ITEM 7A. QUANTITATIVE AND QUALITIATIVE DISCLOSURES ABOUT MARKET RISK
We are a Smaller Reporting Company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements
IC Places, Inc.
(Formerly known as IC Punch Media, Inc.)
As of December 31, 2013 and 2012
Financial Statements:
|
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
Balance Sheets
|
F-3
|
Statements of Operations
|
F-4
|
Statements of Changes in Stockholders' Equity
|
F-5
|
Statements of Cash Flows
|
F-6/F-7
|
Notes to Financial Statements
|
F-8 through F-14
|
|
|
2451 N. McMullen Booth Road
Suite.308
Clearwater, FL 33759
Toll fee: 855.334.0934
Fax: 800.581.1908
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
IC Places, Inc.
We have audited the accompanying balance sheets of IC Places, Inc. as of December 31, 2013 and 2012, and the related statements of operations, stockholders' deficiency, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits 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 audits 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 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 audits 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 IC Places, Inc. as of December 31, 2013 and 2012, and the results of its operations and its cash flows for the years 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 shown in the accompanying financial statements, the Company has significant net losses and cash flow deficiencies. Those conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans regarding those matters are described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ DKM Certified Public Accountants
DKM Certified Public Accountants
Clearwater, Florida
April 15, 2014 and for the changes mentioned in the explanatory note on April 30, 2014
|
|
PCAOB Registered
|
|
|
AICPA Member
|
|
|
|
IC Places, Inc.
(Formerly known as IC Punch Media, Inc.)
|
Balance Sheet
|
|
|
|
December 31, 2013
|
|
|
December 31, 2012
|
|
|
|
(restated)
|
|
|
(audited)
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash
|
|
$
|
---
|
|
|
$
|
1,121
|
|
Accounts receivable
|
|
|
3,200
|
|
|
|
6,688
|
|
Allowance for doubtful accounts
|
|
|
(3,200
|
)
|
|
|
---
|
|
Prepaid expenses
|
|
|
87,260
|
|
|
|
146,010
|
|
Total current assets
|
|
|
87,260
|
|
|
|
153,819
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net of depreciation
|
|
|
8,108
|
|
|
|
1,341,835
|
|
Intangible assets, net of amortization
|
|
|
---
|
|
|
|
1,391,382
|
|
|
|
|
8,108
|
|
|
|
2,733,217
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
95,368
|
|
|
$
|
2,887,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders' deficit
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Bank overdraft
|
|
|
398
|
|
|
|
8,276
|
|
Accrued liabilities
|
|
|
31,150
|
|
|
|
29,339
|
|
Accrued Interest
|
|
|
5,736
|
|
|
|
43,154
|
|
Convertible note payable, net of discount
|
|
|
285,989
|
|
|
|
279,335
|
|
Derivative liability
|
|
|
177,761
|
|
|
|
399,566
|
|
Advances from stockholder
|
|
|
---
|
|
|
|
28,991
|
|
Total current liabilities
|
|
|
501,034
|
|
|
|
788,661
|
|
|
|
|
|
|
|
|
|
|
Stockholders' deficit
|
|
|
|
|
|
|
|
|
Common stock, $.00001 par value;
|
|
|
|
|
|
|
|
|
4,000,000,000 shares authorized;
|
|
|
|
|
|
|
|
|
31,604,333 and 12,844,523 shares outstanding
|
|
|
316
|
|
|
|
128
|
|
Additional paid in capital
|
|
|
13,795,490
|
|
|
|
10,436,698
|
|
Unearned stock based compensation
|
|
|
---
|
|
|
|
(2,710
|
)
|
Common stock receivable
|
|
|
---
|
|
|
|
---
|
|
Accumulated deficit
|
|
|
(14,201,472
|
)
|
|
|
(8,335,741
|
)
|
Total Stockholders' Deficit
|
|
|
(405,666
|
)
|
|
|
2,098,375
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' deficit
|
|
$
|
95,368
|
|
|
$
|
2,887,036
|
|
The accompanying notes are an integral part of these financial statements
(Formerly known as IC Punch Media, Inc.)
|
Statements of Operations
|
|
|
For the twelve months
|
|
|
For the twelve months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
December 31, 2013
|
|
|
December 31, 2012
|
|
|
|
(restated)
|
|
|
(audited)
|
|
|
|
|
|
|
|
|
NET REVENUES
|
|
$
|
-
|
|
|
$
|
195,082
|
|
|
|
|
|
|
|
|
|
|
COST OF SERVICES
|
|
|
-
|
|
|
|
224,881
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
(29,799
|
)
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
225,460
|
|
|
|
463,829
|
|
Depreciation
|
|
|
1,713
|
|
|
|
147,525
|
|
Stock Compensation
|
|
|
3,022,710
|
|
|
|
4,781,000
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
3,249,883
|
|
|
|
5,392,354
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME/(LOSS)
|
|
|
(3,249,883
|
)
|
|
|
(5,422,153
|
)
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion
|
|
|
---
|
|
|
|
---
|
|
Loss on conversion of debt
|
|
|
(18,000
|
)
|
|
|
---
|
|
Gain on forgiveness of debt
|
|
|
28,941
|
|
|
|
19,042
|
|
Interest income
|
|
|
1
|
|
|
|
---
|
|
Interest expense
|
|
|
(21,157
|
)
|
|
|
(329,060
|
)
|
Loan default expense
|
|
|
(77,750
|
)
|
|
|
---
|
|
Change in derivative
|
|
|
135,636
|
|
|
|
(487,110
|
)
|
|
|
|
|
|
|
|
|
|
Total other income (expense)
|
|
|
47,671
|
|
|
|
(797,128
|
)
|
|
|
|
|
|
|
|
|
|
INCOME/(LOSS) FROM CONTINUING OPERATIONS
|
|
|
(3,205,019
|
)
|
|
|
(6,219,281
|
)
|
|
|
|
|
|
|
|
|
|
Loss on disposal of assets
|
|
|
(2,663,519
|
)
|
|
|
---
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
$
|
(5,865,731
|
)
|
|
$
|
(6,219,281
|
)
|
|
|
|
|
|
|
|
|
|
NET LOSS PER COMMON SHARE
|
|
|
|
|
|
|
|
|
- BASIC AND DILUTED:
|
|
$
|
(0.26
|
)
|
|
$
|
(0.69
|
)
|
|
|
|
|
|
|
|
|
|
Weighted common shares outstanding
|
|
|
|
|
|
|
|
|
- basic and diluted
|
|
|
22,665,171
|
|
|
|
9,080,316
|
|
See accompanying notes to the financial statements
IC PLACES, INC.
(Formerly known as IC Punch Media, Inc.)
|
Statement of Changes in Stockholders' Equity
|
|
|
Common Stock,
$0.00001 Par Value
|
|
|
Additional
|
|
|
Unearned
|
|
|
|
|
|
Total
|
|
|
|
Number of
|
|
|
|
|
|
Paid-in
|
|
|
Stock
|
|
|
Accumulated
|
|
|
Stockholders'
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Compensation
|
|
|
Deficit
|
|
|
Deficit
|
|
Balance, December 31, 2011
|
|
|
3,351,087
|
|
|
$
|
34
|
|
|
$
|
1,886,253
|
|
|
$
|
(35,208
|
)
|
|
$
|
(2,116,460
|
)
|
|
$
|
(265,382
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred compensation earned in period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,498
|
|
|
|
|
|
|
|
32,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt and accrued interest converted to shares
|
|
|
4,895,505
|
|
|
|
49
|
|
|
|
900,991
|
|
|
|
|
|
|
|
|
|
|
|
901,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for acquisition of assets
|
|
|
1,350,000
|
|
|
|
13
|
|
|
|
2,848,487
|
|
|
|
|
|
|
|
|
|
|
|
2,848,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for compensation and services
|
|
|
2,510,000
|
|
|
|
25
|
|
|
|
4,780,975
|
|
|
|
|
|
|
|
|
|
|
|
4,781,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for retirement of debt
|
|
|
737,931
|
|
|
|
7
|
|
|
|
19,993
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,219,281
|
)
|
|
|
(6,219,281
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2012
|
|
|
12,844,523
|
|
|
|
128
|
|
|
|
10,436,698
|
|
|
|
(2,710
|
)
|
|
|
(8,335,741
|
)
|
|
|
2,098,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for compensation and services
|
|
|
8,500,000
|
|
|
|
85
|
|
|
|
2,969,915
|
|
|
|
|
|
|
|
|
|
|
|
2,970,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt and accrued interest converted to shares
|
|
|
10,459,810
|
|
|
|
105
|
|
|
|
396,875
|
|
|
|
|
|
|
|
|
|
|
|
396,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt conversion shares cancelled
|
|
|
(300,000
|
)
|
|
|
(3
|
)
|
|
|
(35,997
|
)
|
|
|
|
|
|
|
|
|
|
|
(36,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt converted to shares
|
|
|
100,000
|
|
|
|
1
|
|
|
|
27,999
|
|
|
|
|
|
|
|
|
|
|
|
28,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,710
|
|
|
|
(5,865,731
|
)
|
|
|
(5,863,021
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2013
|
|
|
31,604,333
|
|
|
$
|
316
|
|
|
$
|
13,795,490
|
|
|
$
|
-
|
|
|
$
|
(14,201,472
|
)
|
|
$
|
(405,666
|
)
|
See accompanying notes to the financial statements.
IC PLACES, INC.
(Formerly known as IC Punch Media Inc.)
|
Statement of Cash Flows
|
|
|
Dec 31, 2013
|
|
|
Dec 31, 2012
|
|
|
|
(restated)
|
|
|
(audited)
|
|
|
|
|
|
|
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
Net Loss from Operations
|
|
$
|
(5,865,731
|
)
|
|
$
|
(6,219,281
|
)
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to meet cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
1,713
|
|
|
|
147,525
|
|
Stock Based Compensation
|
|
|
2,972,710
|
|
|
|
4,781,000
|
|
Change in Derivative
|
|
|
135,636
|
|
|
|
487,110
|
|
Amortization of finance costs and debt discounts
|
|
|
98,907
|
|
|
|
329,060
|
|
Beneficial conversion
|
|
|
---
|
|
|
|
58,400
|
|
Gain on forgiveness of debt
|
|
|
(28,941
|
)
|
|
|
(19,042
|
)
|
Loss on conversion of debt
|
|
|
18,000
|
|
|
|
---
|
|
Loss on disposal of assets
|
|
|
2,663,519
|
|
|
|
---
|
|
Bad debt
|
|
|
3,200
|
|
|
|
---
|
|
Decreases (increases) in assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts Receivable
|
|
|
3,488
|
|
|
|
(4,463
|
)
|
Prepaid expenses & other current assets
|
|
|
58,750
|
|
|
|
103,157
|
|
|
|
|
|
|
|
|
|
|
Change in derivative liability
|
|
|
(221,805
|
)
|
|
|
---
|
|
Accounts payable & accrued expenses
|
|
|
(50,163
|
)
|
|
|
49,489
|
|
Net cash (used in) provided by operations
|
|
|
(210,717
|
)
|
|
|
(287,045
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
Capital Expenditures
|
|
|
(2,018
|
)
|
|
|
(22,155
|
)
|
Net cash provided by (used in) investing activities
|
|
|
(2,018
|
)
|
|
|
(22,155
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
Proceeds/(repayments) from notes and loans
|
|
|
240,200
|
|
|
|
374,000
|
|
Stockholder advances, proceeds
|
|
|
12,700
|
|
|
|
121,913
|
|
Stockholder advances, repayments
|
|
|
(41,691
|
)
|
|
|
(189,941
|
)
|
Deferred financing costs
|
|
|
405
|
|
|
|
2,033
|
|
Net cash provided by (used in) financing activities
|
|
|
211,614
|
|
|
|
308,005
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) in Cash
|
|
|
(1,121
|
)
|
|
|
(1,195
|
)
|
|
|
|
|
|
|
|
|
|
Cash, beginning of year
|
|
|
1,121
|
|
|
|
2,316
|
|
|
|
|
|
|
|
|
|
|
Cash, ending
|
|
$
|
---
|
|
|
$
|
1,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non Cash Disclosures
|
|
|
|
|
|
|
|
|
Conversion of debt to equity
|
|
$
|
396,980
|
|
|
$
|
370,500
|
|
Conversion shares cancelled, re-issued
|
|
$
|
8,000
|
|
|
$
|
---
|
|
Conversion of shareholder debt to note
|
|
$
|
---
|
|
|
$
|
20,000
|
|
Default penalty
|
|
$
|
77,750
|
|
|
$
|
---
|
|
Acquisition of assets
|
|
$
|
---
|
|
|
$
|
2,848,500
|
|
See accompanying notes to the financial statements.
IC Places, Inc.
(Formerly known as IC Punch Media, Inc.)
Notes to the Financial Statements
December 31, 2013
(Audited and Restated)
1. Background Information
IC Places, Inc. ("The Company") was formed on March 18, 2005 as a Delaware Corporation and is based in Celebration, Florida. The Company engages in the ownership and operation of a network of city-based websites for use by business and vacation travelers as well as local individuals. The Company's websites provide local information about hotels, restaurant dining, golf courses, discount event tickets, discount car rentals, discount airfare, and attraction tickets.
IC Place's offers marketing tools and expertise to advertisers that combine the quality and power of Flash video, interactive features, the ability to update their information and add special events immediately and as frequently as desired. The IC Places websites also incorporate the most comprehensive online tracking and reporting capabilities. This dramatically enhances the impact and effectiveness of any ad campaign.
On July 10, 2012, IC Places, Inc. ("the Company" or "Buyer") entered into an Asset Purchase Agreement with Punch Television Network ("Punch", "Seller"). Through the agreement, the Buyer has acquire substantially all of the assets, tangible and intangible, owned by Seller that are used in, or necessary for the conduct of, its Television Network business, including, without limitation: (i) the Station Licenses, subject to any obligations contained in disclosed license agreements and all related intellectual property; (ii) the fixed assets of Seller; (iii) any and all customer lists; and (iv) the goodwill associated therewith, all free and clear of any security interests, mortgages or other encumbrances. The aggregate consideration for the assets and business was 135,000,000 shares of restricted common shares of PNCH Stock.
Punch TV is an African American network that includes new programming. Punch TV Network differs from current "African American" television that uses research-driven approaches to target African Americans audiences; Punch TV was designed to deliver entertainment to multicultural audiences. Punch TV represents a Multi-Media experience that satisfies and excites viewers.
Effective May 14, 2013, the Company rescinded the Punch Television Network Agreement and all associated employment agreements and the entire transaction has been cancelled by mutual agreement of both parties. Joseph Collins resigned as President and Director as result of the rescission of the Punch Television Network Agreement. All 285 million shares the Company issued as a result of the previous contracts are expected to remain outstanding.
In September 2013, the Company announced that it will begin broadcasting VU Television, the first 24/7 video network launched by IC Punch Media, Inc. The network will offer original series as well as shows from its production partners. The network will be available free of charge on FilmOn.com, icplaces.com and via the FilmOn mobile app on all iPhone and Android devices as well as several set top devices. VU Television will be one of the first 24/7 networks launched exclusively, and in partnership with FilmOn through the FilmOn platform, and is focused on tapping into this highly profitable 18-34 viewer market which is harder to reach through traditional TV. Under the partnership, FilmOn will offer VU Television full access to its cutting edge broadcast platform and wide bandwidth pipeline. VU Television will use the platform to program and broadcast its network 24/7 in a day parted format. While FilmOn will cover the broadcasting costs, the Company will handle all aspects of running the network and then the two companies will share the advertising revenues.
On December 11, 2013, in accordance with the relevant sections of the Delaware General Corporation Law, the Company's Board of Directors approved the amendment of the Company's Certificate of Incorporation to change the Company's name to IC Places, Inc.
2. Summary of Significant Accounting Policies
The Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company's financial condition and results and require management's most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company's significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.
Basis of Presentation
The Company prepares its financial statements in conformity with generally accepted accounting principles in the United States of America. These principals require 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 revenues and expenses during the reporting period. Management believes that these estimates are reasonable and have been discussed with the Board of Directors; however, actual results could differ from those estimates.
Effective January 1, 2008, the Company adopted FASB ASC 820, "Fair Value Measurements and Disclosures" ("ASC 820"), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements establishes a framework for measuring fair value and expands disclosure about such fair value measurements. The adoption of ASC 820 did not have an impact on the Company's financial position or operating results, but did expand certain disclosures.
Fair Value Measurement
ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:
|
Level 1:
|
Observable inputs such as quoted market prices in active markets for identical assets or liabilities
|
|
Level 2:
|
Observable market-based inputs or unobservable inputs that are corroborated by market data
|
|
Level 3:
|
Unobservable inputs for which there is little or no market data, which require the use of the reporting entity's own assumptions.
|
The Company's balance sheets include the following financial instruments: cash, accounts receivable, accrued liabilities and amounts due to stockholder. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.
Cash and Cash Equivalents
The majority of cash is maintained with a major financial institution in the United States. Deposits with this bank may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed on demand and, therefore, bear minimal risk. The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
Accounts Receivable, Credit and Revenue Recognition
Accounts receivable consist of amounts due for advertising, based on referral agreements. Advertising revenue is recognized when businesses place advertisements on the IC Places website or through banner ads or upon a customer's purchase of partner offerings originated from links through the company website. Punch Television records and recognizes revenue when advertisements are aired through their websites. An allowance for doubtful accounts is considered to be established for any amounts that may not be recoverable, which is based on an analysis of the Company's customer credit worthiness, and current economic trends. Based on management's review of accounts receivable, no allowance for doubtful accounts was considered necessary. Receivables are determined to be past due, based on payment terms of original invoices. The Company does not typically charge interest on past due receivables.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are recorded at the invoiced amount, net of an allowance for doubtful accounts. The Company follows paragraph 310-10-50-9 of the FASB Accounting Standards Codification to estimate the allowance for doubtful accounts. The Company performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer's current credit worthiness, as determined by the review of their current credit information; and determines the allowance for doubtful accounts based on historical write-off experience, customer specific facts and economic conditions.
Pursuant to paragraph 310-10-50-2 of the FASB Accounting Standards Codification account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company has adopted paragraph 310-10-50-6 of the FASB Accounting Standards Codification and determine when receivables are past due or delinquent based on how recently payments have been received.
Outstanding account balances are reviewed individually for collectability. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses in the Company's existing accounts receivable.
As of December 31, 2013 and 2012, the Company recorded $3,200 and $0, respectively in bad debt expense and $3,200 and $0 in allowances for doubtful accounts, respectively.
The Company does not have any off-balance-sheet credit exposure to its customers at December 31, 2013 or December 31, 2012.
Property and Equipment
Property and equipment is stated at cost. Depreciation is computed by the straight-line method over estimated useful lives (3-7 years). The carrying amount of all long-lived assets is evaluated periodically to determine if adjustment to the depreciation and amortization period or the unamortized balance is warranted. Based upon its most recent analysis, the Company believes that no impairment of property and equipment existed at December 31, 2013.
Long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not be recoverable. When required impairment losses on assets to be held and used are recognized based on the fair value of the asset. The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required. If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset. When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate that commensurate with the risk associated with the recovery of the assets. We did not recognize any impairment losses for any periods presented.
The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.
Pursuant to Section 850-10-20 the related parties include a. affiliates of the Company; b. entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved b. description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
Share-based Compensation
All share-based payments to employees, including grants of employee stock options to be 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 had no common stock options or common stock equivalents granted or outstanding for all periods presented.
Advertising Costs
The costs of advertising are expensed as incurred. Advertising expense was $2,661 and $23,761 for the twelve months ended December 31, 2013 and 2012, respectively.
Cash Flows Reporting
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification 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 paragraph 230-10-45-25 of the FASB Accounting Standards Codification 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 pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.
Income Taxes
The Company accounts for income taxes under the liability method. This method provides that deferred tax assets and liabilities are recorded based on the differences between the tax basis of assets and liabilities and their carrying amounts for financial reporting purpose, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.
Earnings (Loss) Per Share
Basic earnings (loss) per share calculations are determined by dividing net income (loss) by the weighted average number of shares outstanding during the year. Diluted earnings (loss) per share calculations are determined by dividing net income (loss) by the weighted average number of shares. There are no options or warrants outstanding, however, convertible notes payable are considered to be common stock equivalents, at the date of their maturity (when available to convert). As of December 31, 2012 and 2011, there are potential share equivalents based on conversion options associated with our debt instruments (approximately 90,870,000 potential shares), however, due to net operating losses sustained anti-dilution issues are not applicable.
Subsequent Events
The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.
The accompanying audited financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern.
The Company incurred a net loss for the twelve months ended December 31, 2013. As of December 31, 2013 the Company had minimal cash with which to satisfy any future cash requirements. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company depends upon capital to be derived from future financing activities such as subsequent offerings of its common stock or debt financing in order to operate and grow the business. There can be no assurance that the Company will be successful in raising such capital. The key factors that are not within the Company's control and that may have a direct bearing on operating results include, but are not limited to, acceptance of the Company's business plan, the ability to raise capital in the future, the ability to expand its customer base, and the ability to hire key employees to build and maintain websites and to provide services and support to its customers and users. There may be other risks and circumstances that management may be unable to predict.
The audited financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
4. 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.
In February 2013, the FASB issued ASU No. 2013-02, "
Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.
" The ASU adds new disclosure requirements for items reclassified out of accumulated other comprehensive income by component and their corresponding effect on net income. The ASU is effective for public entities for fiscal years beginning after December 15, 2013.
In February 2013, the Financial Accounting Standards Board, or FASB, issued ASU No. 2013-04, "
Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for which the Total Amount of the Obligation Is Fixed at the Reporting Date
." This ASU addresses the recognition, measurement, and disclosure of certain obligations resulting from joint and several arrangements including debt arrangements, other contractual obligations, and settled litigation and judicial rulings. The ASU is effective for public entities for fiscal years, and interim periods within those years, beginning after December 15, 2013.
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.
5. Correction of error, restatement of financial statements
The number of shares outstanding as of the date of the filing of the original 10K did not correctly reflect the amount of post-split shares outstanding, as reflected in the table below.
|
As originally reported
|
|
Number of the issuer's Common Stock outstanding as of the date the original report was filed, April 15, 2014
|
534,769,650
|
|
Restatement
The amount of depreciation expense for the period ending December 31 2013 was over-stated. The table below reflects the resulting effect to the financial statements.
December 31, 2013
|
|
|
|
As filed
|
|
Adjustment
|
|
|
Restated Actual
|
|
Balance Sheet (Extract)
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Fixed assets, net of depreciation
|
|
$
|
6,508
|
|
|
|
$
|
(2,027
|
)
|
|
$
|
4,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
93,405
|
|
|
|
$
|
(2,027
|
)
|
|
$
|
95,368
|
|
Stockholders' deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated deficit
|
|
$
|
(14,203,435
|
)
|
|
|
$
|
(2,027
|
)
|
|
$
|
(14,201,472
|
)
|
Total Stockholders' Deficit
|
|
$
|
(407,629
|
)
|
|
|
$
|
(2,027
|
)
|
|
$
|
(405,666
|
)
|
Total Liabilities & Equity
|
|
$
|
93,405
|
|
|
|
$
|
(2,027
|
)
|
|
$
|
95,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations (Extract)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense
|
|
$
|
4,584
|
|
|
|
$
|
(2,871
|
)
|
|
$
|
1,713
|
|
General and administrative
|
|
$
|
225,396
|
|
|
|
$
|
64
|
|
|
$
|
225,460
|
|
Loss on disposal of assets
|
|
$
|
2,662,675
|
|
|
|
$
|
844
|
|
|
$
|
2,663,519
|
|
Net Loss
|
|
$
|
(5,867,694
|
)
|
|
|
$
|
(1,963
|
)
|
|
$
|
(5,865,731
|
)
|
The prior period amounts included on the Balance Sheet for the period ending December 31, 2013 have been restated to reflect the correct retroactive application of the Company's reverse stock split.
December 31, 2012
|
|
|
As filed
|
|
Adjustment
|
|
Restated Actual
|
|
Balance Sheet (Extract)
|
|
|
|
|
|
|
Common Stock
|
|
$
|
12,845
|
|
|
$
|
(12,717
|
)
|
|
$
|
128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Paid in Capital
|
|
$
|
10,423,981
|
|
|
$
|
12,717
|
|
|
$
|
10,436,698
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The prior period amounts included on the Statement of Stockholders' Equity for the period ending December 31, 2011 have been restated to reflect the correct retroactive application of the Company's reverse stock split as well as recognition of an addition error.
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Stockholders' Equity (Extract)
|
|
Additional Paid in Capital
|
|
|
Unearned Stock Compensation
|
|
|
Total Stockholders' Deficit
|
|
As filed
|
|
$
|
1,898,992
|
|
|
$
|
(85,208
|
)
|
|
$
|
(265,382
|
)
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment
|
|
$
|
(12,739
|
)
|
|
$
|
50,000
|
|
|
$
|
33,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restated Actual
|
|
$
|
1,886,253
|
|
|
$
|
(35,208
|
)
|
|
$
|
(265,382
|
)
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
In the original 10-K filed for the period ending December 31, 2013, Total Stockholders' Deficit for the periods ending December 31, 2013 and 2012 erroneously reflected the same amount. The correct balance for the period ending December 31, 2012 should have reflected ($299,325) instead of ($265,382).
6. Property and Equipment
|
|
December 31, 2013
|
|
|
December 31, 2012
|
|
|
|
(audited)
|
|
|
(audited)
|
|
Office Furniture
|
|
$
|
10,571
|
|
|
$
|
10,571
|
|
Film Library
|
|
|
---
|
|
|
|
650,000
|
|
Satellite Equipment
|
|
|
---
|
|
|
|
18,000
|
|
Computer Equipment
|
|
|
2,018
|
|
|
|
517,983
|
|
Software
|
|
|
---
|
|
|
|
269,566
|
|
|
|
|
12,589
|
|
|
|
1,466,121
|
|
Less accumulated depreciation
|
|
|
(4,481
|
)
|
|
|
(124,285
|
)
|
Property and equipment, net
|
|
$
|
8,108
|
|
|
$
|
1,341,835
|
|
Depreciation expense was $1,713 and $147,525 for the twelve months ended December 31, 2013 and 2012, respectively.
On July 10, 2012 IC PLACES, INC. (formerly known as IC Punch Media, Inc.) ("the Company" or "Buyer") entered into an Asset Purchase Agreement with Punch Television Network ("Punch", "Seller"). Through the agreement, the Buyer has acquire substantially all of the assets, tangible and intangible, owned by Seller that are used in, or necessary for the conduct of, its Television Network business, including, without limitation: (i) the Station Licenses, subject to any obligations contained in disclosed license agreements and all related intellectual property; (ii) the fixed assets of Seller; (iii) any and all customer lists; and (iv) the goodwill associated therewith, all free and clear of any security interests, mortgages or other encumbrances. The aggregate consideration for the assets and business was 135,000,000 shares of restricted common shares of ICPA Stock.
The Company valued the consideration of shares at the fair market value of the shares at the date of acquisition ($.0211) at an amount of $2,848,500. The Company allocated the costs to identifiable assets and the remainder was considered to be the value of station and programming licenses and therefore cost was assigned to intangible assets. The net intangible costs assigned were $2,836,715.
The following intangible asset values have been removed from the Company's balance sheet as a result of the Punch TV rescission made effective on May 14, 2013:
|
|
Cost
|
|
|
Accumulated Amortization
|
|
Affiliates
|
|
$
|
750,000
|
|
|
$
|
---
|
|
License
|
|
|
300,000
|
|
|
|
(75,000
|
)
|
|
|
$
|
1,050,000
|
|
|
$
|
(75,000
|
)
|
8. Convertible Notes Payable
Notes payable consist of the following convertible notes (further described below):
|
|
December 31, 2013
|
|
|
December 31, 2012
|
|
|
|
(audited)
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|
|
(audited)
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|
Convertible notes payable: a series of notes have been issued at various times with identical terms: maturity within 9 months; interest rate at 8%; convertible at 50-65% discount to trading fair market value; convertible at option of holder
|
|
$
|
171,250
|
|
|
$
|
211,500
|
|
Convertible demand note payable, dated September 23, 2011, no maturity date, 2% interest rate, convertible at 50% discount to trading price at time of demand
|
|
|
155,600
|
|
|
|
155,600
|
|
Debt discount
|
|
|
(35,412
|
)
|
|
|
(82,701
|
)
|
Deferred financing costs
|
|
|
(5,449
|
)
|
|
|
(5,044
|
)
|
|
|
|
285,989
|
|
|
|
279,355
|
|
Long-term portion of convertible debt
|
|
$
|
--
|
|
|
$
|
--
|
|
Current portion of convertible debt
|
|
$
|
285,989
|
|
|
$
|
279,355
|
|
Convertible Notes Payable
The Company receives proceeds, at various dates, from an unrelated third party in exchange for a series of convertible promissory notes at an annual interest rate of 8% on any unpaid principal and a maturity date of nine months from the date of funding. A penalty interest rate will be in effect for any amount of principal or interest which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date.
These notes are convertible at the option of the holder at any time during the lending period. These notes are convertible into common stock at a conversion price of 35% (65% discount) of the calculated average of the lowest three trading prices for the common stock during the ten trading day period prior to the date of the conversion notification. The holder has converted a portion of these notes in satisfaction of the amounts due. During the twelve month period ended December 31, 2013, $384,500 in principle and $12,480 in interest were converted into 10,459,810 shares of common stock.
The debt conversion was recorded at the fair market value of the stock, at an average price of $0.038. The difference in the calculated issue price, per the agreed terms listed above, and the fair market value of the shares resulted in recognition of $135,636 as income on the conversion, included as a change in derivative. The Company currently reports the amount due, under these convertible notes net of unamortized discounts and financing costs (amortized to interest expense over the term of each note) associated with origination fees and the beneficial conversions resulting from the terms of the installment funding.
The Company has recognized the derivative liability associated with this agreement and has revalued the beneficial conversion feature, classifying as a derivative liability. As of December 31, 2013 and December 31, 2012, the derivative liability was calculated to be $177,761 and $399,566, respectively.
The derivative valuation resulted from calculation using an option pricing method for the conversion feature of the note payable. The following assumptions were used in our calculation:
Weighted Average:
|
|
|
Stock Price
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|
$
|
.0004
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|
Strike Price
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|
$
|
.0001
|
|
Dividend rate
|
|
|
0.0
|
%
|
Risk-free interest rate
|
|
|
.10
|
%
|
Expected lives (years)
|
.5 years
|
|
Expected price volatility
|
|
|
395.33
|
%
|
Forfeiture Rate
|
|
|
0.0
|
%
|
Convertible Demand Notes Payable
On September 23, 2011, the Company entered into an arrangement with a lender whereby the Company assigned certain debt due the majority shareholder, in the amount of $250,000, secured by a five (5) year employment agreement (see related party footnote). The note is convertible into shares of the Company stock, at the demand of the lender. The convertible note is interest bearing at 2% per annum, there are no repayment terms. Terms of conversion define the stock price as at a 50% discount to the stock price defined as the average three deep bids on the day of funding. During the twelve months ended December 31, 2013, the Company issued 100,000 shares in satisfaction of payments for a value of $28,000. Also during the period, the Company cancelled shares issued in satisfaction of payments for a value of $36,000, resulting in a loss on conversion of debt of $18,000. Payments resulted in the recognition of a beneficial conversion, at the time of the issuance, of $0 and $58,400 for the twelve month periods ended December 31, 2013 and 2012, respectively. The remaining balance on this convertible note payable is $155,600 and $155,600 as of December 31, 2013 and December 31, 2012, respectively.
9. Income Tax
The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting Standards Codification ("Section 740-10-25"). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in years and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.
The Company has not recognized an income tax benefit for the year based on uncertainties concerning its ability to generate taxable income in future periods. The Company has available net operating loss carry-forwards for financial statement and federal income tax purposes. These loss carry-forwards expire if not used within 20 years from the year generated. The Company's management has decided a valuation allowance is necessary to reduce any tax benefits to zero because the available benefits are more likely than not to expire before they can be used. The tax based accumulated deficit creates tax benefits in the amount of $4,971,202 from inception through December 31, 2013.
On June 11, 2010 the Board of Directors of the Company approved a reverse stock split, whereby one common share was issued for each thirty shares of common stock held ("30:1") (184,060,170 shares exchanged for 6,135,339 shares).
The company has two classes of stock, common and preferred. Four billion (4,000,000,000) shares of common stock are authorized by the company's Amended Articles of Incorporation filed within the State of Delaware, at par value $.00001.
Shares issued to consultants during period in advance of services (unearned) to be provided have been charged to a contra-equity account and will be ratably expensed, over the requisite service period, as the services are rendered.
The Company, pursuant to its 2010 Equity Compensation Plan, which has been approved by the Company's Board of Directors, as filed with the Securities and Exchange Commission on February 26, 2010, will issue up to 25,000,000 shares of common stock. The 2010 Equity Compensation Plan is hoped to further provide a method whereby the Company's current employees and officers and non-employee directors and consultants may be stimulated and allow the Company to secure and retain highly qualified employees, officers, directors and non-employee directors and consultants.
On October 31, 2012, the Company's Board of Directors approved the amendment of the Company's Certificate of Incorporation to change the Company's name to IC Punch Media, Inc. and to provide for a class of "blank check" preferred stock. The Company is authorizing five hundred million (500,000,000) shares of preferred stock, par value $.000001. The Board of Directors is expressly vested with the authority to divide any or all of the Preferred Stock into series in addition to those set forth below and to fix and determine the relative rights and preferences of the shares of each series so established, provided, however, that the rights and preferences of various series may vary only with respect to:
*
|
the rate of dividend;
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*
|
whether the shares may be called and, if so, the call price and the terms and conditions of call;
|
*
|
the amount payable upon the shares in the event of voluntary and involuntary liquidation;
|
*
|
sinking fund provisions, if any, for the call or redemption of the shares;
|
*
|
the terms and conditions, if any, on which the shares may be converted;
|
*
|
voting rights; and
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*
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whether the shares will be cumulative, noncumulative, or partially cumulative as to dividends and the dates from which any cumulative dividends are to accumulate.
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On April 29, 2013, the Company issued 5,500,000 shares of common stock to its CEO pursuant to his employment agreement dated November 18, 2005. These shares were valued at $1,650,000, or $0.30 per share.
On May 1, 2013, the Company issued 3,000,000 shares of common stock to its CEO pursuant to his employment agreement dated November 18, 2005. These shares were valued at $1,320,000, or $0.44 per share.
At various times during the twelve month period ending December 31, 2013, the Company issued an aggregate of 10,459,810 shares in satisfaction of debt and accrued interest for a value of $396,980, or an average of $0.038 per share.
In March 2013, the Company cancelled 30,000,000 common shares issued to a creditor during the period ending December 31, 2012 for a value of $36,000 and reissued 10,000,000 common shares as payment on the debt for a value of $28,000.
Effective December 5, 2013, the Company's Board of Directors approved an amendment to certain relative rights and preferences of the "Series A Convertible Preferred Stock" established on October 31, 2012. The Amended Certificate of Designations provides that the authorized Series A Convertible Preferred Stock will be increased to 500,000,000 shares with each share having ten (10) votes.
Effective on or about March 26, 2014, the Company's Board of Directors and majority stockholder approved a 100:1 reverse stock split. The financial statements included in this Form 10-K have been formatted to reflect the retro-application of this event.
11. Related Party Transactions
Advances and Loans from Shareholder
The majority shareholder has advanced funds, since inception, for the purpose of financing working capital and product development. As of December 31, 2013 and December 31, 2012, these advances amounted to $0 and $28,991, respectively. There are no formalized agreement or repayment terms to this advance and the amount is payable upon demand. In the absence of a formal agreement or stated interest rate, the Company is accruing interest at a minimal variable rate, currently 3%. Management will periodically adjust the rate recognized, following guidelines of applicable federal rates of interest.
Employment Contracts
On November 18, 2005 the Company entered into an employment agreement with Steven Samblis to be our Chief Executive Officer. The agreement provided (1) the issuance of 350 million shares of its common stock; (2) compensation to be 15% of revenues; (3) included a provision to authorize the issuance of shares to maintain majority of control; and (4) termination of agreement on November 18, 2025. On September 23, 2011, the Company entered into an employment continuation commitment agreement with the Chief Executive Officer, who is the majority shareholder, whereby the Company's Board of Directors declared a $250,000 amount payable for a five (5) year employment commitment. The amount has been deferred and will be ratably expensed, as compensation, over the length of the agreement.
Rescission of Punch TV
On May 14, 2013, the Company filed Form 8-K with the Securities and Exchange Commission and disclosed that the Company rescinded the Punch Television Network Agreement and all associated employment agreements by mutual agreement of both parties. Joseph Collins resigned as President and director as result of the rescission of the Punch Television Network Agreement and as a result, the Company is no longer accruing wages under the terms of Mr. Collin's Agreement.
On May 21, 2013, Consent to Action by Shareholders Without a Meeting was delivered to the Company deeming it in the best interests of the Company to remove Joseph Collins from the Board of Directors of the Company, President of the Company, Co-Chairman of the Company, and any capacity as a Board Member or Employee. On same date, the Company appointed Gayle Dickie and Meredith Walters to the Board of Directors of the Company. Additionally, Gayle Dickie was appointed President of the Company and James Allen Bradley was appointed as VP of Production and Operations.
Resignation of Director
Effective August 12, 2013, the Company requested the resignation of Meredith Walters from the Board of Directors who served as an interim board member during the company's restructuring of management. Meredith accepted and offered her resignation.
12. Commitments and Contingencies
The Company has entered into agreement for office and studio space for a five year period, beginning in January 2010 and expiring in December 2015.
Future minimum lease payments for the years ended December 31:
2014
|
|
|
2,917
|
|
2015
|
|
|
2,917
|
|
thereafter
|
|
|
--
|
|
|
|
$
|
11,675
|
|
From time to time the Company may be a party to litigation matters involving claims against the Company.
Management believes that there are no current matters that would have a material effect on the Company's financial position or results of operations.
Management has considered all events subsequent to the balance sheet through the date that these financial statements were available, which is the date of our filing with the SEC.
13. Subsequent Events
Effective on or about March 26, 2014, the Company's Board of Directors approved an amendment to certain relative rights and preferences of the "Series A Convertible Preferred Stock" established on October 31, 2012. As a result of the Amended Certificate of Designations, the authorized Series A Convertible Preferred Stock was increased to 500,000,000 shares with each share having ten (10) votes.
Effective on or about March 26, 2014, the Company's Board of Directors and majority stockholder approved an amendment to its Certificate of Incorporation to change the name of the Company to "IC Places, Inc.".
Effective on or about March 26, 2014, the Company's Board of Directors and majority stockholder approved a 100:1 reverse stock split. The financial statements have been formatted to reflect the retro-application of this event.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no changes in, or disagreements with our independent accountants, DKM Certified Public Accountants on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, in connection with its reports.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company's Chief Executive Officer and acting Chief Financial Officer has evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the fiscal period ending December 31, 2013 covered by this Annual Report on Form 10-K. Based upon such evaluation, the Chief Executive Officer and acting Chief Financial Officer has concluded that, as of the end of such period, the Company's disclosure controls and procedures were not effective as required under Rules 13a-15(e) and 15d-15(e) under the Exchange Act. This conclusion by the Company's Chief Executive Officer and acting Chief Financial Officer does not relate to reporting periods after December 31, 2013.
Management's Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) of the Company. 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.
The Company's 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 receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management, under the supervision of the Company's Chief Executive Officer and acting Chief Financial Officer, conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company's internal control over financial reporting was not effective as of December 31, 2013 under the criteria set forth in the in Internal Control—Integrated Framework.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. Management has determined that material weaknesses exist due to a lack of segregation of duties, resulting from the Company's limited resources.
This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permit us to provide only management's report in this Annual Report on Form 10-K.
Changes in Internal Control over Financial Reporting
No change in the Company's internal control over financial reporting occurred during the year ended December 31, 2013, that materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.