10-K

10-K 1 wbsi_10k.htm ANNUAL REPORT 10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K


(Mark One)

[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2013
Or

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 333-140378

WEBSAFETY, INC.

(Exact name of small business issuer as specified in its charter)

Nevada

20-5150818

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer Identification No.)

1 Hampshire Court, Newport Beach, CA 92660

(Address of Principal Executive Offices)

(949) 642-7816

(Issuer’s telephone number)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered under Section 12(b) of the Exchange Act:

None

Securities registered under Section 12(g) of the Exchange Act:

None

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes [ ] No [X]

Indicate by check mark whether issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter( during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [X]

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer”, and “small reporting company” in Rule 12b-2 of the Exchange Act. (check one)

Large accelerated filer: [ ] Accelerated filer: [ ] Non-accelerated filer: [ ] Small reporting company: [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

The aggregate market value of the outstanding common stock, other than shares held by persons who may be deemed affiliates of the registrant, computed by reference to the closing sale price for the registrant’s common shares on June 30, 2013, as reported on the OTCMarkets, was approximately $200,060.

As of April 4, 2014, there were 31,931,665 shares of common stock, $0.001 par value, outstanding.

Documents incorporated by reference:

None.

Forward Looking Statements

This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive positions, growth opportunities for existing products, plans and objectives of management, markets for stock of Websafety, Inc. (the “Company”) and other matters. Statements in this report that are not historical facts are “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and Section 27A of the Securities Act of 1933, as amended. Such forward-looking statements, including, without limitation, those relating to the future business prospects, revenues and income of Websafety, Inc., wherever they occur, are necessarily estimates reflecting the best judgment of the senior management of Websafety, Inc. on the date on which they were made, or if no date is stated, as of the date of this report. These forward-looking statements are subject to risks, uncertainties and assumptions, including those described in the “Risk Factors” described below, that may affect the operations, performance, development and results of our business. Because the factors discussed in this report could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us or on our behalf, you should not place undue reliance on any such forward-looking statements. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

You should understand that the following important factors, in addition to those discussed in the “Risk Factors” section could affect our future results and could cause those results to differ materially from those expressed in such forward-looking statements:

•

general economic conditions;

•

the effectiveness of our planned advertising, marketing and promotional campaigns;

•

anticipated trends and conditions in the industry in which we operate, including regulatory changes;

•

our future capital needs and our ability to obtain financing; and

•

other risks and uncertainties as may be detailed from time to time in our public announcements and filings with the Securities and Exchange Commission (“SEC”).

Although we believe that our expectations are reasonable, we cannot assure you that our expectations will prove to be correct. Should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described in this report as anticipated, believed, estimated, expected or intended.

Except to the extent required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or any other reason. All subsequent forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to herein. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report may not occur.

TABLE OF CONTENTS


		PAGE
PART I
Item 1.	Business	5
Item 1A.	Risk Factors	6
Item 2.	Description of Property	7
Item 3.	Legal Proceedings	8
Item 4.	Mine Safety Disclosures	8
PART II
Item 5.	Market for Registrant’s Common Equity. Related Stockholder Matters and Issuer Purchases of Equity	9
Item 6.	Selected Financial Data	10
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	10
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	13
Item 8.	Financial Statements and Supplementary Data	13
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	14
Item 9A.	Controls and Procedures	14
Item 9B.	Other Information	15
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	16
Item 11.	Executive Compensation	17
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	17
Item 13.	Certain Relationships and Related Transactions, and Director Independence	17
Item 14.	Principal Accounting Fees and Services	20
Part IV
Item 15.	Exhibits, Financial Statement Schedules	21

PART I

ITEM 1. BUSINESS

Business Development

We were incorporated on July 3, 2006 in the State of Nevada under the name Promotions on Wheels Holdings, Inc. We changed our name to Blindspot Alert, Inc. on December 12, 2008 and to Websafety, Inc. on September 11, 2009. The Company was originally a developmental stage company with a principal business objective of offering live promotions and marketing events utilizing unique custom built mobile displays. On July 21, 2008, we discontinued that business.

On June 30, 2008, the Company entered into a License Agreement (“License”) with WQN, Inc., a Texas corporation (“WQN”), which, in consideration for the sum of $300,000 granted the Company the right to market and sell WQN’s Websafety software products. The License covered software products that had been developed by WQN and granted the Company an exclusive right for a period of 12 months to market and sell the software products through the Home Shopping Network, QVC, Inc., CVS Pharmacy, WalMart, and Walgreens and the non exclusive right to market and sell the software products worldwide.

The License provided for the Company to retain 65% of all revenue received from the sale of CYBERSAFETY software and to pay 35% of all revenue to the Licensor, WQN. The License Agreement required Licensor to provide Company technical and customer support and required Licensor to provide Company with all future updates of the software.

On July 2, 2009 the Company entered into an asset acquisition agreement with WQN, Inc. Under the agreement we acquired all of the technology known as Websafety Technology for approximately 27,000,000 shares of our common stock. Consequently, the Company no longer has any royalty commitments to WQN under the June 30, 2008 license agreement.

Management believes that our products are a timely solution to many of the dangers that come with the unprecedented access to information and people that is provided by the internet and cell phones provide.

From June 2008 through December 31, 2009 we refined our website and we commenced limited revenue activity in the fourth quarter of 2009. We had intended to market our products and services through relationships developed with “trusted” sources consisting of child protection advocacy groups including church, school and civic organizations. We also explored opportunities to enter into strategic revenue sharing partnerships with companies having synergy with our products. We suspended our operations in August, 2011 but have continued our research and development of the products. We have been developing new mobile software products that will be launched during the second half of 2014.

Business of Issuer

We are focused on marketing, selling, and distributing a range of Internet software applications and services for cell phones worldwide. These software applications allow parents or other caregivers to monitor and be notified of occurrences of predator advances, cyber bullying, pornography; and cell phone applications that restrict text messaging while driving and provide location information to parents using GPS technology. We market our software products under the WEBSAFETY or CELLSAFETY brand names.

Since our inception on July 3, 2006 and as of December 31, 2013, we have generated a minimal amount of revenue and have incurred a cumulative net loss of $14,052,387. In 2013 our revenues were $0, however, we believe that we must raise approximately $400,000 through the sale of equity or promissory notes for us to sustain operations through the next twelve (12) months. This amount of capital has been budgeted to maintain our minimal infrastructure, continue our product development and marketing and sales campaign. We believe that the recurring revenues from sales of software products eventually will be sufficient to support ongoing operations. We can provide no assurance that the actual expenses we incur will not materially exceed our estimates or that cash flow from sales will be adequate to maintain our business. As a result, our independent auditors have expressed substantial doubt about our ability to continue as a going concern as noted in the independent auditor’s report to the financial statements included in this report.

In August, 2011 due to the lack of revenue and inability to raise enough capital to pay for ongoing operations, we vacated our premises in Irving, Texas. All employees left the Company and we suspended our operations pending the raising of additional capital to finance our operations on a going forward basis. We have continued our product development for new mobile software products.

In August, 2011, our CEO, Rowland W. Day II moved the administration of the business to his law office located in California which is the new address of the Company.

Mr. Day has continued to meet with prospective investors to fund the operations of the Company. To date very little money has been raised or loaned to the Company except by Mr. Day. There is no assurance that enough money can be raised for the Company to become operational at any time in the future.

Our Chief Executive Officer and Chief Financial Officer/Director works for us on a part-time basis. We also have two other Directors.

ITEM 1A. RISK FACTORS

The Company was organized during 2006 and is at an early stage of operation and has no substantial revenue. The Company began receiving revenue from sales of software products during the fourth quarter of 2009. The Company no longer devotes its full resources toward marketing, selling and distributing the software products. The Company will need to generate significant revenues to overcome an accumulated deficit and obtain profitability. The Company may never achieve profitability. If revenues grow more slowly than anticipated, or if operating expenses exceed expectations the Company’s business, results of operations, and financial condition could be materially adversely affected.

RISKS RELATING TO OUR BUSINESS

THE COMPANY HAS A LIMITED OPERATING HISTORY AND FACES SIGNIFICANT RISKS AND CHALLENGES IN BUILDING THE BUSINESS

As a result of the Company’s limited operating history, to achieve profitability, the Company must successfully and timely market and sell its software products. Although the Company has very concrete and specific marketing and sales programs to be implemented, the Company cannot guarantee the success of such programs and alternately, more expensive marketing and sales programs may need to be implemented. Additionally, although the Company believes that a strong market exists for the software products, the Company has conducted no scientific, reliable market surveys but has only performed its own research and due diligence to ascertain the security concerns of parents and others responsible for the safety of children. A more scientific analysis could prove that no market exists for the software products that the Company intends to market and sell; or, if the market exists, the Company may not be able to reach the market with the Company’s limited financial resources and marketing budget. There can be no assurance that the Company will be able to successfully generate revenues. The Company has no significant historical basis to assess how it might respond to competitive, economic, regulatory, or technological challenges. The Company’s business must be considered in light of the risks and uncertainties frequently encountered by companies in the very early stages of operations, particularly companies that operate in new and rapidly developing industries and marketplaces. The Company’s failure to adequately address these risks and uncertainties and rapidly respond to adverse developments as they occur could materially impact the Company’s ability to achieve profitability and, if profitability is achieved, to sustain a level of operations that will cause profitability to be sustained. Although the Company intends to hire numerous people to implement the business of the Company, there is no assurance that the Company will hire the right people or that future changes will not have to be made to find the right people to implement the Company’s business strategy. There is no assurance that the Company’s business strategy or marketing plans will achieve success.

THE COMPANY’S RELIANCE ON THE CAPABILITIES OF THE SOFTWARE PRODUCTS

The Company is heavily dependent upon the capabilities of the software products. The failure of the software to accomplish the objectives as represented will damper if not destroy the Company’s marketing.

COMPANY’S RELIANCE UPON HIRING EXECUTIVES AND CONSULTANTS

The Company’s success is highly dependent upon hiring executive officers and key consultants in order to implement and pursue the Company’s business and marketing plan. The inability to hire the executives or consultants will materially adversely impact the ability of the Company to complete its business and marketing plan and may require the Company to seek the assistance of other qualified personnel who may not be available.

CHALLENGES FROM COMPETITION

Although the Company is unaware of an available product that contains all the characteristics, features and capabilities of its software products, in the dynamic, ever changing field of technology, many companies of all sizes and capabilities are constantly engaged in software development. With the notoriety given to child molesters, pedophiles and others causing harm and sometimes death to children, a reasonable assumption is that many companies are currently engaged in software development activities that will possess many of the characteristics and capabilities possessed by the software. In the event another company successfully develops and markets a competitive product before the Company can establish a significant presence in its target markets, the Company may never be able to achieve a level of revenue to sustain the Company’s operations.

RISKS RELATED TO OUR COMMON STOCK

IF A MARKET FOR OUR COMMON STOCK DOES NOT DEVELOP, OUR STOCKHOLDERS MAY BE UNABLE TO SELL THEIR SHARES.

There is currently a limited market for our common stock and we can provide no assurance that a more liquid market will develop. If a liquid market does not develop for our shares, it will be difficult for stockholders to sell their stock. In such a case, stockholders may find that they are unable to achieve benefits from their investment.

IF A MARKET FOR OUR COMMON STOCK DEVELOPS, OUR STOCK PRICE MAY BE VOLATILE.

If a market for our common stock develops, the price at which our common stock will trade may be highly volatile and may fluctuate as a result of a number of factors, including the number of shares available for sale in the market, quarterly variations in our operating results, actual or anticipated announcements of new data, studies, products or services by us or competitors, regulatory investigations or determinations, acquisitions or strategic alliances by us or our competitors, recruitment or departures of key personnel, the gain or loss of significant customers, changes in the estimates of our operating performance, market conditions in our industry and the economy as a whole.

INVESTORS’ INTERESTS IN OUR COMPANY WILL BE DILUTED AND INVESTORS MAY SUFFER DILUTION IN THEIR NET BOOK VALUE PER SHARE IF WE ISSUE ADDITIONAL SHARES OR RAISE FUNDS THROUGH THE SALE OF EQUITY SECURITIES.

In the event that we are required to issue any additional shares or enter into private placements to raise financing through the sale of equity securities, investors’ interests in our Company will be diluted and investors may suffer dilution in their net book value per share depending on the price at which such securities are sold. If we issue any such additional shares, such issuances also will cause a reduction in the proportionate ownership and voting power of all other stockholders. Further, any such issuance may result in a change in our control.

WE HAVE NEVER PAID CASH DIVIDENDS AND DO NOT INTEND TO DO SO.

We have never declared or paid cash dividends on our common stock. We currently plan to retain any earnings to finance the growth of our business rather than to pay cash dividends. Payments of any cash dividends in the future will depend on our financial condition, results of operations and capital requirements, as well as other factors deemed relevant by our board of directors.

WE NEED ADDITIONAL FINANCING

We need additional financing to maintain and expand the business, and such financing may not be available on favorable terms, if at all. We intend to finance our business through the private placement and public offering of equity and debt securities. If we need funds and cannot raise them on acceptable terms, we may not be able to execute our business plan, and our shareholders may lose substantially all of their investment.

TERRORIST ATTACKS, CONTINUED WAR OR OTHER CIVIL DISTURBANCES COULD LEAD TO FURTHER ECONOMIC INSTABILITY AND ADVERSELY AFFECT OUR BUSINESS

On September 11, 2001, the United States was the target of terrorist attacks of unprecedented scope. The United States is currently engaged in a war in Iraq and Afghanistan. These attacks and these wars have caused instability in the marketplace and contributed to a downturn in the global economy. In the future, there may be armed hostilities, continued wars, further acts of terrorism and civil disturbances in the United States or elsewhere, which may further contribute to economic instability in the United States. Such disturbances could have a material adverse effect on our business, financial condition and operating results.

ITEM 2. DESCRIPTION OF PROPERTY

The Company’s corporate headquarters have been moved to 1 Hampshire Court, Newport Beach, California 92660 which is the office of our CEO and Chairman of the Board Rowland W. Day II. We are not being charged any rent at this time.

ITEM 3. LEGAL PROCEEDINGS

From time to time we may be a defendant or plaintiff in various legal proceedings arising in the normal course of our business. Except as set forth below, we are currently not a party to any legal proceeding that we believe could have a material adverse effect on our business, financial condition or operating results.

On August 28, 2012, Keith Miller a part time employee of the Company at the time of his departure sued the Company, its officers and directors for fraud. Mr. Miller was previously the Interim Chief Technology Officer of the Company.

The Company settled this lawsuit for $4,500 during the quarter ended June 30, 2013.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY. RELATED STOCKHOLDERS MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES

Market Information

Our common stock is quoted on the OTCBB under the symbol “WBSI”. The following table shows the high and low bid prices of our common stock, as quoted on the OTCBB, by quarter during our last fiscal year when trading began. These quotes reflect inter-dealer prices, without retail markup, markdown or commissions and may not represent actual transactions.


	High		Low
1st Quarter (through April 4, 2014)	$	0.01	$	0.01
Year Ended December 31, 2013
1st Quarter	$	0.01	$	0.01
2nd Quarter		0.01		0.01
3rd Quarter		0.01		0.01
4th Quarter		0.01		0.01

Year Ended December 31, 2012
1st Quarter	$	0.03	$	0.01
2nd Quarter		0.09		0.01
3rd Quarter		0.03		0.01
4th Quarter		0.01		0.01

Holders

As of April 4, 2014, there were approximately 134 holders of record of our common stock. This number does not include beneficial owners of common stock whose shares are held in the names of various dealers, clearing agencies, banks, brokers and other fiduciaries.

Dividends

We have never declared or paid any dividends. We anticipate, as our board of directors deems appropriate, that we will continue to retain all earnings for use in our business.

Securities Authorized For Issuance Under Equity Compensation Plans

On February 18, 2011 we issued 2,000,000 options to Travis Bond, the Chief Operating Officer of the Company. In addition, we issued 330,000 to various other people.

ITEM 6. SELECTED FINANCIAL DATA

We are a smaller reporting company as defined in 17 CFR229.10(f)(I) and are not required to provide information required by this item, per Item 301 of Regulation S-K (17 CFR 229.201)

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Plan of Operations

Websafety, Inc. has the objective of marketing and selling through the internet a range of software applications for cell phones that allow parents or other caregivers to monitor and be notified of occurrences of predator advances, cyber bullying and pornography received on cell phones. The cell phone application may also restrict text messaging while driving and provides location information to parents through the use of GPS technology.

Since our inception on July 3, 2006 through the end of the December 31, 2013, we have generated a minimal amount of revenue. We intend to market the products and services by developing relationships with “trusted” sources consisting of child protection advocacy groups including church, school and civic organizations. We intend to also explore opportunities to enter into strategic revenue sharing partnerships with companies having synergy with our products. We suspended our operations in August of 2011 due to lack of working capital and have continued our product development and intend to launch our mobile software products during the second half of 2014.

In 2013, we raised $0 in new equity funding through the sale of common stock and preferred stock.

Results of Operations

For the year ended 2013 we sustained a net operating loss of $907,757 as compared to a loss of $1,142,743 for the same twelve month period ended December 31, 2012. In 2013 and 2012 we had revenues of $0.

The table below highlights on a line item basis the significant elements of expense during the two periods that constituted the preponderance of expense incurred.


	Years Ended December 31,				Increase/
Expense Category	2013		2012		(Decrease)
General and Administrative:
Payroll	$	-	$	(1041)	$	1041
Insurance D&O		-		-
Accounting		5,100		16,628		(11,528)
Consulting/Contract		9,500		80,833		(71,333)
Legal		244,912		241,138		3,774
Marketing/Website		20,851		22,623		(1,772)
Travel		511		4,475		(3,964)
Commissions		-		-		-
Office Expense & Telephone		3,809		2,211		1,598
Rent		-		-		-
Stock Compensation Expense		25,000		385,796		(360,796)
Other		39548		146,468		(106,920)
Totals	$	349,231	$	899,131	$	(549,900)

The decrease in expenses from December 31, 2012 to December 31, 2013 is primarily attributed to a decrease in stock compensation expense due to the suspension of operations.

Liquidity

As noted previously, through December 31, 2013 we raised $0 in new equity. In order to establish operations in 2014 and beyond, additional capital will be required. In that regard it is management’s intent to continue fund raising efforts to generate the capital required to reestablish operations.

Cash and cash equivalents decreased to $870 at December 31, 2013 when compared to cash and cash equivalents of $25,392 at December 31, 2012. The decrease is attributable to cash used for operations.

The decrease in accounts payable and accrued expenses of $(197,344) at December 31, 2013 when compared to December 31, 2012 can primarily be attributed to the decline in revenue generating activities which resulted in less cash for our obligations.

There were no investing activities for the years ended December 31, 2013 and 2012.

Recent Accounting Pronouncements

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the company’s results of operations, financial position or cash flow.

Critical Accounting Policies

Going Concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred cumulative net losses of approximately $14,052,387 from the period of July 3, 2006 (Inception) through December 31, 2013 and has used significant cash in support of its operating activities raising substantial doubt about the Company’s ability to continue as a going concern. The Company in 2012 did not raise any additional capital and will seek additional sources of capital through the issuance of debt or equity financing, but there can be no assurance the Company will be successful in accomplishing its objectives. The Company’s CEO loaned money to the Company for the Company to continue its product development.

The ability of the Company to continue as a going concern is dependent on additional sources of capital and the success of the Company’s plan. The financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Use of estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company is subject to uncertainty of future events, economic, environmental and political factors and changes in the Company's business environment; therefore, actual results could differ from these estimates. Accordingly, accounting estimates used in the preparation of the Company's financial statements will change as new events occur; more experience is acquired, as additional information is obtained and as the Company's operating environment changes. Changes are made in estimates as circumstances warrant. Such changes in estimates and refinement of estimation methodologies are reflected in the financial statements.

Earnings per Share

Basic earnings per common share is computed by dividing net earnings by the weighted average number of common shares outstanding during each period presented. Diluted earnings per common share give the effect to the assumed exercise of stock options when dilutive. In a loss year, the calculation for basic and diluted earnings per share is considered to be the same, as the impact of potential common shares is anti-dilutive. At December 31, 2013, there were 1,990,000 stock options.

Convertible Notes Payable

The Company evaluated the terms of their outstanding notes in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that a portion of their outstanding debt had underlying common stock not indexed to the Company’s common stock. The Company determined that the conversion feature met the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability. For all other remaining outstanding debt, the Company evaluated the conversion feature for a beneficial conversion feature. The effective conversion price was compared to the market price on the date of the notes and was deemed to be less than the market value of underlying common stock at the inception of the note.

The Company recognized beneficial conversion features in the amounts of $230,089 and $562,125 for the periods ended December 31, 2013 and 2012, respectively. The beneficial conversion features were recognized as increases in additional paid-in capital and discounts to the Convertible Notes Payable. The discount to the Convertible Notes Payable was amortized to interest expense over the life of the note.

Fair value of financial instruments

The Company follows paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments and paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

Level 1. Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2. Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3. Pricing inputs that are generally unobservable inputs and not corroborated by market data.

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts payable, accrued expenses and loans payable approximate their fair values because of the short maturity of these instruments. Loans payable are recorded at their issue value.

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

It is not, however, practical to determine the fair value of advances from stockholders, if any, due to their related party nature.

Stock Based Compensation

We account for employee share-based awards in accordance with FASB ASC 718. FASB ASC 718 requires recognition in the financial statements of the cost of employee services received in exchange for an award of equity instruments over the period the employee is required to perform the services in exchange for the award (presumptively the vesting period). FASB ASC 718 also requires measurement of the cost of employee services received in exchange for an equity award based upon the grant-date fair value of the award.

The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of ASC 505-50. Accordingly, the measurement date for the fair value of the equity instruments issued is determined at earliest of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments, issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.

In accordance with ASC 505-50, each transaction involving the issuance of stock in exchange for goods or services is analyzed to determine whether the value of the stock given as consideration on the value of the goods on services received are the more representation of the value of the underlying transactions.

Comprehensive Income

The Company has no components of income that would require classification as other comprehensive income.

Property and Equipment

Fixed assets recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of fixed assets is computed by the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful life. Upon sale or retirement of the asset, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the statements of operations.


Asset	Useful Life (in years)
Equipment	5 years
Furniture & Fixtures	7 years

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

WEBSAFETY, INC.

December 31, 2013

Index to the Financial Statements


Contents	Page(s)

Balance Sheets at December 31, 2013 and 2012	F-3

Statements of Operations for the years ended December 31, 2013 and 2012	F-4

Statement of Stockholders’ (Deficit) for the Period from December 31, 2011 through December 31, 2013	F-5

Statements of Cash Flows for the years ended December 31, 2013 and 2012	F-6

Notes to the Financial Statements	F-7

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders of Websafety Inc.

We have audited the accompanying balance sheets of Websafety Inc. as of December 31, 2013, and the related statements of income, stockholders’ equity, and cash flows for the year then ended, Websafety Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Websafety Inc. as of December 31, 2013, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements the Company has had recurring losses, these conditions raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

/s/ DHW CPA, PLLC

West Henrietta, New York

April 14, 2014

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Websafety, Inc.

We have audited the accompanying balance sheet of Websafety, Inc. as of December 31, 2012, and the related statements of operations, stockholders’ (deficit), and cash flows for year ended December 31, 2012. Websafety, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Websafety, Inc. as of December 31, 2012, and the results of its operations and its cash flows for the year ended December 31, 2012 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements the Company has had recurring losses, these conditions raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

/s/ EFP Rotenberg, LLP

Rochester, New York

April 12, 2013

F-2

WEBSAFETY, INC.

BALANCE SHEETS


				December 31, 2013		December 31, 2012

ASSETS
CURRENT ASSETS:
	Cash			$	870	$	25,392

		Total Current Assets			870		25,392


PROPERTY AND EQUIPMENT, net					3,135		6,295

		Total Fixed Assets			3,135		6,295

			Total Assets	$	4,005	$	31,687

LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
	Accounts payable			$	168,438	$	179,416
	Accrued interest				20,219		55,682
	Accrued expenses				28,907		37,116
	Convertible notes payable - shareholders				703,295		899,218
	Convertible notes payable, net of discount				104,928		209,932
	Derivative liability				13,448		-

		Total Current Liabilities			1,039,235		1,381,364

REDEEMABLE PREFERRED STOCK
	Redeemable convertible preferred stock, $0.001 par value,
	Series B: 1,000 and 0 shares issued and outstanding, respectively				600,000		-

STOCKHOLDERS' DEFICIT:
	Preferred stock at $0.001 par value: 50,000,000 shares authorized,
		2,063,335 shares issued and outstanding			2,063		2,063

	Common stock at $0.001 par value: 1,500,000,000 shares authorized,
		31,931,665 and 16,395,315 shares issued and outstanding, respectively			31,933		16,397
	Additional paid-in capital				12,383,161		11,776,493
	Deficit accumulated				(14,052,387)		(13,144,630)

		Total Stockholders' Deficit			(1,635,230)		(1,349,677)

			Total Liabilities and Stockholders' Deficit	$	4,005	$	31,687

The accompanying notes are an integral part of these financial statements.

F-3

WEBSAFETY, INC.

STATEMENTS OF OPERATIONS

For the years ended December 31, 2013 and 2012


			For the year ended		For the year ended
			December 31, 2013		December 31, 2012


REVENUE			$	-	$	-

COST OF GOODS SOLD				-		-

GROSS MARGIN				-		-

OPERATING EXPENSES:
	General and administrative expenses			349,231		899,131
	Loss Contingency			-		(366,623)
	Research and development			84,000		-
	Depreciation and amortization expense			3,160		48,585

		Total operating expenses		436,391		581,093

LOSS FROM OPERATIONS				(436,391)		(581,093)

OTHER INCOME (EXPENSES)
	Income from forgiven debt			-		48,494
	Income from forgiven accrued interest			854		-
	Income from forgiven account payable			10,297		-
	Other income			-		25
	Loss on extinguishment of debt			(166,928)		-
	Derivative revaluation			116		-
	Amortization of beneficial conversion			(285,780)		(537,592)
	Interest expense			(29,925)		(72,577)

	Total other Income (Expenses)			(471,366)		(561,650)

LOSS BEFORE INCOME TAX PROVISION				(907,757)		(1,142,743)

INCOME TAX PROVISION				-		-

NET LOSS			$	(907,757)	$	(1,142,743)

NET LOSS PER COMMON SHARE
	- BASIC AND DILUTED:		$	(0.032)	$	(0.082)

	Weighted common shares outstanding
		- basic and diluted		27,942,571		13,871,806

The accompanying notes are an integral part of these financial statements.

F-4

WEBSAFETY, INC.

STATEMENTS OF STOCKHOLDERS' (DEFICIT)

For the Period from December 31, 2010 through December 31, 2013


		Preferred Stock, $0.001 Par Value			Common Stock, $0.001 Par Value			Additional				Total
		Number of			Number of			Paid-in		Deficit		Stockholders'
		Shares	Amount		Shares	Amount		Capital		Accumulated		Deficit

Balance, December 31, 2011		2,863,335	$	2,863	4,384,497	$	4,386	$	10,223,383	$	(12,001,887)	$	(1,771,255)

Issuances of common stock for services:
	March 20, 2012 one issuance at $0.01				125,000		125		24,875		-		25,000
	April 1, 2012 one issuance at $0.005				300,000		300		29,700		-		30,000
	June 1, 2012 one issuance at $0.015				150,000		150		44,850		-		45,000
	June 1, 2012 one issuance at $0.016				3,125		3		997		-		1,000

Conversion of notes to common stock					11,380,519		11,381		503,019		-		514,400

Stock Compensation expense							-		385,796		-		385,796

Beneficial Conversion Feature of promissory notes									562,125		-		562,125

Preferred shares converted into common shares at the
	conversion rate of 1:1.25	(800,000)		(800)	50,000		50		750		-		-

Issuances of common stock for services on October 3,
	2012 at $0.02 per share				2,174		2		998		-		1,000

Net loss for the year ended December 31, 2012											(1,142,743)		(1,142,743)

Balance, December 31, 2012		2,063,335	$	2,063	16,395,315	$	16,397	$	11,776,493	$	(13,144,630)	$	(1,349,677)
									-

Beneficial conversion feature of promissory notes									230,089		-		230,089

Loss on extinguishment of debt from incremental
increase in beneficial conversion feature									166,928				166,928

Conversion of accrued expenses and notes to common stock					14,136,350		14,136		177,472		-		191,608

Conversion of accounts payable					150,000		150		8,429				8,579

Issuances of common stock for services:
	July 3, 2013 two issuances at $0.001 per share	-		-	1,250,000		1,250		23,750		-		25,000

Net loss for the year ended December 31, 2013											(907,757)		(907,757)

Balance, December 31, 2013		2,063,335	$	2,063	31,931,665	$	31,933	$	12,383,161	$	(14,052,387)	$	(1,635,230)

The accompanying notes are an integral part of these financial statements.

F-5

WEBSAFETY, INC.

STATEMENTS OF CASH FLOWS

For the years ended December 31, 2013 and 2012


			For the year ended		For the year ended
			December 31, 2013		December 31, 2012


CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss			$	(907,757)	$	(1,142,743)

Adjustments to reconcile net loss to net cash used in operating activities
	Depreciation and amortization expense			3,160		48,585
	Interest expense			2,500		-
	Loss on extinguishment of debt			166,928		-
	Amortization of beneficial conversion			285,780		537,592
	Amortization of debt discount			1,710		-
	Derivative revaluation			(116)		-
	Derivative liability			13,564		-
	Stock compensation expense			-		385,796
	Stock issued for services - non-cash			25,000		102,000
	Gain on adjustment of Loss Contingency			-		(325,000)
	Income from forgiven accounts payable			(10,297)		-
	Income from forgiven accrued interest			(854)		-
Changes in operating assets and liabilities:
		Increase in prepaid expense		-		-
		Increase (decrease) in deposit		-		-
		Increase (decrease) in accounts payable		2,640		(172,201)
		Decrease in Loss Contingency		-		(75,000)
		Increase (decrease) in accrued interest		10,139		-
		Increase (decrease) in accrued expense		(8,209)		(16,740)

NET CASH USED IN OPERATING ACTIVITIES				(415,812)		(657,711)

CASH FLOWS FROM FINANCING ACTIVITIES:
	Increase (decrease) in cash overdraft			-		(700)
	Decrease in liability to issue shares			-		(25,000)
	Loan repayments					(17,735)
	Proceeds from borrowing			40,000		446,056
	Proceeds of advances from shareholders			351,290		280,482
	Proceeds from sale of common stock			-		-

NET CASH PROVIDED BY FINANCING ACTIVITIES				391,290		683,103

NET CHANGE IN CASH				(24,522)		25,392

Cash at beginning of period				25,392		-

Cash at end of period			$	870	$	25,392

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
	Interest paid		$	-	$	-
	Income tax paid		$	-	$	-

NON-CASH INVESTING AND FINANCING ACTIVITIES:
	Conversion of accrued expenses to common stock		$	13,619	$	-
	Conversion of notes to common stock		$	186,569	$	514,400
	Conversion of accrued expenses to preferred stock		$	52,713	$	-
	Conversion of notes to preferred stock		$	547,287	$	-

The accompanying notes are an integral part of these financial statements.

F-6

WEBSAFETY, INC.

NOTES TO THE FINANCIAL STATEMENTS

December 31, 2013 and 2012

Note 1. Background Information

Organization and Business

Websafety, Inc. was originally incorporated as Promotions on Wheels Holdings, Inc.in July 2006 and was a development stage company with planned operations to offer live promotions and marketing events using custom-built mobile displays.

In 2008, we entered into a License Agreement with WQN, Inc. that provided us exclusive rights for 12 months to market and sell their software products to various national retail chains and that also provided us with a nonexclusive right to market and sell worldwide. In 2009 we acquired Websafety Technology from WQN, Inc. in exchange for 1,350,000 post-split shares of our common stock and totaling $2,700,000.

Presently we are focused on worldwide marketing, selling, and distributing Internet software applications for cellphones. These Websafety and Cellsafety products help protect children from suspicious online behavior and cyberbullying.

The Company is currently revising and updating its software applications and intends to re-launch it during 2014.

Note 2. Significant Accounting Policies

Basis of Presentation

The Financial Statements and related disclosures have been prepared pursuant to the rules and regulations of the SEC. The Financial Statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

In the opinion of management, all adjustments necessary to present fairly the financial position, results of operations, and cash flows at December 31, 2013, and for all periods presented herein, have been made.

Cash and Cash Equivalents

For the purpose of the financial statements cash equivalents include all highly liquid investments with maturity of three months or less. Cash and cash equivalents were $870 and $25,392 at December 31, 2013 and 2012, respectively.

Cash Flows Reporting

The Company follows ASC 230, Statement of Cash Flows, for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by ASC 230, Statement of Cash Flows, to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period.

F-7

WEBSAFETY, INC.

NOTES TO THE FINANCIAL STATEMENTS

December 31, 2013 and 2012

Commitments and Contingencies

The Company follows ASC 440, Commitments and ASC 450, Loss Contingencies, to report accounting for commitments and contingencies.

Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. There were no commitments or contingencies at December 31, 2013 and 2012.

Convertible Notes Payable

The Company evaluated the terms of their outstanding notes in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that a portion of their outstanding debt had underlying common stock not indexed to the Company’s common stock. The Company determined that the conversion feature met the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability. For all other remaining outstanding debt, the Company evaluated the conversion feature for a beneficial conversion feature. The effective conversion price was compared to the market price on the date of the notes and was deemed to be less than the market value of underlying common stock at the inception of the note.

Earnings per Share

The Company computes basic and diluted earnings per share amounts in accordance with ASC Topic 260, Earnings per Share. Basic earnings per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company.

For the years ended December 31, 2013 and 2012, the effect of common stock equivalents has been excluded from the calculation of diluted earnings per share as their effect would be anti-dilutive.

The Company does not have any potentially dilutive instruments as of December 31, 2013 and, thus, anti-dilution issues are not applicable.

At December 31, 2013, there were 1,990,000 stock options outstanding.

Fair Value of Financial Instruments

F-8

WEBSAFETY, INC.

NOTES TO THE FINANCIAL STATEMENTS

December 31, 2013 and 2012

Level 1. Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2. Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3. Pricing inputs that are generally unobservable inputs and not corroborated by market data.

It is not, however, practical to determine the fair value of advances from stockholders, if any, due to their related party nature.

Property & Equipment

Property and equipment are stated at cost. Depreciation was calculated using the straight-line method over the estimated useful lives of the related assets, ranging from three to seven years. Expenditures for additions and improvements were capitalized, while repairs and maintenance costs were expensed as incurred. The cost and related accumulated depreciation of property and equipment sold or otherwise disposed of were removed from the accounts and any gain or loss was recorded in the year of disposal. Depreciation expense for the years ended December 31, 2013 and 2012 was $3,160 and $3,155, respectively.

The Company follows ASC 985-20, Costs of Software to be Sold, Leased, or Marketed. Intangible property assets are stated at their fair value acquisition cost. Costs are expensed prior to technological feasibility and capitalized thereafter until available for general release to the public. After the software is brought to market, the costs of maintenance and customer support will be charged to expense when related revenue is recognized or when the costs are incurred. Amortization of intellectual property assets is calculated by the straight line method over their remaining estimated economic lives and starts when the software is available for general release to customers. Amortization is expensed to cost of sales. Historical costs are reviewed and evaluated for their net realizable value of the assets. Amortization expense for the years ended December 31, 2013 and 2012 was $0 and $45,430.

Related Parties

The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. Related party transactions for the periods ending December 31 2013 and 2012 were comprised of convertible notes payable (see Note 6) and related part debt converted to equity (see Note 10).

F-9

WEBSAFETY, INC.

NOTES TO THE FINANCIAL STATEMENTS

December 31, 2013 and 2012

Stock Based Compensation

ASC 718, Compensation - Stock Compensation, prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, Equity - based Payments to Non-Employees. Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.

Research and Development

Research and development expenses include expenses associated with product development. Research and development expenses also include third-party development and programming costs, localization costs incurred to translate software for international markets, and the amortization of purchased software code and services content. Such costs related to software development are included in research and development expense until the point that technological feasibility is reached, which for our software product, is generally shortly before the products is released to manufacturing. Once technological feasibility is reached, such costs are capitalized and amortized to cost of revenue over the estimated life of the product.

Recently Issued Accounting Pronouncements

Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company.

We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.

Reclassification

Certain accounts in the prior-year financial statements have been reclassified for comparative purposes to conform to the presentation in the current-year financial statements.

Note 3. Going Concern

F-10

WEBSAFETY, INC.

NOTES TO THE FINANCIAL STATEMENTS

December 31, 2013 and 2012

Note 4. Property and Equipment

The Company follows ASC 360, Property, Plant, and Equipment, for its fixed assets. Equipment is stated at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets (3-7 years). All equipment with an acquisition value greater than $500 and a useful life of over one year is capitalized.

Property and equipment consist of the following at December 31, 2013 and December 31, 2012:



	2013		2012
Property and Equipment
Equipment	$	16,689	$	16,689
Less accumulated depreciation and amortization		(13,554)		(10,394)
Total property and equipment	$	3,135	$	6,295

Depreciation expense for the years ended December 31, 2013 and 2012 totaled $3,160 and $3,155 respectively.

Note 5. Accrued expenses

Accrued expenses consisted of professional fees, primarily of legal fees due to a related party and audit and review fees.

Note 6. Convertible Notes Payable - Shareholders

Unless otherwise stated, all convertible notes payable-shareholders are due on demand and bear interest at a rate of 5%. Unless otherwise stated, holders have the right to convert at any time all or any unpaid principal and interest into shares of the Company’s common stock at a price equal to $0.00075 per share. The holder of all but one of the convertible notes is Rowland W Day II, a related party. See Note 10.

The Company’s convertible promissory notes payable to shareholders consisted of the following:


		December 31, 2013		December 31, 2012
December 31, 2013; $99,092	$	99,092	$	---
December 31, 2013; $60,250		60,250		---
September 30, 2013; $17,372		16,994		---
September 30, 2013; $53,375		53,375		---
June 30, 2013; $37,440		37,440		---
June 30, 2013; $54,000		54,000		---
March 31, 2013; $20,813		20,813		---
March 31, 2013; $9,398		---		---
December 31, 2012; $3,771		---		3, 771
December 31, 2012; $9,237		9,237		9,237
September 30, 2012; $57,437		45,437		45,437
September 30, 2012; $16,132		---		16,132
June 30, 2012; $18,063		---		18,063
June 30, 2012; $83,125		83,125		83,125
April 1, 2012; $30,000. Convertible at $0.005 per share.		30,000		30,000
March 31, 2012; $62,250		62,250		62,250
March 31, 2012; $12,467		---		12,467
December 31, 2011; $7,250		---		7,250
December 31, 2011; $15,952		15,952		15,952
October 4, 2011; $516,134		115,330		366,134
October 4, 2011; $229,401		---		229,400
	$	703,295	$	899,218

F-11

WEBSAFETY, INC.

NOTES TO THE FINANCIAL STATEMENTS

December 31, 2013 and 2012

During the years ended December 31, 2013 and 2012, a total of $547,287 and $173,373, respectively, was converted. During the years ended December 31, 2013 and 2012, $0 and $12,000, respectively, was repaid in cash.

In June 2012, the Company authorized a change in conversion of Rowland Day’s notes from $.005 to $0.0075. That authorization should have been for $0.00075. Effective September 1, 2013, the conversion rate of the notes was modified from $0.005 to $0.00075. The Company evaluated the application of ASC 470-50, Debtor’s Accounting for a Modification or Exchange of Debt Instrument as it applies to the notes described above

The debt transaction is considered an extinguishment since the fair value of the embedded conversion option changed by more than 10% of the carrying amount of the original debt instrument(s) immediately before the modification or exchange. This change resulted in an additional beneficial conversion of the debt which is recorded as a loss on extinguishment of debt and totaled $166,928.

Note 7. Notes Payable

Unless otherwise stated all notes payable are convertible, due on demand and bear interest at a rate of 8%. Unless otherwise stated, all or any unpaid principal and interest are convertible into shares of the Company’s common stock at a price equal to $0.005 per share.

The Company’s convertible promissory notes payable consisted of the following at:


		December 31, 2013		December 31, 2012

October 22, 2013; $42,500. Due July 24, 2014; Interest rate 8%. Convertible at a price equal to 58% of the market price.	$	42,500	$	---
October 1, 2012; $8,769		---		8,769
September 19, 2012; $63,000. Due June 21, 2013; Interest rate 8%. Convertible at a price equal to 58% of the market price.		---		63,000
July 5, 2012; $63,000. Due April 10, 2013; Interest rate 8%. Convertible at a price equal to 61% of the market price.		---		63,000
June 6, 2012; $18,800		---		18,800
April 9, 2012; $63,054. Due August 31, 2012		63,054		63,054
February 27, 2012; $13,000		---		13,000
February 24, 2012; $20,000		---		20,000
July 23, 2010; $11,228. Interest rate of 5%. Not convertible.		11,228		11,228
Unamortized discount on notes payable		(11,854)		(50,919)
	$	104,928	$	209,932

During the year ended December 31, 2013 and 2012, a total of $186,569 and $345,761, respectively was converted. During the years ended December 31, 2013 and 2012 no amounts were repaid in cash.

Based on the intrinsic value of the conversion feature, the Company determined that there was a beneficial conversion feature associated with some of the notes payable and all the shareholders’ notes. As a result of the beneficial conversion feature exceeding the proceeds received from the promissory notes, management discounted the notes 100% and will amortize this discount over the life of the note. During the years ended December 31, 2013 and 2012, amortization of the beneficial conversion feature was $285,780 and $537,592, respectively. As of December 31, 2013, the total unamortized discount on notes was $11,854.

Note 8. Derivative Liability

The Company issued convertible notes payable that provide for the issuance of common stock with variable conversion provisions. The conversion terms of the convertible note are variable based on certain factors, such as the future price of the Company’s common stock. The number of shares of common stock to be issued is based on the future price of the Company’s common stock. The number of shares of common stock issuable upon conversion of the promissory note is indeterminate. Due to the fact that the number of shares of common stock issuable was not a fixed number, pursuant to ASC 815-15 Embedded Derivatives, the fair values of the variable conversion option was recorded as derivative liabilities on the issuance date.

F-12

WEBSAFETY, INC.

NOTES TO THE FINANCIAL STATEMENTS

December 31, 2013 and 2012

The fair values of the Company’s derivative liabilities were estimated at the issuance date and are revalued at each subsequent reporting date. The Company recorded current derivative liabilities of $13,448 and $0 at December 31, 2013 and December 31, 2012, respectively. The change in fair value of the derivative liabilities resulted in a gain of $116 and $0 for the twelve months ended December 31, 2013 and 2012, respectively, which has been reported as other income (expense) in the statements of operations.

The fair value of the conversion provision was determined using Level III inputs through the Black-Scholes Option pricing model with the following inputs:


Stock Price	$0.0016 - 0.0018
Exercise Price	$0.016 - 0.002
Term	6 months
Risk-Free Rate	0.13%
Dividend Yield	0%
Volatility	119.7 - 125.3%

Note 9. Equity

Preferred Shares

The authorized preferred stock of the Company consists of 50,000,000 shares with a par value of $0.001.

Series A

There were 2,063,335 shares of Preferred Stock, Series A issued and outstanding at December 31, 2013 and 2012.

Conversion rights - The holders of the Series A Preferred Stock have the right to convert any or all of their Series A Preferred Stock, at the option of the holder, at any time, into common stock on a one for 1.25 basis.

Series B

There were 1,000 and 0 shares of Redeemable Preferred Stock, Series B issued and outstanding at December 31, 2013 and 2012.

Voting rights - The Series B Preferred Stock is entitled to 5 times that number of votes multiplied by the number of shares of common stock into which the Series B Preferred Stock are convertible.

Dividend rights - The Series B Preferred Stock shall not pay dividend.

Conversion rights - The holders of the Series B Preferred Stock have the right to convert any or all of their Series B Preferred Stock, at the option of the holder, at any time, into common stock on a one for 909,090,909 basis.

Redemption rights - The holders of the Series B Preferred Stock may at each holder’s option to cause the Company to redeem any of shares or all shares of Series B Preferred Stock at a price of six hundred dollars ($600) per share.

Liquidation entitlement - In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the funds and assets of the Company that may be legally distributed to the Company’s shareholders shall be distributed to shareholders.

The Company has classified the Series B Preferred Stock as temporary equity because it is redeemable at the option of the holder.

On June 28, 2013, the Company issued 1,000 shares, to a related party, at $600 per share and totaling $600,000.

F-13

WEBSAFETY, INC.

NOTES TO THE FINANCIAL STATEMENTS

December 31, 2013 and 2012

Common Shares

The authorized common stock of the Company consists of 1,500,000,000 shares with a par value of $0.001. There were 31,931,665 and 16,395,315 shares of common stock issued and outstanding at December 31, 2013 and at December 31, 2012, respectively.

On December 31, 2013, 150,000 shares were issued at $0.0029 per share and totaling $8,579, in exchange for satisfaction of accounts payable.

On July 3, 2013, the Company issued 250,000 shares, at $0.001 per share and totaling $5,000, to a director in exchange for services rendered and another 1,000,000, also at $0.001 and totaling $20,000 per share to a consultant in exchange for administrative services rendered.

On June 30, 2013 the Company issued 3,174,600 shares at $0.0023 per share and totaling $60,568 in settlement of convertible notes payable.

On June 12, 2013 the Company issued a total of 485,000 shares at $0.0006 per share and totaling $5,820 in settlement of convertible notes payable.

On May 24, 2013 the Company issued a total of 2,222,223 shares at $0.0005 per share and totaling $24,000 in settlement of convertible notes payable.

On May 9, 2013 the Company issued a total of 1,698,276 shares at $0.0008 per share and totaling $19,700 in settlement of convertible notes payable.

On April 22 and 24, 2013 the Company issued a total of 2,715,094 shares at $0.0005 per share and totaling $27,820 in settlement of convertible notes payable.

On April 12, 2013 the Company issued a total of 954,545 shares at $0.0006 per share and totaling $10,500 in settlement of convertible notes payable.

In March 2013, the Company issued a total of 1,627,119 shares at $0.0006 per share and totaling $19,200 in settlement of convertible notes payable.

On February 20, 2013, the Company issued 759,493 shares at $0.0008 per share and totaling $12,000 in settlement of convertible notes payable.

On January 14, 2013, 500,000 shares were issued at $0.0012 per share and totaling $12,000 in settlement of convertible notes payable.

Note 10. Related Party Transactions

Consulting, Legal, and Administrative Services

These services consist of management oversight of the operations of the Company; research and development of the products, review of financial operations, capital raising and meetings with investors, potential investors, preparation of the Company’s SEC reports and documents for the Company’s operations.

F-14

WEBSAFETY, INC.

NOTES TO THE FINANCIAL STATEMENTS

December 31, 2013 and 2012

In the aggregate, during the year ended December 31, 2013, the Company owed to related parties as reflected below.


	Consulting, legal and administrative		Loan		Accrued Interest		Total
Rowland W. Day II	$	618,861	$	54,433	$	16,454	$	689,748
Fowler		---		30,000		---		30,000
	$	618,861	$	84,433	$	16,454	$	719,748

Rowland W. Day II is our CEO, CFO and Chairman of the Board, as well as, a principal owner of the company.

Convertible Notes Payable

See Note 7 for the components of the convertible notes payable at December 31, 2013 and 2012.

Equity - Preferred

On June 28, 2013, the Company issued 1,000 shares, to a related party, at $600 per share and totaling $600,000.

Equity - Common

On July 3, 2013, the Company issued 250,000 common shares, at $0.001 per share and totaling $5,000, to a director in exchange for services rendered. The director is also the sister of the company’s sole officer.

Note 11. Share-based Compensation

In November 2009, the Board of Directors and Shareholders adopted the 2008 Stock Option Plan providing for the issuance of up to 10,000,000 shares to Company officers, directors, employees and to independent contractors who provide services to the Company.

Options granted under the 2008 Stock Option Plan vest as determined by the Board of Directors and terminate after the earliest of the following events: expiration of the option as provided in the option agreement, 90 days subsequent to the date of termination of the employee, or ten years from the date of grant (five years from the date of grant for incentive options granted to an employee who owns more than 10% of the total combined voting power of all classes stock at the date of grant). In some instances, granted stock options are immediately exercisable into restricted shares of common stock, which vest in accordance with the original terms of the related options. The Company recognizes compensation expense ratably over the requisite service period.

The option price of each share of common stock shall be determined by the Board of Directors or compensation committee (when one is established), provided that with respect to incentive stock options, the option price per share shall in all cases be equal to or greater than 100% of the fair value of a share of common stock on the date of the grant, except an incentive option granted under the 2008 Stock Option Plan to a shareholder that owns more than 10% of the total combined voting power of all classes of stock, shall have an exercise price of not less than 110% of the fair value of a share of common stock on the date of grant. No participant may be granted incentive stock options, which would result in shares with an aggregate fair value of more than $10,000,000 first becoming exercisable in one calendar year.

In September 2009, 700,000 stock options with an exercise prices ranging from of $0.10 to $0.35 were granted to officers of the Company which vest as follows: 20% at the conclusion of each 12 month period from the 5 year term. These options carry a grant expiration date of 5 years after issuance. In January 2010, 1,400,000 stock options with exercise prices of $0.025 were granted to an officer and a board member of the Company, which vest monthly over a 36 month term. These options carry a grant expiration date of 3 years after issuance. In February 2011, 2,000,000 stock options with exercise price of $.10 were granted to an officer of the Company, which vest monthly over a 12 month term. These options carry a grant expiration date of 1 year after issuance. In February 2011, 330,000 stock options with exercise price of $0.10 were granted to employees of the Company, which vest monthly over a 48 month term. These options carry a grant expiration date of 4 years after issuance.

F-15

WEBSAFETY, INC.

NOTES TO THE FINANCIAL STATEMENTS

December 31, 2013 and 2012

For the years ended December 31, 2013 and 2012, the Company recorded compensation costs for options and shares granted under the plan amounting to $25,000 and $487,796, respectively. A deduction is not allowed for income tax purposes until nonqualified options are exercised. The amount of this deduction will be the difference between the fair value of the Company’s common stock and the exercise price at the date of exercise. The tax effect of the income tax deduction in excess of the financial statement expense, if any, will be recorded as an increase to additional paid-in capital. No tax deduction is allowed for incentive stock options. Accordingly no deferred tax asset is recorded for GAAP expense related to these options.

Management has valued the options at their date of grant utilizing the Black Scholes Merton option pricing model. The fair value of the underlying shares was determined based on the closing price of the Company’s publicly-traded shares as of date of the grant. Further, the expected volatility was calculated using the historical volatility of the Company’s stock.

The risk-free interest rate is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options depending on the date of the grant and expected life of the options. The expected life of options used was based on the contractual life of the option granted. The Company determined the expected dividend rate based on the assumption and expectation that earnings generated from operations are not expected to be adequate to allow for the payment of dividends in the near future.

The following table summarizes the status of the Company aggregate stock options granted under the incentive stock option plan:


	Number	Weighted
	of Shares	Average		Weighted
	Remaining	Intrinsic		Average	Aggregate
Subject to Exercise	Options	Price		Life (Years)	Value
Outstanding as of January 1, 2012	3,990,000	$	.08	3.04	1,920,364
Granted - 2012		$
Forfeited - 2012	(2,000,000)	$
Exercised - 2012	--	$	--	--	--
Outstanding as of January 1, 2013	1,990,000	$	--	--	--
Forfeited - 2013	--	$
Exercised - 2013	--	$	--	--	--
Outstanding as of December 31, 2013	1,990,000	$	--	3.04	--

There are no unvested stock options.

Note 12. Legal Proceedings

On August 28, 2012, Keith Miller, a part time employee of the Company at the time of his departure sued the Company and its officers and directors for fraud. Mr. Miller was previously the Interim Chief Technology Officer of the Company. Mr. Miller alleged that he was induced to work by promises made by the Company’s representatives and he was not paid for his services. The Company paid $4,500 in July 2013 in settlement.

Note 13. Income Taxes

Deferred tax assets

At December 31, 2013, the Company had net operating loss (“NOL”) carry-forwards for Federal income tax purposes of $14,052,387 that begin expiring in 2033. No tax benefit has been reported with respect to these net operating loss carry-forwards in the accompanying financial statements because the Company believes that the realization of the Company’s net deferred tax assets of approximately $4,777,812 was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are fully offset by a valuation allowance of $4,777,812.

F-16

WEBSAFETY, INC.

NOTES TO THE FINANCIAL STATEMENTS

December 31, 2013 and 2012

Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realization. The valuation allowance increased $308,638 over the twelve month period ending December 31, 2012.

Components of deferred tax assets at December 31, 2012 and 2011 are as follows:


		December 31, 2013	December 31, 2012
Net deferred tax assets - Non-current:

Expected income tax benefit from NOL carry-forwards	$	4,777,812	4,469,174
Less valuation allowance		(4,777,812)	(4,469,174)
Deferred tax assets, net of valuation allowance	$	---	---

Income taxes in the statements of operations

A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes is as follows:


		December 31, 2013

Federal statutory income tax rate		34.0%
Change in valuation allowance on net operating loss carry-forwards		(34.0)%
Effective income tax rate		0.0%

Note 14. Patent

On February 19, 2013, the Company received Patent No: US8, 380,176, B2 which covers a method to inhibit the use of multifunction portable communications in moving vehicles. Costs to file the patent were expensed as incurred. The patent does not have an assigned monetary value and it is not reflected in the Company’s financial statements.

Note 15. Subsequent Events

Management has evaluated subsequent events through the date the financial statements were issued. Based on our evaluation the following event(s) have occurred requiring adjustment or disclosure:

In January 2014, the Company completed a 1-for-20 reverse stock split of our common stock, effective as of January 6, 2014. As a result of the reverse stock split, every 20 shares of issued and outstanding common stock has been converted into one share of the company’s common stock. Fractional shares resulting from the reverse split have been rounded up to the nearest whole share. The common stock split was effective with FINRA and in the marketplace on January 6, 2014. After completion of the reverse stock split, the Company amended its Articles of Incorporation and increased its authorized common shares to 1,500,000,000.

The accompanying financial statements and notes to the financial statements give retroactive effect to the reverse split for all periods presented.

F-17

ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

ITEM 9A. Disclosure Controls and Procedures

Our management with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act for the end of the period covered by this Annual Report on Form 10-K. Based on that evaluation, our principal executive officer and principal financial officer have concluded that these controls and procedures were ineffective at December 31, 2013, including those to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC, and is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events.

Report of Management on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that our receipts and expenditures are being made only in accordance with authorization of our management and directors; (iii) provide reasonable assurance regarding prevention or timely detection of the unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Management assessed our internal control over financial reporting as of December 31, 2013. Management based its assessment on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of those controls.

Based on this assessment, management has concluded that as of December 31, 2013, our internal control over financial reporting was ineffective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. We noted that there is a lack of segregation of certain duties at the Company due to the small number of employees with responsibility for general administrative and financial matters. This constitutes a deficiency in financial reporting. Additionally, we failed to properly record the effects of an unusual transaction related to stock options when the Company suspended operations in 2011. We therefore conclude that our internal control over financial reporting were ineffective as of and for the year ended December 31, 2013. At this time, management has decided that considering the employees involved and the control procedures in place, the risks associated with such lack of segregation of duties are insignificant and the potential benefits of adding additional employees to clearly segregate duties do not justify the additional expenses associated with such increases. Management will periodically reevaluate this situation. If the volume of business increases and sufficient capital is secured, it is the Company’s intention to further increase staffing to mitigate the current lack of segregation of duties within the general, administrative and financial functions.

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to final rulings of the SEC that permit us to provide only management’s report in this annual report.

Changes in Internal Controls

We have evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, that there have been no changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting. Inherent limitations exist in any system of control including the possibility of human error and the potential of overriding controls. The effectiveness of an internal control system may also be affected by changes in conditions.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

Our current officers and directors are listed below. Each of our directors will serve for one year or until their respective successors are elected and qualified. Our officers serve at the pleasure of the board of directors.


Name	Age	Position	Start of Term
Rowland W. Day II	58	CEO, CFO and Chairman of the Board	February 25, 2008

Jaimie Day	56	Director	March 15, 2012

Melinda Day	54	Director	March 15, 2012

Rowland W. Day II, 58 years of age, Chief Executive Office, Chief Financial Officer and Chairman of the Board.

Mr. Day is a business corporate lawyer and has practiced law since 1983. Mr. Day is currently a director of RE3W WorldWide, Inc. and Restaurants on the Run.

Jaimie D. Day, 56 years of age, Director.

Mrs. Day has been an interior designer for over 30 years and is a homemaker. She is the wife of Rowland W. Day II, the Company’s CEO and Director.

Melinda Day, 54 years of age, Director.

From 2011 to the present, Ms. Day has been the Finance Data Entry Manager for the Boy Scouts of America, Orange County Council. Prior to 2011, for approximately 25 years, Ms. Day had been a volunteer worker for the Boy Scouts of America at the Orange County Council. Ms. Day is the sister of Rowland W. Day II, the Company’s CEO and Director.

Family Relationships

Jaimie Day is the wife of our CEO and Chairman, Rowland W. Day II. Melinda Day is the sister of our CEO and Chairman of the Board, Rowland W. Day II.

Legal Proceedings

There have been no events under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees, including judgments finding violations of any federal or state securities or commodities law, material to the evaluation of the ability and integrity of any of our directors, executive officers, promoters or control persons during the past five years.

ITEM 11. EXECUTIVE COMPENSATION

Our Chief Executive Officer/Chief Financial Officer are paid on an as-billed basis at the rate of $250 per hour for time expended on behalf of the Company. A convertible promissory note is issued at the end of each quarter for the amount of services expended on behalf of the Company. No compensation of cash or equity has been paid or granted for the services of our directors.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth the securities ownership of our directors, named executive officers, and any person or group who is known to us to be the beneficial owner of more than five percent of our voting stock as of April 4, 2013:


Title of Class	Name and Address of Beneficial Owner(1)	Amount and Natureof Beneficial Owner(1)		Percent of class
Common Stock	Rowland W. Day II(1)		2,000,000		6.26%
	Jaimie Day(1)		-0-
	Melinda Day(1)		250,000-		.7
Common Stock	All directors and executive officers as a group (3 persons)		2,250,000		6.33%

1 Applicable percentage ownership is based on 31,931,665 shares of total voting stock outstanding at April 4, 2014. The number of shares of voting stock owned are those “beneficially owned” as determined under the rules of the SEC, including any shares of voting stock as to which a person has sole or shared voting or investment power and any shares of voting stock which the person has the right to acquire within sixty days through the exercise of any option, warrant or right. All addresses for Mr. and Mrs. Day and Ms. Day are c/o 1 Hampshire Court, Newport Beach, CA 92660.

2 Applicable percentage ownership is based on 1,000 shares of Series B Convertible Preferred stock outstanding at April 4, 2014. Each share of Series B Convertible Preferred stock is convertible into 909,090,909 shares of common stock. The Series B Convertible Preferred stock has 5 times the number of votes that is equal to the number of shares of Common stock into which such holders’ shares of Series B Convertible Preferred stock are convertible.

Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all Shares beneficially owned by them. A person is deemed to be the beneficial owner of securities which may be acquired by such person within sixty days from the date on which beneficial ownership is to be determined, upon the exercise of options, warrants or convertible securities. Each beneficial owner’s percentage ownership is determined by assuming that options, warrants and convertible securities that are held by such person (but not those held by any other person) and which are exercisable, convertible or exchangeable within such sixty day period, have been so exercised, converted or exchanged.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Transactions with Related Persons

In the aggregate, during the year ended December 31, 2013, the Company owed to related parties as reflected below.


	Consulting, legal and administrative	Loan	Accrued Interest	Total
Rowland W. Day II	$618,861	$54,433	$16,454	$698,748
Bryan Fowler		$30,000		$30,000
	$618,861	$84,433	$16,454	$719,748

Rowland W. Day II is our CEO, CFO and Chairman of the Board.


Series B Preferred Stock	Rowland W. Day II and Jaimie D. Day	1,000 shares	100%

On October 4, 2011, the Company entered into a convertible promissory note in the amount of $516,134 including interest of 5% due to Rowland W. Day II on demand. The convertible promissory note provides the holder the right to convert at any time, all or any unpaid principal and interest into shares of the Company’s common stock at a price equal to $0.00075 per share. As of September 30, 2013, $150,000 of this note has been converted to common stock during 2012 and $250,805 of this note has been converted to shares of preferred stock.

On October 4, 2011, the Company entered into a convertible promissory note in the amount of $229,401 including interest of 5% due to Rowland W. Day II on demand. The convertible promissory note provides the holder the right to convert at any time, all or any unpaid principal and interest into shares of the Company’s common stock at a price equal to $0.00075 per share. As of September 30, 2013, this note was converted to shares of preferred stock.

On December 31, 2011, the Company entered into a convertible promissory note in the amount of $15,952 including interest of 5% due to Rowland W. Day II on demand. The convertible promissory note provides the holder the right to convert at any time, all or any unpaid principal and interest into shares of the Company’s common stock at a price equal to $0.00075 per share. As of September 30, 2013, no portion of this note was converted to shares of common stock.

On December 31, 2011, the Company entered into a convertible promissory note in the amount of $7,250 including interest of 5% due to Rowland W. Day II on demand. The convertible promissory note provides the holder the right to convert at any time, all or any unpaid principal and interest into shares of the Company’s common stock at a price equal to $0.00075 per share. As of September 30, 2013, this note was converted to shares of preferred stock.

On March 31, 2012, the Company entered into a convertible promissory note in the amount of $12,467 including interest of 5% due to Rowland W. Day II on demand. The convertible promissory note provides the holder the right to convert at any time, all or any unpaid principal and interest into shares of the Company’s common stock at a price equal to $0.00075 per share. As of September 30, 2013, this note was converted to shares of preferred stock.

On March 31, 2012, the Company entered into a convertible promissory note in the amount of $62,250 including interest of 5% due to Rowland W. Day II on demand. The convertible promissory note provides the holder the right to convert at any time, all or any unpaid principal and interest into shares of the Company’s common stock at a price equal to $0.00075 per share. As of September 30, 2013, no portion of this note was converted to shares of common stock.

On April 1, 2012, the Company entered into a convertible promissory note in the amount of $30,000, due to Bryan Fowler due August 31, 2012. The convertible promissory note provides the holder the right to convert at any time, all or any unpaid principal and interest into shares of the Company’s common stock at a price equal to $0.005 per share. As of September 30, 2013, no portion of this note was converted to shares of common stock.

On June 30, 2012, the Company entered into a convertible promissory note in the amount of $83,125 including interest of 5% due to Rowland W. Day II on demand. The convertible promissory note provides the holder the right to convert at any time, all or any unpaid principal and interest into shares of the Company’s common stock at a price equal to $0.00075 per share. As of September 30, 2013, no portion of this note was converted to shares of common stock.

On June 30, 2012, the Company entered into a convertible promissory note in the amount of $18,063 including interest of 5% due to Rowland W. Day II on demand. The convertible promissory note provides the holder the right to convert at any time, all or any unpaid principal and interest into shares of the Company’s common stock at a price equal to $0.00075 per share. As of September 30, 2013, this note was converted to shares of preferred stock.

On September 30, 2012, the Company entered into a convertible promissory note in the amount of $16,132 including interest of 5% due to Rowland W. Day II on demand. The convertible promissory note provides the holder the right to convert at any time, all or any unpaid principal and interest into shares of the Company’s common stock at a price equal to $0.00075 per share. As of September 30, 2013, this note was converted to shares of preferred stock.

On September 30, 2012, the Company entered into a convertible promissory note in the amount of $57,437 including interest of 5% due to Rowland W. Day II on demand. The convertible promissory note provides the holder the right to convert at any time, all or any unpaid principal and interest into shares of the Company’s common stock at a price equal to $0.00075 per share. As of September 30, 2013, $12,000 was repaid back in 2012, but no portion of this note was converted to shares of common stock.

On December 31, 2012, the Company entered into a convertible promissory note in the amount of $9,237 including interest of 5% due to Rowland W. Day II on demand. The convertible promissory note provides the holder the right to convert at any time, all or any unpaid principal and interest into shares of the Company’s common stock at a price equal to $0.00075 per share. As of September 30, 2013, no portion of this note was converted to shares of common stock.

On December 31, 2012, the Company entered into a convertible promissory note in the amount of $3,771 including interest of 5% due to Rowland W. Day II on demand. The convertible promissory note provides the holder the right to convert at any time, all or any unpaid principal and interest into shares of the Company’s common stock at a price equal to $0.00075 per share. As of September 30, 2013, this note was converted to shares of preferred stock.

On March 31, 2013, the Company entered into a convertible promissory note in the amount of $20,813 including interest of 5% due to Rowland W. Day II on demand. The convertible promissory note provides the holder the right to convert at any time, all or any unpaid principal and interest into shares of the Company’s common stock at a price equal to $0.00075 per share. As of June 30, 2013, no portion of this note was converted to shares of common stock.

On March 31, 2013, the Company entered into a convertible promissory note in the amount of $9,398 including interest of 5% due to Rowland W. Day II on demand. The convertible promissory note provides the holder the right to convert at any time, all or any unpaid principal and interest into shares of the Company’s common stock at a price equal to $0.00075 per share. As of September 30, 2013, this note was converted to shares of preferred stock.

On June 30, 2013, the Company entered into a convertible promissory note in the amount of $37,440 including interest of 5% due to Rowland W. Day II on demand. The convertible promissory note provides the holder the right to convert at any time, all or any unpaid principal and interest into shares of the Company’s common stock at a price equal to $0.00075 per share. As of September 30, 2013, no portion of this note was converted to shares of common stock.

On June 30, 2013, the Company entered into a convertible promissory note in the amount of $54,000 including interest of 5% due to Rowland W. Day II on demand. The convertible promissory note provides the holder the right to convert at any time, all or any unpaid principal and interest into shares of the Company’s common stock at a price equal to $0.00075 per share. As of September 30, 2013, no portion of this note was converted to shares of common stock.

On September 30, 2013, the Company entered into a convertible promissory note in the amount of $53,375 including interest of 5% due to Rowland W. Day II on demand. The convertible promissory note provides the holder the right to convert at any time, all or any unpaid principal and interest into shares of the Company’s common stock at a price equal to $0.00075 per share. As of September 30, 2013, no portion of this note was converted to shares of common stock.

On September 30, 2013, the Company entered into a convertible promissory note in the amount of $17,372 including interest of 5% due to Rowland W. Day II on demand. The convertible promissory note provides the holder the right to convert at any time, all or any unpaid principal and interest into shares of the Company’s common stock at a price equal to $0.00075 per share. As of September 30, 2013, $378 was given as credit to this note and no portion of this note was converted to shares of common stock.

On December 31, 2013, the Company entered into a convertible promissory note in the amount of $99,092 including interest of 5% due to Rowland W. Day II on demand. The convertible promissory note provides the holder the right to convert at any time, all or any unpaid principal and interest into shares of the Company’s common stock at a price equal to $0.00075 per share.

On December 31, 2013, the Company entered into a convertible promissory note in the amount of $60,250 including interest of 5% due to Rowland W. Day II on demand. The convertible promissory note provides the holder the right to convert at any time, all or any unpaid principal and interest into shares of the Company’s common stock at a price equal to $0.00075 per share.

Effective September 1, 2013, the conversion rate of Rowland Day’s notes were modified from $0.005 to $0.00075. On June 30, 2012, the Company had authorized the change in the conversion rate to $0.0075 in error. The debt transaction is considered an extinguishment since the fair value of the embedded conversion option changed by more than 10% of the carrying amount of the original debt instrument immediately before the modification or exchange. This change resulted in additional beneficial conversion feature of the debt which is reported as a loss on extinguishment of debt of $166,928.

Each loan above has a right to convert to common stock. During the nine months ended September 30, 2013, $547,287 of above mentioned notes were converted into shares of redeemable preferred stock. See Note 9 for redeemable preferred stock classification.

The services that were provided are outlined below.

Consulting, Legal and Administrative Services-These services consist of management oversight of the operations of the Company; review of financial operations, capital raising and meetings with investors and potential investors, preparation of the Company’s SEC reports and documents for the Company’s operations.

Director Independence

It is our position that Mr. Day and Mrs. Day are not independent.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table sets forth the aggregate fees billed to us for the fiscal years ended December 31, 2013 and 2012.


Audit Fees:	Fiscal Year 2013		Fiscal Year 2012
EFP Rotenberg LLP	$	14,250	$	17,000
Audit Related Fees: EFP Rotenberg LLP(1)	$	9,146	$	13,500
Audit Related Fees DHW CPA. PLLC	$	4,000

(1)Review and assistance with comment letters and Company responses.

Tax Fees

There were no fees paid in either 2013 or 2012 for tax related matters.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULE


Exhibit No.	Description
3.1	Amended and Restated Certificate of Incorporation of Blindspot Alert, Inc., a Nevada corporation. Incorporated by reference to our current report on Form 14-C filed with the SEC on December 5, 2008.
10.1	Incorporated by reference to our current report on Form 8-K filed with the SEC on July 25, 2008 License Agreement dated June 30, 2008.
31.1	Rule 13a-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a) Certification of Chief Financial Officer
32.1	Certification of Chief Executive Officer Pursuant to 18.U.S.C. Section 1350, as Pursuant to Section 906 of the Sarbanes Oxley Act of 2002
32.2	Certification of Chief Financial Officer Pursuant to 18.U.S.C. Section 1350, as Pursuant to Section 906 of the Sarbanes Oxley Act of 2002

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	WEBSAFETY, INC.


Date: April 15 2014		By:	/s/ Rowland W. Day II
		Rowland W. Day II,
		Chief Executive Officer

Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:


Signature	Title(s)	Date

/s/ Rowland W. Day II	Chief Executive Officer	April 15, 2014
Rowland W. Day II

/s/ Jaimie Day	Director	April 15, 2014
Jamie Day

/s/ Melinda Day	Director	April 15, 2014
Melinda Day