STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2015

Notes to Financial Statements

Note 15 - STOCKHOLDERS' EQUITY

Authorized

The Company is authorized to issue 250,000,000 shares of preferred stock, having a par value of $0.0001 per share, and 500,000,000 shares of common stock, having a par value of $0.0001 per share.

Effective October 15, 2015, the Company Restated its Articles of Incorporation and Bylaws, and Equity Incentive Plan increasing the total number of shares of stock of all classes which we shall have authority to issue from 60,000,000 shares to 750,000,000 shares, of which the Common Stock, $0.0001 par value per share, was increased from 50,000,000 shares to 500,000,000 shares (hereinafter called “Common Stock”) and of which the Preferred Stock, $0.0001 par value per share, was increased from 10,000,000 shares to 250,000,000 shares (hereinafter called “Preferred Stock”).

Equity Purchase Agreement and Registration Agreement with Tarpon Bay Partners LLC

On July 14, 2015, we entered into an Equity Purchase Agreement (the “Purchase Agreement” or “Equity Line”) and Registration Rights Agreement (the “Registration Agreement”) with Tarpon Bay Partners LLC (“Tarpon”) whereby Tarpon is obligated, providing the Company has met certain conditions, including the filing of a Form S-1 Registration Statement for the shares to be acquired, to purchase up to $5,000,000 of the Company’s common stock at the rates set forth in the Purchase Agreement. In conjunction with the Equity Line, the Company issued a promissory note to Tarpon for $50,000, due on January 31, 2016, with 10% interest per annum as consideration for transaction costs incurred by Tarpon. The $50,000 of transaction costs will be treated as a reduction in additional paid-in capital since the transaction costs relate to equity financing.

The Purchase Agreement has a term of two-years (the “term”) and may be terminated sooner by the Company or if Tarpon has purchased a total of $5,000,000 of the Company’s common stock before the expiration of the term. During the term of the Purchase Agreement, the Company may at any time deliver a “Put Notice” to Tarpon thereby requiring Tarpon to purchase a certain dollar amount (the “Investment Amount”) in exchange for a portion of the Shares (the “Put”), determined by an estimated amount of Shares equal to the investment amount indicated in the Put Notice divided by the closing bid price of the Company’s common stock on the trading day (the “Closing Price”) immediately preceding the date the Put Notice was given (the “Put Date”), multiplied by one hundred twenty-five percent (125%) (the “Estimated Put Shares”). On the trading date preceding the delivery date of such Shares, Tarpon shall deliver payment for the Shares equal to the Company’s requested Investment Amount.

Subject to certain restrictions, the purchase price for the Shares is equal to ninety percent (90%) of the lowest closing bid price, quoted by the exchange or principal market Company’s Common Stock is traded on, on any trading day during the ten (10) trading days immediately after the date the Company delivers to Tarpon a Put Notice in writing requiring Tarpon (the “Valuation Period”) to purchase the applicable number of Shares of the Company, subject to certain terms and conditions of the Purchase Agreement. In the event the number of Estimated Put Shares initially delivered to Tarpon is greater than the Put Shares purchased by Tarpon pursuant to such Put Notice, then immediately after the Valuation Period Tarpon shall deliver to the Company any excess Estimated Put Shares associated with such Put Notice. If the number of Estimated Put Shares delivered to Tarpon is less than the Put Shares purchased by Tarpon pursuant to a Put Notice, then immediately after the Valuation Period the Company shall deliver to Tarpon the difference between the Estimated Put Shares and the Put Shares issuable pursuant to such Put Notice.

The number of Shares sold to Tarpon shall not exceed the number of such Shares that, when aggregated with all other shares of common stock of the Company then beneficially owned by Tarpon, would result in Tarpon owning more than 9.99% of all of the Company’s common stock then outstanding. Additionally, Tarpon may not execute any short sales of the Company’s common stock. Further, the Company has the right, but never the obligation to draw down on the total of $5,000,000. The Purchase Agreement also contains other customary and standard provisions.

On May 24, 2016, the Company and Tarpon Bay Partners LLC (“Tarpon”) executed a Termination Agreement (the “Termination Agreement”), in which the parties agreed to cancel the original Equity Purchase Agreement (the “Original Purchase Agreement”), dated July 14, 2015 (except for the original Promissory Notes (the “Original Tarpon Note”) which was amended and restated as set forth below), in the original amount of USD $50,000.00, issued by the Company to Tarpon as additional compensation pursuant to Original Purchase Agreement), which gave the Company the right to issue and sell to Tarpon any of the Five Million Dollars ($5,000,000) of the Company’s common stock.

In exchange for the Termination Agreement, the Company agreed to: (a) amend and restate the terms of the Original Tarpon Note, in the form of the issuance of an amended and restated convertible redeemable note (the “Amended Tarpon Note”), in the principal amount of $50,000.00, at ten percent (10%) interest per annum commencing on July 14, 2015 (the “Effective Date”), to be due and payable to Tarpon by Company in four (4) separate equal quarterly payments of Twelve Thousand Five Hundred Dollars (USD $12,500), plus accrued interest to date, due on the first day of each quarter beginning on July 1, 2016, convertible into shares of the Company’s common stock at a conversion price equal to fifty-eight percent (58%) of the lowest trading price for the ten (10) prior trading days, subject to aggregate conversion limitations of 9.99% and other terms and conditions set forth therein , and (b) execute a new Equity Purchase Agreement (the “New Purchase Agreement”), pursuant to which the Company would have the right to issue and sell to Tarpon a total of Fifteen Million Dollars ($15,000,000) of the Company’s common stock, under the same terms as the Original Purchase Agreement, except for no additional compensation in lieu of the Amended Tarpon Note, to be executed on such mutually agreed upon date in the future after the Company is current on all SEC filings and is relisted on the Over-the-Counter (OTC) OTCBB and OTCQB markets.

Issued and Outstanding

Preferred Stock

At December 31, 2015, the Company there is no shares of preferred stock outstanding.

On May 18, 2016, the Company issued a total of 2,000,000 shares of Series B Preferred Stock to two (2) separate parties in the amount of 1,000,000 shares each to Ricketts and Antol, respectively, pursuant to the executed Ricketts Subscription Agreement and Antol Subscription Agreement. The Series B Preferred shares were offered and sold to the parties in a private placement transaction in reliance upon exemptions from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended. The Company based such reliance on certain representations made by each of the parties to the Company including that each of the parties were accredited investor s as defined in Rule 501 of Regulation D.

Ricketts and Antol Stock Transfer – Voting Trust

On or about March 14, 2017, Dr. James G. Ricketts, and Stephen Antol (each a Stockholder) executed a Voting Trust Agreement, which the Company approved in advance, in which each of the Stockholder, jointly and severally, agreed to each deposit with the Voting Trustee a total of 500,000 shares of Series B Preferred Stock (for a total of 1,000,000 shares), owned and held by each of them as Stockholders, as referenced in the execution of two (2) separate assignments, which shall, thereafter, upon the completion by the Company of a reverse split of 1:1000 of its Common Stock, be converted by the Company and Voting Trustee into a total of 5,000 shares of Series B Preferred Stock each (for total of 10,000 shares), and 495,000 shares of Common Stock each (for a total totaling 990,000 shares), to be held by the Voting Trustee in the Voting Trust for the benefit of each such Stockholder, in accordance with the terms of the Voting Trust Agreement (as described more fully herein).

Common Stock

As of October 11, 2017, the Company had 150,018,799 shares of common stock issued and outstanding.

Subsequent to our year ended December 31, 2015, and to the filing of this Report, the Company issued the following additional shares of common stock in connection with the convertible notes for the year ended December 31, 2016:

The Company issued 11,923,377 shares of common stock to JSJ in satisfaction of principle reductions aggregating $6,273;

The Company issued 16,964,364 shares of common stock to LG in satisfaction of principle and accrued interest reductions aggregating $7,541;

The Company issued 38,880,995 shares of common stock to Adar in satisfaction of principle reductions aggregating $32,713; and

The Company issued 34,768,337 shares of common stock to EMA in satisfaction of principle reductions aggregating $14,160.

During the interim period ending September 30, 2017, the Company issued 13,500,000 shares of common stock to EMA in satisfaction of a principle reduction of $1,478 and a penalty of $750.

At December 31, 2015, the Company had 27,722,266 shares of common stock issued and outstanding.

During the twelve months ended December 31, 2015, the Company issued 8,503,196 shares of common stock as follows:

On January 8, 2015, the Company sold 25,000 shares of Common Stock and received net proceeds of $25,000.

On January 29, 2015, the Company modified the terms of two convertible notes and entered into shares for liability settlement with a creditor on January 30, 2015, wherein an aggregate of $88,431 of debt was settled by the aggregate issuance of 88,431 shares of common stock. The estimated fair value of the common shares issued was used to measure and record the transaction with the difference between the conversion price and net fair value resulting from the debt modification was $166,580 and was recorded as a gain on extinguishment of debt.

During the year ended December 31, 2015, the Company entered into a note conversion agreements with Rocky Road Capital, Inc. to convert and aggregate of $566,212 of the principal balance, which was due to a former director and subsequently assigned to Rocky Road Capital, Inc., into 5,662,120 shares of Common Stock (at $0.10 per share). The estimated fair value of the common shares issued was used to measure and record the transaction with the difference between the conversion price and fair value of $3,589,717 and was recorded as a loss on extinguishment of debt.

On June 15, 2015, the Company entered into a Separation and Settlement Agreement Release of Claims (the “Settlement Agreement”) with Steven Frye, our former Chief Executive Officer, Chief Financial Officer, and President. According to the Settlement Agreement, the Company agreed to pay Mr. Frye $54,794 for services rendered in the form of 391,386 shares of Common Stock of the Company closing price of the Company’s stock as of June 15, 2015 ($.14 per share). The Settlement Agreement further stated Mr. Frye would be responsible for all taxes and signed a general release of any and all claims, known or unknown, against the Company. On July 1, 2015, Mr. Frye delivered his executed paperwork to the Company.

On June 15, 2015, the Company entered into Addendum Two (“Addendum Two”) of the Promissory Note dated April 15, 2014 (the “Note”) between the Company and Steven Frye. The Promissory Note dated April 15, 2015 was for the principle amount of $13,500 with 12% accrued interest. As of June 15, 2015, the principal and interest totaled $15,206 and was converted into 108,614 shares of Common Stock of the Company at $.14 per share, the fair value of the closing stock price calculated as of June 15, 2015. On July 1, 2015, Mr. Frye delivered his executed paperwork to the Company.

On July 14, 2015, the Company issued 100,000 restricted shares of Common Stock as a loan fee in connection with the Securities Purchase Agreement and 12% Convertible Note with EMA Financial, LLC at $0.20 per share, the fair value of the closing stock price calculated as of July 14, 2015.

On July 27, 2015, the Company issued 2,500 restricted shares via a notice of issuance of stock to an individual for his consulting services for the year ended December 31, 2013, at $0.10 per share, the fair value of the closing stock price calculated as of July 27, 2015.

On December 15, 2015, the Company issued 1,254,199 shares to JSJ Investments, Inc. (“JSJ”) for a reduction in principal of $14,417.02 on their 12% convertible note. The conversion price of $0.011495 per share pursuant to the conversion terms of the note. The JSJ Note was convertible into common stock of the Company on December 11, 2015 (the “Maturity Date”) with the conversion rate a being 55% of the lowest trading price during the previous twenty days before the conversion noticed was submitted.

On December 22, 2015, the Company issued 538,793 shares to Adar Bays, LLC (“Adar”) for a reduction of $5,000.00 in principal of the 6% convertible note (“Adar Note”) dated June 16, 2015 (“Effective Date”. The conversion price was $0.00928 per share. The Note is convertible into common stock of the Company six months from the Effective Date with the conversion rate being a 58% of the lowest trading price during the previous ten days before the conversion noticed was submitted.

On December 29, 2015, the Company issued 333,372 shares to LG Capital Funding, LLC, (“LG”) equivalent to $3,000.00 in principal and $93.70 in accrued interest of the 6% convertible note (“LG Note”) dated June 16, 2015 (“Effective Date”), reducing the principal balance of $52,500 to $49,500 at a conversion price of $0.00928 per share. With a maturity date of June 16, 2016, the Note was convertible into common stock of the Company six months from the Effective Date with the conversion rate being a 58% of the lowest trading price during the previous ten days before the conversion noticed was submitted.

During the year ended December 31, 2014, the Company issued 19,068,582 shares of common stock as follows:

On January 13, 2014, the Company issued 14,000,000 shares of the Company’s Common Stock in conjunction with its asset purchase agreement to acquire www.classifiedride.com.See further discussion at Note 1 and 4.

On January 15, 2014, the Company issued 765,000 shares of the Company’s Common Stock for 51% of the membership interests of Autoglance, LLC, a Tennessee Limited Liability Company. See discussion at Note 1. 

On May 22, 2014, the Board of Directors approved three subscription agreements aggregating $55,000 and authorized issuance of 110,000 shares of common stock pursuant to the terms of the subscription agreements. Cash proceeds of $55,000 were received in November 2013.

On November 19, 2014, the Company issued 250,000 shares of the Company’s Common Stock relating to a consulting contract. The shares were valued at the fair value of services to be rendered at $125,000.

On December 2, 2014, the Company issued 500,000 shares of the Company’s Common Stock relating to a consulting contract. The shares were valued at the fair value of services to be rendered at $250,000.

On December 20, 2014, the Board of Directors approved a subscription agreement for $20,000 and authorized issuance of 40,000 shares of common stock pursuant to the terms of the subscription agreements. Cash proceeds of $20,000 was received in November 2013.

During 2014, the Company entered into four note conversion agreements with Rocky Road Capital, Inc. to convert a total of $340,362 of the note balance, which was due to a former director and subsequently assigned to Rocky Road Capital, Inc., into 3,403,620 shares of Common Stock at $0.10 per share, as partial payment on the note, thereby reducing the balance owed to $566,212. The Company recognized a loss of $1,361,448 on extinguishment of the debt as a result of the transactions.

Reverse Stock Split

Effective October 15, 2015, the Board of Directors under their sole discretion by Board Resolution and applicable FINRA requirements may initiate a 1:1,000 Reverse Split, the number of shares of capital stock issued and outstanding will be reduced to the number of shares of capital stock issued and outstanding immediately prior to the effectiveness of a Reverse Split, divided by up to one thousand (1,000). Each fractional share shall be rounded up to the nearest whole share. There will be no change to the number of authorized shares of Common Stock and Preferred Stock as a result of a Reverse Split. With the exception of the number of shares issued and outstanding, the rights and preferences of the shares of capital stock prior and subsequent to a Reverse Split will remain the same. It is not anticipated that the Company’s financial condition, the percentage ownership of management, the number of shareholders, or any aspect of the Company’s business would materially change, solely as a result of a Reverse Split.

Pursuant to Form 8K filed with the SEC on November 2, 2015, the Company stated that “[e]ffective October 15, 2015, the Company effectuated the actions contained in this Section hereinabove. Although, the corporate action described did include the approval by the voting shareholders of a reverse stock split of up to 1 for 1,000, such effectuated action did not effect an actual (or specific) reverse split on such date, but rather provided for a future approval only. Subject to such approval, the Board of Directors were granted the right to effect a reverse split at any time during the following one year period, at a ratio (between 1 for 1,000), and on such determined “effective date” deemed appropriate by the Board Directors, at such time (which subsequently was determined later to be August 26, 2016).

On August 26, 2016, the Board of Directors decided that it was in the best interest of the Company to approve a reverse split of the Company’s Common Stock at a specified ratio of 1:1,000, as a condition of the execution of WOD Definitive Agreement, as described more fully under Subsequent Events in Item 12 herein, pursuant to the prior approval effective as of October 15, 2015, as referenced in Form 8K filed with the SEC on September 2, 2016. Further, the Company confirmed that at the effective time of the reverse stock split, all of the outstanding shares of our outstanding Common Stock were automatically converted into a smaller number of shares, at the reverse split ratio of 1:1,000, on the effective date.

However, due to the fact, that on August 26, 2016, the Company was delinquent on certain required SEC quarterly filings for year ending 2016, it was determined by the Board of Directors that the “effective date” of the reverse stock split, could not be the same date as the approval date of August 26, 2016, and therefore, the “effective date” had to be postponed until such time as the Company became current as a fully reporting company. Separately, until the Company was current on its filings, the Company could not notify its shareholders about the “effective date” of the reverse split, which would also be subject to approval by FINRA.

Therefore, the Company advises that it intends to define an “effective date” of the reverse stock split as soon as possible after the Company becomes current as a fully reporting company, and complete the required filing with the State of Florida, at which time notice of the “effective date” will be provided to the Company’s shareholders under Form 8K and FINRA, as applicable.

Holders of record of the Common Stock and Series B Convertible Preferred Stock at the close of business on the Record Date were entitled to participate in the written consent of our shareholders. Each share Common Stock was entitled to one vote and each share of Series B Convertible Preferred Stock was entitled to vote 1:1,000 to each share of Common Stock.

Reverse Split

On the effective date of the Reverse Split as determined by the Company when applicable (the “Effective Date”), all of the outstanding shares of our outstanding Common Stock will automatically converted into a smaller number of shares, at the reverse split ratio of 1:1,000.

The Reasons for The Reverse Split

The Reverse Split was intended to reduce the number of outstanding shares in an effort to increase the market value of the remaining outstanding shares. In approving the Reverse Split, the Directors considered that the Company’s Common Stock may not appeal to brokerage firms that are reluctant to recommend lower priced securities to their clients. Investors may also be dissuaded from purchasing lower priced stocks because the brokerage commissions, as a percentage of the total transaction, tend to be higher for such stocks. Moreover, the analysts at many brokerage firms do not monitor the trading activity or otherwise provide coverage of lower priced stocks. The Directors also believed that most investment funds are reluctant to invest in lower priced stocks.

However, the effect of the Reverse Split upon the market price for the Company’s Common Stock cannot be predicted with certainty, and the history of similar stock split combinations for companies in like circumstances is varied. There can be no assurance that the market price per share of the Company’s Common Stock after the Reverse Split will rise in proportion to the reduction in the number of shares of Common Stock outstanding resulting from the Reverse Split. The market price of the Company’s Common Stock may also be based on its performance and other factors, some of which may be unrelated to the number of shares outstanding.

Potential Risks of The Reverse Split

There can be no assurance that the bid price of the Company’s Common Stock will continue at a level in proportion to the reduction in the number of outstanding shares resulting from the Reverse Split, that the Reverse Split will result in a per share price that will increase its ability to attract employees and other service providers or that the market price of the post-split Common Stock can be maintained. The market price of the Company’s Common Stock is also based on its financial performance, market condition, the market perception of its future prospects and the Company’s industry as a whole, as well as other factors, many of which are unrelated to the number of shares outstanding. If the market price of the Company’s Common Stock declines after the Reverse Split, the percentage decline as an absolute number and as a percentage of the Company’s overall capitalization may be greater than would occur in the absence of a Reverse Split.

Potential Effects of The Reverse Split

For each holder of Common Stock, the number of shares held on the Effective Date will be reduced by the Reverse Split as follows: the number of shares held before the Reverse Split will be divided by 1,000, and if the result had a fractional component, the result is that cash will be given in lieu of any fractional shares. By way of example, a shareholder with 100,000 shares of Common Stock before the Reverse Split will hold 100 shares of Common Stock upon completion of the Reverse Split and will receive cash in lieu of the fractional remaining share.

The issuance of cash in lieu of fractional shares will effect a small change in the relative percent ownership of the respective common shareholders. This change is not expected to be material.

Accounting Matters. The par value of the Company’s Common Stock remained unchanged at $0.0001 per share after the Reverse Split. Also the capital account of the Company remained unchanged, and the Company does not anticipate that any other accounting consequences would arise as a result of the Reverse Split.

Effect on Authorized and Outstanding Shares. Based on the stockholdings of shares of Common Stock issued and outstanding on the Effective Date. As a result of the Reverse Split, the number of shares of capital stock issued and outstanding (as well as the number of shares of Common Stock underlying any options, warrants, convertible debt or other derivative securities) on the Effective Date will be reduced to the number of shares of capital stock issued and outstanding immediately prior to the effectiveness of the Reverse Split, divided by one thousand (1,000), minus any shares that were eliminated with cash in lieu of fractional shares.

With the exception of the number of shares issued and outstanding, the rights and preferences of the shares of capital stock prior and subsequent to the Reverse Split will remain the same. It is not anticipated that the Company’s financial condition, the percentage ownership of management, the number of shareholders, or any aspect of the Company’s business would materially change, solely as a result of the Reverse Split. The Reverse Split will be effectuated simultaneously for all of the Company’s Common Stock and the exchange ratio was the same for all shares of the Company’s Common Stock. The Reverse Split will affected all of our shareholders uniformly and will not affect any shareholder’s percentage ownership interests in the Company or proportionate voting power, except to the extent caused by the exchange of cash in lieu of fractional shares. The Reverse Split will not alter the respective voting rights and other rights of shareholders.

The Reverse Split was not intended as, and will not have the effect of, a “going private transaction” covered by Rule 13e-3 under the Exchange Act.

As a result of the Reverse Split, there was a reduction in the number of shares of Common Stock issued and outstanding and no change to the number of authorized shares of the Company’s Common Stock under the Company’s Articles of Incorporation, as amended. Because the number of issued and outstanding shares of Common Stock decreased, the number of shares of Common Stock remaining available for issuance in the future increased.

Effectiveness of The Reverse Split

Exchange of Certificates After Split. It will not be necessary for stockholders to exchange their old certificates. However, those stockholders who wish to obtain new certificates should contact the transfer agent, Manhattan Transfer Registrar Company, 57 Eastwood Road, Miller Place, NY 11764, Phone: (631) 928-7655.

Tax Impact of the Reverse Split. The following discussion summarizing material federal income tax consequences of the Reverse Split is based on the Internal Revenue Code of 1986, as amended (the “Code”), the applicable Treasury Regulations promulgated thereunder, judicial authority and current administrative rulings and practices in effect on the date this Information Statement was first mailed to shareholders. This discussion does not discuss consequences that may apply to special classes of taxpayers (e.g., non-resident aliens, broker-dealers, or insurance companies). Stockholders should consult their own tax advisors to determine the particular consequences to them.

The receipt of the Common Stock following the effective date of the Reverse Split, solely in exchange for the Common Stock held prior to the Reverse Split, will not generally result in recognition of a gain or loss to the shareholders. Although the issue is not free from doubt, additional shares received in lieu of fractional shares, including shares received as a result of the rounding up of fractional ownership, should be treated in the same manner. The adjusted tax basis of a shareholder in the Common Stock received after the Reverse Split will be the same as the adjusted tax basis of the Common Stock held prior to the Reverse Split exchanged therefor, and the holding period of the Common Stock received after the Reverse Split will include the holding period of the Common Stock held prior to the Reverse Split exchanged therefor.

No gain or loss will be recognized by the Company as a result of the Reverse Split. The Company’s views regarding the tax consequences of the Reverse Split are not binding upon the Internal Revenue Service or the courts, and there can be no assurance that the Internal Revenue Service or the courts would accept the positions expressed above.

THIS SUMMARY IS NOT INTENDED AS TAX ADVICE TO ANY PARTICULAR PERSON. IN PARTICULAR, AND WITHOUT LIMITING THE FOREGOING, THIS SUMMARY ASSUMES THAT THE SHARES OF COMMON STOCK ARE HELD AS “CAPITAL ASSETS” AS DEFINED IN THE CODE, AND DOES NOT CONSIDER THE FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY’S SHAREHOLDERS IN LIGHT OF THEIR INDIVIDUAL INVESTMENT CIRCUMSTANCES OR TO HOLDERS WHO MAY BE SUBJECT TO SPECIAL TREATMENT UNDER THE FEDERAL INCOME TAX LAWS (SUCH AS DEALERS IN SECURITIES, INSURANCE COMPANIES, FOREIGN INDIVIDUALS AND ENTITIES, FINANCIAL INSTITUTIONS AND TAX EXEMPT ENTITIES). IN ADDITION, THIS SUMMARY DOES NOT ADDRESS ANY CONSEQUENCES OF THE REVERSE SPLIT UNDER ANY STATE, LOCAL OR FOREIGN TAX LAWS. THE STATE AND LOCAL TAX CONSEQUENCES OF THE REVERS SPLIT MAY VARY AS TO EACH STOCKHOLDER DEPENDING ON THE STATE IN WHICH SUCH STOCKHOLDER RESIDES. AS A RESULT, IT IS THE RESPONSIBILITY OF EACH SHAREHOLDER TO OBTAIN AND RELY ON ADVICE FROM HIS, HER OR ITS TAX ADVISOR AS TO, BUT NOT LIMITED TO, THE FOLLOWING: (A) THE EFFECT ON HIS, HER OR ITS TAX SITUATION OF THE REVERSE SPLIT, INCLUDING, BUT NOT LIMITED TO, THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS; (B) THE EFFECT OF POSSIBLE FUTURE LEGISLATION OR REGULATIONS; AND (C) THE REPORTING OF INFORMATION REQUIRED IN CONNECTION WITH THE REVERSE SPLIT ON HIS, HER OR ITS OWN TAX RETURNS. IT WILL BE THE RESPONSIBILITY OF EACH SHAREHOLDER TO PREPARE AND FILE ALL APPROPRIATE FEDERAL, STATE AND LOCAL TAX RETURNS.

Share Certificates

Following the Reverse Split, the share certificates held will continue to be valid. In the future, new share certificates will reflect the reverse split, but this in no way will affect the validity of current share certificates.

Warrants Issued for Services

As of December 31, 2015, and 2014, warrants outstanding were 2,307 and 1,002,307, respectively. The Company issued no warrants in the twelve months ending December 31, 2015.

On December 3, 2014, pursuant to the terms of a one-year consulting contract, the Company issued a warrant for the purchase of 1,000,000 shares of common stock with a strike price of $2.00, exercisable immediately through December 1, 2015. Using the Black-Scholes option pricing model, the fair market value of the warrants at the time of the issuance was determined to be $522,684. The warrants were valued using the following significant assumptions: (1) a risk free interest rate of 0.14%, (2) expected life of 1.0 year, (3) expected stock price volatility of 92.083%, and (4) expected dividend yield of zero. The amount will be expensed over the life of the contract and $41,528 was expensed as stock compensation during the year ended December 31, 2014, and $481,156 was expensed over the remaining life of the contract.

On January 2, 2014, the Company issued a warrant for the purchase of 769 shares of common stock to an independent contractor (“Contractor”), per a January 1, 2012 four year Stock Purchase Warrant Agreement that gives the Contractor the right to purchase 769 shares of common stock at an exercise price of $390.00 a share, as consideration for services rendered per an Independent Contractor Agreement with the Company. Based on the January 2, 2012, Stock Purchase Warrant, the warrant will expire on January 1, 2016. The fair value of the issued warrant is $-0-, based on Black-Scholes option-pricing model using risk free interest rate of 0.389%, expected life of 2 years and expected volatility of 0.00%.

The following table summarizes the warrant activity for the years ended December 31, 2015 and 2014:

	Warrants Outstanding
				Weighted
				Average
	Number of			Exercise
	Shares			Price
Balance, December 31, 2013		1,538		$	195.00
Granted		1,000,769		$	2.29
Exercised		-			-
Expired/Cancelled		-			-
Balance, December 31, 2014		1,002,307		$	259
Granted		-		$	-
Exercised		-			-
Expired/Cancelled		(1,000,000	)		(2	)
Balance, December 31, 2015		2,307		$	260
Exercisable at December 31, 2015		2,307		$	260

The weighted average exercise price and remaining weighted average life of the warrants outstanding at December 31, 2015 were $260 and .003 years, respectively. The aggregate intrinsic value of the outstanding warrants at December 31, 2015 was $0.