Note 9. Commitments and Contigencies

9 Months Ended

Jun. 30, 2014

Notes

Note 9. Commitments and Contigencies

NOTE 9.     COMMITMENTS AND CONTIGENCIES

On January 22, 2014, the Company entered into an employment agreement with Mr. Czarkowski, which was terminated in March of 2014 resulting in cancellation of certain options and replaced with a consulting agreement. The consulting agreement has an initial term of two years and provides that the Company will pay Mr. Czarkowski $12,000 per month during the term of the agreement which is being recorded under contract services in the accompanying condensed statement of operations. As a result of his termination the shares were returned and the parties entered into a share purchase agreement in which Strategic Capital Partners sold 300,000 shares to Mr. Czarkowski at a price of $0.02.

Pursuant to the employment agreement, Strategic Capital Partners, LLC, the Company’s largest shareholder, originally sold 2,000,000 shares of the Company’s common stock to Mr. Czarkowski at a price of $0.02 per share.

The Company also originally granted Mr. Czarkowski options to purchase up to 1,200,000 shares of the Company’s common stock. The options grants were cancelled. The Company granted new options to Mr. Czarkowski pursuant to the consulting agreement. The new options are as follows:

Shares Issuable
Upon Exercise		Option
of Option		Exercise Price		Vesting Date (1)	Expiration Date
	100,000	$	8.00	1/20/2015	1/20/2018
	100,000	$	12.00	7/20/2015	1/20/2018

(1) Options are subject to certain vesting requirements.

The Company valued the options using the Black-Scholes option pricing model resulting in a total fair market value of approximately $25,000 which will be amortized to stock based expense on the vesting dates.

On March 25, 2014, the Company entered into an employment agreement with Mr. Keogh. The agreement: (i) has an initial term of three years; (ii) requires that Mr. Keogh devote at least 50% of his time to the Company and; (iii) provides that the Company will pay Mr. Keogh $12,000 per month during the term of the agreement. Pursuant to the employment agreement, Strategic Capital Partners, LLC, the Company's largest shareholder, sold 1,200,000 shares of the Company's common stock to Mr. Keogh at a price of $0.02 per share. As the purchase price was estimated to be the fair market value of the stock, the Company was not required to recognize any expense related to this transaction.

Of these 1,200,000 shares, 300,000 shares vested on March 25, 2014 and 900,000 are subject to the following vesting requirements provided that Mr. Keogh is employed the Company on the applicable vesting date: (i) 300,000 Shares will vest on the earlier of March 20, 2015 or the date the Company receives at least $15,000,000 from the sale of its debt or equity securities; (ii) 300,000 Shares will vest on the earlier of March 20, 2016 or the date the Company receives at least $30,000,000 from the sale of its debt or equity securities; for purposes of the foregoing, traditional financing from banks or similar financial institutions will not be given effect and the required amounts and (iii) 300,000 Shares will vest on the earlier March 19, 2017 or the date the Company receives at least $45,000,000 from the sale of its debt or equity to be raised will be cumulative.

If during the term of the employment agreement Mr. Keogh is Terminated other than For Cause, there is a Change in Control, or Mr. Keogh terminates the employment agreement for Good Reason, then, all shares which have not yet vested will immediately vest.

All shares that are not vested at the time of termination of Mr. Keogh's employment, if such termination is a Termination for Cause or a Voluntary Termination, will be repurchased by the Company at a price of $0.001 per share. Any shares which are not vested and which are not required to be purchased by the Company will be returned to treasury and cancelled.

In addition the Company granted Mr. Keogh an option to purchase the Company's common stock pursuant to the following terms.

Shares Issuable Upon Exercise of Option		Option Exercise Price		Vesting Date (1)	Expiration Date
	400,000	$	8.00	3/20/2015	3/20/2018
	400,000	$	12.00	3/20/2016	3/20/2018

(1) The vesting date is the date the options may first be exercised.  The vesting conditions for the shares, as described above, will apply to the options, except the vesting dates for the options will control and any unvested options will not be purchased by the Company.

The Company valued the options using the Black Scholes option pricing model resulting in a total value of approximately $95,000 to be amortized to stock based compensation expense on the vesting date.

The fair value of options and warrants granted during the period were estimated on the date of grant using the Black Scholes option pricing model and the following assumptions:

Year of option grant	2014
Market value of stock on grant date	$	.02
Risk free interest rate		2.62	%
Dividend yield		0	%
Volatility factor		100	%
Weighted average expected life	24		Months
Expected forfeiture rate		0	%

Stock option activity is presented below.

For the three months and nine months ended June 30, 2014 and 2013 option expense was $35,460 and $0 respectively.

	Number of Shares			Weighted Average Exercise Price			Weighted Average Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at September 30, 2013		-			-			-		-
Granted		2,200,000			9.60			4		-
Cancelled		(1,200,000	)		(9.30	)		-		-
Outstanding at June 30, 2014		1,000,000			10.00					-
Expected to Vest at June 30, 2014		1,000,000								-

Total remainder of stock compensation expense to be recognized through the vesting date of the above options as of June 30, 2014 will be approximately $85,000.

In connection with the note receivable from Nature’s Own Wellness Center, Inc., on July 1, 2014, the Company entered into a consulting agreement with Nature’s Own Wellness Center, Inc. The Company will provide general advisory services for business development, facilities design and construction, cultivation and retail operations, marketing and the improvement and expansion of existing operations. The Company is to receive monthly compensation of $10,000 plus pre-approved expenses. The consulting agreement terminates on December 31, 2016. The Company may terminate the agreement without cause with a 30 day notice. Nature’s Own may terminate the agreement if the Company does not provide funding as specified in the agreement or if the Company does not or is unable to perform its duties.