Stockholders' Deficit, Note

3 Months Ended

Mar. 31, 2014

Notes

Stockholders' Deficit, Note

NOTE 8 - STOCKHOLDERS' DEFICIT

As of March 31, 2014, there were 33,270,416 shares of common stock outstanding, and 500,000 preferred shares outstanding.

Preferred Stock

As of March 31, 2014, there were 25,000,000 preferred shares authorized and 500,000 preferred shares outstanding. The board of directors had previously set the voting rights for the preferred stock at 1 share of preferred to 250 common shares.

Common Stock

In January 2014, concurrent with the cancellation of the Le Flav Spirits, LLC license agreement, the Company cancelled two consulting agreements previously entered into during April 2013, in which shares previously issued were returned in full to the Company. A total of 1,765,000 shares valued at $105,900 were returned and canceled in full settlement.

On March 1, 2014, the Company authorized to issue a total of 100,000 shares valued at $41,000 to Douglas Zorn, the Company’s Chief Operating Officer for services. The shares are fully earned and non-assessable as of March 31, 2014. In addition the Company issued the same consultant a total of 900,000 warrants valued at $368,878. The value of these warrants estimated by using the Black-Scholes option pricing model with the following assumptions: exercise price of $1.50, term of 3 years; risk free interest rate of .69%; dividend yield of 0% and expected volatility of 433%.

During the first quarter of 2014, the Company issued warrants to executives of Quest Solution, Inc. with the following milestones. 

When the Company reaches $35,000,000 in sales, 5,000,000 warrants at $1.00 per share vest and become exercisable. These warrants expire on January 9, 2016. 

When the Company makes it to the NASDAQ or AMEX or larger exchange, 2,000,000 warrants at $3.00 per share vest and become exercisable. These warrants expire on January 9, 2017.

Additionally, when the Company reaches $40,000,000 in sales, a 2,000,000 share bonus is given to the executives. This expires January 8, 2017.