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SUBSEQUENT EVENTS
9 Months Ended
Sep. 30, 2015
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

On October 2, 2015 the Company paid $34,000 in cash to a noteholder on an 8% convertible note with an original face value of $31,500 dated March 6, 2015.  At the time of payment, the note had an unconverted principal balance of $17,000 and accrued unpaid interest of $779.  The Company will recognize a loss on this debt conversion in the amount of $16,221.

 

On October 7, 2015, the Company, issued an unsecured Promissory Note to Bureaucom Inc., a Canadian corporation, in consideration of gross proceeds to the Company of $100,000.  This note accrues interest at 4.5% per annum unless there is an event of default in which case the interest rate increases to 9.0% per annum.  The entire principal amount and all accrued but unpaid interest under this note will be due and payable by the Company no later than April 7, 2016. 

 

On October 13, 2015, Typenex and the Company participated in a mediation in an attempt to resolve the Utah Lawsuit without either party having to incur additional legal and court fees.  As a result of the mediation and in order to resolve the Utah Lawsuit and the Arbitration and all other disputes between,  on November 17, 2015 (the “Typenex Effective Date”), the Company and Typenex entered into a Settlement Agreement, Waiver and Release of Claims (the “Settlement Agreement”) and related Exchange Agreement (the “Exchange Agreement”), Pursuant to the terms of the Settlement Agreement and Exchange Agreement, the Company agreed to issue to Typenex 8,000,000 shares of the Company’s common shares of stock in exchanges for any rights Typenex may or may not have had under the Warrant. The Company will deliver the shares to Typenex in two installments: (i) 4,000,000 Shares with five trading days of the Effective Date (the “First Installment Shares”) and (ii) 4,000,000 Shares on or before January 1, 2016 (the “Second Installment Shares”).  The First Installment Shares and the Second Installment Shares are collectively referred to herein as the Typenex Shares.

 

On October 14, 2015 the Company issued 5,000,000 shares of common stock to holder of a convertible note dated March 11, 2015.  The noteholder converted $10,501 of principal and $499 of interest for the shares.  The applicable conversion price was $0.0022.  The note had an original face value of $52,500.  Upon this conversion, the note had a balance of $26,999.  This note was fully satisfied on the same day with the cash payment of $65,000 in cash.  At the time of the payoff the noteholder had interest accrued and unpaid of $1,776.  The Company will recognize a loss on this debt conversion in the amount of $42,225.

 

On October 14, 2015 the Company paid $116,684 in cash to a noteholder on a 12% convertible note with an original face value of $82,500 dated May 22, 2015.  At the time of payment, none of the face value had been converted to shares of common stock and accrued unpaid interest of $3,960.  The Company will recognize a loss on this debt conversion in the amount of $30,224.

 

On October 14, 2015, the Company issued an unsecured Promissory Note to 3476863 Canada Inc. in consideration of gross proceeds to the Company of $100,000.  The 3476863 Note accrues interest at 4.5% per annum unless there is an event of default in which case the interest rate increases to 9.0% per annum.  The entire principal amount and all accrued but unpaid interest under this note will be due and payable by the Company no later than April 14, 2016. 

 

On October 15, 2015, the Company filed a request for withdrawal of Form S-1 previously filed.   Pursuant to Rule 477 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), the Company requested that the Securities and Exchange Commission consent to the withdrawal, effective as of the date hereof or at the earliest practicable date hereafter. The Company’s Registration Statement on Form S-1, File Number 333-206431, together with all exhibits thereto initially filed with the Commission on August 17, 2015.

 

At this time the Company and its investor have determined not to proceed with the public offering contemplated by the Registration Statement. The Registration Statement has not been declared effective by the Commission and the Company hereby confirms that no securities were sold in connection with the offering described in the Registration Statement. Therefore, withdrawal of the Registration Statement is consistent with the public interest and the protection of investors, as contemplated by paragraph (a) of Rule 477.

 

On October 16, 2015, the Company issued an unsecured Promissory Note to Natter Investments Inc., a Canadian corporation, in consideration of gross proceeds to the Company of $50,000. The Natter Investments accrues interest at 4.5% per annum unless there is an Event of Default in which case the interest rate increases to 9.0% per annum.  The entire principal amount and all accrued but unpaid interest under the Natter Investments will be due and payable by the Company no later than April 16, 2016.  

 

On October 20, 2015, the Company issued an unsecured Promissory Note to the Peter Comito Family Trust in consideration of gross proceeds to the Company of $50,000.  The note accrues interest at 4.5% per annum unless there is an event of default in which case the interest rate increases to 9.0% per annum.  The entire principal amount and all accrued but unpaid interest under the Family Trust Note will be due and payable by the Company no later than April 20, 2016. 

 

On October 21, 2015, the Company paid $53,000 in cash as the first of two payments to the holder of a note dated April 22, 2015 with a face value of $53,000 and accrued interest of $2,738.  The Company will recognize a loss on the debt conversion in the amount of $27,900.

 

On October 28, 2015, the Company paid $30,638 in cash as the second of two payments to the holder of a note dated April 22, 2015 with a face value of $53,000 and accrued interest of $2,738.  The Company will recognize a loss on the debt conversion in the amount of $27,900 (as stated in the previous paragraph).

 

On October 28, 2015 the Company received $50,000 cash under an LOI asset purchase agreement whereby a group of investors intend to purchase assets of the Company. The assets to be acquired are all rights and privileges related to those certain patent applications currently pending with the USPTO under the following application serial numbers: (i) 14/817/562 filed on August 4, 2015, and any and all other related patents as of the closing of this agreement. For consideration of $1,000,000 payable immediately upon the closing of the transaction. Additionally, Buyer shall receive 100,000,000 shares of Company common stock, par value $0.0001, payable as follows: (i) 56,500,000 shares of Common Stock shall be delivered directly to Buyer by Kimmel from the shares of Common Stock held by him at such time and (ii) the remaining 43,500,000 shares of Common Stock shall be delivered directly to Buyer by Seller.  This transaction has not closed.

 

On November 4, 2015, the Company received $50,000 cash under an LOI asset purchase agreement (explained above) whereby a group of investors intend to purchase assets of the Company.

 

On November 8, 2015, the New York Court held a hearing regarding Breathe LLC’s request for a preliminary injunction.  On the same day, the New York Court entered an order denying Breathe LLC’s request for a preliminary injunction.  Despite the New York Court’s denial, the overall litigation continues.  Although the Company believes it will prevail on the merits, there can be no guaranty that it will do so.  If the Company is unable to prevail, it may be required to market its products under a different name.

 

On November 10, 2015 the Company filed Amendment No. 1 on Form 10-Q/A to amend and restate in their entirety the following items of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 as originally filed with the Securities and Exchange Commission on August 14, 2015. (the “Original Form 10-Q”): (i) Item 1 of Part I “Financial Information,” (ii) Item 2 of Part I, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” (iii) Item 4 of Part I, “Controls and Procedures,” and (iii) Item 6 of Part II, “Exhibits”, and we have also updated the signature page, the certifications of our Chief Executive Officer and Chief Financial Officer in Exhibits 31.1 and 32.1, and our financial statements formatted in Extensible Business Reporting Language (XBRL) in Exhibits 101.

 

On November 10, 2015 the Company filed Amendment No. 1 on Form 10-Q/A to amend and restate in their entirety the following items of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 as originally filed with the Securities and Exchange Commission on May 15, 2015 (the “Original Form 10-Q”): (i) Item 1 of Part I “Financial Information,” (ii) Item 2 of Part I, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” (iii) Item 4 of Part I, “Controls and Procedures,” and (iii) Item 6 of Part II, “Exhibits”, and we have also updated the signature page, the certifications of our Chief Executive Officer and Chief Financial Officer in Exhibits 31.1 and 32.1, and our financial statements formatted in Extensible Business Reporting Language (XBRL) in Exhibits 101.

 

On November 12, 2015, the Company issued a one year, 4.5% promissory note in the amount of $50,000 to an assignee of an August 25, 2015, assignment agreement pursuant to the securities purchase agreement dated July 2, 2015.  As part of this agreement, the Company directly paid to assignee $180,000 in exchange for the cancellation of associated rights of possession of warrants, price adjustments, additional stock issuance under original contract. The $50,000 was further consideration in exchange for any and all rights of assignee under purchase agreement and all transaction documents effective September 30, 2015


On November 18, 2015, the Company paid $197,954 in cash to the holder of a note dated May 22, 2015 with a face value of $137,500 and accrued unpaid interest of $5,408. The Company will recognize a loss on the debt conversion in the amount of $55,046.