7. Stockholders' Deficit | Common Stock to be Issued On February 26, 2016, the Company entered into a common stock purchase agreement with an individual pursuant to which it agreed to issue shares of the Companys common stock in exchange for proceeds of $5,000. The shares due were not issued as of March 31, 2016 and were reflected as common shares to be issued in the accompanying condensed consolidated balance sheets. On January 2, 2016, the Company entered into an employment agreement with an officer pursuant to which it granted 10,000,000 shares of the Companys common stock. The shares vested immediately and were recognized as stock based compensation expense during the period ended March 31, 2016 based on their fair value on the agreement date of $650,000. The shares due were not issued as of March 31, 2016 and were reflected as common shares to be issued in the accompanying condensed consolidated balance sheet. During 2015, the Company entered into a consulting agreement which included, among other things, monthly compensation of 791,667 shares of common stock. As of December 31, 2015, 1,583,334 shares of common stock with a value of $86,291 were earned but were not issued, and were included in common shares to be issued in the accompanying December 31, 2015 consolidated balance sheet. During the period ended March 31, 2016, the employees earned 2,375,001 shares with a value of $37,287 As of March 31, 2016, 3,958,335 shares of common stock with a value of $123,578 have not been issued and are included in common shares to be issued in the accompanying condensed consolidated balance sheet On September 10, 2015, the Company entered into a one-year consulting agreement with a consultant, which included, among other things, compensation of $50,000 to be paid in shares of common stock based on the closing price of the Companys common stock on the final trading day of the consulting agreement. As of December 31, 2015, $16,667 of common shares were earned but were not issued, and were included in common shares to be issued in the accompanying December 31, 2015 consolidated balance sheet. During the period ended March 31, 2016 the Company recognized $12,500 of compensation for the value of the shares earned during the period. As of March 31, 2016, $29,167 of the value of the shares of common stock has been included in common shares to be issued in the accompanying condensed consolidated balance sheets. Equity Purchase Agreement with Tarpon Bay Partners, LLC On June 15, 2015, the Company entered into an Equity Purchase Agreement (the Equity Purchase Agreement) with Tarpon Bay Partners, LLC, a Florida limited liability company (Tarpon). Under the terms of the Equity Purchase Agreement, Tarpon was to purchase, at the Company's election, up to $5,000,000 of the Company's registered common stock (the Shares). On February 18, 2016, the Company entered into a new Equity Purchase Agreement (the Equity Purchase Agreement) with Tarpon Bay Partners, LLC, a Florida limited liability company (Tarpon). Under the terms of the Equity Purchase Agreement, Tarpon will purchase, at the Company's election, up to $10,000,000 of the Company's registered common stock (the Shares). During the term of the Equity Purchase Agreement, the Company may at any time deliver a put notice to Tarpon thereby requiring Tarpon to purchase a certain dollar amount of the Shares. Simultaneous with the delivery of such Shares, Tarpon shall deliver payment for the Shares. Subject to certain restrictions, the purchase price for the Shares shall be equal to 125% of the lowest Closing Price during the Valuation Period as such capitalized terms are defined in the Agreement. 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. The Equity Purchase Agreement shall terminate (i) on the date on which Tarpon shall have purchased Shares pursuant to the Equity Purchase Agreement for an aggregate Purchase Price of $10,000,000, or (ii) on the date occurring 24 months from the date on which the Equity Purchase Agreement was executed and delivered by the Company and Tarpon. As a condition for the execution of the Equity Purchase Agreements by Tarpon, the Company issued a Promissory Note to Tarpon on February 18, 2016 in the principal amounts of $25,000 with an interest rate of 10% per annum. The maturity date of the note issued on February 18, 2016 is August 31, 2016. The issuance of the note was recorded as a finance cost in the accompanying condensed consolidated statement of operations for the periods ending March 31, 2016 and 2015. In addition, on February 18 2016, the Company and Tarpon entered into a Registration Rights Agreement (the Registration Agreement). Under the terms of the Registration Agreement the Company agreed to file a registration statement with the Securities and Exchange Commission with respect to the Shares within 120 days of February 18, 2016. The Company is obligated to keep such registration statement effective until (i) three months after the last closing of a sale of Shares under the Purchase Agreement, (ii) the date when Tarpon may sell all the Shares under Rule 144 without volume limitations, or (iii) the date Tarpon no longer owns any of the Shares. The February 18, 2016 Purchase Agreement for $10,000,000 effectively supersedes and terminates the prior Equity Purchase Agreement with Tarpon dated June 15, 2015, which was for $5,000,000. At March 31, 2016, Tarpon had not purchased any shares under this agreement. |