Facts:
Company has just increased the A/S by 80%
Cash on hand = $2k
Prepaid consulting fees (assets) = about $660k
Liabilities = about $1.4 MM
G&A burn rate = $388k per quarter
Interest expense = $45k per quarter
Revenue = $0
Advertising burn rate = $31k per quarter
Unpaid convertible debentures with 14% interest rate = $416k
Clearly, the company needs to issue more stock to implement its business plan. That is in fact what they are doing as shown by these subsequent events that have happened since the last 10Q filing. This is not a "bad" thing if the ultimate goal of advancing their product to market is achieved, however, at some point one needs to stop the bleeding and generate cash from sales instead of stock liquidation (and the resulting impact to shareholder value):
The Company has incurred operating losses of $ 3,113,853 since inception, has limited financial resources and a working capital deficit of $866,223 at March 31, 2013.
On April 19, 2013 the Company entered into a one year Convertible debenture with Asher Enterprises, Inc. in the amount of $32,500. The note bears an interest rate of 8% per annum.
On April 2, 2013, the Company entered into a 60-day promissory note in the total amount of $50,000, with Curtis and Janet Threat. The note bears an interest rate of 16% per annum.
During April and May 2013, the Company allowed several of its convertible debenture holders to transfer their convertible debentures totaling $90,000 through a Securities Purchase agreement. On April 18, 2013 a partial conversion of $5,000 was approved by the board of directors however the conversion has not occurred as of the date of this report, resulting in unissued common stock totaling 333,334.
On April 10, 2013, the Company entered into a four month Strategic Consulting agreement with Mosaic Media Group, LLC covering business planning, marketing and advertising advice and planning and public relations and investor relations services. Consideration is in the form of a cash payment of $12,500.
On May 1, 2013, the Company entered into a two-year media and marketing services agreement with Shade Global. Consideration for this contract will be in the form of cash and warrants.
On May 3, 2013, the Company changed auditing firms and retained HJ & Associates, LLC to provide future audit services. Form 8k reflecting the change was filed with the SEC on May 9, 2013.
