Year Ended December 31, 2013 Compared to the Year Ended December 31,
Loss from operations for December 31, 2013, was $(2,013,288) as compared to $(7,575,106) for the year ended December 31, 2012. The decrease of $5,560,195 in operating loss is primarily attributable to the overall pause of operation.
At December 31, 2013, we had a working capital deficit of $1,067,088 as compared to working capital deficit of $932,564 at December 31, 2012, an increase in working capital deficit of $134,524. The increase of the deficit is attributable to an increase of total liabilities, including accrued interest related to the $750,000 note payable to Park Slope, LLC.
Net cash from operating activities for the year ended December 31, 2013 and 2012 was $3,395 and $(226,654) respectively. The net loss for year ended December 31, 2013 and December 31, 2012 was $(2,104,727) and $(7,664,922) respectively. The Company’s slight cash surplus in operations was due to fundings from owners in order to improve short term liquidity and settle outstanding payables. The fundig was associated with reduced spendings in operations.
As reflected in the accompanying financial statements, the Company had a net loss of $(2,104,727) and modest net cash from operations of $3,395 for the year ended December 31, 2013, and working capital and stockholders’ deficit of $(1,067,088)and $(1,065,900) respectively, at December 31, 2013. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
The Company will require additional funding to finance the growth of its current and expected future operations as well as to achieve its strategic objectives. The Company believes its current available cash along with anticipated revenues and financing may be insufficient to meet its cash needs for the near future. There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all, in 2014.
During the year ended December 31, 2013, there were no private placements, and there were no proceeds received from the exercise of stock options.
We comply with the accounting and reporting requirements of Statement of Financial Accounting Standards (“SFAS”) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. We will periodically evaluate the carrying value of long-lived assets when events and circumstances warrant such a review. Long-lived assets will be written down if the evaluation determines that the fair value is less than the book amount.
We comply with SFAS No. 109, Accounting for Income Taxes, which requires an asset and liability approach to financial reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amount expected to be realized.
We follow paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of our financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of our 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 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. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
The carrying amounts of our financial assets and liabilities, such as accrued expenses, approximate our fair values because of the short maturity of this instrument.
We do not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis, consequently, we did not have any fair value adjustments for assets and liabilities measured at fair value at January 31, 2011, nor gains or losses are reported in the statement of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date for the period.
We have four Common Stock purchase warrants each with a term of five years after their issuance date and an exercise price of $5.00, $7.00, $9.00 and $10.00 per share, respectively. Each Warrant entitles the Holder to purchase from the Company up to 1,000,000 Warrant Shares. As of December 31, 2013, we have four Warrants outstanding that are exercisable for an aggregate of up to 4,500,000 shares of our Common Stock.