Delaware
(State or other jurisdiction of incorporation or organization)
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01-05922991
(I.R.S. Employer Identification No.)
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Yes
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x
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No
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o
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Yes
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x
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No
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o
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Large accelerated filer
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o
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Accelerated filer
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o
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Non-accelerated filer (Do not check if a smaller reporting company)
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o
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Smaller reporting company
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x
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Yes
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o
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No
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x
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PART I - FINANCIAL INFORMATION
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ITEM 1.
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1 | |
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1 | |
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2 | |
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3 | |
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4 | |
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5 | |
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ITEM 2.
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10 | |
ITEM 3.
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13 | |
ITEM 4.
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13 | |
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PART II - OTHER INFORMATION
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ITEM 1.
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14 | |
ITEM 2.
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14 | |
ITEM 3.
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14 | |
ITEM 4.
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14 | |
ITEM 5.
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14 | |
ITEM 6.
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14 | |
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15 |
March 31, 2013
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December 31, 2012
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|||||||
(Unaudited)
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||||||||
ASSETS
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||||||||
CURRENT ASSETS
|
||||||||
Cash
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$ | 9,326 | $ | 33,637 | ||||
Prepaid expense
|
2,068 | 3,708 | ||||||
TOTAL CURRENT ASSETS
|
11,394 | 37,345 | ||||||
PROPERTY & EQUIPMENT, at cost
|
||||||||
Machinery & equipment
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13,080 | 13,080 | ||||||
Computer equipment
|
57,795 | 57,795 | ||||||
Furniture & fixture
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4,670 | 4,670 | ||||||
75,545 | 75,545 | |||||||
Less accumulated depreciation
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(71,687 | ) | (71,124 | ) | ||||
NET PROPERTY AND EQUIPMENT
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3,858 | 4,421 | ||||||
OTHER ASSETS
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||||||||
Patents
|
18,925 | - | ||||||
TOTAL OTHER ASSETS
|
18,925 | - | ||||||
TOTAL ASSETS
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$ | 34,177 | $ | 41,766 | ||||
LIABILITIES AND SHAREHOLDERS' DEFICIT
|
||||||||
CURRENT LIABILITIES
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||||||||
Accounts payable
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$ | 90,376 | $ | 67,580 | ||||
Accrued expenses
|
43,060 | 43,060 | ||||||
Accrued interest
|
10,972 | 2,790 | ||||||
Derivative liability
|
470,391 | 696,564 | ||||||
Convertible promissory note payable, net of discount $240,892
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239,358 | 123,400 | ||||||
TOTAL CURRENT LIABILITIES
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854,157 | 933,394 | ||||||
SHAREHOLDERS' DEFICIT
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||||||||
Common stock, $.001 par value;
550,000,000 authorized shares; |
142,280 | 141,155 | ||||||
Additional paid in capital
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11,268,166 | 11,099,398 | ||||||
Deficit accumulated during the development stage
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(12,230,426 | ) | (12,132,181 | ) | ||||
TOTAL SHAREHOLDERS' DEFICIT
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(819,980 | ) | (891,628 | ) | ||||
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT
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$ | 34,177 | $ | 41,766 |
From Inception
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||||||||||||
January 30, 2002
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||||||||||||
Three Months Ended
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through
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|||||||||||
March 31, 2013
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March 31, 2012
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March 31, 2013
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||||||||||
REVENUE
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$ | - | $ | - | $ | 1,127,406 | ||||||
COST OF SERVICES
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- | - | 496,177 | |||||||||
GROSS PROFIT
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- | - | 631,229 | |||||||||
OPERATING EXPENSES
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||||||||||||
General and administrative expenses
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290,991 | 318,476 | 7,898,057 | |||||||||
Research and development
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23,723 | 53,237 | 1,790,568 | |||||||||
Impairment loss
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- | - | 1,753,502 | |||||||||
Depreciation and amortization expense
|
563 | 402 | 124,011 | |||||||||
TOTAL OPERATING EXPENSES
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315,277 | 372,115 | 11,566,138 | |||||||||
LOSS FROM OPERATIONS
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(315,277 | ) | (372,115 | ) | (10,934,909 | ) | ||||||
OTHER INCOME/(EXPENSES)
|
||||||||||||
Interest income
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- | - | 10,321 | |||||||||
Interest expense
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(114,688 | ) | (78,742 | ) | (495,226 | ) | ||||||
Penalties
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- | - | (296 | ) | ||||||||
Gain/(loss) on change in derivative liability
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331,720 | - | (92,194 | ) | ||||||||
Loss on investment
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- | - | (73,121 | ) | ||||||||
Loss on settlement of debt
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- | - | (644,038 | ) | ||||||||
Loss on sale of asset
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- | - | (963 | ) | ||||||||
TOTAL OTHER INCOME/(EXPENSES)
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217,032 | (78,742 | ) | (1,295,517 | ) | |||||||
NET LOSS
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$ | (98,245 | ) | $ | (450,857 | ) | $ | (12,230,426 | ) | |||
BASIC AND DILUTED LOSS PER SHARE
|
$ | (0.00 | ) | $ | (0.00 | ) | ||||||
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
BASIC AND DILUTED |
142,015,134 | 119,534,136 |
Additional
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Accumulated
Deficit During |
|||||||||||||||||||
Common stock
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Paid-in
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Development
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||||||||||||||||||
Shares
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Amount
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Capital
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Stage
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Total
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||||||||||||||||
Balance at December 31, 2012
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141,155,412 | $ | 141,155 | $ | 11,099,398 | $ | (12,132,181 | ) | $ | (891,628 | ) | |||||||||
Issuance of common stock at $0.02 per share for cash (unaudited)
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1,125,000 | 1,125 | 21,375 | - | 22,500 | |||||||||||||||
Stock compensation cost (unaudited)
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- | - | 147,393 | - | 147,393 | |||||||||||||||
Net loss for the three months ended March 31, 2013 (unaudited)
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- | - | - | (98,245 | ) | (98,245 | ) | |||||||||||||
Balance at March 31, 2013 (unaudited)
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142,280,412 | $ | 142,280 | $ | 11,268,166 | $ | (12,230,426 | ) | $ | (819,980 | ) |
From Inception
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||||||||||||
January 30, 2002
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||||||||||||
Three Months Ended
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through
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|||||||||||
March 31, 2013
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March 31, 2012
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March 31, 2013
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||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
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||||||||||||
Net loss
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$ | (98,245 | ) | $ | (450,857 | ) | $ | (12,230,426 | ) | |||
Adjustments to reconcile net loss to net cash
used in operating activities
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||||||||||||
Depreciation and amortization
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563 | 402 | 124,011 | |||||||||
Issuance of common shares and warrants for services
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- | - | 832,361 | |||||||||
Issuance of common shares in conversion of debt
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- | - | 400,000 | |||||||||
(Gain)/loss on investment
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- | - | 73,121 | |||||||||
Stock Compensation Cost
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147,393 | 124,800 | 1,488,962 | |||||||||
(Gain)/loss on change in derivative liability
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(331,720 | ) | - | 92,194 | ||||||||
Gain on sale of asset
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- | - | 963 | |||||||||
Impairment loss
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- | - | 1,753,502 | |||||||||
Amortization of debt discount recognized as interest
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106,505 | 78,500 | 202,526 | |||||||||
Loss on settlement of debt
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- | - | 644,038 | |||||||||
Changes in Assets and Liabilities
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||||||||||||
(Increase) Decrease in:
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||||||||||||
Prepaid expenses
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1,640 | 6,250 | (2,068 | ) | ||||||||
Deposits and other assets
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- | - | 5,000 | |||||||||
Increase (Decrease) in:
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||||||||||||
Accounts payable
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22,796 | 62,350 | 312,061 | |||||||||
Accrued expenses
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8,182 | 16,089 | 641,313 | |||||||||
NET CASH USED IN OPERATING ACTIVITIES
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(142,886 | ) | (162,466 | ) | (5,662,442 | ) | ||||||
NET CASH FLOWS USED IN INVESTING ACTIVITIES:
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||||||||||||
Purchase of property and equipment
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- | - | (81,198 | ) | ||||||||
Expenditures for intangible assets
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(18,925 | ) | - | (18,925 | ) | |||||||
Sale of asset
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- | - | 3,963 | |||||||||
Investment in companies
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- | - | (6,121 | ) | ||||||||
NET CASH USED IN INVESTING ACTIVITIES
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(18,925 | ) | - | (102,281 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
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||||||||||||
Payment of bank overdraft
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- | (6,284 | ) | - | ||||||||
Proceeds from notes payable related parties
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- | 78,500 | 1,174,342 | |||||||||
Proceeds from convertible promissory note
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115,000 | - | 603,417 | |||||||||
Repayment of notes payable related party
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- | - | (184,000 | ) | ||||||||
Contributed capital by shareholder
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- | - | 19,197 | |||||||||
Proceeds from subsidiary
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- | - | 300,000 | |||||||||
Proceeds from issuance of common stock and subscription payable
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22,500 | 90,250 | 3,853,443 | |||||||||
NET CASH PROVIDED BY FINANCING ACTIVITIES
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137,500 | 162,466 | 5,766,399 | |||||||||
NET INCREASE/(DECREASE) IN CASH
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(24,311 | ) | - | 1,676 | ||||||||
CASH, BEGINNING OF PERIOD
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33,637 | - | 7,650 | |||||||||
CASH, END OF PERIOD
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$ | 9,326 | $ | - | $ | 9,326 | ||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
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||||||||||||
Interest paid
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$ | - | $ | - | $ | 137,661 | ||||||
Income taxes
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$ | - | $ | - | $ | - |
1.
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BASIS OF PRESENTATION
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·
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Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;
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·
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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
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·
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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.
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Total
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(Level 1)
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(Level 2)
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(Level 3)
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|||||||||||||
Assets
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$ | - | $ | - | $ | - | $ | - | ||||||||
Total assets measured at fair value
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$ | - | $ | - | $ | - | $ | - | ||||||||
Liabilities
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||||||||||||||||
Derivative liability
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470,391 | - | - | 470,391 | ||||||||||||
Convertible promissory note
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239,358 | - | - | 239,358 | ||||||||||||
Total liabilities measured at fair value
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$ | 709,749 | $ | - | $ | - | $ | 709,749 |
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Management reviewed accounting pronouncements issued during the three months ended March 31, 2013, and no pronouncements were adopted.
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3/31/2013
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||||||||
Risk free interest rate
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1.01 | % | - | 2.38 | % | |||
Stock volatility factor
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93.6 | % | - | 229 | % | |||
Weighted average expected option life
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7 years
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|||||||
Expected dividend yield
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None
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3/31/2013
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||||||||
Weighted
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||||||||
Number
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average
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|||||||
of
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exercise
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|||||||
Options
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price
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|||||||
Outstanding, beginning of period
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23,000,000 | $ | 0.04 | |||||
Granted
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- | - | ||||||
Exercised
|
- | - | ||||||
Expired
|
- | - | ||||||
Outstanding, end of period
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23,000,000 | $ | 0.04 | |||||
Exercisable at the end of period
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15,861,112 | $ | 0.04 | |||||
Weighted average fair value of
options granted during the period |
$ | - |
|
On September 19, 2012, and November 13, 2012, the Company received funds on two securities purchase agreements entered into on September 19, 2012 and November 13, 2012, respectively, for the sale of 8% convertible promissory notes in the aggregate principal amount of $75,000. The notes are convertible into shares of common stock of the Company at a price equal to a variable conversion price of 58% multiplied by the market price representing a discount of 42%. The market price means the average of the lowest three (3) trading prices for the common stock during a ten (10) trading day period ending on the latest complete trading day prior to the conversion date. The notes mature on June 21, 2013 and August 15, 2013, respectively.
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Stock price on the valuation date
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$ | 0.03 | - | $ | 0.05 | |||||
Conversion price for the notes
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$ | 0.01 | - | $ | 0.0232 | |||||
Years to maturity
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6 mos
|
- |
2 year
|
|||||||
Risk free rate
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0.07 | % | - | 0.23 | % | |||||
Expected volatility
|
95.44 | % | - | 124.89 | % |
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Management has evaluated subsequent events according to the requirements of ASC TOPIC 855 and has reported the following events:
|
|
On April 5, 2013, the Company issued 1,500,000 shares of common stock at a price of $0.01 per share for cash in the amount of $15,000.
|
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On April 17, 2013, the Company issued 500,000 shares of common stock at a price of $0.01 per share for cash in the amount of $5,000.
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During the month of April 2013, the Company issued 5,200,713 shares of common stock in conversion of an 8% convertible note for the principal amount of $42,500, plus accrued interest of $1,700. The note was executed on September 19, 2012, and fully converted as of April 19, 2013.
|
|
On April 24, 2013, the Company received $32,500 in consideration upon execution of a securities purchase agreement for the sale of an 8% convertible note in the aggregate principal amount of $32,500. The note is convertible into shares of common stock of the Company at a price equal to variable conversion price equal to the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day prior to the conversion date. The lender has the right to convert all or part of the note following one hundred eighty (180) days following the date of the note. The note matures on January 29, 2014,
|
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Management concluded there were no other subsequent events or transactions that require recognition or disclosure in the financial statements.
|
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(a)
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inability to complete research and development of the new Solar3D technology with little or no current revenue;
|
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(b)
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volatility or decline of the Company’s stock price;
|
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(c)
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potential fluctuation in quarterly results;
|
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(d)
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failure of the Company to earn revenues or profits;
|
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(e)
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inadequate capital to continue business;
|
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(f)
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barriers to raising the additional capital or to obtaining the financing needed to implement its business plans;
|
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(g)
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lack of demand for the Company’s products and services;
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(h)
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rapid and significant changes in markets;
|
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(i)
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litigation with or legal claims and allegations by outside parties;
|
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(j)
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insufficient revenues to cover operating costs;
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(k)
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inability to start or acquire new businesses, or lack of success of new businesses started or acquired by the Company, if any;
|
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(l)
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inability to effectively develop or commercialize our new Solar3D technology; and
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(m)
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inability to obtain patent or other protection for the Company’s proprietary intellectual property.
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Exhibit
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Description
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31.1
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31.2
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32.1
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32.2
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101.INS
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XBRL Instance Document *
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101.SCH
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XBRL Taxonomy Extension Schema Document *
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||
101.CAL
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XBRL Taxonomy Extension Calculation Linkbase *
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101.DEF
|
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XBRL Taxonomy Extension Definition Linkbase Document *
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document **
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document *
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* Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, and otherwise are not subject to liability under those sections.
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SOLAR3D, INC. | |||
Dated: May 13, 2013
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By:
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/s/James B. Nelson | |
James B. Nelson, Director, Chief Executive Officer, President, and Interim
Chief Financial Officer (Principal Executive Officer/Principal Accounting Officer)
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (of persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (of persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
6. SUBSEQUENT EVENTS (Detail) (USD $)
|
3 Months Ended | 134 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | ||||
---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2013
|
Mar. 31, 2012
|
Mar. 31, 2013
|
Apr. 10, 2013
Subsequent Event [Member]
Convertible note on April 10, 2013 [Member]
|
Apr. 24, 2013
Subsequent Event [Member]
Convertible note on April 24, 2013 [Member]
|
Apr. 30, 2013
Subsequent Event [Member]
Principal [Member]
|
Apr. 30, 2013
Subsequent Event [Member]
Interest [Member]
|
Apr. 17, 2013
Subsequent Event [Member]
|
Apr. 05, 2013
Subsequent Event [Member]
|
|
Stock Issued During Period, Shares, Issued for Cash (in Shares) | 1,125,000 | 500,000 | 1,500,000 | ||||||
Equity Issuance, Per Share Amount (in Dollars per share) | $ 0.02 | $ 0.01 | $ 0.01 | ||||||
Proceeds from Issuance of Common Stock | $ 22,500 | $ 90,250 | $ 3,853,443 | $ 5,000 | $ 15,000 | ||||
Proceeds from Convertible Debt | 115,000 | 0 | 603,417 | 17,000 | 32,500 | ||||
Debt Instrument, Interest Rate, Stated Percentage | 10.00% | 8.00% | 8.00% | ||||||
Debt Instrument, Face Amount | 100,000 | 32,500 | |||||||
Debt Instrument, Convertible, Terms of Conversion Feature | equal to the lesser of $0.0.32 per share or fifty percent (50%) of the lowest trading price after the effective date | equal to variable conversion price equal to the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day prior to the conversion date. The lender has the right to convert all or part of the note following one hundred eighty (180) days following the date of the note. | |||||||
Debt Instrument, Maturity Date, Description | six (6) months from the effective date of each advance | ||||||||
Stock Issued During Period, Shares, Conversion of Convertible Securities (in Shares) | 5,200,713 | ||||||||
Debt Conversion, Original Debt, Amount | $ 42,500 | $ 1,700 | |||||||
Debt Instrument, Maturity Date | Jan. 29, 2014 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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Mar. 31, 2013
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Significant Accounting Policies [Text Block] |
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
This
summary of significant accounting policies of Solar3D, Inc.
is presented to assist in understanding the Company’s
financial statements. The financial statements and notes
are representations of the Company’s 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 has been in its initial stages of formation and for
the three months ended March 31 2013, had no
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.
Cash
and Cash Equivalent
The
Company considers all highly liquid investments with an
original maturity of three months or less to be cash
equivalents.
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.
Loss
per Share Calculations
Loss
per Share 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. No shares for
employee options or warrants were used in the calculation
of the loss per share as they were all anti-dilutive. The
Company’s diluted loss per share is the same as the
basic loss per share for the three months ended March 31,
2013 and 2012, as the inclusion of any potential
shares would have had an anti-dilutive effect due to the
Company generating a loss.
Revenue
Recognition
We
recognize revenue upon delivery, 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. We record revenue net of estimated
product returns, which is based upon our return policy,
sales agreements, management estimates of potential future
product returns related to current period revenue, current
economic trends, changes in customer composition and
historical experience. Generally, we extend
credit to our customers and do not require
collateral. We perform ongoing credit
evaluations of our customers and historic credit losses
have been within our expectations. We do not
ship a product until we have either a purchase agreement or
rental agreement signed by the customer with a payment
arrangement. This is a critical policy, because
we want our accountings to show only sales which are
“final” with a payment
arrangement. We do not make consignment sales or
inventory sales subject to a “buy back” or
return arrangement from customers. Accordingly,
original equipment manufacturers do not presently have a
right to return unsold products to us.
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 March 31, 2013, 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:
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 March 31,
2013:
Recently
adopted pronouncements
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