10. Derivative Liability	12 Months Ended
Dec. 31, 2013
Derivative Liability
10. Derivative Liability	From April through June 2013 the Company sold a total of 142,200 Series “A” Shares to a small group of accredited investors at $10.00 per share for a total of $1,422,000. Each Series “A” Share is convertible into 100 shares of Company Common Stock upon the satisfaction of certain terms and conditions. See Note 8 – Stockholders’ Equity. In July 2013 the Company sold a total of 19,176 Series “A” Shares to a small group of accredited investors at $17.00 per share for a total of $325,992. Each Series “A” Share is convertible into 100 shares of Company Common Stock upon the satisfaction of certain terms and conditions. See Note 8 – Stockholders’ Equity. The Company calculated the fair value of the embedded conversion feature on September 30, 2013 using the Black-Scholes valuation model with the following assumptions: market prices of $0.19; exercise price of $0.17; discount rate of .10%; expected volatility of 133.9% and an expected life of one (1) year. The fair value of $145,667 was recorded as a deemed derivative liability, which reduced the value of Equity. In August and September 2013 the Company sold a total of 130,000 Series “A” Shares to a small group of accredited investors at $5.00 per share for a total of $650,000. Each Series “A” Share is convertible into 100 shares of Company Common Stock upon the satisfaction of certain terms and conditions. See Note 8 – Stockholders’ Equity. The Company calculated the fair value of the embedded conversion feature on September 30, 2013 using the Black-Scholes valuation model with the following assumptions: market prices of $0.19; exercise price of $0.05; discount rate of .10%; expected volatility of 133.9% and an expected life of one (1) year. The fair value of $1,859,970 was recorded as a deemed derivative liability, which reduced the value of Equity. In accounting for the various Series “A” Shares described above, the Company considered the guidance contained in ASC 815 Derivatives and Hedging and ASC 480 Distinguishing Liabilities from Equity. In accordance with the guidance provided in ASC 480 and ASC 815, the Company determined that at the time off issuance, the conversion feature of the Series “A” Shares convert into more Common Stock shares than were currently authorized represented an deemed derivative. Accordingly, the Series “A” Shares were not considered to be “conventional” Preferred Stock and thus the embedded conversion feature must be bifurcated and accounted for as a derivative liability. However, on December 3, 2013 the Company filed a Definitive Schedule 14C Information Form with the SEC informing them that the holders of more than a majority of the outstanding Common Stock of the Company had approved to amend the Company’s Certificate of Incorporation to increase the number of authorized shares of Common Stock from 100,000,000 to 250,000,000 which had been approved by a vote of the shareholders of the Company on November 20, 2013. Because the authorized share capital had been increased as of December 31, 2013 the treatment of the Series “A” Shares issued in 2013 was again reviewed and were deemed to no longer represent a deemed derivative and could therefore be considered “conventional” Preferred Stock and all previous accounting for derivative liability was reversed as of December 31, 2013. In July 2013 the Company borrowed a total of $69,000 in Convertible Notes payable to unrelated third parties for working capital purposes. These Convertible Notes bear interest at the rate of 8% per annum and are redeemable in 18 months or convertible after six months into shares of the Company’s Common Stock at a price equal to 60% of the average of the variable weighted average price for the 10 trading days prior to the date of conversion. The Company accrued $2,119 in interest expense for the year ended December 31, 2013 for these Convertible Notes. The conversion option has been accounted for in accordance with ASC Topic 815. Accordingly, the Conversion Option is not considered to be solely indexed to the Company’s own stock and, as such, recorded as a liability. The Company’s convertible promissory note derivative liability has been measured at fair value at July, 2013 and December 31, 2013 using a level 3 input. The fair value of the convertible note payable derivative liability is $30,324 and $39,474 at July, 2013 and December 31, 2013, respectively. The increase in the fair value of the convertible note payable derivative liability of $9,150 was recognized as a loss on line net change in fair value of derivative liability in current period earnings. The value of the derivative at July was treated as a discount and is being amortized.

10. Derivative Liability

12 Months Ended

Dec. 31, 2013

From April through June 2013 the Company sold a total of 142,200 Series “A” Shares to a small group of accredited investors at $10.00 per share for a total of $1,422,000. Each Series “A” Share is convertible into 100 shares of Company Common Stock upon the satisfaction of certain terms and conditions. See Note 8 – Stockholders’ Equity.

In July 2013 the Company sold a total of 19,176 Series “A” Shares to a small group of accredited investors at $17.00 per share for a total of $325,992. Each Series “A” Share is convertible into 100 shares of Company Common Stock upon the satisfaction of certain terms and conditions. See Note 8 – Stockholders’ Equity. The Company calculated the fair value of the embedded conversion feature on September 30, 2013 using the Black-Scholes valuation model with the following assumptions: market prices of $0.19; exercise price of $0.17; discount rate of .10%; expected volatility of 133.9% and an expected life of one (1) year. The fair value of $145,667 was recorded as a deemed derivative liability, which reduced the value of Equity.

In August and September 2013 the Company sold a total of 130,000 Series “A” Shares to a small group of accredited investors at $5.00 per share for a total of $650,000. Each Series “A” Share is convertible into 100 shares of Company Common Stock upon the satisfaction of certain terms and conditions. See Note 8 – Stockholders’ Equity. The Company calculated the fair value of the embedded conversion feature on September 30, 2013 using the Black-Scholes valuation model with the following assumptions: market prices of $0.19; exercise price of $0.05; discount rate of .10%; expected volatility of 133.9% and an expected life of one (1) year. The fair value of $1,859,970 was recorded as a deemed derivative liability, which reduced the value of Equity.

In accounting for the various Series “A” Shares described above, the Company considered the guidance contained in ASC 815 Derivatives and Hedging and ASC 480 Distinguishing Liabilities from Equity. In accordance with the guidance provided in ASC 480 and ASC 815, the Company determined that at the time off issuance, the conversion feature of the Series “A” Shares convert into more Common Stock shares than were currently authorized represented an deemed derivative. Accordingly, the Series “A” Shares were not considered to be “conventional” Preferred Stock and thus the embedded conversion feature must be bifurcated and accounted for as a derivative liability. However, on December 3, 2013 the Company filed a Definitive Schedule 14C Information Form with the SEC informing them that the holders of more than a majority of the outstanding Common Stock of the Company had approved to amend the Company’s Certificate of Incorporation to increase the number of authorized shares of Common Stock from 100,000,000 to 250,000,000 which had been approved by a vote of the shareholders of the Company on November 20, 2013. Because the authorized share capital had been increased as of December 31, 2013 the treatment of the Series “A” Shares issued in 2013 was again reviewed and were deemed to no longer represent a deemed derivative and could therefore be considered “conventional” Preferred Stock and all previous accounting for derivative liability was reversed as of December 31, 2013.

In July 2013 the Company borrowed a total of $69,000 in Convertible Notes payable to unrelated third parties for working capital purposes. These Convertible Notes bear interest at the rate of 8% per annum and are redeemable in 18 months or convertible after six months into shares of the Company’s Common Stock at a price equal to 60% of the average of the variable weighted average price for the 10 trading days prior to the date of conversion. The Company accrued $2,119 in interest expense for the year ended December 31, 2013 for these Convertible Notes.

The conversion option has been accounted for in accordance with ASC Topic 815. Accordingly, the Conversion Option is not considered to be solely indexed to the Company’s own stock and, as such, recorded as a liability.

The Company’s convertible promissory note derivative liability has been measured at fair value at July, 2013 and December 31, 2013 using a level 3 input. The fair value of the convertible note payable derivative liability is $30,324 and $39,474 at July, 2013 and December 31, 2013, respectively. The increase in the fair value of the convertible note payable derivative liability of $9,150 was recognized as a loss on line net change in fair value of derivative liability in current period earnings. The value of the derivative at July was treated as a discount and is being amortized.