STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Note 12 - 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").

On May 17, 2016, the Company designated 100,000,000 shares of preferred stock as Series B Convertible Preferred Stock. This series ranks senior to all non-parity stock and votes as if converted at 1,000 shares of common stock for each share of preferred outstanding. This Series B also votes as a class. The Series B shares are convertible up to 25% of the originally issued shares per quarter ending on each calendar quarter. If common shares are issued below $1.00 per share while any Series B stock is outstanding , the Company is required to issue additional shares of Series B shares so as the issuance of common shares is non-dilutive to the Series B shareholder. The outstanding shares of Preferred Series B will be multiplied by a fraction whose numerator is the number of common shares issued at less then $1.00 and the denominator of which is the number of common shares outstanding immediately before the issuance of the dilutive shares.

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, 2016 and 2015, there were 2,100,000 and 0 shares of preferred stock Series B outstanding, respectively.

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.

In August 2016, 100,000 shares of preferred stock were issued in conjunction with the second closing of the WOD Amended Acquisition Agreement.

Common Stock

As of November 3, 2017, the Company had 150,018,799 shares of common stock issued and outstanding.

During the twelve months ended December 31, 2016, the Company issued 108,796,533 shares of common stock as follows:

In the quarter ended March 31, 2016, the Company issued 10,2515,033 shares of Common Stock for the conversion of $60,126 of notes payable and $281 of accrued interest.

In the quarter ended September 30, 2016, the Company issued 6,281,500 shares of Common Stock for the conversion of $754 of notes payable.

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 effective July 1, 2015.

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.

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 “effective 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 affect 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.

This contemplated reverse stock split was not effectuated as of the date of this Report. 

Warrants Issued for Services

As of December 31, 2016, and 2015, warrants outstanding were 7,000,00 and 2,307, respectively. The Company issued 7,000,000 warrants in the twelve months ending December 31, 2016.

The following table summarizes the warrant activity for the years ended December 31, 2016 and 2015:

	Warrants Outstanding
				Weighted
				Average
	Number of			Exercise
	Shares			Price
Balance, December 31, 2014		1,002,307		$	261
Granted		-		$	-
Exercised		-			-
Expired/Cancelled		(1,000,000	)		(2	)
Balance, December 31, 2015		2,307		$	259
Granted		7,000,000		$	700
Exercised		-			-
Expired/Cancelled		(2,307	)		(259	)
Balance, December 31, 2016		7,000,000		$	700
Exercisable at December 31, 2016		7,000,000		$	700

The weighted average exercise price and remaining weighted average life of the warrants outstanding at December 31, 2015 were $259 and .003 years, respectively. The aggregate intrinsic value of the outstanding warrants at December 31, 2016 was $700 with 2.3 years to exercise.