Stockholders' Equity

9 Months Ended

Sep. 30, 2014

Stockholders' Equity Note [Abstract]

Stockholders’ Equity

10. Stockholders’ Equity

Authorized Shares

Effective April 4, 2014, the Company filed with the State of Nevada a Certificate of Amendment to Articles of Incorporation changing the Company’s number of authorized shares to 600,000,000. On or about September 10, 2014, the Company filed with the State of Nevada a Certificate of Amendment to Articles of Incorporation changing the Company’s number of authorized shares to 2,000,000,000. On or about October 3, 2014, the Company received implemented a 5,000-1 reverse split, with no fractional shares allowed.

The Company has 2,000,000,000 authorized shares of its $0.00001 par value common stock and 20,000,000 shares of its $0.00001 par value Preferred Stock Series B as of September 30, 2014. On September 26, 2012, the Company authorized 10,000 Preferred Stock Series C shares, par value $0.00001.

Common Shares:

On September 2, 2013, effective September 1, 2013, the Company entered into an Evaluation License Agreement (the "ELA") with Micrologic Design Automation, Inc. ("MDA"), pursuant to which MDA temporarily licensed to the Company, on a non-exclusive and royalty-free basis, certain technology and related materials for any purpose related to evaluating NanoDRC, NanoRV and NanoLVS technology (the “Technology”).  On January 2, 2014, and effective December 31, 2013, the Company and MDA signed a letter agreement whereby MDA provided for a perpetual, royalty free, exclusive license of the Licensed Technology, as defined in the Evaluation License Agreement dated September 1, 2013, in exchange for 200 million shares (40,000 shares post-split) of common stock (the “Shares”) of the Company.  MDA is not permitted to sell, assign, hypothecate or transfer the Shares in any way prior to the Company generating at minimum $50,000 in revenue through the use of the Technology (the “Revenue Target”).  A stop transfer legend shall be affixed to the certificate representing the Shares.  If the Revenue Target is achieved, then such stop transfer legend shall be removed.  The shares of common stock were issued under Section 4(2) of the Securities Act of 1933, as amended. (See Note 7)

During the nine months ended September 30, 2014, Financier 1 converted $44,200 of its July 2013 Note into 31,994,477 shares of common stock (6,399 shares post-split) at an average conversion price of $0.0014 per share.

During the nine months ended September 30, 2014, Financier 2 converted $66,178 of its note into 322,000,000 shares of common stock (64,400 shares post-split) at an average conversion price of $0.00021 per share.

During the nine months ended September 30, 2014, GV Global Communications, Inc converted 7,770 of its Series C Preferred Stock into 64,551,667 common shares (12,910 shares post-split). During the third quarter, the Company received an additional 21,021,900 common shares (4,204 shares post-split) to adjust the shares issued to reflect the amount that both they and the Company believed that they were owed.

Treasury Stock

On April 25, 2011, the Company issued a press release announcing that its Board of Directors approved a share repurchase program. Under the program, the Company is authorized to purchase up to 1,000,000 of its shares of common stock in open market transactions at the discretion of management. All stock repurchases will be subject to the requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended and other rules that govern such purchases. As of December 31, 2013 and December 31, 2012, the Company had repurchased 38,000 of its common shares in the open market, which were returned to treasury (8 shares post-split).

	Total Number of		Average		Shares Purchased		Shares Remaining
	Shares Purchased		Price Paid		Under Repurchase Plan		Under Repurchase Plan
Month
May 2011		23,500	$	0.4095		23,500		976,500
August 2011		9,000	$	0.1007		9,000		967,500
November 2011		5,500	$	0.0964		5,500		962,000
Weighted-average price paid per share		38,000	$	0.2910		38,000

Series B Preferred Shares

On November 1, 2011, the Company and certain creditors entered into a Settlement Agreement (the "Settlement Agreement") whereby without admitting any wrongdoing on either part, the parties settled all previous agreements and resolved any existing disputes. Under the terms of the Settlement Agreement, the Company agreed to issue the creditors 45,000 shares of Series B Preferred Stock of the Company on a pro-rata basis. Following the issuance and delivery of the shares of Series B Preferred Stock to said creditors, as well as surrendering the undelivered shares, the Settlement Agreement resulted in the settlement of all debts, liabilities and obligations between the parties.

The Series B Preferred Stock has a stated value of $100 per share and is convertible into the Company’s common stock at a conversion price of $1,500 per share representing 3,000 common shares. Furthermore, the Series B Preferred Stock votes on an as converted basis and carries standard anti-dilution rights. These rights were subsequently removed, except in cases of stock dividends or splits.

Series C Preferred Shares

On April 29, 2011, GV Global Communications, Inc. (“GV”) provided funding to the Company in the aggregate principal amount of $111,000 (the “Loan”).  On September 25, 2012, the Company and GV entered into a Conversion Agreement pursuant to which the Company agreed to convert the Loan into 10,000 shares of Series C Preferred Stock of the Company, which was approved by the Board of Directors.

Each share of Series C Preferred Stock is convertible, at the option of GV, into such number of shares of common stock of the Company as determined by dividing the Stated Value (as defined below) by the Conversion Price (as defined below).  The Conversion Price for each share is equal to a 50% discount to the average of the lowest three lowest closing bid prices of the Company’s common stock during the 10 day trading period prior to the conversion with a minimum conversion price of $0.002 ($10 on a post-split basis).    The stated value is $11.00 per share (the “Stated Value”).  The Series C Preferred Stock has no liquidation preference, does not pay dividends and the holder of Series C Preferred Stock shall be entitled to one vote for each share of common stock that the Series C Preferred Stock shall be convertible into.   GV has contractually agreed to restrict its ability to convert the Series C Preferred Stock and receive shares of the Company's common stock such that the number of shares of the Company's common stock held by it and its affiliates after such conversion does not exceed 4.9% of the then issued and outstanding shares of the Company's common stock.

Effective October 21, 2013, GV notified the Company of its intention to convert 345 of Series C Preferred into 1,897,500 shares of common stock of the Company, representing a conversion price of $0.002 per share ($10 on a post-split basis). The Company instructed its transfer agent to issue the required shares to GV. On November 5, 2013, 2013, GV notified the Company of the additional conversion of 380 of Series C Preferred into 2,090,000 shares of common stock of the Company ($418 on a post-split basis). On November 11, 2013, GV notified the Company of the additional conversion of 380 of Series C Preferred into 2,090,000 (418 post-split) shares of common stock of the Company. On November 26, 2013,GV notified the Company of the additional conversion of 425 of Series C Preferred into 2,337,500 (468 post-split) shares of common stock of the Company.

During the nine months ended September 30, 2014, GV Global Communications, Inc converted 7,770 of its Series C Preferred Stock into 64,551,667 common shares (12,910 shares post-split). During the third quarter of 2014, the Company received 21,021,900 common shares (4,204 shares post-split) to adjust the shares issued to reflect the amount that both they and the Company believed that they were owed.

The following table shows how the conversions were accounted for within the Series C and Common Stock Additional Paid in Capital accounts. This table shows the share amounts before and after the reverse split that took effect on or around October 3, 2014:

	Series C												Series C
	Convertible Preferred												Convertible Preferred
	Stock				Common Stock (pre-split)				Common Stock (post-split)				Stock		Common Stock
													Additional Paid		Additional Paid
	Shares		Amount		Shares		Amount		Shares		Amount		In Capital		In Capital
Balances at December 31, 2013		8,470	$	-		247,303,586	$	2,473		49,461	$	2,473	$	188,322	$	2,050,621
Conversion of Series C Preferred Stock to Common Stock		(7,770)				64,551,667		646		12,910		646		(172,758)		172,112
Adjustment to Series C Preferred Stock						21,021,900		210		4,204		210				(210)
Stock issued for services						90,000,000		900		18,000		900				98,100
Conversion of note payable to common stock						353,994,477		3,540		70,799		3,540				106,838
Balances at September 30, 2014		700	$	-		776,871,630	$	7,769		155,374	$	7,769	$	15,564	$	2,427,461

This presentation shows the impact on the Additional Paid-in Capital account for the Series C Preferred and Common Stock, whereas the financial statements present the Additional Paid-in Capital as one combined account.

The issuance of the Series C Preferred Stock was made in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933 and Rule 506 promulgated under Regulation D thereunder.  GV is an accredited investor as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933.