Liquidity and Capital Resources

As of December 31, 2015, we had no cash on hand, total current assets of $51,595 and total current liabilities of $3,662,273 creating a working capital deficit of $3,610,678. Current assets consisted of $36,376 in prepaid expenses and $15,219 in deferred loan costs. Current liabilities consisted of bank overdrafts totaling $2,981, accounts payable $176,694, current notes payable net of discounts of $151,066, current convertible notes payable net of discounts of $799,976, a derivative liabilities of $1,005,791, accrued interest of $148,655 and accrued expenses, related party payables totaling $10,000 and other liabilities of $1,367,110.

Cash Flows from Operating Activities

Net cash used in operating activities during the year ended December 31, 2015 was $386,867 which consisted of a net loss of $3,661,697, non-cash expenses and gains of $2,592,279 and positive changes in working capital of $682,551. Net cash used in operating activities during the same period in 2014 was $703,809 which consisted of a net loss of $3,568,148, non-cash expenses and gains of $2,942,236 and negative changes in working capital of $77,897. The change in net cash used in operating activities was primarily due to an a greater change in accounts payable and accrued expenses and fewer non-cash expenses and gains.

We expect our cash used in operating activities will increase over the next twelve months as we are uncertain of our opportunities to generate revenue in the near term while we will still recognize significant non-cash expenses.

Cash Flows from Financing Activities

Cash flows from financing activities during the year ended December 31, 2015 were $291,616 compared to $790,708 during the same period in 2014. Cash provided by financing activities during the year ended December 31, 2015 consisted of proceeds from bank overdrafts totaling $2,941, proceeds from convertible notes payable of $218,075, proceeds from notes payable of $100,000, repayments of convertible notes payable of $10,000, repayments of notes payable of $13,400 and repayments of related party payables of $6,000. Cash provided by financing activities during the year ended December 31, 2014 consisted of proceeds from convertible notes payable of $583,500, proceeds from notes payable of $435,000, repayments of notes payable of $150,000, repayments of convertible notes payable of $171,508, proceeds from related party notes payable was $10,000, proceeds from common stock issued for cash of $87,916, and the cost of purchase of treasury stock of $4,200.

During the next twelve months, we anticipate generating additional cash from financing activities from entering into additional debt agreements and the additional issuance of common stock for cash as these activities will be required to fund operations.

Outstanding Loans

On April 14, 2014, the Company received a loan in the amount of $90,000 from Innovest, LLC. The loan was due on August 14, 2014 with a $30,000 payment due on each June 14, 2014; July 14, 2014 and August 14, 2014. The loan is unsecured and non-interest bearing. In the event of default, the note shall bear interest at 18% per annum. Additionally, the Company was obligated to issue 50,000 shares of common stock in the event of late payments. The note holder was also issued 75,000 shares of common stock as an incentive to enter into the note. The Company did not make the required principal payment on July 17, 2014 resulting in 50,000 shares of common stock being issued to Innovest and the note beginning to accrue interest at the rate of 18% per annum. Additionally, the Company did not make the required principal payment on August 17, 2014 resulting in an additional 50,000 shares of common stock being issued to Innovest. The unpaid principal and accrued interest as of August 4, 2015 was purchased by an existing convertible note holder. There was $0 and $60,000 of principal as of December 31, 2015 and 2014 plus accrued interest of $0 and $900 outstanding as of December 31, 2015 and 2014.

On August 5, 2014, the Company entered into two separate note agreements for $50,000 ($100,000 total). The notes carried a fixed interest amount of $800 and are due on October 4, 2014. If the loans were not repaid by the due date, the Company had the obligation to issue 25,000 shares of common stock to each note holder for each consecutive week the notes were outstanding. The notes were purchased by non-related parties on August 11, 2015 and August 19, 2015, respectively, resulting in 1,125,000 and 1,150,000 common shares being issued to each note holder (2,275,000 total common shares) as penalties. Additionally, the note holders each received 125,000 shares of common stock as an incentive to enter into the notes and had the right to sell back 50,000 shares of common stock to the Company for $4,200. There was a total of $0 and $100,000 in principal and $0 and $1,600 of accrued interest due at December 31, 2015 and 2014.

On April 17, 2014, the Company received a loan in the amount of $20,000 from Seton Securities. An additional $5,000 was received on July 15, 2014. The loans are unsecured, due on demand and non-interest bearing. There was $25,000 in principal and no accrued interest due at December 31, 2015 and 2014.

On October 22, 2014, the Company received a loan from an unrelated party totaling $100,000. The note carries an interest rate of 12% per annum and is due on October 22, 2016. During the first quarter of 2015, the note was amended retroactively to October 22, 2014 to adjust the interest rate to 15% per annum. Additionally, the note is secured by the vehicles owned by the company. There was $100,000 of principal and accrued interest of $6,627 and $2,301 due as of December 31, 2015 and 2014.

On August 1, 2015, the Company received a short term loan of $10,000 carrying fixed interest of $1,000. The loan was repaid in full during September 2015. There was no principal or accrued interest outstanding as of December 31, 2015.

On August 1, 2015, the Company received a short term interest free loan of $3,700. The loan was repaid in full during September 2015. There was no principal or accrued interest outstanding as of December 31, 2015.

On October 29, 2015, the Company received a loan from an unrelated party of $33,000 of which $27,000 was lent to the Company in cash and $6,000 is considered an original issue discount. The note is unsecured, carries an interest rate of 8% per annum and is due on April 29, 2016. There was $33,000 and $0 of principal and $456 and $0 of accrued interest due as of December 31, 2015 and 2014.

On October 26, 2012, the Company received a loan totaling $30,000 from an unrelated party. The note bears interest at 10% per annum and had an original maturity date of April 26, 2013; however, the Company is in negotiations to extend the maturity date. There was $30,000 in principal plus accrued interest of $9,542 and $6,542 at December 31, 2015 and 2014. The principal and accrued interest may be converted at the option of the holder to common stock at $0.30.

On February 27, 2014, the Company received a loan totaling $339,026 from an unrelated party. The note bears interest at 10% per annum and matured on February 27, 2015. Of the $339,026 total note, $212,526 was paid to former note holders on our behalf and $1,500 was withheld as debt issue costs resulting in net cash proceeds to the Company of $125,000. Additionally, the note may be converted to common stock at the option of the holder at a rate equal to a 35% discount from the lowest daily volume weighted average price in the five days prior to conversion, but not less than $0.00004. On various dates during the year ended December 31, 2014, the Company accepted twenty separate partial conversions of the note resulting in a total of 4,063,247 shares of common stock being issued in exchange for $242,526 of principal. On various dates during the year ended December 31, 2015, the Company accepted eighteen separate partial conversions of the note resulting in 74,600,243 shares of common stock being issued in exchange for $96,500 of principal. Additionally, the Company accepted a single conversion of accrued interest during the year ended December 31, 2014 resulting in 408,727 shares being issued in exchange for $8,369 of accrued interest. There was $0 and $96,500 in principal plus $14,037 and $10,165 in accrued interest due at December 31, 2015 and 2014.

On June 11, 2015, the Company received a loan totaling $59,800 from an unrelated party. The note bears interest at 10% per annum and matures on June 11, 2016. Of the $59,800 total note, $5,000 was paid to service providers on our behalf, $7,800 was an original issue discount and $2,000 was withheld as debt issue costs resulting in net cash proceeds to the company of $45,000. Additionally, the note may be converted to common stock at the option of the holder at a rate equal to a 50% discount from the lowest trading price during the five days prior to conversion. There was $59,800 and $0 in principal plus $3,325 and $0 in accrued interest due at December 31, 2015 and 2014.

On November 13, 2014, the Company received a loan totaling $104,000 from an unrelated party. The note carries interest at 8% per annum and is due on August 17, 2015 with a default interest rate of 22% should the note not be repaid by the maturity date. The holder has the right to convert the principal and accrued but unpaid interest to common stock at any time after 180 days from the note date, or May 12, 2015, at a 52% discount from the average of the lowest three trading prices of the Company’s common stock during the preceding ten trading days. The Company incurred a default penalty of $52,000 which was added to the principal balance of the note on August 17, 2015. During the year ended December 31, 2015, the Company accepted twenty five separate conversions resulting in a total of 229,814,736 common shares being issued in exchange for $104,000 of principal and two separate conversion resulting in a total of 29,714,286 common shares being issued in exchange for $4,160 of accrued interest. There was $0 and $104,000 of principal and $2,032 and $1,094 of accrued interest payable at December 31, 2015 and 2014.

On December 16, 2014, the Company received a loan totaling $54,000 from an unrelated party. The note carries interest at 8% per annum and is due on September 18, 2015 with a default interest rate of 22% should the note not be repaid by the maturity date. The holder has the right to convert the principal and accrued but unpaid interest to common stock at any time after 180 days from the note, or June 15, 2015, date at a 52% discount from the average of the lowest three trading prices of the Company’s common stock during the preceding ten trading days. The Company incurred a default penalty of $27,000 which was added to the principal balance of the note on September 18, 2015. During the year ended December 31, 2015, the Company accepted three separate conversion notices resulting in 41,153,361 common shares being issued in exchange for $6,140 of principal. On October 7, 2015, an existing noteholder purchased the remaining principal and all accrued interest outstanding as of that date. There was $0 and $54,000 of principal and $0 and $178 of accrued interest payable at December 31, 2015 and 2014.

On December 12, 2014, the Company received a loan totaling $50,000 from an unrelated party. The note carries interest at 10% per annum and is due on December 12, 2015. The holder has the right to convert the principal and accrued but unpaid interest to common stock at any time after 180 days from the note date, or June 10, 2015, at a 40% discount from the lowest closing bid price for the Company’s common stock for the fifteen prior trading days. During the year ended December 31, 2015, the Company incurred a default penalty equal to 10% of the principal amount of the note, or $5,000, which was added to the existing principal outstanding. There was $55,000 and $50,000 of principal and $5,687 and $260 of accrued interest payable at December 31, 2015 and 2014.

On June 26, 2015, the Company received a loan totaling $55,000 from an unrelated party. The note bears interest at 10% per annum and is due March 24, 2016. Of the $55,000 total note, $5,000 was an original issue discount resulting in net cash proceeds to the company of $50,000. Additionally, the note may be converted to common stock at the option of the holder at a rate equal to a 45% discount from the lowest trading price during the twenty days prior to conversion but not less than $0.00005. During the year ended December 31, 2015, the Company accepted seven separate conversion notices resulting in 57,406,767 common shares being issued in exchange for a reduction of principal totaling $55,000. There was $0 in principal plus $2,137 and $0 in accrued interest due at December 31, 2015 and 2014.

On May 14, 2015, the Company received a loan totaling $4,812 from an unrelated party. The note carries interest at 12% per annum and is due on February 18, 2016. The holder has the right to convert the principal and accrued but unpaid interest to common stock at any time after 180 days from the note date at a 55% discount from the average of the three lowest trading prices for the Company’s common stock for the twenty prior trading days. On October 7, 2015, an existing noteholder purchased the outstanding principal and unpaid interest as of that date resulting in prepayment penalties totaling $2,406. There was $0 of principal and $0 of accrued interest payable at December 31, 2015 and 2014.

On May 29, 2015, the Company received a loan totaling $5,500 from an unrelated party. The note carries interest at 12% per annum and is due on February 21, 2016. The holder has the right to convert the principal and accrued but unpaid interest to common stock at any time after 180 days from the note date at a 55% discount from the average of the three lowest trading prices for the Company’s common stock for the twenty prior trading days. On October 7, 2015, an existing noteholder purchased the outstanding principal and unpaid interest as of that date resulting in prepayment penalties totaling $2,750. There was $0 of principal and $0 of accrued interest payable at December 31, 2015 and 2014.

On July 8, 2015, the Company received a loan totaling $27,466 from an unrelated party. The note carries interest at 10% per annum and is due on July 7, 2016. The holder has the right to convert the principal and accrued but unpaid interest to common stock at any time after 180 days from the note date, or June 10, 2015, at a 40% discount from the lowest closing bid price for the Company’s common stock for the fifteen prior trading days. There was $27,466 and $0 of principal and $1,324 and $0 of accrued interest payable at December 31, 2015 and 2014.

On July 23, 2015, the Company received a loan totaling $43,000 from an unrelated party. The note carries interest at 12% per annum and is due on May 3, 2016. The holder has the right to convert the principal and accrued but unpaid interest to common stock at any time after 180 days from the note date at a 52% discount from the average of the three lowest trading prices for the Company’s common stock for the ten prior trading days. On October 7, 2015, an existing noteholder purchased the outstanding principal and unpaid interest as of that date resulting in prepayment penalties totaling $21,500. There was $0 of principal and $0 of accrued interest payable at December 31, 2015 and 2014.

On August 20, 2015, the Company received a loan totaling $60,000 from an unrelated party of which $5,000 was considered an original issue discount and $5,000 was paid to third parties on the Company’s behalf resulting in net cash proceeds of $50,000. The note carries interest at 12% per annum and is due on May 19, 2016. The holder has the right to convert the principal and accrued but unpaid interest to common stock at any time after 90 days from the note date at a 50% discount from the average of the three lowest trading prices for the Company’s common stock for the twenty prior trading days. There was $60,000 and $0 of principal and $2,624 and $0 of accrued interest payable at December 31, 2015 and 2014.

On September 30, 2015, the Company received a loan totaling $47,000 from an unrelated party of which $4,000 was considered an original issue discount and $3,000 was paid to third parties on the Company’s behalf resulting in net cash proceeds of $40,000. The note carries interest at 12% per annum and is due on September 30, 2016. The holder has the right to convert the principal and accrued but unpaid interest to common stock at any time after 90 days from the note date at a 50% discount from the average of the three lowest trading prices for the Company’s common stock for the twenty prior trading days. There was $47,000 and $0 of principal and $1,422 and $0 of accrued interest payable at December 31, 2015 and 2014.

On August 19, 2015, the Company received a loan totaling $50,800 from an unrelated party which was paid directly to an existing noteholder to retire the prior note in full. The note carries interest at 12% per annum and 22% per annum in the event of default and was due on August 19, 2015 which resulted in the note being in default immediately. The holder has the right to convert the principal and accrued but unpaid interest to common stock at any time after 90 days from the note date at a 50% discount from the average of the three lowest trading prices for the Company’s common stock for the twenty prior trading days. During the year ended December 31, 2015, the Company accepted nine partial conversions resulting in 188,595,810 common shares being issued in exchange for $29,617 of principal. There was $21,183 and $0 of principal and $2,213 and $0 of accrued interest payable at December 31, 2015 and 2014.

On August 11, 2015, the Company received a loan totaling $60,800 from an unrelated party of which $50,800 was paid directly to an existing noteholder to retire the prior note in full and $10,000 was considered an original issue discount. The note carries interest at 15% per annum and 22% per annum in the event of default and was due on September 11, 2015. The holder has the right to convert the principal and accrued but unpaid interest to common stock at a 60% discount from the average of the three lowest trading prices for the Company’s common stock for the twenty five prior trading days. During the year ended December 31, 2015, the Company accepted six partial conversions resulting in 619,892,000 common shares being issued in exchange for $27,649 of principal. On October 28, 2015, the noteholder assigned a total of $16,500 of principal to two separate parties. There was $16,651 and $0 of principal and $1,828 and $0 of accrued interest payable at December 31, 2015 and 2014.

On August 18, 2015, the Company received a loan totaling $57,500 from an unrelated party of which $7,500 was paid directly to third parties on the Company’s behalf resulting in net cash proceeds of $50,000. The note carries interest at 15% per annum and is due on February 17, 2016. The holder has the right to convert the principal and accrued but unpaid interest to common stock at a 60% discount from the average of the three lowest trading prices for the Company’s common stock for the twenty five prior trading days. On October 12, 2015, the noteholder assigned a total of $57,500 of principal plus $1,441 of accrued interest to an existing noteholder. There was $0 of principal and $0 of accrued interest payable at December 31, 2015 and 2014.

During the year ended December 31, 2015, the Company entered into six separate notes payable totaling $255,633 with an existing noteholder. Of the $97,450 total, $227,633 was paid to a prior noteholders on the Company’s behalf and $2,925 was considered an original issue discount resulting in net cash proceeds to the Company of $25,075. The unpaid principal and interest may be converted to common stock at the option of the noteholder at a rate equal to a 45% discount from the lowest intra-day trading price of the Company’s common stock during the twenty trading days immediately preceding the conversion date. During the year ended December 31, 2015, the Company issued a total of 708,610,688 common shares in exchange for $70,386. There was $185,248 and $0 of principal and $4,838 and $0 of accrued interest due as of December 31, 2015 and 2014.

On October 12, 2015, the Company entered into a note payable totaling $58,941 which was paid to an existing noteholder on behalf of the Company. The note carries interest at 22% per annum and was due on October 12, 2015. The outstanding principal and interest may be converted to common stock at the option of the noteholder at a rate equal to a 50% discount from the lowest price of the Company’s common stock in the twenty trading days immediately preceding the conversion. There was $58,941 and $0 of principal plus accrued interest of $2,842 and $0 outstanding as of December 31, 2015 and 2014.

On November 5, 2015, the Company entered into a note payable totaling $36,000 of which $6,000 was an original issue discount resulting in cash proceeds to the Company of $30,000. The note carries interest at 12% per annum and is due on August 30, 2016. The outstanding principal and interest may be converted to common stock at the option of the noteholder at a rate equal to a 50% discount from the lowest price of the Company’s common stock in the twenty trading days immediately preceding the conversion. There was $36,000 and $0 of principal plus accrued interest of $663 and $0 outstanding as of December 31, 2015 and 2014.

On October 28, 2015 the Company entered into a note payable for $15,000 which was paid to an existing noteholder on behalf of the Company. The note was due immediately on October 28, 2015 and carries an interest rate of 22% per annum. The holder has the right to convert the principal and accrued but unpaid interest to common stock at a 60% discount from the average of the three lowest trading prices for the Company’s common stock for the twenty five prior trading days. During the year ended December 31, 2015, the Company issued a total of 119,009,000 shares of common stock as the conversion of $5,950 of principal. There was $9,050 and $0 of principal and $374 and $0 of accrued interest due as of December 31, 2015 and 2014.

On October 5, 2015 the Company entered into a note payable for $1,500 which was paid to an existing noteholder on behalf of the Company. The note was due immediately on October 5, 2015 and carries an interest rate of 0% per annum. The holder has the right to convert the principal and accrued but unpaid interest to common stock at a 60% discount from the average of the three lowest trading prices for the Company’s common stock for the twenty five prior trading days. During the year ended December 31, 2015, the Company issued a total of 150,000,000 shares of common stock as the conversion of $1,500 of principal. There was $0 of principal and $0 of accrued interest due as of December 31, 2015 and 2014.

On September 9, 2015 the Company entered into a note payable for $11,500 of which $10,000 was paid to a third party on behalf of the Company and $1,500 is an original issue discount. The note is due on June 15, 2016 and carries an interest rate of 10% per annum. The holder has the right to convert the principal and accrued but unpaid interest to common stock at a 45% discount from the lowest intraday trading price for the Company’s common stock for the twenty prior trading days. There was $11,500 and $0 of principal due as of December 31, 2015 and 2014.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.