid expenses
|
(354 | ) | (15,371 | ) | (13,242 | ) | ||||||
Increase (Decrease) in:
|
||||||||||||
Accounts payable
|
34,111 | 263,243 | 425,596 | |||||||||
Accrued expenses
|
20,365 | 184,320 | 303,469 | |||||||||
Rent deposit
|
1,500 | - | 1,500 | |||||||||
Unearned income
|
2,250 | - | 2,250 | |||||||||
. | ||||||||||||
NET CASH USED IN OPERATING ACTIVITIES
|
(101,858 | ) | (271,013 | ) | (6,472,068 | ) | ||||||
CASH FLOWS USED IN INVESTING ACTIVITIES:
|
||||||||||||
Proceeds from sale of vehicle
|
- | - | 24,500 | |||||||||
Patent expenditures
|
(200 | ) | (19,034 | ) | (89,931 | ) | ||||||
Purchase of equipment
|
- | - | (206,489 | ) | ||||||||
NET CASH USED IN INVESTING ACTIVITIES
|
(200 | ) | (19,034 | ) | (271,920 | ) | ||||||
CASH FLOWS IN FINANCING ACTIVITIES:
|
||||||||||||
Advances from officer
|
- | - | 113,000 | |||||||||
Loans from investors
|
- | 171,000 | 625,000 | |||||||||
Proceeds received for convertible promissory notes
|
95,380 | - | 487,880 | |||||||||
Repayment of advances and loans
|
- | - | (383,000 | ) | ||||||||
Proceeds from subscriptions payable
|
- | - | 362,775 | |||||||||
Proceeds from issuance of common stock, net
|
- | 138,075 | 5,545,912 | |||||||||
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
95,380 | 309,075 | 6,751,567 | |||||||||
NET INCREASE/(DECREASE) IN CASH
|
(6,678 | ) | 19,028 | 7,579 | ||||||||
CASH, BEGINNING OF PERIOD
|
14,257 | 7,265 | - | |||||||||
CASH, END OF PERIOD
|
$ | 7,579 | $ | 26,293 | $ | 7,579 | ||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||||||
Interest paid
|
$ | 1,535 | $ | 491 | $ | 11,065 | ||||||
Taxes paid
|
$ | - | $ | - | $ | - | ||||||
. | ||||||||||||
SUPPLEMENTAL DISCLOSURES OF NON CASH ACTIVITIES
|
||||||||||||
During the six months ended June 30, 2013 the Company issued 6,036,896 shares of common stock for conversion of $79,023 in convertible promissory notes, plus $1,700 of accrued interest. The Company recognized a gain of $26,890 on the conversion of the notes. Also, during the same period, the Company exchanged demand notes for convertible promissory notes in the amount of $97,000. During the six months ended June 30, 2012, the Company issued 69,737 shares of common stock for converted debt in the amount of $265,000, at fair value of $3.80 per share. Also, the shares Company issued 6,098 of common stock at a fair value of $8,110 for an accounts payable with a loss of $610.
|
|
·
|
Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;
|
|
·
|
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
|
|
·
|
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
Total
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||||||||||
Assets
|
$ | - | $ | - | $ | - | $ | - | ||||||||
Total assets measured at fair value
|
$ | - | $ | - | $ | - | $ | - | ||||||||
Liabilities
|
||||||||||||||||
Derivative liability
|
$ | 935,936 | - | - | $ | 935,936 | ||||||||||
Convertible promissory note
|
404,795 | - | - | 404,795 | ||||||||||||
Total liabilities measured at fair value
|
$ | 1,340,731 | $ | - | $ | - | $ | 1,340,731 |
6/30/2013
|
||||||||
Weighted
|
||||||||
Number
|
average
|
|||||||
of
|
exercise
|
|||||||
Options
|
price
|
|||||||
Outstanding, beginning of period
|
1,137,500 | $ | 2.39 | |||||
Granted
|
- | - | ||||||
Exercised
|
- | - | ||||||
Expired
|
(1,037,500 | ) | 2.44 | |||||
Outstanding, end of period
|
100,000 | $ | 1.88 | |||||
Exercisable at the end of period
|
87,000 | $ | 1.58 | |||||
Weighted average fair value of
|
||||||||
options granted during the period
|
$ | - |
Stock price on the valuation dates
|
$0.013 - $0.77 | ||
Conversion price for the debt
|
$0.005 - $0.50 | ||
Dividend yield
|
0.00 | % | |
Years to Maturity
|
1 - 2 | ||
Risk free rate
|
.05% - .25 | % | |
Expected volatility
|
90.93% - 369.31 | % |
31.1
|
Certification of the Chief Executive Officer and Chief Financial Officer., pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Certification of the Chief Executive Officer and Chief Financial Officer., furnished pursuant to Section 1350 of Chapter 63 of 18 U.S.C. as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
EX-101.INS
|
XBRL INSTANCE DOCUMENT
|
|
EX-101.SCH
|
XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
|
|
EX-101.CAL
|
XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
|
|
EX-101.DEF
|
XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
|
|
EX-101.LAB
|
XBRL TAXONOMY EXTENSION LABELS LINKBASE
|
|
EX-101.PRE
|
XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE
|
CARBON SCIENCES, INC.
|
|||
By:
|
/s/ William Beifuss
|
||
Chief Executive Officer (Principal Executive
Officer ) and Acting Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
|
/s/ William Beifuss
|
William Beifuss
|
Chief Executive Officer and
|
Acting Chief Financial Officer (Principal Executive Officer and Principal Accounting and Financial Officer)
|
August 16, 2013
|
/s/ William Beifuss
|
|
William Beifuss
|
||
Chief Executive Officer and
|
||
Acting Chief Financial Officer (Principal Executive Officer and Principal Accounting and Financial Officer)
|
6. Convertible Promissory Notes: Fair Value Inputs, Liabilities, Quantitative Information (Tables)
|
6 Months Ended | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||
Tables/Schedules | |||||||||||||||
Fair Value Inputs, Liabilities, Quantitative Information |
|
Statements of Operations (Unaudited) (USD $)
|
3 Months Ended | 6 Months Ended | 82 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
|
Income Statement | |||||
REVENUE | |||||
OPERATING EXPENSES | |||||
General and administrative expenses | 121,593 | 501,348 | 277,212 | 1,023,090 | 8,625,133 |
Research and development | (2,000) | 27,798 | 439 | 126,544 | 1,245,808 |
Depreciation and amortization expense | 864 | 5,671 | 1,728 | 11,697 | 111,148 |
TOTAL OPERATING EXPENSES | 120,457 | 534,817 | 279,379 | 1,161,331 | 9,982,089 |
LOSS FROM OPERATIONS BEFORE OTHER INCOME/(EXPENSES) | (120,457) | (534,817) | (279,379) | (1,161,331) | (9,982,089) |
OTHER INCOME/(EXPENSE) | |||||
Interest income | 39,521 | ||||
Rental income | 4,500 | 6,750 | 6,750 | ||
Loss on sale of asset | (69,033) | ||||
Loss on foreign exchange | (2,327) | ||||
Impairment of intangible assets | (88,147) | ||||
Loss on settlement of debt | (27,536) | (610) | (27,536) | (610) | (28,241) |
Gain on forgiveness of debt | 20,000 | 102,000 | 20,000 | 102,000 | 122,000 |
Common stock issued for incentive fees | (521,400) | (779,800) | (1,079,800) | ||
Loss on change in derivative liability | (245,697) | (237,146) | (310,405) | ||
Penalties | (382) | ||||
Interest expense | (182,907) | (7,044) | (347,684) | (9,319) | (424,671) |
TOTAL OTHER INCOME/(EXPENSES) | (431,640) | (427,054) | (585,616) | (687,729) | (1,834,736) |
NET LOSS | $ (552,097) | $ (961,871) | $ (864,995) | $ (1,849,060) | $ (11,816,825) |
BASIC AND DILUTED LOSS PER SHARE | $ (0.04) | $ (0.09) | $ (0.07) | $ (0.18) | |
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING BASIC AND DILUTED | 13,269,334 | 10,653,172 | 12,427,683 | 10,148,995 |
4. Stock Options
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
||||||||||||||||||||||||||||||||||||||||
Notes | ||||||||||||||||||||||||||||||||||||||||
4. Stock Options | 4. STOCK OPTIONS
As of June 30, 2013, the Company had non-qualified stock options outstanding of 100,000 shares of common stock to its employees. Each Option shall be exercisable to the nearest whole share, in installments or otherwise, as the respective Option agreements may provide. Notwithstanding any other provisions of the Option agreement, each Option expires on the date specified in the Option agreement, which date shall not be later than the seventh (7th) anniversary from the grant date of the options. The stock options vested immediately, and are exercisable for a period of seven to ten years from the date of grant at exercise prices between $0.95 and $3.40 per share, the market value of the Companys common stock on the date of grant.
A summary of the Companys stock option activity and related information as follows:
Stock-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that is ultimately expected to vest. Stock-based compensation expense recognized in the financial statements of operations during the six months ended June 30, 2013, included compensation expense for the stock-based payment awards granted prior to, but not yet vested, as of June 30, 2013 based on the grant date fair value estimated, and compensation expense for the stock-based payment awards granted subsequent to June 30, 2013, based on the grant date fair value estimated. We account for forfeitures as they occur. The stock-based compensation expense recognized in the statement of income during the six months ended June 30, 2013 and 2012 is $81,175 and $379,748, respectively.
Warrants As of June 30, 2013, the Company had 460,000 common stock purchase warrants outstanding. |
6. Convertible Promissory Notes: Fair Value Inputs, Liabilities, Quantitative Information (Details) (USD $)
|
0 Months Ended |
---|---|
Jun. 30, 2013
|
|
Fair Value Assumptions, Expected Dividend Rate | 0.00% |
Minimum
|
|
Share Price | $ 0.013 |
Fair Value Assumptions, Exercise Price | $ 0.005 |
Fair Value Assumptions, Expected Term | 1 year |
Fair Value Assumptions, Risk Free Interest Rate | 0.05% |
Fair Value Assumptions, Expected Volatility Rate | 90.93% |
Maximum
|
|
Share Price | $ 0.77 |
Fair Value Assumptions, Exercise Price | $ 0.50 |
Fair Value Assumptions, Expected Term | 2 years |
Fair Value Assumptions, Risk Free Interest Rate | 0.25% |
Fair Value Assumptions, Expected Volatility Rate | 369.31% |
2. Summary of Significant Accounting Policies: Fair Value of Financial Instruments: Fair Value, Assets Measured on Recurring Basis (Details) (USD $)
|
Jun. 30, 2013
|
---|---|
Convertible promissory note | $ 1,340,731 |
Fair Value, Inputs, Level 3
|
|
Convertible promissory note | 1,340,731 |
Derivative Financial Instruments, Liabilities
|
|
Convertible promissory note | 935,936 |
Derivative Financial Instruments, Liabilities | Fair Value, Inputs, Level 3
|
|
Convertible promissory note | 935,936 |
Convertible Promissory Note
|
|
Convertible promissory note | 404,795 |
Convertible Promissory Note | Fair Value, Inputs, Level 3
|
|
Convertible promissory note | $ 404,795 |
7 Subsequent Events (Details) (Subsequent Event, USD $)
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Debt Instrument, Face Amount | $ 42,500 |
Debt Instrument, Interest Rate, Stated Percentage | 8.00% |
Debt Instrument, Convertible, Terms of Conversion Feature | The note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of 58% multiplied by the market price representing a discount of 42%. The market price means the average of the lowest three (3) trading prices for the common stock during a ten (10) trading day period ending on the latest complete trading day prior to the conversion date |
Debt Instrument, Maturity Date | Apr. 10, 2014 |
July 2013
|
|
Conversion of Stock, Shares Issued | 7,476,276 |
July 2013 | Principal
|
|
Conversion of Stock, Amount Issued | 33,841 |
July 2013 | Accrued interest
|
|
Conversion of Stock, Amount Issued | 354 |
August 2013
|
|
Conversion of Stock, Shares Issued | 4,242,571 |
August 2013 | Principal
|
|
Conversion of Stock, Amount Issued | 13,309 |
August 2013 | Accrued interest
|
|
Conversion of Stock, Amount Issued | $ 151 |
2. Summary of Significant Accounting Policies
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2. Summary of Significant Accounting Policies | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Carbon Sciences, Inc. is presented to assist in understanding the Companys financial statements. The financial statements and notes are representations of the Companys management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.
Development Stage Activities and Operations The Company is in its initial stages of formation and has insignificant revenues. A development stage activity is one in which all efforts are devoted substantially to establishing a new business and even if planned principal operations have commenced, revenues are insignificant.
Revenue Recognition The Company will recognize revenue when services are performed, and at the time of shipment of products, provided that evidence of an arrangement exists, title and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured. To date, the Company has had no revenues and is in the development stage.
Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.
Loss per Share Calculations The Company adopted the accounting pronouncement for loss per share, which dictates the calculation of basic earnings per share and diluted earnings per share. Basic earnings per share are computed by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The Companys diluted loss per share is the same as the basic loss per share for the six months ended June 30, 2013 as the inclusion of any potential shares would have had an anti-dilutive effect due to the Company generating a loss.
Stock-Based Compensation Share based payments applies to transactions in which an entity exchanges its equity instruments for goods or services, and also applies to liabilities an entity may incur for goods or services that are to follow a fair value of those equity instruments. We will be required to follow a fair value approach using an option-pricing model, such as the Black Scholes option valuation model, at the date of a stock option grant. The deferred compensation calculated under the fair value method would then be amortized over the respective vesting period of the stock option. The adoption of share based compensation has no material impact on our results of operations.
Fair Value of Financial Instruments Disclosures about fair value of financial instruments, requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of December 31, 2012, the amounts reported for cash, accrued interest and other expenses, and notes payable approximate the fair value because of their short maturities.
We adopted ASC Topic 820 (originally issued as SFAS 157, Fair Value Measurements) as of January 1, 2008 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include: · Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; · Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and · Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
We measure certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows at June 30, 2013:
Recently Issued Accounting Pronouncements
Management reviewed accounting pronouncements issued during the three months ended June 30, 2013, and no pronouncements were adopted during the period. |
5. Promissory Notes
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6 Months Ended |
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Jun. 30, 2013
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Notes | |
5. Promissory Notes | 5. PROMISSORY NOTES
During the six months ended June 30, 2013, the Company signed three (3) additional demand promissory notes for funds received during the month of May 2013 in the amount of $20,379 for operating expenses from an existing shareholder. The total aggregate balance due to the shareholder was $30,379, which included previous funds received in January. The notes bore interest at 5% per annum, and are due within one year from the effective date. As of May 29, 2013, the notes were exchanged for a convertible promissory note.
During the month of May 2013, the Company signed two (2) demand promissory notes in exchange for accounts payable in the amount of $66,621. The notes bore interest at 10% per annum, and are due within one year from the effective date. As of May 23, 2013, the notes were purchased by a shareholder. |
3. Capital Stock
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6 Months Ended |
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Jun. 30, 2013
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Notes | |
3. Capital Stock | 3. CAPITAL STOCK
At June 30, 2013, the Companys authorized stock consisted of 100,000,000 shares of common stock, with $0.001 par value. The Company is also authorized to issue 20,000,000 shares of preferred stock with a par value of $0.001 per share. The rights, preferences and privileges of the holders of the preferred stock will be determined by the Board of Directors prior to issuance of such shares.
During the six months ended, the Company issued 6,036,896 shares of common stock at fair value in conversion of $79,023 convertible promissory notes, plus accrued interest payable of $1,700. The Company recognized a loss of $26,890 for conversion of the notes. |