RDAR Setting Up For A Reverse Split!
Let's look at some of the highlights of the last 10-Q:
The Company currently has no sales and limited marketing and/or distribution capabilities. The Company has limited experience in developing, training or managing a sales force and will incur substantial additional expenses if we decide to market any of our current and future products. Developing a marketing and sales force is also time consuming and could delay launch of our future products. In addition, the Company will compete with many companies that currently have extensive and well-funded marketing and sales operations. Our marketing and sales efforts may be unable to compete successfully against these companies. In addition, the Company has limited capital to devote sales and marketing.
In October to December 2015, the Company issued eight convertible promissory note to various third parties resulting proceeds of $312,000. The convertible notes included on issuance discounts of $45,125 which are included as part of the discount to the convertible notes disclosed below. Upon issuance total principal due on the convertible notes at maturity is $357,125. The convertible notes bears interest rates ranging from 4% to 10%, due at dates ranging from March 2016 to July 2017, and are convertible any time after issuance at a variable conversion prices calculated as the lower of prices ranging from $0.10 to $0.30 or discounts ranging from 50% to 55% of the lowest trading price in the 20 to 25 days prior to conversion. In addition, the principal balance of one of the convertible notes increases from $123,625 to $247,250 if not repaid by June 9, 2016. The increase will not be trigged until the repayment isn't made. As of March 31, 2016, these convertible notes were convertible into approximately 523 million shares of common stock.
In connection with two of the convertible notes discussed above the Company issued a total of 500,000 shares of common stock and warrants to purchase 250,000 shares of common stock. The Company valued the common shares at $11,950 based upon the closing market price of the Company's common stock on the date of the agreement. The warrants were valued at $11,184 based upon the Black-Scholes inputs disclosed in within the Company's Form 10-K. The Company recorded the value of these items as interest expense as the convertible notes had already been fully discounted due to the on issuance discounts and derivative liabilities, as discussed below.
Based on these valuations, the derivatives were recorded at their initial value of $492,730. The convertible notes were fully discounted at issuance due to the associated derivative liabilities being in excess of the convertible notes payable. The excess fair value of $186,954 was immediately expensed as a loss on the fair value of the derivative liabilities during the year ended December 31, 2015. During the three months ended March 31, 2016, interest expense from accretion of the discount was $125,221 with $167,874 of the discount remaining as of March 31, 2016. At March 31, 2016, the derivative liabilities were re-valued at $612,980. See below for weighted average variables used. During the three months ended March 31, 2016, the gain on the fair value of the derivative liability was $588,422.
2016
During the three months ended March 31, 2016, the Company entered into four convertible notes with stated principal balances of $188,900, of which $179,950 in proceeds were received. The difference between the stated principal balance and proceeds received related to on issuance discounts and fees withheld from the proceeds by the lender. The convertible notes bears interest rates ranging from at 8-12%, are due at dates ranging from September 2016 to March 2017, and are convertible any time after issuance at a variable conversion price calculated at discounts ranging from 50 to 55% of the lowest trading price in the 10-20 days prior to conversion. On the date of issuance one of these notes was not convertible into shares of convertible common stock and thus a derivative liability wasn't recorded. The note becomes convertible 180 days after the agreement date. As of March 31, 2016, these convertible notes were convertible into approximately 166 million shares of common stock.
Mmmmmm... Dilution!
Revenues and Costs of Goods Sold. The Company had no revenues or cost of goods sold during the three months ended March 31, 2016 and 2015 due to the Company not having any active sales contracts or products in which could generate revenues. In 2015, the Company expects minimal revenues due to the recent launch of RAADR in September 2015. In addition, the Company lacks sufficient capital to promote this product.
Salaries and Wages. As of March 31, 2016, we had no employees. Salaries and wages expensed during the quarters ended March 31, 2016 and 2015 were $17,944 and $116,596, respectively.
