STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2014

Notes to Financial Statements

STOCKHOLDERS' EQUITY

On June 5, 2013 the Company issued 750,000 (2,679 post reverse split) shares as an result of an Investor Relations Consulting Agreement. Given the market price of $0.33 as of June 5, 2013, the Company has valued the shares at $247,500 based on the fair market value on closing on date of grant. Due to the shares being issued the Company has expensed this value.

On June 7, 2013, the Company entered into an Investor Relations Consulting Agreement with San Diego Torrey Hills Capital, Inc. for nine months. The Company has issued 750,000 (2,679 post reverse split) shares. Given the market price of $0.355 as of June 7, 2013, the Company has valued the shares at $266,250 based on fair market value on closing on date of grant. Due to the shares being issued the Company has expensed this value.

On January 17, 2014 the Company entered into a Private Placement Agreement to issue up to 10,000,000 (35,714 post reverse split) shares of Common Stock at $0.08 per share. The Company has received $468,200 by way of subscription agreements. The 5,852,500 (20,902 post reverse split) shares were issued on May 23, 2014.

On April 17, 2014, the Company extended an Investor Relations Consulting Agreement with San Diego Torrey Hills Capital, Inc. for an additional nine months. The Company has issued 750,000 (2,679 post reverse split) shares. Given the market price of $0.08 as April 17, 2014, the Company has valued the shares at $60,000 based on fair market value of the closing price on the date of grant. Due to the shares being issued the Company has expensed this value.

On April 1, 2014 the Company issued 350,000 (1,250 post reverse split) shares as settlement for services provided. Given the market price of $0.10 as April 1, 2014, the Company valued the shares at $35,000 based on fair market value of the closing price on the date of grant. Due to the shares being issued the Company has expensed this value.

On June 9, 2014 the Company issued 1,250,000 (4,464 post reverse split) shares as settlement for services provided. Given the market price of $0.07 as June 9, 2014, the Company valued the shares at $87,500 based on fair market value of the closing price on the date of grant. Due to the shares being issued the Company has expensed this value.

On June 15, 2014 the Company issued 297,500 (1,063 post reverse split) shares as settlement for services provided. Given the market price of $0.05 as June 15, 2014, the Company valued the shares at $14,875 based on fair market value of the closing price on the date of grant. Due to the shares being issued the Company has expensed this value..

On June 17, 2014 the Company issued 2,250,000 (8,036 post reverse split) shares as settlement for services provided. Given the market price of $0.05 as June 17, 2014, the Company valued the shares at $112,500 based on fair market value of the closing price on the date of grant. Due to the shares being issued the Company has expensed this value.

On February 28, 2014 the Company issued 1,000,000 (3,571 post reverse split) warrants to a consultant. The warrants have an exercise price of $0.04 per share and have a life of ten years. The warrants were fully vested and expensed on the date of grant. The Company valued these warrants using the Black-Scholes option pricing model totaling $104,997 under the following assumptions: $0.11 stock price, 10 years to maturity, 365% volatility, 1.51% risk free rate. During the same period, the consultant exercised on a cashless basis and received 1,000,000 (3,571 post reverse split) shares of common stock.

On February 28, 2014 the Company issued 2,250,000 (8,036 post reverse split) warrants to a consultant. The warrants have an exercise price of $0.04 per share and have a life of ten years. The warrants were fully vested and expensed on the date of grant. The Company valued these warrants using the Black-Scholes option pricing model totaling $241,869 under the following assumptions: $0.11 stock price, 10 years to maturity, 365% volatility, 1.51% risk free rate. During the same period, the consultant exercised on a cashless basis and received 2,250,000 (8,036 post reverse split) shares of common stock.

On February 28, 2014 the Company issued 250,000 (893 post reverse split) warrants to a consultant. The warrants have an exercise price of $0.04 per share and have a life of ten years. The warrants were fully vested and expensed on the date of grant. The Company valued these warrants using the Black-Scholes option pricing model totaling $26,874 under the following assumptions: $0.11 stock price, 10 years to maturity, 365% volatility, 1.51% risk free rate. During the same period, the consultant exercised on a cashless basis and received 250,000 (893 post reverse split) shares of common stock.

On April 17, 2014 the Company issued 1,900,000 (6,786 post reverse split) warrants to a consultant. The warrants have an exercise price of $0.04 per share and have a life of ten years. The warrants were fully vested and expensed on the date of grant. The Company valued these warrants using the Black-Scholes option pricing model totaling $151,965 under the following assumptions: $0.08 stock price, 10 years to maturity, 320% volatility, 1.75% risk free rate. During the same period, the consultant exercised on a cashless basis and received 1,900,000 (6,786 post reverse split) shares of common stock.

On April 17, 2014 the Company issued 2,200,000 (7,857 post reverse split) warrants to a consultant. The warrants have an exercise price of $0.04 per share and have a life of ten years. The warrants were fully vested and expensed on the date of grant. The Company valued these warrants using the Black-Scholes option pricing model totaling $175,960 under the following assumptions: $0.08 stock price, 10 years to maturity, 320% volatility, 1.75% risk free rate. During the same period, the consultant exercised on a cashless basis and received 2,200,000 (7,857 post reverse split) shares of common stock.

On June 20, 2014 the Company issued 5,000,000 (17,857 post reverse split) warrants to a consultant. The warrants have an exercise price of $0.04 per share and have a life of ten years. The warrants were fully vested and expensed on the date of grant. The Company valued these warrants using the Black-Scholes option pricing model totaling $399,909 under the following assumptions: $0.04 stock price, 10 years to maturity, 320% volatility, 1.75% risk free rate. One consultant exercised on a cashless basis and received 5,000,000 (17,857 post reverse split) shares of common stock.

On July 4, 2014 the Company issued 1,500,000 (5,357 post reverse split) warrants to a consultant. The warrants have an exercise price of $0.02 per share and have a life of ten years. The Company valued these warrants using the Black-Scholes option pricing model totaling $59,989 under the following assumptions: $0.04 stock price, 10 years to maturity, 326% volatility, 1.74% risk free rate. During the same period, the consultant exercised on a cashless basis and received 1,500,000 (5,357 post reverse split) shares of common stock.

On July 4, 2014 the Company issued 2,000,000 (7,143 post reverse split) warrants to a consultant. The warrants have an exercise price of $0.02 per share and have a life of ten years. The Company valued these warrants using the Black-Scholes option pricing model totaling $79,985 under the following assumptions: $0.04 stock price, 10 years to maturity, 326% volatility, 1.75% risk free rate. During the same period, the consultant exercised on a cashless basis and received 2,000,000 (7,143 post reverse split) shares of common stock.

On July 14, 2014 the Company issued 1,500,000 (5,357 post reverse split) warrants to a consultant. The warrants have an exercise price of $0.02 per share and have a life of ten years. The Company valued these warrants using the Black-Scholes option pricing model totaling $59,989 under the following assumptions: $0.04 stock price, 10 years to maturity, 326% volatility, 1.74% risk free rate. During the same period, the consultant exercised on a cashless basis and received 1,500,000 (5,357 post reverse split) shares of common stock.

On December 23, 2014, the Company announced a 280 to 1 reverse stock split. This has been applied retroactively in the attached financial statements.

As of December 31, 2014 and 2013, the Company recorded related party advances of $32,213 and $251,793, respectively. The advances have no stated repayment terms or interest. The Company recognized imputed interest of $19,121 and $13,914 for period ended December 31, 2014 and 2013, respectively.

On July 1, 2014, the Company entered into an agreement with a related party to convert $226,785 advances to a convertible promissory note. The note is due on January 1, 2015 and carries a fix convertible price of $0.01 and interest rate of 5%. As a result of the fixed conversion price, the Company recognized a debt discount on the convertible note of $226,785 with an increase of the same amount to additional paid-in capital.