STOCKHOLDERS' DEFICIT

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

NOTE 7 - STOCKHOLDERS' DEFICIT

Stock Issuances

The Company is authorized to issue up to 2,000,000,000 shares of its $0.00001 par value common stock, and up to 10,000,000 shares of its $.001 par value preferred stock.

As of September 30, 2016 and December 31, 2015, the Company had common stock payable of $16,800 resulting from a technology transfer agreement with an unrelated party that obligated the Company to issue a total of 96,000 shares of its common stock, payable in 8 quarterly installments of 12,000 shares.

During the nine months ended September 30, 2016, the Company issued a total of 188,954,515 shares of its common stock to accredited investors in conversion of $22,405 principal and $5,308 accrued interest payable at a conversion prices ranging from $0.00005 to $0.00045 per share and settled $42,365 of derivative liabilities. As a result of the debt conversions and derivative settlement, common stock was increased by $1,890 and additional paid-in capital was increased by $68,188.

2006 Stock Option Plan

The 2006 Stock Option Plan was adopted by our Board of Directors in March of 2006. A total of 550,000 shares of Common Stock have been reserved for issuance to employees, consultants and directors upon exercise of incentive and non-statutory options and stock purchase rights which may be granted under the Company’s 2006 Stock Plan (the “2006 Plan”). On October 15, 2009, 235,000 of those options were exercised, leaving 315,000 shares available for issuance to employees. Because of the 5.31-for-one forward stock split of the Company’s common stock on October 15, 2009, there are now 1,512,650 shares available for issuance as a part of this stock plan. As of September 30, 2016, there were 560,000 options outstanding to purchase shares of Common Stock, and no shares of Common Stock had been issued pursuant to stock purchase rights under the 2006 Plan.

Under the 2006 Plan, options may be granted to employees, directors, and consultants. Only employees may receive “incentive stock options,” which are intended to qualify for certain tax treatment, and consultants and directors may receive “non-statutory stock options,” which do not qualify for such treatment. A holder of more than 10% of the outstanding voting shares may only be granted options with an exercise price of at least 110% of the fair market value of the underlying stock on the date of the grant, and if such holder has incentive stock options, the term of the options must not exceed five years.

Options and stock purchase rights granted under the 2006 Plan generally vest ratably over a four year period (typically 1⁄4 or 25% of the shares vest after the 1st year and 1/48 of the remaining shares vest each month thereafter); however, alternative vesting schedules may be approved by the Board of Directors in its sole discretion. Any unvested portion of an option or stock purchase right will accelerate and become fully vested if a holder’s service with the Company is terminated by the Company without cause within twelve months following a Change in Control (as defined in the 2006 Plan).

All options must be exercised within ten years after the date of grant. Upon a holder’s termination of service for any reason prior to a Change in Control, the Company may repurchase any shares issued to such holder upon the exercise of options or stock purchase rights. The Board of Directors may amend the 2006 Plan at any time. The 2006 Plan will terminate in 2016, unless terminated sooner by the Board of Directors.

The Company did not grant any stock options or warrants during the nine months ended September 30, 2016, and did not record any stock-based compensation expense during the nine months ended September 30, 2016 and 2015.

A summary of the status of the options and warrants issued by the Company as of September 30, 2016, and changes during the nine months then ended is presented below:

			Weighted Average
	Shares		Exercise Price
Outstanding, December 31, 2015		560,000	$	0.10
Granted		-		-
Canceled / Expired		-		-
Exercised		-		-
Outstanding, September 30, 2016		560,000	$	0.10