2. SIGNIFICANT ACCOUNTING POLICIES	6 Months Ended
Jun. 30, 2013
Notes to Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES	Basis of Presentation The financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Concentration of Credit Risk Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of accounts receivable and prepaid inventory. Cash is deposited in various financial institutions. At times, amounts on deposit may be in excess of the Federal Deposit Insurance Corporation (FDIC) insurance limit. At June 30, 2013 and December 31, 2012, no deposits were in excess of the federally insured limits. Revenue Recognition Revenue is derived from product sales and is recognized upon shipment to the customer. Returns are accepted, but are not significant to the Company’s overall operations. Payments received by the Company in advance are recorded as Deferred Revenue until the merchandise has shipped to the customer. Cost of Goods Sold The Company recognizes the direct cost of purchasing product for sale, including freight-in and packaging, as cost of goods sold in the accompanying statements of operations. Shipping and Handling Costs Outgoing shipping and handling costs are included as selling expenses in the accompanying statements of operations. Advertising and Promotion The Company recognizes advertising and promotion costs as incurred. The amount of advertising and promotion expense recognized for the six months ended June 30, 2013 and 2012 were approximately $587,000 and $198,000 respectively. Cash and Cash Equivalents The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. At June 30, 2013 and December 31, 2012, the Company had no cash equivalents. Accounts Receivable Accounts receivable, primarily from retail customers or third-party internet brokers, are reported at the amount invoiced. Payment terms vary by customer and may be subject to an early payment discount. Management reviews accounts receivable on a monthly basis to determine if any receivables are potentially uncollectible. An overall allowance for doubtful accounts is determined based on a combination of historical experience, length of time outstanding and specific identification. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. As of June 30, 2013 and December 31, 2012, the Company has estimated an allowance of approximately $17,000 and $0 for doubtful accounts. Inventory Inventory, which consists of ready for sale disposable e-cigarettes, batteries, cartomizers and other accessories, is carried at the lower of cost or fair market value. Cost is determined using the first-in, first-out method. Prepaid Inventory Prepaid inventory consists of deposits paid for inventory to be manufactured by a third-party overseas supplier or inventory which is in-transit and the Company has not yet received title for the goods. Furniture and Equipment The Company records furniture and equipment at historical cost, less accumulated depreciation. Expenditures for additions and improvements over $1,500 that substantially extend the useful life of property and equipment or increase its operating effectiveness are capitalized. Repair and maintenance costs are expensed as incurred. Long-lived assets are reviewed for impairment whenever events or circumstances warrant such a review, at least annually, pursuant to the provisions Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 360 Property, Plant, and Equipment. The Company depreciates the cost of furniture and equipment over the estimated useful lives of the assets, currently over five years, using the straight-line method. Depreciation of $321 and $0 was recorded during the six months ended June 30, 2013 and 2012. Employee Stock Based Compensation The Company accounts for employee stock based compensation in accordance with ASC 718 and Compensation – Stock Compensation. ASC 718 provides investors and other users of financial statements with more complete and neutral financial information, by requiring that the compensation cost relating to share-based payment transactions be recognized in financial statements. The cost will be measured based on the fair value of the equity or liability instrument issued. ASC 718 covers a wide range of share-based compensation arrangements, including share options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. Non-Employee Stock Based Compensation The Company accounts for stock based compensation awards issued to non-employees for services, as prescribed by ASC 718-10, at either the fair value of the services or the instruments issued in exchange for such services, whichever is more readily determinable. Earnings Per Share The Company has adopted ASC 260-10, Earning Per Share which provides for calculation of basic and diluted earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common stockholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. Recent Accounting Pronouncements Management does not believe that any recently issued, but not yet effective, accounting standards, if adopted, will have a material effect on our financial statements. Reclassification Certain reclassifications have been made to the 2012 financial statements to conform to the 2013 presentation. Subsequent Events In accordance with ASC 855, Subsequent Events, the Company has evaluated subsequent events through August 14, 2013; the date the condensed consolidated financial statements were available for issue.

2. SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2013

Basis of Presentation

The financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of accounts receivable and prepaid inventory. Cash is deposited in various financial institutions. At times, amounts on deposit may be in excess of the Federal Deposit Insurance Corporation (FDIC) insurance limit. At June 30, 2013 and December 31, 2012, no deposits were in excess of the federally insured limits.

Revenue Recognition

Revenue is derived from product sales and is recognized upon shipment to the customer. Returns are accepted, but are not significant to the Company’s overall operations. Payments received by the Company in advance are recorded as Deferred Revenue until the merchandise has shipped to the customer.

Cost of Goods Sold

The Company recognizes the direct cost of purchasing product for sale, including freight-in and packaging, as cost of goods sold in the accompanying statements of operations.

Shipping and Handling Costs

Outgoing shipping and handling costs are included as selling expenses in the accompanying statements of operations.

Advertising and Promotion

The Company recognizes advertising and promotion costs as incurred. The amount of advertising and promotion expense recognized for the six months ended June 30, 2013 and 2012 were approximately $587,000 and $198,000 respectively.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. At June 30, 2013 and December 31, 2012, the Company had no cash equivalents.

Accounts Receivable

Accounts receivable, primarily from retail customers or third-party internet brokers, are reported at the amount invoiced. Payment terms vary by customer and may be subject to an early payment discount. Management reviews accounts receivable on a monthly basis to determine if any receivables are potentially uncollectible. An overall allowance for doubtful accounts is determined based on a combination of historical experience, length of time outstanding and specific identification. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. As of June 30, 2013 and December 31, 2012, the Company has estimated an allowance of approximately $17,000 and $0 for doubtful accounts.

Inventory

Inventory, which consists of ready for sale disposable e-cigarettes, batteries, cartomizers and other accessories, is carried at the lower of cost or fair market value. Cost is determined using the first-in, first-out method.

Prepaid Inventory

Prepaid inventory consists of deposits paid for inventory to be manufactured by a third-party overseas supplier or inventory which is in-transit and the Company has not yet received title for the goods.

Furniture and Equipment

The Company records furniture and equipment at historical cost, less accumulated depreciation. Expenditures for additions and improvements over $1,500 that substantially extend the useful life of property and equipment or increase its operating effectiveness are capitalized. Repair and maintenance costs are expensed as incurred. Long-lived assets are reviewed for impairment whenever events or circumstances warrant such a review, at least annually, pursuant to the provisions Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 360 Property, Plant, and Equipment. The Company depreciates the cost of furniture and equipment over the estimated useful lives of the assets, currently over five years, using the straight-line method. Depreciation of $321 and $0 was recorded during the six months ended June 30, 2013 and 2012.

Employee Stock Based Compensation

The Company accounts for employee stock based compensation in accordance with ASC 718 and Compensation – Stock Compensation. ASC 718 provides investors and other users of financial statements with more complete and neutral financial information, by requiring that the compensation cost relating to share-based payment transactions be recognized in financial statements. The cost will be measured based on the fair value of the equity or liability instrument issued. ASC 718 covers a wide range of share-based compensation arrangements, including share options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans.

Non-Employee Stock Based Compensation

The Company accounts for stock based compensation awards issued to non-employees for services, as prescribed by ASC 718-10, at either the fair value of the services or the instruments issued in exchange for such services, whichever is more readily determinable.

Earnings Per Share

The Company has adopted ASC 260-10, Earning Per Share which provides for calculation of basic and diluted earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common stockholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity.

Recent Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting standards, if adopted, will have a material effect on our financial statements.

Reclassification

Certain reclassifications have been made to the 2012 financial statements to conform to the 2013 presentation.

Subsequent Events

In accordance with ASC 855, Subsequent Events, the Company has evaluated subsequent events through August 14, 2013; the date the condensed consolidated financial statements were available for issue.

- Definition

The entire disclosure for all significant accounting policies of the reporting entity.

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