STOCKHOLDERS' DEFICIT

12 Months Ended

Dec. 31, 2015

Stockholders' Equity Note [Abstract]

STOCKHOLDERS' DEFICIT

Preferred Stock

The Company was established on June 2, 2006 with 10,000,000 shares of preferred stock authorized with a par value of $0.001. The Company has not issued any preferred stock.

Common Stock

The Company was established on June 2, 2006 with 100,000,000 shares of common stock authorized with a par value of $0.001. On December 8, 2011, the Company amended the authorized stock to 150,000,000 shares. On March 17, 2014, the Company amended the authorized stock to 500,000,000 shares. On March 15, 2016 the Company’s shareholders ratified managements restructuring plan by approving the increase in authorized shares to 8,000,000,000

In 2014, the Company issued:

During November and December 2014, 14,310,000 private placement shares were issued to investors for an amount totaling $715,500 ($0.05 per share).

On January 10, 2014, the Company issued 1,000,000 common shares in connection with an asset purchase valued at $340,000.

50,000 shares of common stock upon the exercise of 50,000 stock options by a Director of the Company, at an exercise price of $0.25, for total proceeds of $12,500.

400,000 shares were issued for services rendered evaluated at an amount of $121,500.

Also, 4,250,000 shares previously issued to directors or administrators were cancelled.

In 2015, the Company issued:

On January 20, 2015 150,000,000 shares were issued in the acquisition of Breathe which was accounted for as reverse merger.

On March 31, 2015 the Company issued 2,666,667 shares for $100,000 in an investment into Tauriga Sciences, Inc (“TAUG”). The Company entered into a commercialization/license agreement with TAUG to jointly develop a new line of business involving CBD oil cartridges in on March 31, 2015. The Company received from TAUG 10,869,565 shares of TAUG common stock (with a value of $100,000) in exchange for their shares (reflected as an investment). Due to the very low stock value of both companies and with the Company exiting the eCigarette business both companies have impaired their respective investment to $0 as December 31, 2015.

On May 10, 2015 the Company issued a supplier 750,000 shares of common stock at a value of $22,500 for the payment of inventory ($0.03 per share) and 300,000 shares of common stock valued at $9,000 ($0.03 per share) to a former noteholder ("Iconic") as part of an Assignment and Assumption Agreement dated May 7, 2015.

26,983,998 common shares were issued for cash in the amount of $1,047,270 at an average share price of $0.039.

71,858,817 shares of common stock for consulting services rendered and to be rendered accrued as of December 31, 2015 in the amount of $5,547,305 including the cost of 6,500,000 shares to be issued. ($0.077 per share) including an agreement with Maxim Group LLC ("Maxim") to provide general financial advisory and investment banking services in exchange for 2.5% of the then issued and outstanding stock at the date of execution. The number of shares of common stock issued and outstanding at the time of this agreement was 276,352,667. At that date 2.5% of the issued and outstanding common stock equaled 6,908,817 shares. The Company, on May 18, 2015 canceled shares in the amount of 3,150,000 shares due to services never provided at a value of $157,500 ($0.05 per share).

85,074,284 common shares were issued for the conversion of principal and accrued interest by the holders of convertible notes at a value of $406,385 having and average share price of $0.005 at conversion.

17,150,000 common shares of stock to noteholders as commitment and assignment shares and recorded as debt financing cost at a value of $176,050 (average price $0.01.)

Under the first tranche of a July 2, 2015 securities purchase agreement whereby $240,000 was committed for purchase of common stock and warrants.  Cash was received associated with this offering was $233,500, with $6,500 credited to the purchaser for legal fees.  Under the second tranche of this agreement the amount to be funded will be $200,000. Second tranche closing date was to be a trading date no later than five (5) Business Days following the effective date of the Registration Statement. on which all of the transaction documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount for the Second Tranche and (ii) the Company’s obligations.  The Company filed Form S-1 “Registration Statement Under the Securities Act of 1933” (“S1”) on August 17, 2015.   On October 2, 2015 the Company pursuant to Rule 477 promulgated under the Securities Act of 1933, as amended (the “Securities Act”) submitted a request for withdrawal of the previously file S-1.  

Under this agreement, the Company was obligated to issued 4,000,000 common shares of its stock at $0.06 per share subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the common stock that occur after the date of agreement.  Final purchase price is subject to adjustment based on the closing price of the common stock on first adjustment date that is six (6) months immediately following the closing date (or if such date is not a trading day, the trading day immediately preceding such six (6) month period).  Final purchase price is also subject to adjustment based on the second adjustment date based on the closing price of the common stock on thirty (30) days following the first adjustment date (or if such date is not a trading day, the Trading Day immediately preceding such date).

Under the agreement, at any time while warrants are outstanding, if the Company sold or grants any option to purchase, or sell or any common stock or common stock equivalents, at an effective price per share less than the exercise price then in effect but greater than $0.10 (price adjusted) will be considered a “dilutive issuance” and the holder of the warrant will be entitled to receive shares of common stock at an effective price per share that is less than the exercise price.

Cashless warrants registered in the name of such purchaser to purchase up to a number of shares of common stock equal to 100% of such purchaser shares for the first tranche, with an exercise price equal to $0.20, subject to adjustments whereby the Company may issue without further consideration.  In the event that the first adjusted price is higher than the per-share purchase price but lower than $.08 cents per share, 10% of the aggregate number of shares issued or issuable or 15% if equal to or lower than the per-share price.  The Company must file Form S-1 with the SEC under terms of this agreement.

Under this agreement, the Company reserved 25 million shares of common stock to provide for the issuance of common shares, the adjustment shares and warrant shares.  In the event that the company’s stock falls below $0.04 per share for three consecutive training days the Company will immediately add an additional 15 million shares to this reserve. In the event that the stock falls below $.02 per share the three consecutive trading days the Company will immediately add an additional 20 million shares of the reserve.

On August 25, 2015, the Company consented to an assignment agreement whereby the assignor received $265,000 cash in exchange for the transfer of rights 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 assignee waiving all rights under the original agreement related to price adjustments, second tranche issuance and warrants.

On September 8, 2015 the cashless warrants to purchase 690,625 common shares were exercised to convert to 7,541,511 common shares based on a price reset to equal the conversion price associated with the debt agreements from the stated strike price of $0.75. The price reset which resulted in the conversion to 7,541,511 common shares based on the the difference between the current market value (market price of $0.25 multiplied by exercise shares of 690,625) and the exercise price ($0.0375) multiplied by number of exercise shares (690,625.) This number is then divided by the adjusted price of the common stock ($0.01946.)

As of December 31, 2015, the Company has 470,811,277 shares of common stock issued and outstanding.  As of December 31, 2015 the Company had a liability for stock of $82,710 for stock to be issued as conversion shares under the note settlement agreement of the March 13, 2015 8% convertible note.  Share are to be issued in three issuances of 500,000 each not to have a value less than $5,000 each.  Issuances are scheduled November 1, 2015; December 1, 2015 and January 1, 2015. The Company reversed liability for stock issuable under a distribution agreement in the amount of five million common shares which had a value of $37,500 ($0.0075 per share) due to that agreement no longer being in effect. The Company further has a liability for stock to be issued under a consulting agreement to issue 1,400,000 shares in the amount of $17,710 ($0.013 per share.)These shares do not include the shares owed to the noteholders as described in Note 4. The liability for those shares is included with the note payable balances.

The Company initiated payments in the amount of $180,000 to buy back price adjustment rights, warrants and additional issuance rights transferred to assignee under original stock purchase agreement dated July 2, 2015. The Company has the 4,000,000 share stock certificate in its possession pending the stock reissuance to a new certificate to assignee.

Authorized Reserved Shares

Under terms of several of the Company’s convertible notes it was required under those note agreements at all times to authorize and reserve four and in some cases five times the number of shares that are actually issuable upon full conversion of said notes (based on the conversion price of the notes in effect from time to time.)  The noteholders waived the requirement of the reserve shares above and beyond what was needed to convert through the maturity date, not withstanding the initial reserve amount. The Company is required to make proper provisions so that there after there shall be a sufficient number of shares of common stock authorized and reserved, free from preemptive rights.  The Company is further obligated to make any changes to its capital structure which would change the number shares of common stock into which said notes shall be convertible at the then current conversion price. Based on this calculation, the Company did not have sufficient authorized common shares to convert all convertible notes, and exercise all outstanding warrants from the unissued common shares as of December 31, 2015, however, cured any deficiency related to these provisions on March 15, 2016, upon the approval of the DEF 14A and amendments to the Certificates of Incorporation. As noted herein, the noteholders waived this requirement to the Company as they knew the Company was amending their charter to increase the authorized number of common shares to accommodate any conversions.

Stock Options

On August 12, 2013, the Company approved and enacted the 2013 Stock Incentive Plan (the “Plan”). Under the 2013 Stock Incentive Plan, the Company may grant options or share awards to its full-time employees, executive officers, directors and consultants up to a maximum of 8,000,000 common shares. Under the Plan, the exercise price of each option has been established at $0.25. Stock options vest as stipulated in the stock option agreement and their maximum term is 8 years.

The following table summarizes information about the Company’s stock options:

	December 31, 2015				December 31, 2014
			Weighted					Weighted
			average					average
	Number of		exercise		Number of			exercise
	options		Price		options			price
Options outstanding, beginning of period		200,000	$	0.25		1,283,000		$	0.25
Granted		-		-		-			-
Exercised		-				(50,000	)		(0.25	)
Forfeited		-				(1,033,000	)		(0.25	)
Expired		(200,000)	$	(0.25)		-			-
Options outstanding, end of period		-				200,000			0.25

Under the Plan, the exercise price of each option has been established at $0.25. Stock options vest as stipulated in the stock option agreement and their maximum term is 8 years. In the year ended December 31, 2015 the last of these options expired. There are no outstanding options as of December 31, 2015.

The following table summarizes the ranges of exercise prices of outstanding and exercisable options held by officers and directors as of December 31, 2015:

December 31, 2014				December 31, 2014
Options Outstanding				Options Exercisable
	Weighted	Weighted			Weighted		Weighted
	average		Average		average		average
Number of	remaining		exercise	Number of	remaining		exercise
options	life (years)		price	options	life (years)		price
-	-	$	-	200,000	6.70	$	0.25

There were no stock options issued in 2015 or 2014 by the Company. The latest options issued in 2013 were determined using the Black-Scholes option–pricing model using the following weighted-average assumptions:

Risk-free interest rate		.32	%
Dividend yield		-
Volatility		152.5	%
Expected life in years	2 years
Exercise price	$	0.25

Stock options-based compensation expense included in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2015 and 2014 was $0.

Warrants

The following table summarizes the Company’s share warrants outstanding as of December 31, 2015 and 2014:

	December 31, 2015						December 31, 2014
			Weighted		Weighted				Weighted		Weighted
			average		average				average		average
	Number of		remaining		exercise		Number of		remaining		exercise
	warrants		life (years)		price		warrants		life (years)		price
Warrants outstanding, beginning of year		1,540,625		1.5	$	0.66		600,000		2.0	$	0.71
Granted								940,626		1.6		0.63
Exercised		(690,625)		-		-		-		-
Expired		(850,000)		-		-		-		-		-
Warrants outstanding, end of year		-		-	$	-		1,540,625		1.5	$	0.66

On September 8, 2015 the cashless warrants to purchase 690,625 common shares were exercised to convert to 7,541,511 common shares based on a price reset to equal the conversion price associated with the debt agreements from the stated strike price of $0.75. The price reset which resulted in the conversion to 7,541,511 common shares based on the the difference between the current market value (market price of $0.25 multiplied by exercise shares of 690,625) and the exercise price ($0.0375) multiplied by number of exercise shares (690,625.) This number is then divided by the adjusted price of the common stock ($0.01946.)

On August 12, 2013, the Company approved and enacted the 2013 Stock Incentive Plan (the “Plan”). Under the 2013 Stock Incentive Plan, the Company may grant options or share awards to its full-time employees, executive officers, directors and consultants up to a maximum of 8,000,000 common shares. Under the Plan, the exercise price of each option has been established at $0.25. Stock options vest as stipulated in the stock option agreement and their maximum term is 8 years. 850,000 options were issued in 2013 which expired in 2015.

As of December 31, 2015, there are no warrants outstanding.