Start Scientific, Inc. - Quarter Report: 2016 March (Form 10-Q)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________

FORM 10-Q

[ X ] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarter ended March 31, 2016

OR

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to ___________

Commission file number: 000-52227

START SCIENTIFIC, INC.

(Name of Small Business Issuer in Its Charter)

(Former name or former address and former fiscal year, if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date. As of March 9, 2018, the Company had issued and outstanding 652,899,353 shares of common stock.

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS REQUIRED BY FORM 10-Q

The Financial Statements of the Company are prepared as of March 31, 2016.

START SCIENTIFIC, INC.

Notes to the Financial Statements

March 31, 2016

(Unaudited)

NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION

The accompanying unaudited financial statements have been prepared by Start Scientific, Inc. (the "Company") pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim financial statements be read in conjunction with the Company’s audited financial statements and notes thereto included in its Form 10-K for the year ended December 31, 2015. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results to be expected for the year ending December 31, 2016.

NOTE 2 - GOING CONCERN CONSIDERATIONS

The accompanying condensed financial statements have been prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As reported in its Annual Report on Form 10-K for the year ended December 31, 2015, the Company has incurred operating losses of $16,502,834 from inception of the Company through December 31, 2015. The Company’s accumulated deficit at March 31, 2016 was $16,448,738 and had a working capital deficit, continued losses, and negative cash flows from operations. These factors combined, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans to address and alleviate these concerns are as follows:

The Company’s management continues to develop a strategy of exploring all options available to it so that it can develop successful operations and have sufficient funds, therefore, as to be able to operate over the next twelve months. The Company is attempting to improve these conditions by way of financial assistance through issuances of additional equity and by generating revenues through sales of products and services. No assurance can be given that funds will be available, or, if available, that it will be on terms deemed satisfactory to management. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually attain profitable operations. The accompanying condensed financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of these uncertainties.

NOTE 3 - STOCK BASED COMPENSATION

During the three months ended March 31, 2015, the Company issued a total of 6,000,000 shares of common stock for consulting services rendered to the Company. The stock was valued at the market price on the date of issuance which totaled $1,050,000. This amount is included in salaries and consulting expenses on the statement of operations.

START SCIENTIFIC, INC.

Notes to the Financial Statements

March 31, 2016

(Unaudited)

NOTE 4 - RELATED PARTY TRANSACTIONS

Accounts payable and accrued liabilities – related parties consisted of the following as of March 31, 2016 and December 31, 2015:

NOTE 5 - CONVERTIBLE NOTES PAYABLE

Convertible notes payable consisted of the following as of March 31, 2016 and December 31, 2015:

On February 10, 2015, the Company issued a promissory note in the original principal amount of $33,000 to a lender. The Note matured on November 12, 2015 and carried an interest rate of 8% per annum. The Note shall at the maturity date, be due and payable in full unless converted partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of common stock of the Company at a 55% discount to the average of the three lowest daily trading prices as reported on the OTCQB for the twelve trading days previous to the conversion date. During the year ended December 31, 2015, the entire principal amount of the note was converted into common stock of the Company.

START SCIENTIFIC, INC.

Notes to the Financial Statements

March 31, 2016

(Unaudited)

(A) On February 25, 2015, the Company issued a promissory note in the original principal amount of $52,500 to a lender. The Note matured on February 25, 2016 and carries an interest rate of 8% per annum. The Note shall at the maturity date, be due and payable in full unless converted partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of common stock of the Company at a 60% discount to the lowest trading price as reported on the OTCQB for the fifteen trading days previous to the conversion date. During the year ended December 31, 2015, $25,175 of the principal amount of the note was converted into common stock of the Company leaving a net balance of $23,058 with the debt discount of $4,267. During the three months ended March 31, 2016, $3,695 of the principal amount of the note was converted into common stock of the Company leaving a net balance of $20,803 with the debt discount of $2,827.

(B) On March 6, 2015, the Company entered into a Note Purchase Agreement in respect of a credit line and associated convertible debenture in the original principal amount up to $220,000. As of March 6, 2015, the Company recorded a $55,000 draw down and consideration in respect of the credit line. The Debenture matures on March 6, 2016 and bears interest at the rate of 10% per annum. The Debenture, together with all interest as accrued, is convertible into shares of the Company’s common stock at a price equal to the lower of $.10 or 58% of the lowest trading price of the Company’s common stock during the 20 previous consecutive trading days. The Note Purchase and the Debenture contain representations, warranties, conditions, restrictions, and covenants of the Company that are customary in such transactions with smaller companies. During the year ended December 31, 2015, $50,299 of the principal amount of the note was converted into common stock of the Company leaving a net balance of $3,853 with the debt discount of $848, with was converted during the quarter. As of March 31, 2016, the balance was $-0-.

(C) On April 29, 2015, the Company issued a promissory note in the original principal amount of $53,500 to a lender. The Note matures on April 29, 2016 and carries an interest rate of 10% per annum. The Note shall at the maturity date, be due and payable in full unless converted partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of common stock of the Company at a 55% discount to the lowest trading price as reported on the OTCQB for the fifteen trading days previous to the conversion date. During the year ended December 31, 2015, $5,774 of the principal amount of the note was converted into common stock of the Company leaving a net balance of $32,078 with the debt discount of $15,647. As of March 31, 2016, the balance was $43,725 with the debt discount of $3,762.

(D) On January 12, 2016, the Company issued a promissory note in the original principal amount of $25,000 to a lender. The Note matures on demand and carries an interest rate of 10% per annum. The Note shall at the maturity date, be due and payable in full unless converted partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of common stock of the Company at a conversion price equal to $0.00005. During the three months ended March 31, 2016, $2,600 of the principal amount of the note was converted into common stock of the Company leaving a net balance of $22,400 as of March 31, 2016.

The Company recognized amortization expense related to the debt discount of $14,174 and $-0- for the three months ended March 31, 2016 and 2015, respectively.

START SCIENTIFIC, INC.

Notes to the Financial Statements

March 31, 2016

(Unaudited)

For the periods ended March 31, 2016 and December 31, 2015, the Company recognized interest expense on convertible notes of $40,358 and $11,160, respectively. As of March 31, 2016 and December 31, 2015, the accrued interest payable was $7,237 and $8,405, respectively.

NOTE 6 - DERIVATIVE LIABILITY

The Company analyzed the conversion option for derivative accounting consideration under ASC 815, “Derivatives and Hedging,” and determined that the convertible notes should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The Company accounts for warrants as a derivative liability due to there being no explicit limit to the number of shares to be delivered upon settlement of all conversion options.

The Company determined our derivative liabilities to be a Level 2 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of December 31, 2015. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note and warrant is estimated using the Black-Scholes valuation model.

The derivative liability at March 31, 2016 consisted of the following:

START SCIENTIFIC, INC.

Notes to the Financial Statements

March 31, 2016

(Unaudited)

The derivative liability at December 31, 2015 consisted of the following:

The above convertible notes contain a variable conversion feature based on the future trading price of the Company’s common stock. Therefore, the number of shares of common stock issuable upon conversion of the note is indeterminate. Due to the convertible notes described in Note 5 above, it was determined at March 31, 2016 that there was a derivative liability associated with these notes. The amount of the derivative liability at March 31, 2016 was $27,305, which is reported on the balance sheet. During the quarter the Company converted $12,258 of the derivative liability into shares of the Company’s common stock. The Company also recorded a gain on the change in the fair value of the derivative liability of $111,781 on the statement of operations for the three months ended March 31, 2016.

NOTE 7 - EQUITY TRANSACTIONS

On January 8, 2016, the Company amended and restated its Certificate of Incorporation to increase the number of authorized shares of common stock to be issued to 5,000,000,000. The par value of both the Preferred Stock and common stock was also changed from $0.0001 to $0.00001.

During the three months ended March 31, 2016, the Company issued an aggregate of 188,311,135 shares of its common stock for the conversion of notes payable and accrued interest in the amount of $29,617.

NOTE 8 - INCOME TAX DISCLOSURE

During the three months ended March 31, 2016, the Company recorded net income in the amount of $54,096. The reported net income is mainly derived from the gain on change in fair value of derivative liability. Due to the fact that this is simply book income, no income tax expense or reduction in the NOL has been recorded or disclosed.

START SCIENTIFIC, INC.

Notes to the Financial Statements

March 31, 2016

(Unaudited)

NOTE 9 - SUBSEQUENT EVENTS

Subsequent to March 31, 2016, the Company issued an aggregate of 140,800,000 shares of its common stock for the conversion of notes payable and accrued interest. The Company has evaluated subsequent events for the period of March 31, 2016 through the date the financial statements were issued, and concluded there were no other events or transactions occurring during this period that required recognition or disclosure in its financial statements.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion of the company's financial condition and results of operations in conjunction with the audited financial statements and related notes included in the filing of the company’s latest annual 10-K. This discussion may contain forward-looking statements, including, without limitation, statements regarding our expectations, beliefs, intentions, or future strategies that are signified by the words "expects," "anticipates," "intends," "believes," or similar language. Actual results could differ materially from those projected in the forward looking statements. We caution you that Start Scientific’ business and financial performance is subject to substantial risks and uncertainties.

Overview

Prior to April 2012, we were a reseller of technology-related hardware and software, including laptops, desktops, networking devices, telecommunication systems and networks, servers and software. In April, 2012 in connection with the acquisition of two separate one-fourth (1/4) working interests in certain oil and gas leases located in Yazoo County, Mississippi, our principal business became the exploration, development, and production of oil and gas interests.

On January 2, 2015, the Company entered into a Farmout Agreement with BPS Operating Services LLC, located in Jackson, Mississippi. The Company has until April 1, 2015 to tender $500,000 for the first well to be drilled. The production interest includes 40 acres around the new well and the Company will earn a 75% working interest before payout, and a 60% working interest after payout. All of the production facilities, salt water disposal systems, and 33 well bores are in place. The Company may drill additional wells for $400,000 per well within 60 days of completion of each previously drilled well completion. No payments towards this Farmout Agreement have been made yet by the Company as of the date of this quarterly report.

On January 21, 2015, the Company entered into a Farmout Agreement with Durban Energy, Inc., located in Jackson, Mississippi. The Company has until July 10, 2015 to commence drilling a new well on the Farmout acreage. The Company will receive 100% of the net revenue until payout of all costs, at which time the Company will assign a 25% working interest to Durban and partners. There is a 30% royalty burden on the leases, which means that before payout the Company will have 70% of net revenue and after payout the Company will have 52.5% of net revenue and Durban will have 17.5% of net revenue. Each well will be treated separately for payout calculation. No payments towards this Farmout Agreement have been made yet by the Company as of the date of this quarterly report.

Results of Operations

Following is our discussion of the relevant items affecting results of operations for the periods ended March 31, 2016 and 2015.

Revenues. The Company generated net revenues of $-0- for the three month periods ended March 31, 2016 and 2015. The lack of revenues is mainly the result of the change in our business model from a reseller of computer hardware and software to an oil and gas exploration and development company.

Salaries and Consulting Expenses. Salaries and consulting expenses consist of salaries and benefits, company paid payroll taxes and outside consulting expenses. Salaries and consulting expenses for the three months ended March 31, 2016 were $-0- compared to $1,050,000 during the three months ended March 31, 2015. For the three months ended March 31, 2015, stock valued at $1,050,000 was issued for consulting services. The stock was valued at the market price on the date of issuance.

Professional Fees. Professional fees consist of legal and accounting fees associated with the preparation, audits and reviews of the Company’s financial statements. Professional fees for the three months ended March 31, 2016 were $1,180 compared to $76,557 during the three months ended March 31, 2015.

Selling, General and Administrative Expenses. Selling, general and administrative expenses have been comprised of advertising; occupancy and office expenses; travel and other miscellaneous administrative expenses. Selling, general and administrative expenses for the three months ended March 31, 2016 were $-0- compared to $824 during the three months ended March 31, 2015.

Other Income (Expense). Other income and expenses for the three months ended March 31, 2016 resulted in net other income of $55,276 compared to net other expenses of $163,291 during the three months ended March 31, 2015. Other expenses incurred were comprised primarily of interest expenses related to the promissory notes and other liabilities of the Company in the amount of $55,447 which includes the amortization of debt discount of $14,174 during the three months ended March 31, 2016. Also included in this category is the gain on the change in fair value of derivative liability in the amount of $111,781 during the three months ended March 31, 2016. We do not anticipate any major changes in other income and expenses in the near future.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Personnel

Start Scientific has project-based contract personnel that we utilize to carry out our business. We utilize contract personnel on a continuous basis, primarily in connection with service contracts which require a high level of specialization for one or more of the service components offered.

Liquidity and Capital Resources

Since inception, the Company has financed its operations through a series of loans, credit accounts with hardware vendors, and the use of Company credit to procure goods and services. As of March 31, 2016, our primary source of liquidity consisted of $-0- in cash and cash equivalents. We may seek to secure additional debt or equity capital to finance substantial business development initiatives or acquire additional oil and gas resources.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company we are not required to provide this information.

ITEM 4. CONTROLS AND PROCEDURES

Management’s Report on Disclosure Controls and Procedures

The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean a Company's controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is

accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms and that information required to be disclosed is accumulated and communicated to principal executive and principal financial officers to allow timely decisions regarding disclosure.

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, the chief executive officer and chief financial officer concluded that the disclosure controls and procedures are designed to provide reasonable assurance of achieving the objectives of timely alerting them to material information required to be included in the Company’s periodic SEC reports and of ensuring that such information is recorded, processed, summarized and reported within the time periods specified. The Company’s chief executive officer and chief financial officer also concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report to provide reasonable assurance of the achievement of these objectives.

Changes in Internal Control over Financial Reporting

There have been no significant changes in our internal controls over financial reporting that occurred during the first quarter ended March 31, 2016 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

As a smaller reporting company, we are not required to provide the information required by this item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES

On March 23, 2016, the Company converted into 23,920,000 shares of common stock, $239 of a note, originally issued by the Company on April 29, 2015.

On February 4, 2016, the Company converted into 21,000,000 shares of common stock, $1,050 of a note, originally issued by the Company on January 1, 2005.

On February 4, 2016, the Company converted into 42,452,830 shares of common stock, $2,250 of a note, originally issued by the Company on March 6, 2015.

On January 29, 2016, the Company converted into 20,041,333 shares of common stock, $1,202 of a note, originally issued by the Company on February 25, 2015.

On January 25, 2016, the Company converted into 19,000,000 shares of common stock, $950 of a note, originally issued by the Company on January 1, 2005.

On January 20, 2016, the Company converted into 34,591,195 shares of common stock, $5,500 of a note, originally issued by the Company on March 6, 2015.

On January 12, 2016, the Company converted into 12,000,000 shares of common stock, $600 of a note, originally issued by the Company on January 1, 2005.

On January 11, 2016, the Company converted into 15,305,777 shares of common stock, $2,755 of a note, originally issued by the Company on February 25, 2015.

On December 30, 2015, the Company converted into 14,564,041 shares of common stock, $3,275 of a note and $220 of interest, originally issued by the Company on February 25, 2015.

On December 14, 2015, the Company converted into 14,627,000 shares of common stock, $3,300 of a note and $210 of interest, originally issued by the Company on February 25, 2015.

On November 20, 2015, the Company converted into 6,792,166 shares of common stock, $3,080 of a note and $180 of interest, originally issued by the Company on February 25, 2015.

On November 16, 2015, the Company converted into 6,874,687 shares of common stock, $3,120 of a note and $180 of interest, originally issued by the Company on February 25, 2015.

On November 4, 2015, the Company converted into 13,122,579 shares of common stock, $5,774of a note, originally issued by the Company on April 29, 2015.

On October 30, 2015, the Company converted into 18,300,000 shares of common stock, $9,699 of a note, originally issued by the Company on March 6, 2015.

On October 27, 2015, the Company converted into 22,075,472 shares of common stock, $11,700 of a note, originally issued by the Company on March 6, 2015.

On October 26, 2015, the Company converted into 6,493,750 shares of common stock, $3,700 of a note and $196 of interest, originally issued by the Company on February 25, 2015.

On October 22, 2015, the Company converted into 19,622,642 shares of common stock, $10,400 of a note, originally issued by the Company on March 6, 2015.

On October 21, 2015, the Company converted into 4,418,182 shares of common stock, $3,540 of a note and $1,320 of interest, originally issued by the Company on February 10, 2015.

On October 19, 2015, the Company converted into 6,484,300 shares of common stock, $3,700 of a note and $191 of interest, originally issued by the Company on February 25, 2015.

On October 19, 2015, the Company converted into 13,145,455 shares of common stock, $14,460 of a note, originally issued by the Company on February 10, 2015.

On October 16, 2015, the Company converted into 16,037,736 shares of common stock, $8,500 of a note, originally issued by the Company on March 6, 2015.

On October 13, 2015, the Company converted into 2,333,755 shares of common stock, $2,000 of a note and$100 of interest, originally issued by the Company on February 25, 2015.

On October 1, 2015, the Company issued to a former officer and director of the Company, 20,000,000 restricted shares of common stock. The shares were issued pursuant to the conversion of $40,000 in outstanding debt held on the books and records of the Company. No solicitation was made and no underwriting discounts were given or paid in connection with this transaction. The Company believes that the issuance of shares pursuant to the Agreement was exempt from registration with the Securities and Exchange Commission pursuant to Section 4(2) of the Securities Act of 1933.

On September 14, 2015, the Company converted into 2,657,454 shares of common stock, $10,000 portion of a note, originally issued by the Company on March 6, 2015.

On September 10, 2015, the Company converted into 4,054,054 shares of common stock, $15,000 of a note, originally issued by the Company on February 10, 2015.

On August 27, 2015, the Company converted into 519,945 shares of common stock, $3,000 portion of a note and $120 of interest, originally issued by the Company on February 25, 2015.

On August 13, 2015, Kenneth I. Denos, the Company’s controlling shareholder assigned all 100 shares of Series A Preferred Stock (the “Control Stock”) of Start Scientific, Inc. (the “Company”) to the Company’s Chief Executive Officer and Chairman Norris R. Harris. The Control Stock is not convertible into common stock but collectively hold 1,000,000,000 voting rights and are entitled to vote together with holders of common stock on all such matters upon which common stockholders may vote. As a result, Mr. Harris now holds a controlling beneficial interest in the Company and may unilaterally determine the election of the Board and other substantive matters requiring approval of the Company’s stockholders.

On April 1, 2015, the Company issued 1,000,000 shares of common stock of the Company to a consultant for services rendered.

On April 29, 2015, the Company issued a promissory note in the original principal amount of $53,500 (“Note”) to a lender. The Note matures on April 29, 2016 and carries an interest rate of 10% per annum. The Note, at the election of the lender is convertible into fully paid and non-assessable shares of Common Stock of the Company at (i) the Closing sale price of the Common Stock on the trading day immediately preceding the Closing Date; or (ii) 55% of the lowest sale price for the fifteen prior days trading of the conversion date.

On March 6, 2015, the Company entered into a Note Purchase Agreement (the “Note Purchase”) in respect of a credit line and associated convertible debenture (“Debenture”) in the original principal amount up to $220,000. As of March 6, 2015, the Company recorded a $55,000 draw down and consideration in respect of the credit line. The Debenture matures on March 6, 2016 (the “Maturity Date”), and bears interest at the rate of 10% per annum. The Debenture, together with all interest as accrued, is convertible into shares of the Company’s common stock at a price equal to the lower of $.10 or 58% of the lowest trading price of the Company’s common stock during the 20 previous consecutive trading days.

On February 25, 2015, the Company issued a promissory note in the original principal amount of $52,500 (“Note”) to a lender. The Note matures on February 25, 2016 and carries an interest rate of 8% per annum. The Note, at the election of the lender is convertible into fully paid and non-assessable shares of Common Stock of the Company at 60% of the lowest trading price for the fifteen prior days trading, including the date of conversion.

On February 3, 2015, the Company issued 5,000,000 shares of its common stock to a consultant of the Company for services rendered.

On February 10, 2015, the Company issued a promissory note in the original principal amount of $33,000 (“Note”) to a lender. The Note matures on November 12, 2015 and carries an interest rate of 8% per annum. The Note, at the election of the lender is convertible into fully paid and non-assessable shares of Common Stock of the Company at a 55% discount to the average of the three lowest trading days in the twelve trading days previous to the conversion.

Exemption From Registration Claimed

All of the sales by the Company of its unregistered securities were made by the Company in reliance upon Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”). All of the individuals and/or entities listed above that purchased the unregistered securities were all known to the Company and its management, through pre-existing business relationships. All purchasers were provided access to all material information, which they requested, and all information necessary to verify such information and were afforded access to management of the Company in connection with their purchases. All purchasers of the unregistered securities acquired such securities for investment and not with a view toward distribution, acknowledging such intent to the Company. All certificates or agreements representing such securities that were issued contained restrictive legends, prohibiting further transfer of the certificates or agreements representing such securities, without such securities either being first registered or otherwise exempt from registration in any further resale or disposition.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. OTHER INFORMATION

Not applicable.

ITEM 5. EXHIBITS:

The following documents are filed as exhibits to this Form 10-Q:

INDEX TO EXHIBITS

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.