7. STOCKHOLDERS' DEFICIT

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

STOCKHOLDERS' DEFICIT

A)      NUMBER OF SHARES AUTHORIZED

Under the Company’s charter, 750,000 shares of $0.001 par value common stock were authorized as of December 31, 2006. On November 28, 2007, the stockholders approved the increase in the Company’s authorized shares of common stock from 750,000 to 3.50 million shares, changed the par value to $0.001 and authorized 50,000 shares of $0.001 par value “blank check” preferred stock. On December 18, 2011, the Board of Directors approved an increase in the Company’s authorized common stock to 10,000,000. On December 28, 2012, the Board of Directors approved a 100 to 1 reverse stock split. All per share information in these financial statements have been retroactively restated for the reverse stock split. As of December 31, 2014 and 2013, 9,225,089 and 8,975,089 shares of common stock are issued and 8,425,089 and 8,175,089 shares are outstanding, respectively. The difference between the issued and outstanding shares are the ESOP shares being held in trust. There were no shares of preferred stock issued and outstanding.

B)      PREFERRED STOCK

As described above, the stockholders voted to authorize 50,000 shares of “blank check” preferred stock. The terms, rights and features of the preferred stock will be determined by the Board of Directors upon issuance. Subject to the provisions of the Company’s certificate of amendment to the articles of incorporation and the limitations prescribed by law, the Board of Directors would be expressly authorized, at its discretion, to adopt resolutions to issue shares, to fix the number of shares and to change the number of shares constituting any series and to provide for or change the voting powers, designations, preferences and relative, participating, optional or other special rights, qualifications, limitations or restrictions thereof, including dividend rights (including whether the dividends are cumulative), dividend rates, terms of redemption (including sinking fund provisions), redemption prices, conversion rights and liquidation preferences of the shares constituting any series of the preferred stock, in each case without any further action or vote by the stockholders. The Board of Directors would be required to make any determination to issue shares of preferred stock based on its judgment as to the best interests of the Company.

C)      ISSUANCES OF COMMON STOCK

On February 6, 2013, the Board authorized the issuance of 50,000 shares to a legal professional for services performed, valued at $60,000, the market value on the day of grant.

On June 20, 2013, the Board authorized the issuance of 194,304 shares for the conversion of accounts payable valued at $38,861, the market value on the day of grant. The total payables converted, amounted to $204,081, which resulted in a forgiveness of debt gain of $165, 220.

On June 30, 2013, the Company negotiated a settlement with the officers of the Company, wherein $3,843,133 of past due wages, advances, and expenses were converted into notes payable. This left a forgiveness of debt in the amount of $3,108,133, which was recorded to paid in capital as a contribution from these officers, because they are material shareholders and control persons.

On July 5, 2013, the Board authorized the issuance of 1,550,000 shares for the conversion of debt by officers of the company, valued at $17,205, the market value on the day of grant.

On July 5, 2013, Board authorized the issuance of 200,000 shares for services of board members, valued at $2,220, the market value on the day of grant.

On December 19, 2013, Board authorized the issuance of 300,000 shares for services valued at $54,300, the market value on the day of grant.

During the twelve months ended December 31, 2013, the Company recorded imputed interest on a non-interest bearing note in the amount of $13,440, with an increase in paid in capital.

On September 22, 2014, the Board authorized the issuance of 250,000 shares to three individuals for services valued at $10,000, the market value on the day of grant.

During the twelve months ended December 31, 2014, the Company recorded imputed interest on a non-interest bearing note in the amount of $13,440, with an increase in paid in capital.

D)      2007 OMNIBUS STOCK AND INCENTIVE PLAN

On September 24, 2007, the Board of Directors authorized the creation of the 2007 Omnibus Stock and Incentive Plan (the “2007 Plan”). The 2007 Plan was approved by the stockholders on November 28, 2007. An aggregate of 60,000 shares of common stock are reserved for issuance and available for awards under the 2007 Plan.

Awards under the 2007 Plan may include non-qualified stock options, incentive stock options, stock appreciation rights (“SARs”), restricted shares of common stock, restricted units and performance awards. For a complete description of the Plan, see Tree Top’s Form 8-K filed with the SEC on November 7, 2007.

E)      UNEARNED ESOP SHARES

During 2010, the Company issued 200,000 shares to a Trust account for the future benefit of the employees of the Company. These shares have been recorded as Unearned ESOP Shares on the balance sheet as a contra equity account, pursuant to the guidance of SOP 93-6. The value recorded for the ESOP shares was the fair value of the shares at the date of issuance, of $1,100,000.

In December 2011, the Company issued an additional 200,000 shares to the ESOP Trust account for the future benefit of the employees of the Company. These shares have been recorded as Unearned ESOP Shares on the balance sheet as a contra equity account, pursuant to the guidance of SOP 93-6. The value recorded for the ESOP shares was the fair value of the shares at the date of issuance, of $600,000.

In December 2012, the Company issued an additional 400,000 shares to the ESOP Trust account for the future benefit of the employees of the Company. These shares have been recorded as Unearned ESOP Shares on the balance sheet as a contra equity account, pursuant to the guidance of SOP 93-6. The value recorded for the ESOP shares was the fair value of the shares at the date of issuance, of $476,000.

The total balance at December 31, 2014 and 2013 was $2,176,000 and $2,176,000, respectively.