Stockholder's Equity

12 Months Ended

Dec. 31, 2016

Equity [Abstract]

Stockholder's Equity

NOTE 5 – STOCKHOLDER’S EQUITY

For the fiscal year ended December 31, 2016, the Company amortized $17,022, compared to $11,556 for the previous year, related to the value of its patent portfolio, acquired in 2013 from an affiliate.

On January 28, 2016 the Company entered into five license agreements (the “January 2016 License Agreements”) with Chong Corporation, a related party, to which we were granted exclusive worldwide licenses for the following patented and patent pending technology:

U.S. Patent No.: 8,903228 issued on December 20, 2014 for a vapor delivery device;

U.S. Patent No.: 8,962,040 issued on February 24, 2015 for appetite suppression (hoodia);

U.S. Patent App. No.: 13/836,617 filed on March 18, 2013 for low temperature vaporization of a tobacco;

U.S. Patent App. No.: 13/453,939 filed on April 12, 2012 for an enhanced vapor delivery system; and

U.S. Patent App. No.: 14/629,279 filed on February 23, 2015 for a sleep aid (melatonin).

The terms of each January 2016 License Agreement is identical. Under the agreements, the Company was granted the rights to sublicense and/or produce and market products during the term of the agreement. As consideration for each of these January 2016 License Agreements we issued 5,000,000 shares of our common stock to Chong Corporation, for an aggregate issuance of 25,000,000 shares. Under each agreement we agreed to pay Chong a royalty in the amount of $50,000 per annum in the first calendar year, and for each year thereafter for the remaining life of patent, in which the patent is issued and is licensed and/or commercialized with an acknowledged embodiment and/or use. Chong Corporation is responsible for all expenses and costs associated with protecting the patents from infringement and/or claims of infringement from other parties. The term of the license is for the life of the respective patent.

In May 2016, we declared and issued 50,000 shares of our common stock to Chong Corporation as a 2015 dividend on our 10% Series A convertible preferred stock. The stock was valued at $0.15 per share.

In December 2016, the Company, in line with the Company’s 2014 Equity Compensation Plan, granted 3,000,000 non-qualified stock options to its management. These options were fully vested upon granting and have an exercise price of $0.25 per share. The options were valued at the common stock’s par value of $0.0001 per share. The exercise period terminates 5:00 pm Eastern Time December 31, 2021.

On December 31, 2016, the Company had 75,210,000 shares of common stock issued and outstanding.

Preferred Stock – Under the terms of the 10% Series A Convertible Preferred Stock the Company pays the holder a 10% annual dividend in common stock and the preferred becomes convertible to common stock five years from issuance at a conversion rate of one share of the Company’s common stock for each share of the 10% Series A Convertible Preferred Stock. The 10% Series A convertible preferred stock is not redeemable at the holder’s option, has no voting rights.

The Company analyzed the embedded conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the conversion option should be classified as equity.