During January 2014, the Company received $25,000 in cash from an investor with respect to the Subscription Receivable due at year end.

During February 2014, an investor loaned the Company $50,000. The loan is due by May 1, 2014 and a payment of $25,000 was made during April 2014. The investor received 50,000 shares of common stock in conjunction with the loan. The proceeds were allocated using relative fair value to the stock and loan as follows:

Relative fair value of stock		$	25,000
Relative fair value of note payable		$	25,000

The discount on the note, $25,000, will be recognized as additional interest over the life of the note.

On March 26, 2014, the Company borrowed $290,000 under a convertible note agreement with an investor. The note bears an interest rate of 10% and matures on March 26, 2015. The investor received warrants to purchase 500,000 shares of common stock at $0.50 per share with a two year exercise term.

We evaluated the warrants for derivative accounting consideration under ASC Topic 815-40, Derivatives and Hedging – Contracts in Entity’s own stock. We concluded that the warrants meet the criteria for classification in stockholders' equity. Therefore, derivative accounting is not applicable for the warrants. Accordingly, we allocated the proceeds from the transaction to the debt, stock, and warrants based on their relative fair value. We determined the fair value of the warrants using a Black-Sholes option pricing model with the following inputs:

Risk-free interest rate			0.45%
Dividend yield			-%
Volatility factor			145%
Expected life (years)			2

The volatility was determined by referring to the average historical volatility of a peer group of public companies because we do not have a trading history from which to determine historical volatility.

The fair value of the investment was allocated between the note and warrant as follows:

Relative fair value of warrants			167,477
Relative fair value of note payable			$ 122,553

Because the price for recent sales of common stock exceeded the effective conversion price, we also recognized a beneficial conversion feature of $122,553. The total discount on the note, $290,000, will be recognized as additional interest over the life of the note.

During April 2014, an investor purchased 500,000 shares of common stock for $1.00 per share. The investor also received warrants to purchase 500,000 shares of common stock at $0.50 per share. The warrants have a one-year term.

During January 2014, we were granted a license to market nutritional supplements under the TapouT XT name to retail locations worldwide. Under the license agreement, we are required to pay a royalty fee to Nutra Evolution of 12.5% of net sales. The agreement provides us with an initial test period of four years, until January 31, 2018, to distribute the product. We paid $85,000 in conjunction with the license. At the expiration of this four year period, we may extend the license for three (3) consecutive three (3) year terms. We are required to pay minimum royalties of $400,000 during the first contract year; $750,000 during the second contract year and $1,000,000 each year thereafter.