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EX-31.1 - EX31_1 - NYXIO TECHNOLOGIES Corpex31_1.htm
EX-10.5 - EX10_5 - NYXIO TECHNOLOGIES Corpex10_5.htm
EX-10.8 - EX10_8 - NYXIO TECHNOLOGIES Corpex10_8.htm
EX-10.2 - EX10_2 - NYXIO TECHNOLOGIES Corpex10_2.htm
EX-10.3 - EX10_3 - NYXIO TECHNOLOGIES Corpex10_3.htm
EX-10.4 - EX10_4 - NYXIO TECHNOLOGIES Corpex10_4.htm
EX-10.9 - EX10_9 - NYXIO TECHNOLOGIES Corpex10_9.htm
EX-32.1 - EX32_1 - NYXIO TECHNOLOGIES Corpex32_1.htm
EX-10.7 - EX10_7 - NYXIO TECHNOLOGIES Corpex10_7.htm
EX-31.2 - EX31_2 - NYXIO TECHNOLOGIES Corpex31_2.htm
EX-10.10 - EX10_10 - NYXIO TECHNOLOGIES Corpex10_10.htm
EX-10.11 - EX10_11 - NYXIO TECHNOLOGIES Corpex10_11.htm
EX-10.1 - EX10_1 - NYXIO TECHNOLOGIES Corpex10_1.htm
EX-10.6 - EX10_6 - NYXIO TECHNOLOGIES Corpex10_6.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
   
  For the quarterly period ended September 30, 2014
   
[  ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
   
  For the transition period from __________ to__________
   
  Commission File Number: 333-137160

 

 

 

NYXIO TECHNOLOGIES CORPORATION

(Exact name of registrant as specified in its charter)

 

Nevada 98-0501477
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)

 

1330 S.W. 3rd Ave., Portland, Oregon  97201
(Address of principal executive offices)

 

800-398-4132
(Registrant’s telephone number)

 _________________________________________________________________

(Former name, 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 preceding 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 [X] Yes [] 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). [X] Yes [ ] No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

 

[ ] Large accelerated filer [ ] Accelerated filer
[ ] Non-accelerated filer [X] Smaller reporting company

 

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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 4,830,909,232 as of November 18, 2014.

 

 

 

  TABLE OF CONTENTS  
    Page
 
PART I – FINANCIAL INFORMATION
 
Item 1: Financial Statements 3
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations 4
Item 3: Quantitative and Qualitative Disclosures About Market Risk 11 
Item 4: Controls and Procedures 12
 
PART II – OTHER INFORMATION
 
Item 1: Legal Proceedings 13
Item 1A: Risk Factors 13
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds 13
Item 3: Defaults Upon Senior Securities 13
Item 4: Mine Safety Disclosures 13
Item 5: Other Information 13
Item 6: Exhibits 13

 

2

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Our financial statements included in this Form 10-Q are as follows:

  

F-1 Condensed Consolidated Balance Sheets as of September 30, 2014 (unaudited) and December 31, 2013;
F-2 Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2014 and 2013 (unaudited);
F-3 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2014 and 2013 (unaudited);
F-4 Notes to Condensed Consolidated Financial Statements (Unaudited).

 

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended September 30, 2014 are not necessarily indicative of the results that can be expected for the full year.

 

3

 

Nyxio Technologies Corporation

Condensed Consolidated Balance Sheets

(Unaudited) 

 

  September 30,  December 31,
   2014  2013
Current assets:          
Cash  $3,377   $27,082 
Accounts receivable   —      223 
Deposits on Inventory   16,004      
Total current assets   19,381    27,305 
Fixed assets, net of accumulated depreciation of $38,346 and $30,785, respectively   8,234    15,321 
Total assets  $27,615   $42,626 
Current liabilities          
Accounts payable and accrued expenses  $689,631   $567,598 
Accrued interest   145,506    131,741 
Deferred revenue   19,324    25,000 
Notes payable   171,630    171,630 
Notes payable - related party   10,458    8,458 
Convertible notes payable, net of discounts of $225,946 and $61,842, respectively   128,995    328,361 
Warrant liability   49,854      
Derivative liability   170,768    505,647 
Total current liabilities   1,386,166    1,738,435 
Shareholders' (deficit)          
Series A preferred stock; $0.01 par value; 1,100 shares authorized; no shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively   —      —   
Series B preferred stock; $0.01 par value; 100 shares authorized;  shares 100 shares issued and outstanding as of September 30, 2014 and December 31, 2013, respectively   1    1 
Common stock; $0.001 par value; 5,000,000,000 shares authorized; 4,188,001,232 and 335,994,983 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively   4,188,002    335,995 
Common shares sold and unissued, 1,666 at September 30, 2014 and December 31, 2013, respectively   2    2 
Additional paid-in capital   16,582,887    19,322,140 
Common stock payable   50,000    50,000 
Deferred compensation   (3,020,833)   (6,770,833)
Other comprehensive (loss)   —      (85,502)
(Deficit) accumulated during the development stage   (19,158,610)   (14,547,612)
Total shareholders' (deficit)   (1,358,551)   (1,695,809)
Total liabilities and shareholders' (deficit)  $27,615   $42,626 

 

F-1

 

Nyxio Technologies Corporation

Condensed Consolidated Statements of Operations

(Unaudited)

 

  Three Months Ended  Nine Months Ended
  September 30,  September 30,
   2014  2013  2014  2013
 Revenue  $5,676   $—     $5,676   $6,065 
 Cost of goods sold   2,829    —      2,829    1,445 
 Gross profit (loss)   2,847    —      2,847    4,620 
 Operating expenses                    
Consulting services   85,299    318,042    193,142    389,042 
Depreciation   2,333    2,637    7,561    8,481 
General and administrative   12,127    1,438    26,866    9,392 
Professional fees   72,950    81,438    177,465    108,957 
Promotional and marketing   11,483    —      14,114    45 
Research and development   —      —      —      —   
Rent expense   2,825    5,499    7,055    10,153 
Salaries and wages   60,504    62,500    187,500    94,987 
Officer compensation   1,250,000    1,250,000    3,750,000    3,979,167 
Travel and entertainment   11,099    947    16,474    4,541 
Impairment   —      —      —      —   
 Total operating expenses   1,508,620    1,722,501    4,380,177    4,604,765 
 Net loss from operations   (1,505,773)   (1,722,501)   (4,377,330)   (4,600,145)
 Other income (expense)                    
 Amortization of debt discounts   (125,375)   (44,070)   (384,901)   (219,116)
 Financing costs   (49,854)   (7,000)   (55,894)   (316,768)
 Interest expense   (13,306)   (63,657)   (56,048)   (85,289)
 Interest expense - related party   (243)   (439)   (666)   (649)
 Other income   1    —      3    —   
 Gain (loss) on derivatives   906,405    (171,266)   249,377    (254,951)
 Gain (loss) on debt settlement   —      —      14,461    —   
 Total other income (expense)   717,628    (286,432)   (233,668)   (876,773)
 Net loss  $(788,145)  $(2,008,933)  $(4,610,998)  $(5,476,918)
 Basic and fully diluted loss per common share  $(0.00)  $(0.03)  $(0.00)  $(0.15)
     Basic and fully diluted - weighted average common shares outstanding   3,634,702,298    74,770,313    2,034,307,114    35,969,456 

 

F-2

 

Nyxio Technologies Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

  Nine Months Ended
  September 30,
   2014  2013
Cash flows from operating activities:          
Net (loss)  $(4,610,998)  $(3,467,985)
Adjustments to reconcile net (loss) to net  cash used by operating activities:          
Depreciation   7,561    8,481 
Shares and options issued for services   3,883,500    4,486,207 
Shares issued for financing costs   —      306,770 
Amortization of beneficial conversion   384,901    219,116 
Penalty interest on default of convertible debt   15,243    51,550 
(Gain) loss on derivatives   (249,377)   254,951 
Warrants issued for finance charges   49,854      
Decrease (increase) in assets:          
Accounts receivable   223    —   
Deposits on inventory   (16,004)   —   
Increase (decrease) in liabilities:          
Accounts payable and accrued expenses   241,407    (68,112)
Accrued interest   27,010    44,785 
Deferred revenue   (5,676)   —   
Net cash used in operating activities   (272,356)   1,835,763 
Cash flows from investing activities:          
Change in due from related party, net   —      27,177 
Purchase of fixed assets   (474)   (300)
Net cash provided by (used in) investing activities   (474)   26,877 
Cash flows from financing activities:          
Proceeds from notes payable - related party   3,000    —   
Payments on notes payable - related party   (1,000)   —   
Proceeds from convertible debt   247,125    145,250 
Proceeds from the sale of common stock   —      —   
Net cash provided by financing activities   249,125    145,250 
Net increase (decrease) in cash   (23,705)   2,007,890 
Cash, beginning of period   27,082    2,658 
Cash, end of period  $3,377    2,010,548 
Supplemental disclosure of cash flow information:          
Cash paid for income taxes  $—     $—   
Cash paid for interest  $—     $—   

     

 

F-3

 

Nyxio Technologies Corporation

Notes to Consolidated Financial Statements

(Unaudited) 

 

NOTE 1 – Significant Accounting Policies and Procedures

 

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary to present fairly the financial position of the Company as of September 30, 2014, and the results of its operations and cash flows for the three months and nine months ended September 30, 2014 and 2013. Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to rules and regulations of the U.S. Securities and Exchange Commission (“the Commission”). The Company believes that the disclosures in the unaudited condensed consolidated financial statements are adequate to ensure the information presented is not misleading. However, the unaudited condensed consolidated financial statements included herein should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 21, 2013 filed with the Commission on April 15, 2014.

 

The accompanying consolidated financial statements are prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America.

 

Principles of Consolidation

The financial statements as of September 30, 2014 and for the nine months then ended include Nyxio Technologies Corporation (“NTC”) and its wholly owned subsidiary, Nyxio Technologies, Inc. (“NTI”). All significant inter-company transactions and balances have been eliminated. NTC and its subsidiary are collectively referred to herein as the “Company”.

  

Cash and cash equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of nine months or less to be cash equivalents. At September 30, 2014 and December 31, 2013, the Company had no cash equivalents.

 

Accounts receivable

Accounts receivable is reported at the customers’ outstanding balances less any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable.

 

An allowance for doubtful accounts on accounts receivable is charged to operations in amounts sufficient to maintain the allowance for uncollectible accounts at a level management believes is adequate to cover any probable losses. Management determines the adequacy of the allowance based on historical write-off percentages and information collected from individual customers. Accounts receivable are charged off against the allowance when collectability is determined to be permanently impaired.

 

Inventory

Inventories are stated at the lower of cost or market. Cost is determined on a standard cost basis that approximates the first-in, first-out (FIFO) method. Market is determined based on net realizable value. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realizable value. As of September 30, 2014 and December 31, 2013, respectively, there was no finished goods inventory.

 

Fixed Assets

Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate. The estimated useful lives for significant property and equipment categories are as follows:

 

Equipment 3-5 years

Furniture 7 years

 

The Company reviews the carrying value of property, plant, and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors. Based on this assessment there were no impairments needed as of September 30, 2014 or December 31, 2013. Depreciation expense for the nine months ended September 30, 2014 and 2013 was $7,561 and $8,481, respectively.

 

F-4

 

Revenue recognition

The Company recognizes revenue in accordance with ASC subtopic 605-10 (formerly SEC Staff Accounting Bulletin No. 104 and 13A, “Revenue Recognition”) net of expected cancellations and allowances. As of September 30, 2014 and 2013, the Company evaluated evidence of cancellation in order to make a reliable estimate and determined there were no material cancellations during the years and therefore no allowances has been made.

 

The Company's revenues, which do not require any significant production, modification or customization for the Company's targeted customers and do not have multiple elements, are recognized when (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) the Company's fee is fixed and determinable; and (iv) collectability is probable.

 

Substantially all of the Company's revenues are derived from the sales of Smart TV and Tablet PC technology and products. The Company's clients are charged for these products on a per transaction basis. Pricing varies depending on the product sold.  Revenue is recognized in the period in which the products are sold.

 

Loss per share

The Company reports earnings (loss) per share in accordance with ASC Topic 260-10, "Earnings per Share." Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings (loss) per share has not been presented since the effect of the assumed exercise or conversion of stock options, warrants, and debt to purchase common shares, would have an anti-dilutive effect. At September 30, 2014 and December 31, 2013 the Company had 250,000,000 and 10,090 potential common shares that have been excluded from the computation of diluted net loss per share.

 

Income taxes

The Company follows ASC subtopic 740-10 for recording the provision for income taxes. ASC 740-10 requires the use of the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.

 

Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.

 

Fair Value of Financial Instruments

The Company has financial instruments whereby the fair value of the financial instruments could be different from that recorded on a historical basis in the accompanying balance sheets. The Company's financial instruments consist of cash, receivables, accounts payable, accrued liabilities, and notes payable. The carrying amounts of the Company's financial instruments approximate their fair values as of September 30, 2014 and December 31, 2013 due to their short-term nature.

 

Long-lived assets

The Company accounts for its long-lived assets in accordance with ASC Topic 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost or carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and its fair value or disposable value. For the nine months ended September 30, 2014 and 2013, the Company determined that none of its long-term assets were impaired.

 

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affects the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Advertising

The Company expenses advertising costs as incurred. The Company’s advertising expenses were $14,114 and $45 during the nine months ended September 30, 2014 and 2013, respectively.

 

F-5

 

Research and development

Research and development costs are expensed as incurred. During the nine months ended September 30, 2014 and 2012 research and development costs were $0 and $0, respectively.

 

Concentration of Business and Credit Risk

The Company has no significant off-balance sheet risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements. The Company’s financial instruments that are exposed to concentration of credit risks consist primarily of cash. The Company maintains its cash in bank accounts which, may at times, exceed federally-insured limits.

 

Financial instruments which potentially subject the Company to concentrations of business risk consist principally of availability of suppliers. As of September 30, 2014, the Company was dependent on approximately two vendors for 85% of product supply.

 

Share-Based Compensation

The Company accounts for stock-based payments to employees in accordance with ASC 718, “Stock Compensation” (“ASC 718”). Stock-based payments to employees include grants of stock, grants of stock options and issuance of warrants that are recognized in the consolidated statement of operations based on their fair values at the date of grant.

 

The Company accounts for stock-based payments to non-employees in accordance with ASC 718 and Topic 505-50, “Equity-Based Payments to Non-Employees.” Stock-based payments to non-employees include grants of stock, grants of stock options and issuances of warrants that are recognized in the consolidated statement of operations based on the value of the vested portion of the award over the requisite service period as measured at its then-current fair value as of each financial reporting date.

 

The Company calculates the fair value of option grants and warrant issuances utilizing the Black-Scholes pricing model. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. ASC 718 requires forfeitures to be estimated at the time stock options are granted and warrants are issued to employees and non-employees, and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” or “expirations” and represents only the unvested portion of the surrendered stock option or warrant. The Company estimates forfeiture rates for all unvested awards when calculating the expense for the period. In estimating the forfeiture rate, the Company monitors both stock option and warrant exercises as well as employee termination patterns.

 

The resulting stock-based compensation expense for both employee and non-employee awards is generally recognized on a straight-line basis over the requisite service period of the award.

 

For the nine months ended September 30, 2014 and 2013 the Company recorded share-based compensation of $3,883,500 and $4,486,20, respectively.

 

Recent accounting pronouncements

On June 10, 2014, the Financial Accounting Standards Board (FASB) issued a new accounting statement that reduces some of disclosures and reporting requirements for development stage companies. The change will be in effect for the interim and annual reporting periods beginning after December 15, 2014. As of such date, among other things development stage entities will no longer be required to report inception-to-date information. The Company has elected early adoption of this pronouncement and will no longer be reporting inception-to-date information.

 

International Financial Reporting Standards

In November 2008, the Securities and Exchange Commission (“SEC”) issued for comment a proposed roadmap regarding potential use of financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. Under the proposed roadmap, the Company would be required to prepare financial statements in accordance with IFRS in fiscal year 2014, including comparative information also prepared under IFRS for fiscal 2013 and 2012. The Company is currently assessing the potential impact of IFRS on its financial statements and will continue to follow the proposed roadmap for future developments.

 

Year-end

The Company has adopted December 31, as its fiscal year end.

 

F-6

 

NOTE 2 - Going concern

 

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. The Company has not yet achieved profitable operations and since its inception (July 8, 2010) through September 30, 2014 the Company had accumulated losses of $19,158,610 and a working capital deficit of $1,366,785. Management expects to incur further losses in the development of its business, all of which raises substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.

 

The Company expects to continue to incur substantial losses as it executes its business plan and does not expect to attain profitability in the near future. Since its inception, the Company has funded operations through short-term borrowings and equity investments in order to meet its strategic objectives. The Company's future operations are dependent upon external funding and its ability to execute its business plan, realize sales and control expenses. Management believes that sufficient funding will be available from additional borrowings and private placements to meet its business objectives, including anticipated cash needs for working capital, for a reasonable period of time. However, there can be no assurance that the Company will be able to obtain sufficient funds to continue the development of its business operation, or if obtained, upon terms favorable to the Company.

 

NOTE 3 - Accounts receivable

 

Accounts receivable consist of the following:

  September 30,  December 31,
   2014  2013
Trade accounts receivable  $223   $223 
Less: Allowance for doubtful accounts   (223)   —   
   $—     $223 

 

NOTE 4 - Property and equipment

The following is a summary of property and equipment:

  September 30,  December 31,
   2014  2013
Furniture and fixtures  $11,912   $11,612 
Software   11,945    11,945 
Computers and equipment   22,723    22,249 
Less: accumulated depreciation   (38,346)   (30,785)
   $8,234   $15,321 

 

Depreciation for the nine months ended September 30, 2014 and 2013 was $7,561 and $8,481, respectively.

 

F-7

 

NOTE 5 - Related party transactions

 

During the nine months ended September 30, 2014, the president and CEO donated additional services valued at $187,500, of which $66,467 has been recorded as a reduction in the officer;s receivable balance and $121,033 was recorded as accrued wages. The receivable balance as of September 30, 2014 and December 31, 2013 was $0.00 and $0.00, respectively.

 

Employment/Consulting commitments

One June 1, 2011, the Company entered into an Employment Agreement with its chief executive officer. The initial term of the agreement covers a three-year period commencing on June 1, 2011 and required annual compensation payment of $24,000. On January 1, 2012, the original agreement was amended to provide for an increase in annual compensation from the original $24,000 to $48,000 per year. On July 18, 2013, the Company and its CEO entered into an Amended and Restated Employment agreement which increased the CEO’s annual salary to $250,000 per annum, payable bimonthly effective July 1, 2013.

 

On June 1, 2011, the Company issued a Consulting Agreement to its chief financial officer. Pursuant to the agreement, annual consulting fees of $24,000 will be paid per annum for the term of the agreement which was to expire on March 1, 2014. In September 2011, the Company replaced the consulting agreement with an offer of employment with annual compensation of $30,041. Employment is considered “at-will” and therefore can be terminated at any time by either party.

 

During May 2013, the board of directors approved the issuance of 50,000,000 to the Company’s president and CEO. The shares were valued at $10,000,000, and vest over the period of two years. The Company amortized $3,229,167 for the year ended December 31, 2013. Additionally, as board of directors approved the issuance of 10,000,000 shares to the Company’s president and CEO. The shares were valued at $2,000,000 and expensed for the year ended December 31, 2013. During December 31, 2013, the CEO returned a net 50,000,000 shares in order to provide additional authorized shares to the Company. The Company is expected to reissue the shares at a future date and has accordingly recorded a common stock payable of $50,000 for the par value of the shares.

 

During June 2013, the Company’s CFO resigned. On June 12, 2013, this former CFO entered into a Business Consulting Agreement to provide consulting services at a rate of $10,000 per month, payable in bi-monthly installment of $5,000 on the 15th and last day of the month for the term of one year. During the year ended December 31, 2013 the Company issued 25,391,606 shares of common valued at $60,000 for the first six months of the agreement and accrued another $10,000. In addition, all prior payroll liabilities owing from the Company to this individual were released in exchange for 1,961,803 shares of the Company’s common stock. The stock was valued at $78,472 and satisfied $7,510 in accrued wages. The remaining value of $70,962 was recorded as additional compensation costs for the year ended December 31, 2013.

 

Note payable to a related party

During the year ended December 31, 2011, the Company’s chief financial officer paid certain liabilities totaling $10,578 on behalf of the Company. In October 2011, the Company issued a promissory note for the value of the payment which bears interest at a rate of 8% per annum and matures on September 30, 2012. On January 12, 2012, this same officer provided an additional $20,000 under the same terms, to the Company for operating expenses. During the nine months ended September 30, 2014, this former officer advanced an additional, $3,000 to the Company. As of September 30, 2014 and December 31, 2013 the note totaled $10,458 and $8,458, respectively.

 

F-8

 

NOTE 6 - Notes payable

 

Chamisa Technology, LLC

 On July 8, 2010, the Company’s chief executive officer and majority shareholder contributed a note payable in the amount of $83,627 which originated from his previously dissolved limited liability company. The note balance represented cash advances of $81,595 and previously accrued interest of $2,032. During the period from inception (July 8, 2010) through December 31, 2010, the Company received additional advances of $64,491 and $18,000 during the year ended December 31, 2011. No formal agreement pertaining to the advances had previously been documented, however pursuant to a verbal agreement between the parties, the balance was due on demand and bears interest at a rate of 12% per annum. March 5, 2012, the Company formalized and acknowledged its liability to Chamisa Technology, LLC in the form of a promissory note. The promissory note is unsecured bears interest at a rate of 12% per annum, and matures on August 31, 2012. Pursuant to the new promissory note, the Company is required to make monthly principal and interest payments through maturity. As of September 30, 2014, the note is in default.

 

On April 21, 2012, Chamisa Technology, LLC assigned $81,595 of the note to an individual who further assigned portions of the debt to various entities. During the year ended December 31, 2012, the original assignee agreed to forgive $56,595 of the debt in exchange for immediate conversion rights at a conversion rate of $0.001. During the period ended December 31, 2012, the Company authorized the issuance of 98 (post-split) shares of common stock for the conversion of $25,000 in principal and $936 of accrued interest. The fair value of the shares issued totaled $737,873 based on the market price of the common stock on the date of conversion. The difference in the fair value of the shares issued and the principal amount of debt and accrued interest converted totaled $711,937 and has been recorded as a financing costs.

 

On May 1, 2013, Chamisa Technology, LLC assigned the outstanding note to an affiliate who further assigned portions of the debt to various entities. During the year ended December 31, 2013, the Company authorized the issuance of 19,400,000 shares of common stock for the conversion of $19,400 in principal. The fair value of the shares issued totaled $336,863 based on the market price of the common stock on the various dates of conversion. The difference in the fair value of the shares issued and the principal amount of debt and accrued interest converted totaled $317,463 and has been recorded as a financing costs.

 

On December 1, 2013, Chamisa Technology, LLC assigned $65,123 of the note to an individual who further assigned portions of the debt to various entities. During the year ended December 31, 2013, the original assignee agreed to forgive $21,500 of the debt in exchange for immediate conversion rights at a conversion rate of $0.001. As of December 31, 2013, the Company recognized an interest expense of $43,623 from BCF related to the conversion and gain on settlement of debt of $21,500.

 

As of September 30, 2014 and December 31, 2013, the unpaid principal balance together with accrued interest totaled $106,895 and $100,606, respectively. The Company is still negotiating additional terms as it relates to this note.

 

Coach Capital LLC

On September 30, 2011, the Company issued a promissory note in the amount of $111,000 to Coach Capital, LLC. The note is unsecured, due on demand and bears interest at a rate of 10% per annum. In the event of default, the interest rate will immediately escalate to 30% per annum. As of September 30, 2014 and December 31, 2013, the unpaid principal balance together with accrued interest totaled $153,463 and $142,418, respectively.

 

ICG USA, LLC

On February 16, 2012, the Company entered into a Securities Purchase Agreement with ICG USA, LLC (“ICG”) and issued a Convertible Promissory Note in the amount of $200,000. The note is unsecure, bears interest at a rate of 6% interest per annum, and is due on demand. The note is convertible into shares of the Company’s common stock beginning year after the date of issuance and was convertible on August 16, 2012. Pursuant to the terms of the Agreement, the note is convertible at a rate equal to a 45% discount to the average of the three lowest closing trade prices in the preceding thirty trading days. On the date the note became convertible; the Company valued the benefit of conversion at $309,631 and recorded a discount of $200,000 and a derivative liability with a corresponding comprehensive loss in the amount of $109,631. The discount related to the conversion value will be amortized over the remaining term of the note utilizing the interest method of accretion. During the year ended December 31, 2012, ICG elected to convert $32,743 in principal. Pursuant to the conversion rate calculation in the Agreement, the Company issued 13,634 (post-split) shares at an average conversion rate of $2.40 and recognized a loss on the derivative in the amount of $23,340.

 

During the nine months ended September 30, 2014, ICG assigned $182,500 in principal and accrued interest to three other entities. As discussed below, the Company issued new convertible note agreements with those entities.

As of September 30, 2014 accrued interest totaled $28,506.

 

F-9

 

JMJ Financial 

On May 7, 2012, the Company issued a Convertible Promissory Note to JMJ Financial (“JMJ”) in the amount of $275,000. Pursuant to the terms of the note, a 10% original issue discount is included and is due in one year. The Note does not bear interest if paid in full within 90 days. Thereafter, a one-time interest charge of 5% shall be applied to the principal sum. The Note is convertible to common stock in whole or in part at conversion price equal to the lesser of $0.06 per share or 65% of the lowest trading price in the 25 trading days prior to the conversion. As of December 31, 2012, JMJ has funded $55,000 of the note which includes an original issue discount in the amount of $5,000. The Company has computed the present value of the amount funded at $52,731 as a result of its non-interest bearing terms. Additionally, the Company recorded a discount in the amount of $44,270 in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the interest method of accretion over the one year term of the note. Further, the Company has recognized a derivative asset resulting from the variable change in conversion rate in relation to the change in market price of the Company’s common stock. During the year ended December 31, 2012, JMJ elected to convert $7,735 in principal. Pursuant to the conversion rate calculation in the Agreement, the Company issued 11,666 (post-split) shares at an average conversion rate of $1.51 and recognized a loss on the derivative in the amount of $7,665.

 

During January and February 2013, JMJ elected to convert $5,858 in principal. Pursuant to the conversion rate calculation in the Agreement, the Company issued 16,022 (post-split) shares at an average conversion rate of $0.37 and recognized a loss on the derivative in the amount of $5,689.

 

During April 2013, JMJ advanced an additional $5,400 to the Company.

 

During June 2013, JMJ elected to convert $5,330 in principal. Pursuant to the conversion rate calculation in the Agreement, the Company issued 100,000 shares at a conversion rate of $0.053 and recognized a loss on the derivative in the amount of $3,670.

 

During July 2013, JMJ elected to convert $6,500 in principal. Pursuant to the conversion rate calculation in the Agreement, the Company issued 325,000 shares at a conversion rate of $0.02 and recognized a loss on the derivative in the amount of $5,850.

 

During August 2013, JMJ elected to convert $13,000 in principal. Pursuant to the conversion rate calculation in the Agreement, the Company issued 2,600,000 shares at a conversion rate ranging from $0.003 to $0.01 and recognized a gain on the derivative in the amount of $650.

 

During October 2013, JMJ elected to convert $3,575 in principal. Pursuant to the conversion rate calculation in the Agreement, the Company issued 5,500,000 shares at a conversion rate of $0.00065 and recognized a loss on the derivative in the amount of $3,025.

 

During November 2013, JMJ elected to convert $1,885 in principal. Pursuant to the conversion rate calculation in the Agreement, the Company issued 5,800,000 shares at a conversion rate of $0.000325 and recognized a loss on the derivative in the amount of $2,175.

 

During the nine months ended September 30, 2014, JMJ elected to convert the remaining $16,517 in principal. Pursuant to the conversion rate calculation in the Agreement, the Company issued 39,845,000 shares at conversion rates ranging from of $0.0004 to $0.0005.

 

Asher Enterprises 

During the year ended December 31, 2012, the Company issued three Convertible Promissory Notes to Asher Enterprises, Inc. (“Asher”) in the amount of $63,000, $37,500 and $40,000, respectively. The notes bears interest at a rate of 8% per annum, are unsecured and mature on March 8, April 12, 2013 and August 13, 2013. The Notes are convertible into common stock in whole or in part at a variable conversion price equal to a 39% discount to the 10-day average trading price prior to the conversion date. The Company recorded a discount in the amount of $117,779 in connection with the initial valuation of the beneficial conversion feature of the notes to be amortized utilizing the interest method of accretion over the term of the notes. During the year ended December 31, 2012, Asher elected to convert $5,700 in principal. Pursuant to the conversion rate calculation in the Agreement, the Company issued 14,305 (post-split) shares at an average conversion rate of $2.51 and recognized a loss on the derivative in the amount of $25. During the year ended December 31, 2013, the Company incurred $51,550 in penalty interest on these notes due to default. The penalty interest was added to the principal of these notes.

 

During the year ended December 31, 2013, the Company issued seven Convertible Promissory Notes to Asher totaling $152,250. The notes bears interest at a rate of 8% per annum, are unsecured and mature on from November 1, 2013 through June 20, 2014. The notes are convertible into common stock in whole or in part at a variable conversion price equal to a 45% discount to the average of the lowest 3 trading prices in the 10-day trading period prior to the conversion date. The Company recorded discounts in the amount of $131,387 in connection with the initial valuation of the beneficial conversion feature of the notes to be amortized utilizing the interest method of accretion over the term of the note.

 

During January and March 2013, the Company elected to convert $31,700 in principal. Pursuant to the conversion rate calculation in the Agreement, the Company issued 78,654 (post-split) shares at a conversion rate ranging from $0.36 to $0.44 and recognized a loss on the derivative in the amount of $40,724.

 

During April and May 2013, the Company elected to convert $13,000 in principal. Pursuant to the conversion rate calculation in the Agreement, the Company issued 201,842 shares at a conversion rate ranging from $0.06 to $0.11 and recognized a loss on the derivative in the amount of $28,933.

 

F-10

 

During July and September 2013, the Company elected to convert $59,600 in principal and $2,520 in accrued interest. Pursuant to the conversion rate calculation in the Agreement, the Company issued 11,331,517 shares at a conversion rate ranging from $0.0011 to $0.0122 and recognized a loss on the derivative in the amount of $142,186.

 

During October 2013, the Company elected to convert $30,450 in principal and $3,000 in accrued interest. Pursuant to the conversion rate calculation in the Agreement, the Company issued 35,774,642 shares at a conversion rate ranging from $0.00068 to $0.00087 and recognized a loss on the derivative in the amount of $28,997.

 

During November 2013, the Company elected to convert $23,370 in principal. Pursuant to the conversion rate calculation in the Agreement, the Company issued 63,455,501 shares at a conversion rate ranging from $0.00028 to $0.00055 and recognized a loss on the derivative in the amount of $26,034.

 

During December 2013, the Company elected to convert $26,240 in principal. Pursuant to the conversion rate calculation in the Agreement, the Company issued 99,661,141 shares at a conversion rate ranging from $0.00024 to $0.00029 and recognized a loss on the derivative in the amount of $55,154.

 

During the nine months ended September 30, 2014, Asher elected to convert $172,990 in principal and $7,490 in accrued interest. Pursuant to the conversion rate calculation in the Agreements, the Company issued 804,856,857 shares at conversion rates ranging from $0.00009 to $0. Additionally, for the converted notes Asher waived accrued interest totaling $10,372, recorded as a gain on debt settlement for the nine months ended September 30, 2014.

 

As of September 30, 2014 all balances owed Asher had been converted.

 

Continental Equities, LLC 

On September 20, 2012, the Company issued a Convertible Promissory Note to Continental Equities, LLC (“Continental”) in the amount of $35,000. The note bears interest at a rate of 8% per annum, is unsecured and matured on May 15, 2013. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 42.5% discount to the lowest three average thirty day trading prices prior to the conversion date. The Company recorded a discount in the amount of $35,000 in connection with the initial valuation of the beneficial conversion feature of the notes to be amortized utilizing the interest method of accretion over the term of the notes. Further, the Company has recognized a derivative liability in the amount of $1,437 resulting from the variable change in conversion rate in relation to the change in market price of the Company’s common stock.

 

On May 20, 2013, the Company issued a Convertible Promissory Note to Continental Equities, LLC (“Continental”) in the amount of $13,000. The note bears interest at a rate of 8% per annum, is unsecured and matures on May 31, 2014. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 42.5% discount to the lowest three average thirty day trading prices prior to the conversion date. The Company recorded a discount in the amount of $13,000 in connection with the initial valuation of the beneficial conversion feature of the notes to be amortized utilizing the interest method of accretion over the term of the notes. Further, the Company has recognized a derivative liability in the amount of $92,915 resulting from the variable change in conversion rate in relation to the change in market price of the Company’s common stock.

 

During September 2013, the Company elected to convert $12,499 in principal. Pursuant to the conversion rate calculation in the Agreement, the Company issued 8,571,500 shares at a conversion rate ranging from $0.0009 to $0.002 and recognized a loss on the derivative in the amount of $23,880.

 

During October 2013, the Company elected to convert $7,136 in principal. Pursuant to the conversion rate calculation in the Agreement, the Company issued 10,137,806 shares at a conversion rate ranging from $0.0007 to $0.0008 and recognized a loss on the derivative in the amount of $7,885.

 

During November 2013, the Company elected to convert $6,745 in principal. Pursuant to the conversion rate calculation in the Agreement, the Company issued 13,695,814 shares at a conversion rate ranging from $0.0004 to $0.0006 and recognized a loss on the derivative in the amount of $2,640.

 

During December 2013, Tide Pool Ventures Corporation (“Tide Pool”) purchased the remaining balance of the note.

 

During the nine months ended September 30, 2014, Tide Pool elected to convert the remaining balance of $21,620. Pursuant to the conversion rate calculation in the Agreement, the Company issued 105,385,200 shares at a conversion rate ranging from $0.0002 to $0.0003. Additionally, Tide Pool waived the prior accrued interest on the note totaling $4,088 recorded as a gain on debt settlement for the nine months ended September 30, 2014.

 

F-11

 

Tide Pool Ventures Corporation 

On December 10, 2013, the Company issued a Convertible Promissory Note to Tide Pool in the amount of $11,500. The note bears interest at a rate of 9.875% per annum, is unsecured and matures on December 31, 2014. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 30% discount to the lowest volume weighted average price of the five trading days prior to the conversion date. The Company recorded a discount in the amount of $11,500 in connection with the initial valuation of the beneficial conversion feature of the notes to be amortized utilizing the interest method of accretion over the term of the notes.

 

On February 20, 2014, ICG assigned $27,500 in principal to Tide Pool and the Company issued a new Convertible Promissory Note agreement. The note bears interest at a rate of 10% per annum, is unsecured and matures on February 20, 2015. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 50% discount to the lowest three average ten day trading prices prior to the conversion date. The Company recorded a discount in the amount of $27,500 in connection with the initial valuation of the beneficial conversion feature of the notes to be amortized utilizing the interest method of accretion over the term of the notes.

 

On February 20, 2014, the Company issued a Convertible Promissory Note to Tide Pool in the amount of $22,250. The note bears interest at a rate of 10% per annum, is unsecured and matures on February 20, 2015. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 45% discount to the lowest three average ten day trading prices prior to the conversion date. The Company recorded a discount in the amount of $22,250 in connection with the initial valuation of the beneficial conversion feature of the notes to be amortized utilizing the interest method of accretion over the term of the notes.

 

On April 1, 2014, ICG assigned $60,000 in principal and interest to Tide Pool and the Company issued a new Convertible Promissory Note agreement. The note bears interest at a rate of 10% per annum, is unsecured and matures on April 1, 2015. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 50% discount to the lowest three average ten day trading prices prior to the conversion date. The Company recorded a discount in the amount of $60,000 in connection with the initial valuation of the beneficial conversion feature of the notes to be amortized utilizing the interest method of accretion over the term of the notes.

 

On April 1, 2014, the Company issued a Convertible Promissory Note to Tide Pool in the amount of $42,500. The note bears interest at a rate of 10% per annum, is unsecured and matures on April 1, 2015. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 45% discount to the lowest three average ten day trading prices prior to the conversion date. The Company recorded a discount in the amount of $42,500 in connection with the initial valuation of the beneficial conversion feature of the notes to be amortized utilizing the interest method of accretion over the term of the notes.

 

During the nine months ended September 30, 2014, Tide Pool elected to convert $70,000 in principal. Pursuant to the conversion rate calculation in the Agreement, the Company issued 637,740,740 shares at a conversion rate ranging from 0.0000 to 0.0007. Additionally, Tide Pool sold and assigned the $11,500 note to WHC Capital, LLC and $22,250 note to Beaufort Capital Partners, LLC, along with the related accrued interest of $1,505.73 and 1,158, respectively.

 

As of September 30, 2014, the unpaid principal balance was $29,917, net of discount in the amount of $30,083. Accrued interest totaled $3,425.

 

WHC Capital, LLC, Series Bravo 

On February 5, 2014, ICG assigned $20,000 in principal to WHC Capital, LLC, Series Bravo (“WHC”) and the Company issued a new Convertible Promissory Note agreement. The note bears interest at a rate of 6% per annum, is unsecured and matures on February 5, 2015. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 45% discount to the lowest three average thirty day trading prices prior to the conversion date. The Company recorded a discount in the amount of $20,000 in connection with the initial valuation of the beneficial conversion feature of the notes to be amortized utilizing the interest method of accretion over the term of the notes.

 

On February 7, 2014, the Company issued a Convertible Promissory Note to WHC in the amount of $10,000. The note bears interest at a rate of 10% per annum, is unsecured and matures on February 20, 2015. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 40% discount to the lowest three average thirty day trading prices prior to the conversion date. The Company recorded a discount in the amount of $10,000 in connection with the initial valuation of the beneficial conversion feature of the notes to be amortized utilizing the interest method of accretion over the term of the notes.

 

On May 8, 2014, the Company issued a Convertible Promissory Note to WHC in the amount of $20,000. The note bears interest at a rate of 10% per annum, is unsecured and matures on May 8, 2015. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 40% discount to the lowest three average thirty day trading prices prior to the conversion date. The Company recorded a discount in the amount of $20,000 in connection with the initial valuation of the beneficial conversion feature of the notes to be amortized utilizing the interest method of accretion over the term of the notes.

 

On June 16, 2014, the Company issued a Convertible Promissory Note to WHC in the amount of $20,000. The note bears interest at a rate of 10% per annum, is unsecured and matures on June 20, 2015. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 40% discount to the lowest three average thirty day trading prices prior to the conversion date. The Company recorded a discount in the amount of $20,000 in connection with the initial valuation of the beneficial conversion feature of the notes to be amortized utilizing the interest method of accretion over the term of the notes.

 

F-12

 

On August 5, 2014, the Company issued a Convertible Promissory Note to WHC in the amount of $10,000. The note bears interest at a rate of 12% per annum, is unsecured and matures on August 5, 2015. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 45% discount to the lowest three average thirty day trading prices prior to the conversion date. The Company recorded a discount in the amount of $10,000 in connection with the initial valuation of the beneficial conversion feature of the notes to be amortized utilizing the interest method of accretion over the term of the notes.

 

On August 13, 2014, Tide Pool assigned $11,500 in principal and $1,506 in accrued interest to WHC and the Company issued a new Convertible Promissory Note agreement for the combined principal and interest. The note bears interest at a rate of 12% per annum, is unsecured and matures on August 13, 2015. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 45% discount to the lowest three average thirty day trading prices prior to the conversion date. The Company recorded a discount in the amount of $13,006 in connection with the initial valuation of the beneficial conversion feature of the notes to be amortized utilizing the interest method of accretion over the term of the notes.

 

During the nine months ended September 30, 2014, WHC elected to convert $49,064 in principal. Pursuant to the conversion rate calculation in the Agreement, the Company issued 484,560,767 shares at a conversion rate ranging from 0.0001 to 0.0002.

 

As of September 30, 2014, the unpaid principal balance was $9,425, net of discount in the amount of $34,517. Accrued interest totaled $1,791.

 

LG Capital Funding, LLC

 On March 11, 2014, ICG assigned $75,000 in principal to LG Capital Funding, LLC (“LG Capital”) and the Company issued a new Convertible Promissory Note agreement. The note bears interest at a rate of 8% per annum, is unsecured and matures on March 11, 2015. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 50% discount to the lowest closing bid price in the five day trading prices prior to the conversion date. The Company recorded a discount in the amount of $75,000 in connection with the initial valuation of the beneficial conversion feature of the notes to be amortized utilizing the interest method of accretion over the term of the notes.

 

On March 11, 2014, the Company issued a Convertible Promissory Note to LG Capital in the amount of $37,875. The note bears interest at a rate of 8% per annum, is unsecured and matures on March 11, 2015. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 50% discount to the lowest closing bid price in the five day trading prices prior to the conversion date. The Company recorded a discount in the amount of $37,875 in connection with the initial valuation of the beneficial conversion feature of the notes to be amortized utilizing the interest method of accretion over the term of the notes.

 

On June 17, 2014, the Company issued a Convertible Promissory Note to LG Capital in the amount of $20,000. The note bears interest at a rate of 8% per annum, is unsecured and matures on June 17, 2015. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 50% discount to the lowest closing bid price in the five day trading prices prior to the conversion date. The Company recorded a discount in the amount of $20,000 in connection with the initial valuation of the beneficial conversion feature of the notes to be amortized utilizing the interest method of accretion over the term of the notes.

 

During the nine months ended September 30, 2014, LG Capital elected to convert $75,000 in principal. Pursuant to the conversion rate calculation in the Agreement, the Company issued 685,910,195 shares at a conversion rate ranging from 0.0001 to 0.0003.

 

As of September 30, 2014, the unpaid principal balance was $26,818, net of discount in the amount of $31,057. Accrued interest totaled $2,381.

 

Leland Martin Capital Partners, LLC

On August 8, 2014, the Company issued a Convertible Promissory Note to Leland Martin Capital Partners, LLC (“Leland Martin”) in the amount of $15,000. The note bears interest at a rate of 10% per annum, is unsecured and matures on August 8, 2015. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 45% discount to the lowest three average ten day trading prices prior to the conversion date. The Company recorded a discount in the amount of $15,000 in connection with the initial valuation of the beneficial conversion feature of the notes to be amortized utilizing the interest method of accretion over the term of the notes.

 

On August 27, 2014, the Company issued a Convertible Promissory Note to Leland Martin Capital Partners, LLC (“Leland Martin”) in the amount of $14,500. The note bears interest at a rate of 10% per annum, is unsecured and matures on August 27, 2015. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 45% discount to the lowest three average ten day trading prices prior to the conversion date. The Company recorded a discount in the amount of $14,500 in connection with the initial valuation of the beneficial conversion feature of the notes to be amortized utilizing the interest method of accretion over the term of the notes.

 

On September 8, 2014, the Company issued a Convertible Promissory Note to Leland Martin Capital Partners, LLC (“Leland Martin”) in the amount of $5,000. The note bears interest at a rate of 10% per annum, is unsecured and matures on September 8, 2015. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 45% discount to the lowest three average ten day trading prices prior to the conversion date. The Company recorded a discount in the amount of $5,000 in connection with the initial valuation of the beneficial conversion feature of the notes to be amortized utilizing the interest method of accretion over the term of the notes.

 

F-13

 

On September 18, 2014, the Company issued a Convertible Promissory Note to Leland Martin Capital Partners, LLC (“Leland Martin”) in the amount of $5,000. The note bears interest at a rate of 10% per annum, is unsecured and matures on September 18, 2015. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 45% discount to the lowest three average ten day trading prices prior to the conversion date. The Company recorded a discount in the amount of $5,000 in connection with the initial valuation of the beneficial conversion feature of the notes to be amortized utilizing the interest method of accretion over the term of the notes.

 

As of September 30, 2014, the unpaid principal balance was $3,995, net of discount in the amount of $35,505. Accrued interest totaled $399.

 

Beaufort Capital Partners LLC 

On September 8, 2014, Tide Pool assigned $22,250 in principal and $1,158 in accrued interest to Beaufort Capital Partners LLC (“Beaufort”).

 

September 4, 2014 the Company issued a Convertible Promissory Note to Beaufort (“Leland Martin”) in the amount of $25,000. The note bears interest at a rate of 12% per annum, is unsecured and matures on March 4,, 2015. The Note is convertible into common stock in whole or in part after the maturity date at a fixed conversion price of $0.0001. The Company recorded a discount in the amount of $25,000 in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the interest method of accretion over the term of the notes. Further, the Company may prepay the note at $37,500 at anytime prior to December 4, 2014. In connection with this note, the Company issued warrants to purchase 250,000,000 shares of the Company’s common stock at $0001 per share anytime from March 4, 2015 through September 4, 2019. The Company recorded the fair value of the note as a Warrant liability and financing costs totaling $49,854.

 

As of September 30, 2014, the unpaid principal balance was $25,841, net of discount in the amount of $21,409. Accrued interest totaled $1,533.

 

Cane Clark LLP 

On July 7, 2014, the Company issued a Convertible Promissory Note to Cane Clark LLP (“Cane Clark”) in the amount of $106,374, for legal fees incurred through June 30, 2014. The note bears interest at a rate of 6% per annum, is unsecured and is payable in full upon the earlier of: (i) thirty days following written demand or, (ii) April, 7 2015. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 35% discount to the lowest three average twenty day trading prices prior to the conversion date. The Company recorded a discount in the amount of $106,374 in connection with the initial valuation of the beneficial conversion feature of the notes to be amortized utilizing the interest method of accretion over the term of the note.

 

As of September 30, 2014, the unpaid principal balance was $32,999, net of discount in the amount of $73,375. Accrued interest totaled $1,486.

 

Derivative Liability

As of September 30, 2014, the Company valued and recorded a derivative liability for the variable conversion features of the outstanding notes totaling $170,768 and a gain on these derivatives totaling $249,377.

 

NOTE 7 – Commitments

 

Lease agreements

In June 2011, the Company entered into a two-year lease agreement for additional office space commencing July 1, 2011 and expiring December 31, 2013. Pursuant to the terms of the lease agreement, the monthly rate will increase to $4,175 with an additional increase at the anniversary date to $4,300. In addition, the Company has increased its security deposit to $4,836. During the year ended December 31, 2013, the Company terminated all leases for office space.

 

Consulting agreements

As of September 30, 2014 the Company had accrued $247,700 in consulting fees. Active engagements include three consultants at a combined total of $19,700 per month. During the nine months ended September 30, 2014, the Company issued 1,054,080,427 shares of common stock valued at $146,500, of which included $13,000 in accrued fees from the previous year.

 

F-14

 

NOTE 8- Income taxes

 

Deferred income tax assets and liabilities are computed annually for differences between financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.

 

The effective tax rate on the net loss before income taxes differs from the U.S. statutory rate as follows:

   2014    2013 
U.S. Statutory rate   34 %    34%
Valuation allowance   (34)%    (34)%
Effective tax rate   —        —    

 

The net change in the valuation for the nine months ended September 30, 2014 was an increase in valuation of $1,567,739.

 

The Company has a net operating loss carryover of approximately $19,200,000 available to offset future income for income tax reporting purposes, which will expire in various years through 2032, if not previously utilized. However, the Company’s ability to use the carryover net operating loss may be substantially limited or eliminated pursuant to Internal Revenue Code Section 382.

 

The Company had no material unrecognized income tax assets or liabilities as of September 30, 2014. The Company’s policy regarding income tax interest and penalties is to expense those items as general and administrative expense but to identify them for tax purposes. During the nine months ended September 30, 2014 and 2013, there were no income tax, or related interest and penalty items in the income statement, or as a liability on the balance sheet. We file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Company is subject to U.S. federal or state income tax examination by tax authorities for years beginning at inception of July 8, 2010 through current. The Company is not currently involved in any income tax examinations.

 

NOTE 9 - Fair value measurement

 

The Company adopted ASC Topic 820-10 at the beginning of 2009 to measure the fair value of certain of its financial assets required to be measured on a recurring basis. The adoption of ASC Topic 820-10 did not impact the Company’s financial condition or results of operations. ASC Topic 820-10 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  ASC Topic 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability. The three levels of the fair value hierarchy under ASC Topic 820-10 are described below:

 

Level I – Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access.

 

Level II – Valuations based on quoted prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

 

Level III – Valuations based on inputs that are supportable by little or no market activity and that are significant to the fair value of the asset or liability.

 

The following table presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis as of September 30, 2014 and December 31, 2013:

 

    Level I  Level II  Level III  Fair Value
September 30, 2014            
 Notes payable   $ —    $(182,088)  $—     $(182,088)
 Convertible debt, net     —     (128,995)   —     (128,995)
 Derivative Liabilities     —    (170,768)   —      (170,768)
     $ —    $(481,851)  $—     $(481,851)
December 31, 2013                     
 Notes payable   $ —    $(180,088)  $—     $(180,088)
 Convertible debt, net     —     (328,361)   (328,361)     
 Derivative Liabilities   —    (505,647)   —      (505,647)
     $ —    $(1,014,096)  $—     $(1,014,096)

 

 

F-15

 

NOTE 10 – Shareholders’ equity

 

Common stock issuances

During the six months ended March 31, 2013, the Company issued a total of 94,676 (post-split) shares of common stock in connection with the conversion of $37,558 in convertible debt.

 

During the nine months ended September 30, 2013, the Company issued a total of 3,301,842 shares of common stock in connection with the conversion of $21,330 in debt. Additionally, the Company recorded finance costs pursuant to these issuances totaling $243,000.

 

During the six months ended September 30, 2013, the Company issued a total of 30,009,620 shares of common stock in connection with the conversion of $99,519 in debt, including accrued interest of $2,520. Additionally, the Company recorded finance costs pursuant to these issuances totaling $63,770.

 

During the six months ended December 31, 2013, the Company issued a total of 248,822,386 shares of common stock in connection with the conversion of $113,401 in debt, including accrued interest of $3,000. Additionally, the Company recorded finance costs pursuant to these issuances totaling $10,693.

 

During the year ended December 31, 2013, the Company issued 41,521,023 shares of common stock pursuant to consulting services valued at $488,080.

 

During June 2013, the Company incorrectly issued 100,000 shares and is expecting their return.

 

During May 2013, the Company issued 60,000,000 shares of common stock to the Company’s president and CEO valued at $12,000,000, of which the Company expensed $2,729,167 for the year ended December 31, 2013. Additionally, the CEO temporarily returned 50,000,000 shares to provide additional outstanding shares to the company, which was recorded as a common stock payable totaling $50,000.

 

During June 2013, the Company issued 1,961,803 shares of common stock to the Company’s former CFO in satisfaction of accrued wages totaling $7,510. The remaining value of $70,962 was recorded as compensation for the year ended December 31, 2013.

 

Effective March 20, 2013, the Company performed a 1 for 450 reverse split of its common stock.

 

Effective December 9, 2013, the Company amended its articles to increase the authorized shares to 1,000,000,000.

 

Effective March 21, 2014 the Company amended its articles to increase the authorized shares to 5,000,000,000.

 

During the nine months ended September 30, 2014, the Company issued a total of 2,800,231,592 shares of common stock in connection with the conversion of $417,249 in debt, including accrued interest of $8,514.

 

During the nine months ended September 30, 2014, the Company issued a total of 1,054,080,427 shares of common stock valued at $146,500, including accrued expenses of $13,000, in connection with consulting agreements.

 

F-16

 

NOTE 11 - Subsequent events

 

During October 2014, Tide Pool elected to convert an additional $12,500 in principal for which the Company issued 300,000,000 shares of common stock.

 

During October 2014, WHC elected to convert an additional $10,454 in principal for which the Company issued 190,071,091 shares of common stock.

 

During October 2014, the Company issued an additional convertible note to Clane Clark for legal fees from July 1, 2014 through September 2014 totaling $14,975, with similar terms as noted above.

 

During October 2014, the Company entered into a Share Exchange Agreement (the “Agreement”) with 212 DB Corp., a private Delaware corporation (“212”). 212 is an electronic entertainment company best known for its Play Gig It and Rock This gaming applications. Under the Agreement, the Company will acquire all of the issued and outstanding capital stock of 212 in exchange for: (i) a direct assumption of $7,126,658.27 in debt owed by 212 to a variety of note holders and other creditors; and (ii) the issuance of convertible preferred stock having a stated value of $10,000,000 to the former stockholders of 212.

 

In connection with the Agreement, the Company will issue to 212’s former stockholders, on a pro-rata basis, a total of 1,000 shares of Series A Preferred Stock. As specified in the 1st Amended Certificate of Designation, the Series A Preferred Stock has a stated value of $10,000 per share and is convertible at the stated value into shares of the Company’s common stock at price equal to the greater of $0.0001 per share or 90% of the average of the closing bid prices for the Company’s common stock for the five trading days preceding the conversion. The conversion right is limited such that no holder of Series A Preferred Stock, following any conversion, is allowed to hold more than 4.99% of the issued and outstanding common stock. The Series A Preferred Stock is non-voting. Holders of Series A Preferred Stock are entitled to a preference in liquidation, up to the stated value per share, over the holders of the Company’s common stock.

 

Of the $7,126,658.27 in 212 debt that the Company will assume directly under the Agreement, $6,200,000 consists of convertible debentures (the “212 Debentures”), and $926,658.27 consists of general accounts payable. Under the Agreement, the 212 Debentures shall be amended such that the terms of conversion for such notes shall be substantially the same as the terms for the conversion shares of the Series A Preferred Stock.

 

F-17

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-Looking Statements

 

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Company Overview

 

Through our wholly-owned subsidiary, Nyxio Technologies Inc., an Oregon corporation (“Nyxio”), we develop and provide technology for the entertainment and commercial markets within the consumer electronic industry. Since inception, the company’s approach to the industry can be best described as disruptive evolution. The general population has evolved to the point where computers and devices that rely on an internal computer for operation have become second nature. Gone are the days when people were intimidated by their electronics. Consumer electronics continue to evolve and morph into new form factors. Touch cell phones, web tablets and now TV with browsers incorporated have become an accepted and expected part of our society. Nyxio’s flagship product, The VioSphere, is the first TV with a fully functional personal computer built in. Unlike TVs with limited browser capabilities, the VioSphere has no limitations. Like many of the company’s innovative products, it is an entertainment destination. This destination philosophy has become a driving force for product innovation and development, which, we believe, we provide at a reasonable cost.  We are determined to become a leading-edge driver and developer of technology across a wide range of vertical markets that include retail, education, B2B, and digital signage.  We strive to reduce the overall environmental footprint of end users by consolidating key hardware into more efficient devices.

 

We are excited to announce that Nyxio continues to strengthen as a company. The last few months have been both intense and exciting for the company. Upgrades of the hardware used in the VioSphere and the significant upgrade in its capabilities, along with the acquisition of 212 Decibel have created significant opportunities for moving the company forward. In this time of accelerated evolution we look forward to sharing some new products, acquisitions and revenue streams. The Company has made significant progress towards the company’s vision.

 

With the vision of becoming a global entertainment company in a true multimedia environment, Nyxio has learned to quickly evaluate and if appropriate, execute on opportunities. We believe that we can methodically analyze and efficiently evaluate opportunities; which give us the ability to execute quickly. Part and parcel to the evaluation process is judging the impact the decision(s) may have on shareholders and future investors. The short term goals have been financing our continued operations, financing our own purchase orders and adjusting the process by which we produce revenue.

 

Nyxio has always designed and built innovative products; and has always been ahead of the technology curve. The last few years have seen the company suffer some degree of economic pressure due to a dearth of traditional financing during a continued period of consumer and industry recovery. Once accomplished, “self-evaluation” resulted in the “disruptive evolution” of our business model.

 

Nyxio Flagship Product

 

The VioSphere – The first Genius TV


The first fully integrated computer and TV represents the ultimate in convergence. Fitted with a full touch screen on all models from 32” to 65” with “Intel Inside” processor (i3, i5 or i7) represent a fully configured PC (HDD; BR/DVD/RW; 8GB; USB 2.0 AND 3.0; Windows 8.1, BT; WiFi; Ethernet; HD webcam; MORE). A full 1080P HD TV with multiple HDMI ports (including one extended HTMI), multiple audio and video inputs, and much more are standard. Watch the football game and work your fantasy football team on the same screen at the same time.

Given that the VioSphere does not fit to a specific niche, comparisons have to be made to individual markets. Based on our due diligence it can be said with certainty that our main competitors can be found within the following categories:

 

• Smart TVs

• All In One PCs

• Digital Signage devices

• Electronic Whiteboards (for the education + enterprise sectors)

 

As developers will further expand within their niches, the VioSphere will claim a stronghold in the Genius market, standing alone - for now. This product is focused on four channels of sales: 1) Consumer; 2) Digital Signage; 3) Education; 4) Office.

 

4

 

Recent Developments – Acquisitions

 

Recently, the Company was presented with a significant opportunity to take another step towards our “vision”, and Nyxio has finalized its acquisition of 212 DB Corp. (“212 Decibel” or “212dB”). This company has shown their intent to change the landscape of their industry entirely through unique innovations, which is a trait that is fundamental to Nyxio’s vision. 212Db has, in prior years, raised 17 million dollars for its operations and has also attracted the requisite investor base as well as assets that can be used to secure more traditional equity and debt financing.

 

212 Decibel

 

212Db is best known for its groundbreaking gaming applications, Play Gig It and Rock This, both launched on Facebook. These applications are blurring the lines that once separated gaming, the music industry, merchandising, and other revenue generating opportunities. With more than 70 artists currently under contract, and more than 400 million likes, followers, etc., the marketing potential is almost unprecedented. The 212Db acquisition brings a huge amount of Intellectual Property (IP) to Nyxio along with equity and the partnership with Artivision.

 

The 212Db team has spent millions of dollars in securing the licenses from such labels as Sony, Universal Music Group, and Warner as well as major publishers such as Sony/ATV, Universal Publishing, Warner and many more. In addition they signed a very large number of artists to exclusive agreement including the use of their avatar in the games.

 

Over the past 60 days, Nyxio has been working diligently to prepare and plan product launches in relation to software and applications. The 212Db acquisition has opened up new markets. The Play Gig It and Rock products are currently in desktop form and will be launched in several variations into mobile applications for users to enjoy on their phone or pad devices.

 

EEI International

To take advantage of the licenses and exclusive agreements acquired with 212Db, Nyxio is launching EEI International. With the catchphrase “Bringing Entertainment to the Masses”, one can’t help but know the goal of Encore Entertainment Industries International. Representing talent ranging from visual to vocal artists and beyond, EEI intends to manage a roster of talented, marketable individuals and groups - opening up a multitude of potential revenue streams. These mediums will be delivered by Nyxio’s flagship product redux, the VioSphere Genius TV.

 

With the additions of these two arms of Nyxio, we believe the Company can truly place a foothold across a number of intertwining industries.

 

Modest expansion in the organization of the company has been undertaken to support the acquisition and to support of the evolving Nyxio products. Our manufacturer has completed resolution of the capacity and QC issues we have been working on. Nyxio is now in a position to add not only to our customer base for hardware, but for adding additional products to the portfolio.

 

The newly patented graphic user interface developed by Nyxio is moving forward through the development process. The addition of a skilled software company was an obvious target for acquisition. When completed, the GUI will enable users to unify their devices, including their televisions, desktop computers, pad devices and mobile phones.

 

Nyxio branded software products set for 2015 are designed around expanding the Sphere software design of its patented interface. Nyxio has strived to provide forward thinking hardware with advanced software engines to drive core offerings. The acquisition of 212dB will allow us to expand from the product centric base into software as well.

 

Marketing

 

Our marketing strategy will focus on targeted markets, including a focused push around Nyxio’s presence on the east coast. With the new VioSphere Genius TV in stock with Adorama, our soon to be released apps Rock This and Play Gig-It, and our new user-interface software, Nyxio is poised to solidify its position in the marketplace. Not only is Adorama currently generating television, print, and radio ads in conjunction with the VioSphere and the NY Giants, they are also running promotional giveaways of the VioSphere itself. In regard to promotions nationwide, our acquisition of 212 has yielded mutually beneficial relationships with many talented music artists, who have been contracted to participate in promotions. With their over 400 million Facebook followers, these artists will join us in national media events that will continue to elevate our identity across the board. Additionally, we will expand our range even more to target key markets for our new Rock This and Play Gig-It apps. Not only will we have press tours for the artists in regard to the apps, we will create and run ads within the apps themselves. The cross-promotional opportunities around these apps are limitless, as they provide a multi-faceted view of Nyxio as a whole, and liason between the varied levels of our technologies, artists, and audiences.

 

5

 

Goals

 

Nyxio Technologies continues to have six achievable goals:

 

  Company Growth
  Profitability
  Product Development
  Fast Innovation
  Market Penetration
  Industry Expansion

 

Results of operations for the three and nine months ended September 30, 2014 and 2013

 

The discussion that follows is derived from our unaudited interim balance sheets and the unaudited statements of operations and cash flows for the three and nine months ended September 30, 2014 and 2013.

 

Revenues, net

 

We generated $5,676 in revenue during the quarter ended September 30, 2014 and no revenue during the quarter ended September 30, 2013. Our operating revenues during the nine months ended September 30, 2014 were $5,676 compared to $6,065 during the nine months ended September 30, 2013.

 

We recognize revenue when delivery has occurred, the sales price is fixed and collectability is reasonably assured. Ownership and title of our products pass to customers upon delivery of the products to customers. We record revenues, net of sales discounts.

 

Cost of Sales

 

Our costs of sales were $2,829 for the quarter ended September 30, 2014 and $0 for the quarter ended September 30, 2013. Our cost of sales for the nine months ended September 30, 2014 was $2,829, compared to $1,445 for the nine months ended September 30, 2013. Cost of sales includes finished goods, assembly services, and cost to deliver our product. Cost of sales has remained consistent with the previous year comparable period. As we are able to increase our revenues, we expect our cost variables to decrease due to volume discounts.

 

Gross Profit

 

Our gross profit was $2,847 for the quarter ended September 30, 2014 and $0 for the quarter ended September 30, 2013. During the nine months ended September 30, 2014 our gross profit was $2,847, compared to a gross profit for the nine months ended September 30, 2013 of $4,620. We expect gross profits to normalize at 38% in the near-term and 40% in the long-term. Gross profit, as a percentage of sales, will also increase as we have a higher weighting of sales through direct distribution to our end customer.

 

Expenses

 

During the quarter ended September 30, 2014 we incurred $1,508,620 in operating expenses, compared to $1,722,501 for the quarter ended September 30, 2013. The decrease in operating expenses for the three months ended September 30, 2014 compared to the same period in 2013 was attributable primarily to a decrease in the value of stock based compensation paid to consultants.

 

Cash salaries and wages were $60,504 for the quarter ended September 30, 2014, compared to $62,500 for the quarter ended September 30, 2013. Professional fees were $72,950 for the quarter ended September 30, 2014, compared to $81,438 for the quarter ended September 30, 2013. We incurred $85,299 consulting fees for the quarter ended September 30, 2014, compared to consulting fees of $318,042 for the quarter ended September 30, 2013.

 

During the quarter ended September 30, 2014, we incurred $11,099 in travel and entertainment expenses, compared to $947 in travel and entertainment expenses during the quarter ended September 30, 2013. This expense is expected to increase during the remainder of the year as we continue our product marketing and business development strategies.

 

During the quarter ended September 30, 2014, we incurred $2,631 in promotional and marketing expense, compared to $0 in promotions and marketing during the quarter ended September 30, 2013. These costs include demonstration products, advertising, shipping samples to retailers and distributors, and promotion allowances for distributors and tradeshows which includes booth costs, and various other tradeshow costs. We expect this expense to increase over the remainder of the year.

 

6

 

During the quarter ended September 30, 2014, we incurred $2,333 in depreciation, compared to $2,637 for the quarter ended September 30, 2013. General and administrative expenses were $12,127 for the quarter ended September 30, 2014, compared to $1,438 for the quarter ended September 30, 2013. Stock based officer compensation was valued at $1,250,000 for the quarter ended September 30, 2014 and at $1,250,000 for the quarter ended September 30, 2013. We incurred $2,825 in rent expense for the quarter ended September 30, 2014 compared to $5,499 for the three months ended September 30, 2013. We incurred promotional and marketing expense of $11,483 during the quarter ended September 30, 2014, compared to $0 for the quarter ended September 30, 2013.

 

During the nine months ended September 30, 2014, our total operating expenses were $4,380,177, compared $4,604,785 for the nine months ended September 30, 2013.

 

Other Income and Expense

 

During the quarter ended September 30, 2014, we experienced a gain on the change in the value of a derivative liability in the amount of $906,405, financing costs of $49,854, interest expense of $13,306, interest expense to a related party of $243, amortization of debt discounts in the amount of $125,275, and other income of $1.

 

As a result of various financing agreements, we have incurred additional costs which are attributable to the terms of each agreement with respect to their variable conversion rights. Until such time the agreements are satisfied in full, we will continue to incur costs related to the valuation of these terms.

 

Net Loss

 

During the quarter ended September 30, 2014 we incurred a net loss of $788,145. By comparison, we incurred a net loss of $2,008,933 during the quarter ended September 30, 2013. The decrease in net loss of compared to the same period last year is primarily attributable to a gain on the change in value of derivative liabilities, as well as a decrease in the value of stock based consulting compensation issued during the three months ended September 30, 2014 as compared to the same quarter last year.

 

Our net loss for the nine months ended September 30, 2014 was $4,610,988, compared to $5,486,918 for the nine months ended September 30, 2013.

  

Our greatest challenges which have prohibited us from executing our business plan are as follows:

 

 

  Lack of adequate funding to obtain a small inventory, establish a healthy PR campaign, recruit a world class management team, and fund future development to enhance current product features and new products to stay ahead of the technology curve.
  Manufacturing in Asia – Too far away to monitor quality and suppliers without costly travel.
  Lack of adequate funding to retain skilled sales team.

 

Our current and future operations are focused on continuing to carry out our business plan through the marketing and continued development of our current products, including the VioSphere, Realm, RealmPro, Venture MMV technology and Vuzion Android TV, and our future products, continued development efforts, and the continued evaluation of potential strategic acquisitions and/or partnerships.

 

Our operations to date have consisted primarily of the following:

 

Enhancing product features and aesthetics
Negotiations to reduce product cost and enhance quality
Building a reliable Bill of Material for all products and sourcing from established suppliers
Work with technology partners such as Avnet, Intel, and AMD, with whom we have collaboration agreements, to develop new CPU list of options and board options. To date we have not entered into any Purchase Orders with these partners.
Develop new products with alternate revenue streams, such as gaming and cloud commerce
Develop clear and concise marketing, sales, and specification literature and tools

 

Our efforts are directed at generating revenue through the sales of our current products, which are available for purchase at the following locations: Amazon.com, OrderBorder, Rapid Buyer, Focus, University Book Stores, Smith and Associates, Sterling Technology, and at our proprietary web-site.

 

Key factors affecting our results of operations include capitalization, revenues, cost of revenues, operating expenses and income and taxation.

 

7

 

Liquidity and Capital Resources

 

As of September 30, 2014, we had cash and equivalents on hand of $3,377, deposits on inventory of $16,004 and a working capital deficit of $1,366,785. We determined that our cash on hand and working capital were not sufficient to meet our current anticipated cash requirements. As such, we evaluated several options to obtain short term financing, as discussed below. While we hope to see a significant increase in revenue in the second quarter of 2014 as a result on pending product orders, we have continued to rely on funds obtained through the issuance of debt and equity securities throughout 2014. We may enter into further debt and equity agreements to fund operations and inventory requirements if management feels it is required. We anticipate our additional cash requirements to fund cost of goods sold and operations to be roughly $1.7 million dollars, at which point revenues from sales should be sufficient to fund inventory and operational expenses. Our operations to date have been primarily funded through the issuance of debt and equity securities.

 

Coach Capital LLC

 

Specifically, on September 30, 2011, we entered into a promissory note with Coach Capital LLC in the amount of $111,000 (the “Coach Note”). The Coach Note is unsecured, bears interest at 10% per annum and is due on demand. The holder of the Coach Note may elect to convert all or part of the indebtedness owing under the Coach Note into our securities at such rate as that being offered to investors at the time of conversion. As of September 30, 2014, the unpaid principal balance and accrued interest under the Coach Note totaled $153,463.

 

ICG USA, LLC

 

On February 16, 2012, we entered into a Securities Purchase Agreement with and issued a Convertible Promissory Note in the amount of $200,000, at 6% interest per annum, to ICG USA, LLC (the “ICG Note”). As discussed below, ICG has assigned a total of $182,500 in principal to three other entities.

 

LG Capital Funding, LLC

 

On March 11, 2014, ICG assigned $75,000 in principal to LG Capital Funding, LLC (“LG”). LG issued a “Replacement Note” for the amount of $75,000. The note accrues interest at 8% per annum and matures March 11, 2014. Further, LG Capital may convert all or any amount of the principal at a rate equal to 50% of the lowest closing bid price for the five prior trading days, including the day of notice.

 

During March 2014, LG Capital advanced an additional $37,875 to us, subject to the same terms and Maturity date as the Replacement Note.

 

On June 17, 2014, we issued a Convertible Promissory Note to LG Capital in the amount of $20,000. The note accrues interest at 8% per annum and matures June 17, 2015. Further, LG Capital may convert all or any amount of the principal at a rate equal to 50% of the lowest closing bid price for the five prior trading days, including the day of notice.

 

During the nine months ended September 30, 2014, LG Capital elected to convert $75,000 in principal to common stock. As of September 30, 2014, the unpaid principal balance owed to LG was $26,818 net of discount in the amount of $31,057, with accrued interest of $2,381.

 

Tide Pool Ventures Corp.

 

On December 10, 2013, we issued a convertible promissory note to Tide Pool Venture Corp. (“Tide Pool”) in the amount of $11,500. The note bears interest at a rate of 9.875% per annum, is unsecured and matures on December 31, 2014. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 30% discount to the lowest volume weighted average price of the five trading days prior to the conversion date.

 

On February 20, 2014, ICG assigned $27,500 in principal to Tide Pool. We entered into a new Convertible Promissory Note agreement with Tide Pool. The replacement note bears interest at a rate of 10% per year, and matures on February 20, 2015. The Note is convertible to our common stock at a price equal to a 50% discount to the average of the lowest three trading prices in the 30 days preceding the conversion date.

 

Also on February 20, 2014, we issued a new convertible promissory note to Tide Pool in the amount of $22,250. The Note bears interest at a rate of 10% per year, and matures on February 20, 2015. The Note is convertible to our common stock at a price equal to a 45% discount to the average of the lowest three trading prices in the 30 days preceding the conversion date.

 

In April of 2014, ICG assigned $60,000 in principal to Tide Pool. We entered into a new Convertible Promissory Note with Tide Pool. The replacement note bears interest at a rate of 10% per year, and matures on February 20, 2015. The Note is convertible to our common stock at a price equal to a 50% discount to the average of the lowest three trading prices in the 30 days preceding the conversion date.

 

On April 1, 2014, we issued a new convertible promissory note to Tide Pool in the amount of $42,500. The Note bears interest at a rate of 10% per year, and matures on April 1, 2015. The Note is convertible to our common stock at a price equal to a 45% discount to the average of the lowest three trading prices in the 30 days preceding the conversion date.

 

8

 

During the nine months ended September 30, 2014, Tide Pool elected to convert $70,000 in principal into common stock. As of September 30, 2014, the unpaid principal balance owed to Tide Pool was $29,917, net of discount of $30,083, with accrued interest of $3,245.

 

WHC Capital, LLC, Series Bravo

 

On February 5, 2014, ICG assigned $20,000 in principal to WHC Capital, LLC, Series Bravo (“WHC”). We entered into a new Convertible Promissory Note agreement with WHC. The replacement note bears interest at a rate of 6% per year, and matures on February 5, 2015. The Note is convertible to our common stock at a price equal to a 40% discount to the average of the lowest three trading prices in the 30 days preceding the conversion date.

 

On February 7, 2014, we issued a new convertible promissory note to WHC in the amount of $10,000. The Note bears interest at a rate of 10% per year, and matures on February 20, 2015. The Note is convertible to our common stock at a price equal to a 40% discount to the average of the lowest three trading prices in the 30 days preceding the conversion date.

 

On May 8, 2014, we issued a new convertible promissory note to WHC in the amount of $20,000. The Note bears interest at a rate of 10% per year, and matures on May 8, 2015. The Note is convertible to our common stock at a price equal to a 40% discount to the average of the lowest three trading prices in the 30 days preceding the conversion date.

 

On June 16, 2014, we issued a new convertible promissory note to WHC in the amount of $20,000. The Note bears interest at a rate of 10% per year, and matures on June 16, 2015. The Note is convertible to our common stock at a price equal to a 40% discount to the average of the lowest three trading prices in the 30 days preceding the conversion date.

 

On August 5, 2014, we issued a new convertible promissory note to WHC in the amount of $10,000. The Note bears interest at a rate of 12% per year, and matures on August 5, 2015. The Note is convertible to our common stock at a price equal to a 45% discount to the average of the lowest three trading prices in the 30 days preceding the conversion date.

 

On August 13, 2014, Tide Pool assigned $11,500 in principal debt and $1,506 in accrued interest to WHC. We entered into a new replacement Convertible Promissory Note with WHC. This replacement Note bears interest at a rate of 12% per year, and matures on August 13, 2015. The Note is convertible to our common stock at a price equal to a 45% discount to the average of the lowest three trading prices in the 30 days preceding the conversion date.

 

During the nine months ended September 30, 2014, WHC elected to convert $49,064 in principal into common stock. As of September 30, 2015, the unpaid principal balance owed to WHC was $9,425, net of discount of $34,517, with accrued interest of $1,791.

 

JMJ Financial

 

On May 7, 2012, we entered into a $275,000 Promissory Note (the “Note”) with JMJ Financial (“JMJ”). Under the Note, we received $50,000 in loan proceeds with JMJ. Additional sums up to a maximum total of $275,000 may be advanced in the sole discretion of JMJ. An additional $5,400 was advanced during April of 2013. The Note included a 10% original issue discount and is due in 1 year. The Note would not bear interest if paid in full within 90 days. Thereafter, a one-time interest charge of 5% was to be applied to the principal sum. The Note was convertible to common stock in whole or in part at conversion price equal to the lesser of $0.06 per share or 65% of the lowest trading price in the 25 trading days prior to the conversion. As of September 30, 2014, this Note has been fully converted to common stock.

 

Asher Enterprises, Inc. 

 

In addition, we have received debt financing from Asher Enterprises, Inc. under a series of Convertible Promissory Notes. All Notes issued to Asher Enterprises, Inc. bore interest at a rate of 8% per year and are convertible at a conversion price equal to 55% of the Market Price of our common stock on the conversion date.  For purposes of the Notes, “Market Price” was defined as the average of the 3 lowest closing prices for our common stock on the 10 trading days immediately preceding the conversion date.  The number of shares issuable upon conversion of the Notes is limited so that the holder’s total beneficial ownership of our common stock may not exceed 4.99% of the total issued and outstanding shares. This condition may be waived at the option of the holder upon not less than 61 days-notice.

 

As of September 30, 2014, all notes issued to Asher have been converted in full.

 

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Continental Equities, LLC

 

On September 20, 2012, we received additional financing under a Convertible Promissory Note issued to Continental Equities, LLC (“Continental”) in the amount of $35,000. The note bears interest at a rate of 8% per annum, is unsecured and matures on May 15, 2013. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 42.5% discount to the lowest three average thirty day trading prices prior to the conversion date. In addition, we entered into a Registration Rights Agreement with Continental under which, upon demand of Continental, we must register resale of the common shares issuable upon conversion of the Note on Form S-1. In addition, Continental has “piggy-back” registration rights, which require us to include the re-sale of shares issuable upon conversion of the Note in any registration statement we may file, except for registrations on Forms S-4 or S-8. On May 20, 2013, we issued an additional Convertible Promissory Note to Continental in the amount of $13,000, bearing the same terms. During December of 2013, Tide Pool Ventures Corporation (“Tide Pool”) purchased the remaining balance of the notes. As of September 30, 2014, the Notes have been fully converted to common stock.

  

Chamisa Technology, LLC

 

On July 8, 2010, in connection with our reverse acquisition, we assumed a Promissory Note owed by Nyxio Technologies, LLC dated March 15, 2010 and issued to Chamisa Technology, LLC (“Chamisa”). The total principal and interest owing at the time we assumed the Note was $83,627. The Note bore interest at an annual rate of twelve percent (12%). From July of 2010 through December of 2010, additional advances were made under the Note in the principal amount of $64,491. In 2011, additional advances in the amount of $18,000 were made under the Note. On April 20, 2012, a portion of the balance due under the Note in the amount of $81,595 was assigned by Chamisa to Michelle Nelson, leaving total principal and interest due to Chamisa of $120,782. On April 25, 2012, we entered into an amendment of the Note portion purchased by Ms. Nelson. Under this amendment, Ms. Nelson agreed to forgive $56,595 of the principal balance in exchange for conversion rights on the remaining balance of $25,134. In accordance with the amendment, the remaining portion of the obligation was made convertible to common stock at $0.001 per share. Over the course of 2012, Ms. Nelson and various subsequent assignees converted the Nelson portion of the Note into common stock.

 

On December 1, 2013, Chamisa assigned the remaining portion of the Note still owing to Reign Investment Group, LLC. On December 1, 2013, Reign Investment Group, LLC assigned portions of the debt to various entities. During the year ended December 31, 2013, the original assignee agreed to forgive $21,500 of the debt in exchange for immediate conversion rights at a conversion rate of $0.001. As of December 31, 2013, the Company recognized an interest expense of $43,623 from BCF related to the conversion and gain on settlement of debt of $21,500.

 

As of September 30, 2014, the unpaid principal balance together with accrued interest totaled $106,895. We are still negotiating additional terms as it relates to this note.

 

Leland Martin Capital Partners, LLC

 

We have also entered into a series of small Convertible Promissory Notes with Leland Martin Capital Partners, LLC (“Leland Martin”). All Notes issued to Leland Martin bear interest at a rate of 10% per annum and are convertible to our common stock at a conversion price equal to a 45% discount to the lowest three ten day average trading prices prior to the conversion date. The amounts and due dates of the Leland Martin Notes are as follows:

 

Issue Date  Amount  Due Date
August 8, 2014  $15,000   August 8, 2015
August 27, 2014  $14,500   August 27, 2015
September 8, 2014  $5,000   September 8, 2015
September 18, 2014  $5,000   September 18, 2015

 

Beaufort Capital Partners, LLC

 

On September 8, 2014 , Tide Pool assigned $22,250 in principal debt and $1,158 in accrued interest to Beaufort Capital Partners, LLC (”Beaufort”). On October 13, 2014, we entered in to a Securities Exchange and Settlement Agreement with Beaufort regarding this debt. Under this Agreement, Beaufort may exchange the balance due to shares of our common stock at $0.00001 per share. 

 

On September 4, 2014 , we issued a new Original Issue Discount Convertible Promissory Note to Beaufort in the amount of $37,500. The Note has an original issue discount of $12,500, resulting in net proceeds to us of $25,000. The Note bears interest at a rate of 12% per annum, is convertible to common stock at a price of $0.0001 per share, and matures on March 4, 2014. We may prepay the note at $37,500 at any time prior to December 4, 2014. In connection with the Note, we also issued warrants to purchase 250,000,000 shares of common stock at a price of $0.0001 per share at any time from March 4, 2014 through September 4, 2019.

 

Cane Clark LLP

 

On July 7, 2014, we issued a Convertible Promissory Note to Cane Clark LLP (“Cane Clark”) in the amount of $106,374, for legal fees incurred through September 30, 2014. The note bears interest at a rate of 6% per annum, is unsecured and is payable in full upon the earlier of: (i) thirty days following written demand or, (ii) April, 7 2015. The Note is convertible into common stock in whole or in part at a variable conversion price equal to a 35% discount to the lowest three average twenty day trading prices prior to the conversion date.

 

On October 1, 2014, we issued an additional Convertible Promissory Note with similar terms in the amount of $14,975, for legal fees incurred from July 1, 2014 through September 30, 2014.

 

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212 DB Liabilities

 

On October 1, 2014, our Board of Directors approved our entry into a Share Exchange Agreement (the “Agreement”) with 212 DB Corp., a private Delaware corporation (“212”). Under the Agreement, we acquired all of the issued and outstanding capital stock of 212 in exchange for: (i) our direct assumption of $7,126,658.27 in debt owed by 212 to a variety of note holders and other creditors; and (ii) our issuance of convertible preferred stock having a stated value of $10,000,000 to the former stockholders of 212.

 

In connection with the Agreement, we issued to 212’s former stockholders, on a pro-rata basis, a total of 1,000 shares of Series A Preferred Stock. As specified in the 1st Amended Certificate of Designation, our Series A Preferred Stock has a stated value of $10,000 per share and is convertible at the stated value into shares of our common stock at price equal to the greater of $0.0001 per share or 90% of the average of the closing bid prices for our common stock for the five trading days preceding the conversion. The conversion right is limited such that no holder of Series A Preferred Stock, following any conversion, is allowed to hold more than 4.99% of our issued and outstanding common stock. The Series A Preferred Stock is non-voting. Holders of Series A Preferred Stock are entitled to a preference in liquidation, up to the stated value per share, over the holders of our common stock.

 

Of the $7,126,658.27 in 212 debt that we assumed directly under the Agreement, $6,200,000 consists of convertible debentures (the “212 Debentures”), and $926,658.27 consists of general accounts payable. Under the Agreement, the 212 Debentures shall be amended such that the terms of conversion for such notes shall be substantially the same as the terms for the conversion shares of our Series A Preferred Stock.

 

To meet our future objectives, we will need to meet our revenue objectives and/or sell additional equity and debt securities, which could result in dilution to current shareholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects.

 

Our current cash requirements are significant due to planned development and marketing of our current products, and we anticipate generating losses.  In order to execute on our business strategy, we will require additional working capital, commensurate with the operational needs of our planned marketing, development and production efforts.  Our management believes that we should be able to raise sufficient amounts of working capital through debt or equity offerings, as may be required to meet our short-term obligations.  However, changes in our operating plans, increased expenses, acquisitions, or other events, may cause us to seek additional equity or debt financing in the future.  We anticipate continued and additional marketing, development and production expenses.  Accordingly, we expect to continue to use debt and equity financing to fund operations for the next twelve months, as we look to expand our asset base and fund marketing, development and production of our products.

 

There are no assurances that we will be able to raise the required working capital on terms favorable, or that such working capital will be available on any terms when needed.  Any failure to secure additional financing may force us to modify our business plan.  In addition, we cannot be assured of profitability in the future.

 

Off Balance Sheet Arrangements

 

As of September 30, 2014, there were no off balance sheet arrangements.

 

Going Concern

 

We have negative working capital, have incurred losses since inception, and have not yet received significant revenues from sales of products or services. These factors create substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustment that might be necessary if we are unable to continue as a going concern.

 

Our ability to continue as a going concern is dependent on generating cash from the sale of our common stock and/or obtaining debt financing and attaining future profitable operations. Management’s plans include selling our equity securities and obtaining debt financing to fund our capital requirement and ongoing operations; however, there can be no assurance we will be successful in these efforts.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

A smaller reporting company is not required to provide the information required by this Item.

 

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Item 4. Controls and Procedures

 

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2014. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer, Giorgio Johnson, and our Chief Financial Officer, Mark Gustavson. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2014, our disclosure controls and procedures are not effective. There have been no changes in our internal controls over financial reporting during the quarter ended September 30, 2014.

 

In performing the above-referenced assessment, our management identified the following material weaknesses:

 

 i)

We have insufficient quantity of dedicated resources and experienced personnel involved in reviewing and designing internal controls. As a result, a material misstatement of the interim and annual financial statements could occur and not be prevented or detected on a timely basis.

 

 ii)

We do not have an audit committee or an independent audit committee financial expert. While not being legally obligated to have an audit committee or independent audit committee financial expert, it is the management’s view that to have an audit committee, comprised of independent board members, and an independent audit committee financial expert is an important entity-level control over our financial statements.

 

 iii)

We did not perform an entity level risk assessment to evaluate the implication of relevant risks on financial reporting, including the impact of potential fraud related risks and the risks related to non-routine transactions, if any, on our internal control over financial reporting. Lack of an entity-level risk assessment constituted an internal control design deficiency which resulted in more than a remote likelihood that a material error would not have been prevented or detected, and constituted a material weakness.

 

 

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

 

Limitations on the Effectiveness of Internal Controls

 

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error.   Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

 

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PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

On February of 2013, we were sued in the Multnomah County Circuit Court of the State of Oregon by four former consultants, Joe Fijak, Steve Wiseman, Richard Walsh, and Robert Calderella (the “Fijak Litigation”). The plaintiffs in the Fijak Litigation allege that we breached consulting agreements with them by failing to pay compensation required by the agreements. The Complaint filed by the Plaintiffs seeks damages in the amount of $501,000, but management does not believe a recovery at or near that amount is likely. We contend that we complied with the terms of the agreements until such time as they were terminated by the Plaintiffs and that the Plaintiffs performed very limited services and, in some cases, no services at all. After being served with the Complaint, we removed the Fijak Litigation to the United States District Court for the District of Oregon, where it remains pending as Wiseman et al v. Nyxio Technologies Corporation et al, Case No. 3:14-cv-00420-PK. Following removal of the action to federal court, we have been engaged in active settlement discussions with the Plaintiffs. On March 25, 2014, the court stayed the proceedings for a period of ninety (90) days in order to allow the parties to continue settlement discussions. At this time, settlement discussions are continuing and we believe this matter will be settled.

 

Item 1A: Risk Factors

 

A smaller reporting company is not required to provide the information required by this Item. Risk factors regarding our current business can be found in our Annual Report on Form 10-K for the year ended December 31, 2012, filed with the Securities and Exchange Commission on April 16, 2012.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3. Defaults upon Senior Securities

 

None

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

Exhibit Number Description of Exhibit
10.1 Convertible Promissory Note issued to WHC Capital, LLC, Series Bravo, dated August 5, 2014 ($10,000)
10.2 Convertible Promissory Note issued to WHC Capital, LLC, Series Bravo, dated August 13, 2014 ($11,500)
10.3 Convertible Promissory Note issued to Leland Martin Capital Partners, LLC, dated August 8, 2014 ($15,000)
10.4 Convertible Promissory Note issued to Leland Martin Capital Partners, LLC, dated August 27, 2014 ($14,500)
10.5 Convertible Promissory Note issued to Leland Martin Capital Partners, LLC, dated September 8, 2014 ($5,000)
10.6 Convertible Promissory Note issued to Leland Martin Capital Partners, LLC, dated September 18, 2014 ($5,000)
10.7 Original Issue Discount Convertible Promissory Note issued to Beaufort Capital Partners, LLC, dated September 4, 2014 ($37,500)
10.8 Warrant issued to Beaufort Capital Partners, LLC (250,000,000 shares)
10.9 Convertible Promissory Note issued to Cane Clark LLP, dated July 7, 2014 ($106,374)
10.10 Convertible Promissory Note issued to Clark Corporate Law Group LLP, dated October 1, 2014 ($14,875)
10.11 Securities Exchange and Settlement Agreement with Beaufort Capital Partners
31.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101 Materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 formatted in Extensible Business Reporting Language (XBRL).

 

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 SIGNATURES

 

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.

 

  Nyxio Technologies Corporation
   
Date:

November 19, 2014

   
 

By: /s/ Giorgio Johnson

             Giorgio Johnson

Title:    Chief Executive Officer

 

 

  Nyxio Technologies Corporation
   
Date:

November 19, 2014

   
 

By: /s/ Mark Gustavson

             Mark Gustavson

Title:    Chief Financial Officer

 

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