UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-K/A

Amendment No. 1



(Mark One)



☑
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December
31, 2014



OR



☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934



Commission File Number: 001-15673

|                                                      
|------------------------------------------------------
|AGRITEK HOLDINGS, INC.                                
|(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 20-8484256                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               |  |                                     
|319 Clematis Street, Suite 1008                                |  |                                     
|West Palm Beach, FL                                            |  | 33401                               
|(Address of principal executive offices)                       |  | (Zip Code)                          



|                                                    
|----------------------------------------------------
|(561) 249-6511                                      
|(Registrant’s telephone number, including area code)



Securities registered under Section 12(b)
of the Act: None



Securities registered pursuant to Section
12(g) of the Act: Common Stock, $0.0001 par value



Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐   No ☑



Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐   No ☑



Indicate by check mark whether the issuer
(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 has for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes☑  No ☐



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



Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to
the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. ☑





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



|Large accelerated filer ☐                                             | Accelerated filer ☐        
|--------------------------------------------------------------------- | ---------------------------
|                                                                      |                            
|Non-accelerated filer☐  (Do not check if a smaller reporting company) | Smaller reporting company ☑



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



State the aggregate market value of the
voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last
sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently
completed second fiscal quarter. $1,604,495 on June 30, 2014.



The
number of shares outstanding of the registrant’s $0.0001 par value Common Stock as of April 15, 2015, was 123,152,040 shares.









EXPLANATORY
NOTE



This Amendment No. 1 on Form 10-K/A ("this
Amendment") amends the Agritek Holdings, Inc. ("the Company") Annual Report on Form 10-K for the year ended December
31, 2014, which was filed with the Securities and Exchange Commission on April 15, 2015 ("the Original Filing"). The
Company is filing this Amendment for the purpose of correcting the Independent Registered Public Accounting Firm’s audit
report and to revise Item 9A., Management’s Report on Internal Control over Financial Reporting.



The information presented in this Amendment is as of the filing
date of the Original Filing. Other than (i) the disclosure regarding the resignation of the Company’s previous chief financial
officer (“CFO”), (ii) the disclosure regarding the hiring of a new CFO, (iii) deletion of disclosure in a footnote
to the exhibit index indicating that XBRL information is furnished and not filed, and (iv) as set forth above, this Amendment does
not modify or update disclosures in the Original Filing and does not reflect any other events that may have occurred after the
date of the Original Filing.











Table of Contents





|        | PART I                                                                                                       | Page
|------- | ------------------------------------------------------------------------------------------------------------ | ----
|        |                                                                                                              |     
|Item 1  | Business                                                                                                     | 4   
|Item 1A | Risk Factors                                                                                                 | 8   
|Item 1B | Unresolved Staff Comments                                                                                    | 12  
|Item 2  | Properties                                                                                                   | 13  
|Item 3  | Legal Proceedings                                                                                            | 13  
|Item 4  | Mine Safety Disclosures                                                                                      | 13  
|        |                                                                                                              |     
|        | PART II                                                                                                      |     
|        |                                                                                                              |     
|Item 5  | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 14  
|Item 6  | Selected Financial Data                                                                                      | 17  
|Item 7  | Management’s Discussion and Analysis of Financial Condition and Results of Operations                        | 17  
|Item 7A | Quantitative and Qualitative Disclosures About Market Risk                                                   | 23  
|Item 8  | Financial Statements and Supplementary Data                                                                  | 23  
|Item 9  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         | 23  
|Item 9A | Controls and Procedures                                                                                      | 24  
|Item 9B | Other Information                                                                                            | 25  
|        |                                                                                                              |     
|        | PART III                                                                                                     |     
|        |                                                                                                              |     
|Item 10 | Directors, Executive Officers and Corporate Governance                                                       | 26  
|Item 11 | Executive Compensation                                                                                       | 28  
|Item 12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               | 30  
|Item 13 | Certain Relationships and Related Transactions, and Director Independence                                    | 30  
|Item 14 | Principal Accountant Fees and Services                                                                       | 31  
|        |                                                                                                              |     
|        | PART IV                                                                                                      |     
|        |                                                                                                              |     
|Item 15 | Exhibits and Financial Statement Schedules                                                                   | 32  
|        | Signatures                                                                                                   | 33  











FORWARD-LOOKING STATEMENTS



This report contains forward-looking statements.
The Securities and Exchange Commission (the “SEC”) encourages companies to disclose forward-looking information so
that investors can better understand a company’s future prospects and make informed investment decisions. This report and
other written and oral statements that we make from time to time contain such forward-looking statements that set out anticipated
results based on management’s plans and assumptions regarding future events or performance. We have tried, wherever possible,
to identify such statements by using words such as “project”, “believe”, “anticipate”, “plan”,
“expect”, “estimate”, “intend”, “should”, “would”, “could”,
or “may”, or other such words, verbs in the future tense and words and phrases that convey similar meaning and uncertainty
of future events or outcomes to identify these forward–looking statements. There are a number of important factors beyond
our control that could cause actual results to differ materially from the results anticipated by these forward–looking statements.
While we make these forward–looking statements based on various factors and using numerous assumptions, you have no assurance
the factors and assumptions will prove to be materially accurate when the events they anticipate actually occur in the future.
Factors that could cause our actual results of operations and financial condition to differ materially are discussed in greater
detail under Item 1A, “Risk Factors” of this annual report on Form 10-K.



The forward–looking statements are
based upon our beliefs and assumptions using information available at the time we make these statements. We caution you not to
place undue reliance on our forward–looking statements as (i) these statements are neither predictions nor guaranties of
future events or circumstances, and (ii) the assumptions, beliefs, expectations, forecasts and projections about future events
may differ materially from actual results. We undertake no obligation to publicly update any forward–looking statement to
reflect developments occurring after the date of this report.











PART I



ITEM 1. DESCRIPTION OF BUSINESS.



General Business Development



Corporate History



Agritek Holdings, Inc. (referred to hereafter
as “AGTK,” or, the “Company”), was initially incorporated under the laws of the State of Delaware in 1997
under the name Easy Street Online, Inc.



In 1997, the Company changed its name to Frontline
Communications Corp. (“Frontline”) and operated as a regional Internet service provider (“ISP”) providing
Internet access, web hosting, website design, and related services to residential and small business customers throughout the Northeast
United States and, through a network partnership agreement, Internet access to customers nationwide.



On April 3, 2003, the Company acquired Proyecciones
y Ventas Organizadas, S.A. de C.V. (“Provo Mexico”) and in December 2003 the Company changed the name to Provo International
Inc. (“Provo”).



In 2008, Provo changed its name to Ebenefits
Direct, Inc., which, through its wholly-owned subsidiary, L.A. Marketing Plans, LLC, engaged in the business of direct response
marketing. The Company’s principal business was to market and sell non-insurance healthcare programs designed to complement
medical insurance products and to provide savings for those who cannot afford or qualify for traditional health insurance products.



On October 14, 2008, Ebenefits Direct, Inc.
changed its name to Seraph Security, Inc. (“Seraph”).



On April 25, 2009, Seraph acquired Commerce
Online Technologies, Inc., a credit and debit card processing company.



On May 20, 2009, Seraph Security, Inc. changed
its name to Commerce Online, Inc. to more accurately reflect its core business of merchant processing, and financial services.



As of February 18, 2010, Commerce Online, Inc.
changed its name to Cannabis Medical Solutions, Inc. (“CMSI”) as a provider of merchant processing payment technologies
for the medical marijuana and wellness sector.



On March 8, 2010, the Company completed the
acquisition of 800 Commerce, Inc. (“800 Commerce”) a Florida Corporation incorporated by the Company’s Chief
Executive Officer. The company issued 1,000,000 shares of common stock to 800 Commerce for all the issued and outstanding stock
of 800 Commerce, Inc.



In June 2010, 31,288,702 shares of common stock
were issued as dividend shares (the “dividend”) to all existing shareholders of common stock of record.



On June 14, 2011, Cannabis Medical Solutions,
Inc. changed its merchant name to MediSwipe Inc. (“MWIP”) as a result of its focus on the processing and financial
services related to medical marijuana business.



On June 26, 2013, the Company formed American
Hemp Trading Company, a wholly owned subsidiary.



On June 26, 2013, the Company formed Agritech
Innovations, Inc. (“AGTI”), a wholly owned subsidiary. On September 3, 2013, AGTI changed its name to Agritech Venture
Holdings, Inc. (“AVH”).





4





On November 12, 2013, the Board of Directors
of the Company approved a 1-for-10 reverse stock split (the “Reverse Stock Split”) and a decrease in the authorized
common stock of the Company to 250,000,000. Pursuant to the Reverse Stock Split, each 10 shares of the Company’s common stock
automatically converted into one share of Company common stock.



On November 12, 2013, the Financial Industry
Regulatory Authority (“FINRA”) approved the ’ Reverse Stock Split ’ with an effective date of December
11, 2013. All the share amounts in this annual report on Form 10-K reflect the Reverse Stock Split.



On April 23, 2014, MWIP changed its name to
Agritek Holdings, Inc. (“AGTK”) to more properly reflect the Company’s current business model.



On May 27, 2014, AVH changed its names to Agritek
Venture Holdings, Inc. (“AVHI”).



On August 27, 2014, American Hemp Trading Company
changed its name to Prohibition Products, Inc. (“PPI”)



Unless otherwise noted, references in this
Form 10-K to “Seraph,” “Commerce Online, Inc.,” “Cannabis Medical Solutions,” “Mediswipe,”
the “Company,” “we,” “our” or “us” means Agritek Holdings, Inc.



Description of Business



Agritek’s business plan is to
acquire and lease real estate, then lease or sub-lease the real estate to licensed marijuana operators, including providing complete
turnkey growing space and related facilities to licensed marijuana growers and dispensary owners. Additionally, the Company offers
a variety of services and product lines to the medicinal marijuana sector, including the distribution of hemp- based nutritional
products, a line of innovative solutions for electronically processing merchant transactions and recently, the Company began importing
and distributing vaporizers and e-cigarettes under the Company’s Mont Blunt brand.

The Company does not grow, harvest,
distribute or sell marijuana or any substances that violate the laws of the United States of America.

On March 18, 2014, the Company completed the
purchase of 80 acres zoned for agricultural use in Pueblo County, Colorado. The Company plans to lease individual parcels of the
80 acre parcel to fully-licensed and compliant growers and dispensaries within the regulated medicinal and recreational market
of Colorado. The Company plans to receive rents and management fees for providing infrastructure, water, electricity, equipment
leasing and security services to potential tenants.



On April 28, 2014,
the Company entered into a lease agreement for 20 acres of an agricultural farming facility located in South Florida, following
the approval of the so-called “Charlotte’s Web” legislation, aimed at decriminalizing low grade marijuana specifically
for the use of treating epilepsy and cancer patients. Pursuant to the lease agreement, the Company has a first right of refusal
to purchase the property for three years.



On July 11, 2014,
the Company signed a 10- yearlease agreement for 40 acres in Pueblo, Colorado, now bringing
total land holdings in the country’s first recreational cannabis state to over 120 acres zoned for its planned agricultural
and cultivation facilities located in Pueblo County, Colorado. The lease requires monthly rent payments of $10,000 during the first
year and is subject to a 2% annual increase over the life of the lease. The lease also provides rights to 50 acres of certain tenant
water rights for $50,000 annually plus cost of approximately $2,400 annually. The water rights ensure the Company’s non-interruption
of operations on behalf of new tenants qualified as fully registered and licensed grow and manufacturing operations.





5





On November
26, 2014, the Company executed a Real Property Purchase Agreement relating to the acquisition of approximately 3.2 acres for $224,000,
in the Apex Industrial Park Complex, otherwise known as Nevada’s “Green Zone”. The Company has also entered into
a 99-year lease agreement with My Life Organics, Inc. (“My Life”). Pursuant to the terms and conditions of the lease,
My Life will begin paying rent, six months after the Company receives a Certificate of Occupancy and has met all other occupancy
conditions, equal to 20% of the gross receipts from the prior month. My Life has been issued a provisional license for cultivation
of marijuana to be grown on the Company’s property. The Company also advanced $50,000 to MYLO Construction, LLC (“MYLO”),
a newly formed company, to manage the construction of the proposed building. On January 7, 2015, My Life notified the Company that
it was terminating the lease with the Company, claiming the Company had defaulted on certain provisions of the lease.



On September
12, 2014, the Company completed the asset acquisition of the entire line of products, technology and customers of Dry Vapes Holdings,
Inc. (“Dry Vapes”). Dry Vapes is an importer, marketer and distributor of innovative vaporizers and accessories with
over 11,000 social network followers. Dry Vapes has historically sold its product under the logo “DV” on eBay and other
websites. The Company, through its wholly owned subsidiary, PPI, plans to develop a full line of products under the “Mont
Blunt” brand name and market it to brick and mortar smoke shops nationally.

Through December 31,
2014, we operated in one reportable segment, wholesale sales.



Chill Drinks



On April 13, 2013, the Company entered into
a one-year Distribution Agreement with Chill Drinks, LLC (“Chill Drinks”). Chill Drinks has the rights to an energy
drink called Chillo Energy Drink (“Chillo”) and a hemp ice tea drink called C+ Swiss Ice Tea (“C+Swiss”).
Chillo and C+Swiss are referred to as the Chill Drink Products. Pursuant to the Distribution Agreement, the Company had the exclusive
distribution and placement rights of the Chill Drink Products to medical dispensaries. The agreement expired during the year ended
December 31, 2014.



Employees



The Company has three full-time employees.
The Company relies on several independent contractors and other agreements it has with other companies to provide the services
needed. Each management hire has been carefully selected to address immediate needs in particular functional areas, but also with
consideration of the Company’s future needs during a period of expected rapid growth and expansion. Value is placed not only
on outstanding credentials in specific areas of functional expertise, but also on cross-functionality, a strong knowledge of content
acquisition and distribution, along with hands-on experience in scaling operations from initial beta and development stage through
successful commercial deployment.



Sales and Marketing Strategy

Agritek’s plan is to gain market share within the medicinal and recreational cannabis industry. Agritek intends to accomplish
this by providing infrastructure and turnkey solutions to operators and licensees within legal jurisdictions. Agritek canprovide
these operations support with the licensing process, site selection, agriculture planning, build out, equipment leasing/financing,
security and oversight by operational expertise. The Company additionally has expanded its product offerings to include a proprietary
brand of vaporizers and accessories under its wholly owned subsidiary Prohibition Products Inc. and is planning to enter the edibles
and nutraceutical markets through third party licenses.



Competition



There are other companies competing within
the recreational cannabis sector including:



Medbox, Inc. (OTCB: MDBX) is seeking to become
a dispensary and cultivation infrastructure and licensing specialist, patented technology provider, and partner to the cannabis
industry.





6





Terra Tech
Corp (OTCB: TRTC) is integrating the best of the natural world with technology to create sustainable renewable solutions for food
production, indoor cultivation, and agricultural research and development.



Cannabics Pharmaceuticals, Inc. (OTCQB: CNBX)
is an emerging drug development company focused on the development and commercialization of advanced drugs, therapies, food supplements
and administration routes based on the wide range of active ingredients found in diverse and unique strains of the Cannabis plant.



Government Regulation



As of March 31, 2015, there are 23
states plus the District of Columbia that have laws and/or regulation that recognize in one form or another legitimate medical
uses for cannabis and consumer use of cannabis in connection with medical treatment. Many other states are considering similar
legislation. Conversely, the federal government regulates drugs through the Controlled Substances Act (“CSA”), which
does not recognize the difference between medical and recreational use of cannabis. Under federal law, cannabis is treated like
every other controlled substance, such as cocaine and heroin. The federal government places every controlled substance in a schedule,
in principle according to its relative potential for abuse and medicinal value. Under the CSA, cannabis is classified as a Schedule
I drug, which means that the federal government views medical cannabis as highly addictive and having no medical value. Pursuant
to the CSA, it is unlawful for any person (1) to sell or offer for sale drug paraphernalia; (2) to use the mails or any other facility
of interstate commerce to transport drug paraphernalia; or (3) to import or export drug paraphernalia.

The extent to which the regulation of drug
paraphernalia under the CSA is applicable to our business and the sale of our product is found in the definition of drug paraphernalia.
Drug paraphernalia means any equipment, product, or material of any kind which is primarilyintended or designed for use
in manufacturing, compounding, converting, concealing, producing processing, preparing, injecting ingesting, inhaling or otherwise
introducing into the human body a controlled substance, possession of which is unlawful. Our products are primarily designed for
general agricultural use.

In an effort to provide
guidance to federal law enforcement, the Department of Justice (the “DOJ”) has issued Guidance Regarding Marijuana
Enforcement to all United States Attorneys in a memorandum from Deputy Attorney General David Ogden on October 19, 2009, in a memorandum
from Deputy Attorney General James Cole on June 29, 2011 and in a memorandum from Deputy Attorney General James Cole on August
29, 2013. Each memorandum provides that the DOJ is committed to enforcement of the CSA but the DOJ is also committed to using its
limited investigative and prosecutorial resources to address the most significant threats in the most effective, consistent and
rational way.

The August 29, 2013,
memorandum provides updated guidance to federal prosecutors concerning marijuana enforcement in light of state laws legalizing
medical and recreational marijuana possession in small amounts. The memorandum sets forth certain enforcement priorities that are
important to the federal government:

| | • | Distribution
                                         of marijuana to children;
| | - | -------------------------------------------------------------------------------

| | • | Revenue
                                         from the sale of marijuana going to criminals;
| | - | -----------------------------------------------------------------------------------------------

| | • | Diversion
                                         of medical marijuana from states where is legal to states where it is not;
| | - | -----------------------------------------------------------------------------------------------------------------------------

| | • | Using
                                         state authorized marijuana activity as a pretext of other illegal drug activity;
| | - | -------------------------------------------------------------------------------------------------------------------------------

| | • | Preventing
                                         violence in the cultivation and distribution of marijuana;
| | - | --------------------------------------------------------------------------------------------------------------

| | • | Preventing
                                         drugged driving;
| | - | --------------------------------------------------------------------

| | • | Growing
                                         marijuana on federal property; and
| | - | -----------------------------------------------------------------------------------

| | • | Preventing
                                         possession or use of marijuana on federal property.
| | - | -------------------------------------------------------------------------------------------------------



The
DOJ has not historically devoted resources to prosecuting individuals whose conduct is limited to possession of small amounts
of marijuana for use on private property but relied on state and local law enforcement to address marijuana activity. If the Department
of Justice (the “DOJ”) Guidance Regarding Marijuana Enforcement to all United States Attorneys from Deputy Attorney
General David Ogden on October 19, 2009, and from Deputy Attorney General James Cole on June 29, 2011 and again from Deputy Attorney
General James Cole on August 29, 2013, were reversed and it was determined that the Company violated the regulation of drug paraphernalia
under the CSA, then the Company would need to make appropriate modifications to its products to avoid violation of the CSA. Until
Congress amends the CSA with respect to medical marijuana, there is a risk that federal authorities may enforce current federal
law. Active enforcement of the current federal regulatory position on cannabis may thus indirectly, adversely and materially affect
revenues and profits of the Company. The risk of strict enforcement of the CSA in light of congressional activity, judicial holdings
and stated federal policy remains uncertain.





7





ITEM 1A – RISK FACTORS



You should carefully consider the risks
described below, as well as other information provided to you in this document, including information in the section of this document
entitled “Forward-Looking Statements.” The risks and uncertainties described below are not the only ones facing the
Company. If any of the following risks actually occur, the Company’s business, financial condition or results of operations
could be materially adversely affected.



Investors should not place undue reliance
on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement
is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date
on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. Our business,
financial condition and/or results of operation may be materially adversely affected by the nature and impact of these risks. New
factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact
of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual
results to differ materially from those contained in any forward-looking statements.



Risk Related to Our Company



Our independent auditors have expressed
substantial doubt about our ability to continue as a going concern.



We incurred a net loss of $2,012,102 and $4,421,662
for the years ending December 31, 2014 and 2013, respectively. Because of our continued operating losses, negative cash flows from
operations and working capital deficit, in their report on our financial statements for the year ended December 31, 2014, our independent
auditors included an explanatory paragraph regarding their substantial doubt about our ability to continue as a going concern.
We will continue to experience net operating losses in the foreseeable future. Our ability to continue as a going concern is subject
to our ability to generate a profit and/or obtain necessary funding from outside sources, including obtaining additional funding
from the sale of our securities, increasing sales or obtaining loan from various financial institutions where possible. Our continued
net operating losses increase the difficulty in meeting such goals and there can be no assurances that such methods will prove
successful.



Federal regulation and enforcement may
adversely affect the implementation of medical marijuana laws and regulations may negatively impact our revenues and profits.



Currently, there are 23 states plus the District
of Columbia that have laws and/or regulation that recognize in one form or another legitimate medical uses for cannabis and consumer
use of cannabis in connection with medical treatment. Many other states are considering similar legislation. Conversely, under
the Controlled Substances Act (the “CSA”), the policy and regulations of the Federal government and its agencies is
that cannabis has no medical benefit and a range of activities including cultivation and use of cannabis for personal use is prohibited.
Until Congress amends the CSA with respect to medical marijuana, there is a risk that federal authorities may enforce current federal
law, and we may be deemed to be facilitating the selling or distribution of drug paraphernalia in violation of federal law. Active
enforcement of the current federal regulatory position on cannabis may thus indirectly and adversely affect revenues and profits
of the Company. The risk of strict enforcement of the CSA in light of congressional activity, judicial holdings and stated federal
policy remains uncertain.



Federal authorities have not focused their
resources on such tangential or secondary violations of the Act, nor have they threatened to do so, with respect to the leasing
of real property or the sale of equipment that might be used by medical cannabis gardeners, or with respect to any supplies marketed
to participants in the emerging medical cannabis industry. We are unaware of such a broad application of the CSA by federal authorities,
and we believe that such an attempted application would be unprecedented.





8





We depend on third party providers for
a reliable Internet infrastructure and the failure of these third parties, or the Internet in general, for any reason would significantly
impair our ability to conduct our business.



We outsource all of our data center facility
management to third parties who host the actual servers and provide power and security in multiple data centers in each geographic
location. These third party facilities require uninterrupted access to the Internet. If the operation of our servers is interrupted
for any reason, including natural disaster, financial insolvency of a third party provider, or malicious electronic intrusion into
the data center, our business would be significantly damaged. If either a third party facility failed, or our ability to access
the Internet was interfered with because of the failure of Internet equipment in general or we become subject to malicious attacks
of computer intruders, our business and operating results will be materially adversely affected.



The gathering, transmission, storage
and sharing or use of personal information could give rise to liabilities or additional costs of operation as a result of governmental
regulation, legal requirements, civil actions or differing views of personal privacy rights.



We transmit and plan to store a large volume
of personal information in the course of providing our services. Federal and state laws and regulations govern the collection,
use, retention, sharing and security of data that we receive from our customers and their users. Any failure, or perceived failure,
by us to comply with U.S. federal or state privacy or consumer protection-related laws, regulations or industry self-regulatory
principles could result in proceedings or actions against us by governmental entities or others, which could potentially have an
adverse effect on our business, operating results and financial condition. Additionally, we may also be contractually liable to
indemnify and hold harmless our customers from the costs or consequences of inadvertent or unauthorized disclosure of their customers’
personal data which we store or handle as part of providing our services.



The interpretation and application of privacy,
data protection and data retention laws and regulations are currently unsettled particularly with regard to location-based services,
use of customer data to target advertisements and communication with consumers via mobile devices. Such laws may be interpreted
and applied inconsistently from country to country and inconsistently with our current data protection policies and practices.
Complying with these varying international requirements could cause us to incur substantial costs or require us to change our business
practices in a manner adverse to our business, operating results or financial condition.



As privacy and data protection have become
more sensitive issues, we may also become exposed to potential liabilities as a result of differing views on the privacy of personal
information. These and other privacy concerns, including security breaches, could adversely impact our business, operating results
and financial condition.



In the U.S., we have voluntarily agreed to
comply with wireless carrier technological and other requirements for access to their customers’ mobile devices, and also
trade association guidelines and codes of conduct addressing the provision of location-based services, delivery of promotional
content to mobile devices and tracking of users or devices for the purpose of delivering targeted advertising. We could be adversely
affected by changes to these requirements, guidelines and codes, including in ways that are inconsistent with our practices or
in conflict with the rules or guidelines in other jurisdictions.





9





We have identified material weaknesses
in our internal control over financial reporting which could, if not remediated, result in material misstatements in our financial
statements.



Our management is responsible for establishing
and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). A material weakness is defined as a deficiency, or combination of deficiencies,
in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual
or interim financial statements will not be prevented or detected on a timely basis. During the fourth quarter of fiscal year 2014,
management identified material weaknesses in our internal control over financial reporting as discussed in Item 9A of this Annual
Report on Form 10-K. As a result of these material weaknesses, our management concluded that our internal control over financial
reporting was not effective based on criteria set forth by the Committee of Sponsoring Organization of the Treadway Commission
in Internal Control-An Integrated Framework. We are planning to engage in developing a remediation plan designed to address these
material weaknesses. If our remedial measures are insufficient to address the material weaknesses, or if additional material weaknesses
or significant deficiencies in our internal control are discovered or occur in the future, our consolidated financial statements
may contain material misstatements and we could be required to restate our financial results, which could lead to substantial additional
costs for accounting and legal fees and shareholder litigation.



We may require additional capital in
the future, which may not be available or may only be available on unfavorable terms.



We monitor our capital adequacy on an ongoing
basis. To the extent that our funds are insufficient to fund future operating requirements, we may need to raise additional funds
through corporate finance transactions or curtail our growth and reduce our liabilities. Any equity, hybrid or debt financing,
if available at all, may be on terms that are not favorable to us. If we cannot obtain adequate capital on favorable terms or at
all, our business, financial condition and operating results could be adversely affected.



Risks Relating to Ownership of Our Common
Stock



Although there is presently a market for our
common stock, the price of our common stock may be extremely volatile and investors may not be able to sell their shares at or
above their purchase price, or at all. We anticipate that the market may be potentially highly volatile and may fluctuate substantially
because of:



| | • | Actual or anticipated
fluctuations in our future business and operating results;
| | - | --------------------------------------------------------------------------------



| | • | Changes in or
failure to meet market expectations;
| | - | --------------------------------------------------



| | • | Fluctuations
in stock market price and volume
| | - | ---------------------------------------------





As a public company, we will incur substantial
expenses.



The U.S. securities laws require, among other
things, review, audit, and public reporting of our financial results, business activities, and other matters. Recent SEC regulation,
including regulation enacted as a result of the Sarbanes-Oxley Act of 2002, has also substantially increased the accounting, legal,
and other costs related to becoming and remaining an SEC reporting company. If we do not have current information about our Company
available to market makers, they will not be able to trade our stock. The public company costs of preparing and filing annual and
quarterly reports, and other information with the SEC and furnishing audited reports to stockholders, will cause our expenses to
be higher than they would be if we were privately-held. These increased costs may be material and may include the hiring of additional
employees and/or the retention of additional advisors and professionals. Our failure to comply with the federal securities laws
could result in private or governmental legal action against us and/or our officers and directors, which could have a detrimental
effect on our business and finances, the value of our stock, and the ability of stockholders to resell their stock.





10





FINRA sales practice requirements may
limit a stockholder’s ability to buy and sell our stock.



“FINRA” has
adopted rules that relate to the application of the SEC’s penny stock rules in trading our securities and require that a
broker/dealer have reasonable grounds for believing that the investment is suitable for that customer, prior to recommending the
investment. Prior to recommending speculative, low priced securities to their non-institutional customers, broker/dealers must
make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and
other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative, low
priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker/dealers
to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity and
liquidity of our common stock. Further, many brokers charge higher transactional fees for penny stock transactions. As a result,
fewer broker/dealers may be willing to make a market in our common stock, reducing a shareholder’s ability to resell shares
of our common stock.



The Company’s common stock is currently
deemed to be “penny stock”, which makes it more difficult for investors to sell their shares.



The Company’s common stock is currently
subject to the “penny stock” rules adopted under section 15(g) of the Exchange Act. The penny stock rules apply to
companies whose common stock is not listed on the NASDAQ Stock Market or other national securities exchange and trades at less
than $5.00 per share or that have tangible net worth of less than $5,000,000 ($2,000,000 if the company has been operating for
three or more years). These rules require, among other things, that brokers who trade penny stock to persons other than “established
customers” complete certain documentation, make suitability inquiries of investors and provide investors with certain information
concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many
brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number
of broker-dealers willing to act as market makers in such securities is limited. If the Company remains subject to the penny stock
rules for any significant period, it could have an adverse effect on the market, if any, for the Company’s securities. If
the Company’s securities are subject to the penny stock rules, investors will find it more difficult to dispose of the Company’s
securities.



We have raised capital through the use
of convertible debt instruments that causes substantial dilution to our stockholders.



Because of the size of our Company and its
status as a “penny stock” as well as the current economy and difficulties in companies our size finding adequate sources
of funding, we have been forced to raise capital through the issuance of convertible notes and other debt instruments. These debt
instruments carry favorable conversion terms to their holders of up to 50% discounts to the market price of our common stock on
conversion and in some cases provide for the immediate sale of our securities into the open market. Accordingly, this has caused
dilution to our stockholders in 2014 and may for the foreseeable future. As of December 31, 2014, we had approximately $938,721
in convertible debt and potential convertible debt outstanding. This convertible debt balance as well as additional convertible
debt we incur in the future will cause substantial dilution to our stockholders.



Because we are quoted on the OTCQB instead
of an exchange or national quotation system, our investors may have a tougher time selling their stock or experience negative volatility
on the market price of our common stock.



Our common stock is quoted on the OTCQB. The
OTCQB is often highly illiquid, in part because it does not have a national quotation system by which potential investors can follow
the market price of shares except through information received and generated by a limited number of broker-dealers that make markets
in particular stocks. There is a greater chance of volatility for securities that are quoted on the OTCQB as compared to a national
exchange or quotation system. This volatility may be caused by a variety of factors, including the lack of readily available price
quotations, the absence of consistent administrative supervision of bid and ask quotations, lower trading volume, and market conditions.
Investors in our common stock may experience high fluctuations in the market price and volume of the trading market for our securities.
These fluctuations, when they occur, have a negative effect on the market price for our securities. Accordingly, our stockholders
may not be able to realize a fair price from their shares when they determine to sell them or may have to hold them for a substantial
period of time until the market for our common stock improves.

11









We do not intend to pay dividends.



We do not anticipate paying cash dividends
on our common stock in the foreseeable future. We may not have sufficient funds to legally pay dividends. Even if funds are legally
available to pay dividends, we may nevertheless decide in our sole discretion not to pay dividends. The declaration, payment and
amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things,
the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors our board
of directors may consider relevant. There is no assurance that we will pay any dividends in the future, and, if dividends are paid,
there is no assurance with respect to the amount of any such dividend.



Our operating history and lack of profits
which could lead to wide fluctuations in our share price. You may be unable to sell your common shares at or above your purchase
price, which may result in substantial losses to you. The market price for our common shares is particularly volatile given our
status as a relatively unknown company with a small and thinly traded public float.



The market for our common shares is characterized
by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more
volatile than a seasoned issuer for the indefinite future. The volatility in our share price is attributable to a number of factors.
First, our common shares are sporadically and thinly traded. As a consequence of this lack of liquidity, the trading of relatively
small quantities of shares by our shareholders may disproportionately influence the price of those shares in either direction.
The price for our shares could, for example, decline precipitously in the event that a large number of our common shares are sold
on the market without commensurate demand, as compared to a seasoned issuer which could better absorb those sales without adverse
impact on its share price. Secondly, we are a speculative or “risky” investment due to our limited operating history
and lack of profits to date, and uncertainty of future market acceptance for our potential products. As a consequence of this enhanced
risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or
lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case
with the stock of a seasoned issuer. Many of these factors are beyond our control and may decrease the market price of our common
shares, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market
price for our common shares will be at any time, including as to whether our common shares will sustain their current market prices,
or as to what effect that the sale of shares or the availability of common shares for sale at any time will have on the prevailing
market price.



Shareholders should be aware that, according
to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns
include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;
(2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler
room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive
and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities
by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse
of those prices and with consequent investor losses. Our management is aware of the abuses that have occurred historically in the
penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who
participate in the market, management will strive within the confines of practical limitations to prevent the described patterns
from being established with respect to our securities. The occurrence of these patterns or practices could increase the volatility
of our share price.



Should one or more of the foregoing risks
or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from
those anticipated, believed, estimated, expected, intended or planned.



ITEM 1B. UNRESOLVED STAFF COMMENTS



Not applicable to a smaller reporting company.





12





ITEM 2. DESCRIPTION OF PROPERTY



Office Space



Effective on April 1, 2013, the Company entered
into a three year agreement to rent approximately 2,500 square feet of office space (the “Office Lease”) in Detroit,
Michigan. The monthly rent under this lease was $2,200 per month.



Effective August 28, 2013, the Company and
the landlord amended the Office Lease allowing the Company to move to a new location in downtown Detroit. The new lease was for
3,657 square feet for monthly rent of $3,047. In November 2013, the Company was notified that the owner of the building (the Company’s
landlord) was delinquent in its obligations to the mortgage holder of the building. In January 2014, due to the uncertainty of
the Company’s Office Lease in Detroit, Michigan, the Company decided to relocate its administrative offices to West Palm
Beach, Florida. Effective April 1, 2014, the Company entered into a rent sharing agreement for the use of 1,300 square feet with
a company controlled by the Company’s CFO. The Company has agreed to pay $1,350 per month for the space.



In April 2014, the Company entered into a 10-year
sublease agreement for the use of up to 7,500 square feet with a Colorado based oncology
clinical trial and drug testing company and facility presently doing cancer research and testing for established pharmaceutical
companies seeking FDA approval for new drugs. Pursuant to the lease, as amended, the Company has agreed to pay $3,500 per
month for the space, and it will be utilized to market, sell and distribute products to Colorado dispensaries.



Leased Properties



On April 28, 2014,
the Company entered into a 10-year lease agreement for 20 acres of an agricultural farming facility located in South Florida following
the approval of the so-called “Charlotte’s Web” legislation, aimed at decriminalizing low grade marijuana specifically
for the use of treating epilepsy and cancer patients. Pursuant to the lease agreement, the Company has a first right of refusal
to purchase the property for three years.



On July 11, 2014,
the Company signed a 10-yearlease agreement for 40 acres in Pueblo, Colorado. The lease
requires monthly rent payments of $10,000 during the first year and is subject to a 2% annual increase over the life of the lease.
The lease also provides rights to 50 acres of certain tenant water rights for $50,000 annually plus cost of approximately $2,400
annually. The Company paid the $50,000 in July 2014. The water rights ensure the Company’s non-interruption of operations
on behalf of new tenants qualified as fully registered and licensed grow and manufacturing operations.



ITEM 3. LEGAL PROCEEDINGS.



On March 2, 2015, the Company, the Company’s
CEO at the time and the Company’s CFO were named in a civil complaint filed by Erick Rodriguez in the District Court in Clark
County, Nevada. The complaint alleges that Mr. Rodriguez never received 250,000 shares of Series B preferred stock that were initially
approved by the Board of Directors in 2012. Mr. Rodriguez resigned in June 2013, and the Company cancelled the issuance of the
shares to Mr. Rodriguez on the Company’s books and records.



On March 20, 2015, Montblanc-Simplo GmbH (“Montblanc”)
filed a Combined Notice of Opposition and Petition for Cancellation with the United States Patent and Trademark Office. Montblanc
believes that it will be damaged by the registration of the mark MONT BLUNT filed on April 26, 2014 in Application Serial No. 86/263,737
(the “Application”) and by the previously issued U.S. Registration NO. 4,608,789 (the “Registration”).
The Company believes that the logos and product of Mont Blunt pursuant to the Registration and Application significantly differ
from Montblanc and accordingly does not believe it subjects Montblanc to any damages.



ITEM 4. MINE SAFETY DISCLOSURES



Not applicable.





13





PART II



ITEM 5. MARKET FOR REGISTRANT’S COMMON
EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES



The Company’s common stock is traded
in the over-the-counter market, and quoted on the OTCQB tier of the OTC Markets Group Inc. under the symbol “AGTK.”



(a) Market Information



The following table sets forth for the periods
indicated the high and low bid quotations for our common stock. These quotations represent inter-dealer quotations, without adjustment
for retail markup, markdown, or commission and may not represent actual transactions.



|Period                                               |  |   | High  |  |  |   | Low   | 
|---------------------------------------------------- |  | - | ----- |  |  | - | ----- | 
|Fiscal Year 2014                                     |  |   |       |  |  |   |       | 
|First Quarter (January 1, 2014 – March 31, 2014 )    |  | $ | 0.56  |  |  | $ | 0.20  | 
|Second Quarter (April 1, 2014 – June 30, 2014 )      |  | $ | 0.42  |  |  | $ | 0.22  | 
|Third Quarter (July 1, 2014 – September 30, 2014)    |  | $ | 0.26  |  |  | $ | 0.09  | 
|Fourth Quarter (October 1, 2014 – December 31,2014 ) |  | $ | 0.13  |  |  | $ | 0.05  | 
|                                                     |  |   |       |  |  |   |       | 
|Fiscal Year 2013                                     |  |   |       |  |  |   |       | 
|First Quarter (January 1, 2013 – March 31, 2013)     |  | $ | 1.174 |  |  | $ | 0.196 | 
|Second Quarter (April 1, 2013 – June 30, 2013)       |  | $ | 0.549 |  |  | $ | 0.329 | 
|Third Quarter (July 1, 2013 - September 30, 2013)    |  | $ | 0.62  |  |  | $ | 0.392 | 
|Fourth Quarter (October 1, 2013 – December 31, 2013) |  | $ | 0.397 |  |  | $ | 0.085 | 



(b) Holders



The number of record holders of our common
stock as of March 31, 2015 was approximately 255. This excludes shareholders who hold their stock in street name. The Company estimates
that there are over 7,700 stockholders who hold their shares of common stock in street name.



(c) Dividends



The Company did not declare any cash dividends
for the years ended December 31, 2014 and 2013. Our Board of Directors does not intend to distribute any cash dividends in the
near future. The declaration, payment and amount of any future dividends will be made at the discretion of the Board of Directors,
and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital
requirements, and other factors as the Board of Directors considers relevant. There is no assurance that future dividends will
be paid, and if dividends are paid, there is no assurance with respect to the amount of any such dividend.



(d) Securities authorized for issuance under
equity compensation plans



None



Recent Sales of Unregistered Equity Securities



In January 2014, the Company issued in the
aggregate 8,467,388 shares of common stock to Typenex upon the conversion of $523,564 of the Company Note and accrued and unpaid
interest of $3,716. The shares were issued at approximately $0.06227 per share.





14





On January 13, 2014, the Company issued 545,454
shares of common stock to Venture Equity upon the conversion of $60,000 of accrued management fees. The shares were issued at $0.11
per share, the market price of the common stock on December 31, 2013.



On January 14, 2014, the Company issued 2,460,968
shares of common stock upon the conversion of 100,000 shares of Class B Preferred Stock.



On January 30, 2014, February 3, 2014 and February
5, 2014, the Company issued in the aggregate 369,420 shares of common stock to Asher upon the conversion of $65,000 of the 2013
Notes and accrued and unpaid interest of $2,600. The shares were issued at approximately $0.18299.



In March 2014, the Company issued in the aggregate
843,654 shares of common stock to Typenex upon the conversion of $116,611 of the Company note and accrued and unpaid interest.
The shares were issued at approximately $0.1382 per share.



On March 17, 2014, the Company issued 4,312,420
shares of common stock upon the conversion of 150,000 shares of Class B Preferred Stock.



On March 31, 2014, the Company issued 56,948
shares of common stock to Jayme Canton upon the conversion of $25,000 of accrued stock compensation.



On April 17, 2014, the Company issued 188,088
shares of common stock in satisfaction of $36,000 of the October 2013 Asher Note. The shares were issued at approximately $0.19
per share.



On April 20, 2014, the Company issued 202,867
shares of common stock in satisfaction of $34,000 of the October 2013 Asher convertible note and accrued and unpaid interest of
$2,800. The shares were issued at approximately $0.18 per share.



On July 22, 2014, the Company issued 150,000
shares of Company common stock to Mr. Bartoletta as an advisor to the Board of the Directors
of the Company.



On August 6, 2014, the Company issued 625,978
shares of common stock upon the conversion of $19,933 of principal of the 2014 Company Note and $80,067 of accrued and unpaid interest.
The shares were issued at approximately $0.16 per share.



On September 5, 2014, the Company issued 871,460
shares of common stock upon the conversion of $88,804 of principal of the 2014 Company Note and $11,196 of accrued and unpaid interest.
The shares were issued at approximately $0.115 per share.



On September 18, 2014, the Company issued 208,333
shares of common stock to Jayme Canton upon the conversion of $25,000 of accrued stock compensation.



On September 18, 2014, the Company issued 1,300,000
shares of common stock to Philip Johnston pursuant to a consulting agreement for services including but not limited to business
modeling and strategies, strategic alliances, introduction to investment bankers, identify property acquisitions for agricultural
use in Canada and to identify retail chains/outlets for wellness products throughout Canada.



On September 18, 2014, the Company issued in
the aggregate 1,500,000 shares of common stock pursuant to the APA for the acquisition of Dry Vapes Holdings, Inc. The shares were
valued at $0.12 per share.



On October 13, 2014, the Company issued 562,272
shares of common stock upon the conversion of $38,745 of principal of the 2014 Company Note and $11,255 of accrued and unpaid interest.
The shares were issued at approximately $0.089 per share.



On October 21, 2014, the Company issued 2,011,142
shares of common stock upon the conversion of $89,369 of principal of the 2014 Company Note and $10,631 of accrued and unpaid interest.
The shares were issued at approximately $0.05 per share.



On October 21, 2014 the Company issued 735,895
shares of common stock to a consultant for investor relation services.





15





On October 24, 2014, the Company received a
payment of $100,000 on notes receivable issued in exchange for convertible promissory note.



On November 11, 2014, the Company issued 1,541,163
shares of common stock upon the conversion of $76,483 of principal of the 2014 Company Note and $147 of accrued and unpaid interest.
The shares were issued at approximately $0.05 per share.



On December 5, 2014, the Company issued 1,712,241
shares of common stock upon the conversion of $90,007 of principal of the 2014 Company Note and $9,993 of accrued and unpaid interest.
The shares were issued at approximately $0.058 per share.



On December 31, 2014, the Company issued 17,226,778
shares of restricted common stock to Mr. Friedman upon the conversion of 450,000 shares of Class B Preferred Stock.



On December 31, 2014, the Company issued 1,230,484
shares of restricted common stock to Venture Equity upon the conversion of 50,000 shares of Class B Preferred Stock. The Company
also issued Venture Equity 444,444 shares of restricted common stock for accrued and unpaid management fees of $40,000 owed to
Venture Equity.



On December 31, 2014, the Company issued 277,778
shares of common stock to Jayme Canton upon the conversion of $25,000 of accrued stock compensation.



On March 19, 2013, the Company issued 25,000
shares of restricted common stock, to Empire Relations Holdings, LLC, as consideration under a consulting agreement dated March
7, 2013 for public and financial relations services.



On March 31, 2013, the Company agreed to issue
369,928 shares of common stock upon the conversion of the remaining balance of $32,000 of a convertible note and accrued and unpaid
interest of $6,060.



Previously the Company appointed Mr. James
Canton to be an advisor to the Company’s Board of Directors. In April 2013, the Company agreed to issue to Mr. Canton 200,000
shares of common stock, a warrant to purchase 300,000 shares of common stock at an exercise price of $0.50 per share with an expiration
date on the third year anniversary of the grant, and $25,000 to be paid in shares of common stock to be issued at the end of each
calendar quarter beginning on June 30, 2013 and ending on the earlier of March 31, 2015 (the term of Canton’s advisor role)
or the date Canton is no longer serving as an advisor to the board of directors. The Company valued the warrant at $124,200 based
on the Black Scholes formula.



On April 23, 2013 the Company issued a Convertible
Note to an unaffiliated third party in exchange and for the cancellation of a litigation contingency of $46,449, which was acquired
by the third party. Also on April 23, 2013, the Company issued 175,000 shares of common stock in satisfaction of the April 23,
2013 Convertible Note.



On June 4, 2013 and June 11, 2013, the Company
issued in the aggregate 121,027 shares of common stock in satisfaction of the November 28, 2012 note of $23,500 and accrued and
unpaid interest of $940. The shares were issued at $0.20 per share.



On June 26, 2013, B. Michael Friedman, the
Company’s CEO exchanged 3,033,500 shares of common stock for 450,000 shares of Class B Preferred Stock.



On July 8, 2013, the Company issued 185,714
shares of common stock in satisfaction of the January 2, 2013 Asher convertible note of $37,500 and accrued and unpaid interest
of $1,500. The shares were issued at $0.21 per share.



On August 22, 2013 and August 27, 2013, the
Company issued in the aggregate 131,480 shares of common stock in satisfaction of the February 11, 2013 note of $27,500 and accrued
and unpaid interest of $1,100. The shares were issued at $0.21 per share.



On October 21, 2013, the Company issued 172,289
shares of common stock in satisfaction of the April 18, 2013 Asher convertible note of $27,500 and accrued and unpaid interest
of $1,100. The shares were issued at approximately $0.16 per share.





16





On November 22, 2013, the Company issued 145,191
shares of common stock to Typenex upon the conversion of $20,000 of their Note. The shares were issued at approximately $0.1377
per share.



On December 11, 2013, the Company issued 424,899
shares of common stock to Typenex upon the conversion of $50,000 of their Note. The shares were issued at approximately $0.1177
per share.



All such shares were issued in reliance on
the exemption found in Section 4(a)(2) of the Securities Act of 1933, as amended. Each share recipient was provided with access
to information which would be required to be included in a registration statement and such issuances did not involve a public offering.



ITEM 6. SELECTED FINANCIAL DATA



Not applicable to a smaller reporting company.



ITEM 7. MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



The following is management’s discussion
and analysis of certain significant factors that have affected our financial position and operating results during the periods
included in the accompanying consolidated financial statements, as well as information relating to the plans of our current management.
This report includes forward-looking statements. Generally, the words “believes,” “anticipates,” “may,”
“will,” “should,” “expect,” “intend,” “estimate,” “continue,”
and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements.
Such statements are subject to certain risks and uncertainties, including the matters set forth in this report or other reports
or documents we file with the Securities and Exchange Commission from time to time, which could cause actual results or outcomes
to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements which speak
only as of the date hereof. We undertake no obligation to update these forward-looking statements.



The independent auditors’ report on our
financial statements for the years ended December 31, 2014 and 2013 includes a “going concern” explanatory paragraph
that describes substantial doubt about our ability to continue as a going concern. Management’s plans in regard to the factors
prompting the explanatory paragraph are discussed below and also in Note 10 to the consolidated financial statements filed herein.



While our financial statements are presented
on the basis that we are a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the
normal course of business over a reasonable length of time, our auditors have raised a substantial doubt about our ability to continue
as a going concern.



Results of Operations



Year ended December 31, 2014 compared to
December 31, 2013



Revenues



Revenues for the years ended December 31, 2014
and 2013 were $47,261 and $143,792, respectively, and were comprised of the following:



|                     |  | Year ended December 31,
|-------------------- |  | -----------------------
|                     |  | 2014                   
|Wellness products    |  | $                      
|Chillo products      |  |                        
|Cloud-based products |  |                        
|ACS                  |  |                        
|Total                |  | $                      



17







During 2013, the Company entered into an exclusive
distributorship agreement with Chill Drinks, LLC for sales of Chill Drink’s products to dispensaries. Sales began in April
2013 and ceased upon the termination of the agreement. In April 2013, Alternative Capital Solutions (“ACS”) and the
Company terminated their agreements and accordingly, the Company no longer receives fees related to the ACS agreement.



Operating Expenses



Operating expenses were $1,315,676 for the
year ended December 31, 2014 compared to $3,898,317 for the year ended December 31, 2013. The expenses were comprised of:



|                                       |  | Year Ended December 31,
|-------------------------------------- |  | -----------------------
|Description                            |  | 2014                   
|Administration and management fees     |  | $                      
|Stock compensation expense, management |  |                        
|Stock compensation expense, other      |  |                        
|Professional and consulting fees       |  |                        
|Bad debt expense                       |  |                        
|Commissions and license fees           |  |                        
|Advertising and promotional expenses   |  |                        
|Rent and occupancy costs               |  |                        
|Leased property for sub-lease          |  |                        
|Property and maintenance cost          |  |                        
|Travel and entertainment               |  |                        
|General and other administrative       |  |                        
|Total                                  |  | $                      



There was no stock compensation expense, management
for the year ended December 31, 2014 compared to $3,129,405 for the year ended December 31, 2013. Stock compensation expense, management
for the year ended December 31, 2013 was comprised of $2,821,275 of preferred stock compensation related to the 450,000 shares
of Class B preferred stock issued to the Company’s CEO, in exchange for the return of 3,033,500 shares of common stock, $124,200
warrant based compensation for the issuance of a warrant to purchase 300,000 shares of common stock to our advisor to the board
of directors, $80,000 for the one time issuance of 200,000 shares of common stock to the same advisor and 75,000 shares of common
stock (with an additional 25,000 shares to be issued each quarter the advisor continues his relationship with the Company) valued
at $22,500. The 2013 expense also includes the amortization of deferred stock compensation of $81,431 from the previous issuance
of Series B preferred stock.



Stock compensation expense,
other (included in professional and consulting fees) was $379,000 for the year ended December 31, 2014 compared to $126,542
for the year ended December 31, 2013. The 2014 period is comprised of $133,000 to advisories to the board of directors and
$246,000 for the issuance of 2,035,895 shares of common stock for services provided.



Stock compensation expense,
other (included in professional and consulting fees) for 2013 includes $111,041 for the amortization of deferred stock
compensation, and $15,500 for the issuance of 25,000 shares for services provided to the Company.



Professional and consulting fees
(excluding stock compensation expense, other) increased to $107,532 for the year ended December 31, 2014 compared to
$85,762 for the year ended December 31, 2013 and is comprised of the following:



|                         |  | Year ended December 31,
|------------------------ |  | -----------------------
|                         |  | 2014                   
|Legal fees               |  | $                      
|Property management fees |  |                        
|Consulting fees          |  |                        
|Accounting fees          |  |                        
|Investor relation costs  |  |                        
|                         |  | $                      



18







The increase in the 2014 period is primarily
due to costs associated with the Company’s land acquisition and property management fees.



Commission and licensing fees of $8,722
were  incurred for year ended December 31, 2014 compared to commissions of $27,671 for the year ended December 31, 2013. Also
included in 2013 were fees of $31,200 pursuant to the ACS Agreement. The decrease in the 2014 period is primarily due to
the Company and ACS terminating their agreement in April 2013.



Advertising and promotional expenses increased
to $72,091 for the year ended December 31, 2014 compared to $15,077 for the year ended December 31, 2013. The increase of $57,014
was primarily due to the design, launch and marketing of the Company’s Mont Blunt brand.



Rent and occupancy costs were $76,235 for the
year ended December 31, 2014 compared to $37,195 for the year ended December 31, 2013. The increase was due primarily to the Company
entering into sublease agreement for the use of up to 7,500 square feet of office space that will be utilized to market, sell and
distribute products to Colorado dispensaries.



Leased property available for sub-lease and
property maintenance costs were $108,163 and $67.925, respectively, for the year ended December 31, 2014. These costs were comprised
of $85,246 for leased real estate that the Company plans to lease or sub-lease to licensed marijuana operators, $22,917 for water
rights, $15,500 for land surveys and $2,425 on land maintenance. Additionally, the Company expensed $50,000 it had advanced to
MYLO Construction for the management and construction of a proposed building in the Apex Industrial Park Complex, otherwise known
as Nevada’s “Green Zone”.



General and other administrative costs for
the year ended December 31, 2014, were $93,665 compared to $137,881 for the year ended December 31, 2013. Expenses for the year
ended December 31, 2014, include a settlement expense of $15,000 related to licensing fees, public company filing and transfer
agent fees of $12,236, telephone, internet and web based service costs of $17,225, office and employee moving costs of $9,518,
payroll taxes and fees of $6,304, office supply purchases of $11,736 and $21,646 of other general and administrative costs. Expenses
for the 2013 period include public company filing and transfer agent fees of $30,770, travel and entertainment costs of $43,071,
internet and web based service costs of $26,585, office supplies of $8,661 and $28,794 of other general and administrative costs.



Other Income (Expense), Net



Other expense for the year ended December 31,
2014 was $675,083 compared to $578,321 for the year ended December 31, 2013. Included in other expenses for the 2014 period was
income from the decrease on the fair value of derivatives of $30,347 and interest income of $80,206, offset by interest expense
of $785,636 related to the 2013 and 2014 Company Notes.



The 2013 expenses were comprised of $299,856
of interest expense and expense from the decrease on the fair value of derivatives of $353,761. Also included in other expenses
was a gain on distribution of equity method investee of $67,186 and $8,110 of interest income related to interest collected on
notes receivables.



Interest expense was $785,636 for the year
ended December 31, 2014 compared to $299,856 for the year ended December 31, 2013. The increase was due to the issuance of various
debt instruments from May 2013 through January 2014. A summary of interest expense for each of the periods is as follows:



|                                        |  | Year ended December 31,
|--------------------------------------- |  | -----------------------
|                                        |  | 2014                   
|Excess value of common stock issued     |  | $                      
|Interest on face value                  |  |                        
|Additional true-up interest             |  |                        
|Amortization of note discount           |  |                        
|Amortization of OID                     |  |                        
|Beneficial conversion feature           |  |                        
|Amortization of deferred financing fees |  |                        
|Total                                   |  | $                      





19





Liquidity
and Capital Resources.



For the year ended December 31, 2014, net cash
used in operating activities was $749,764 compared to $453,355 for the year ended December 31, 2013. The net loss for the year
ended December 31, 2014 of $2,012,102 was impacted by stock compensation expense of $379,000 comprised of $133,000 to advisories
to the board of directors and $246,000 for the issuance of 2,035,895 shares of common stock for services provided. Non cash interest
expense included $363,991 for excess value of common stock issued for convertible notes payable, the amortization of discounts
on convertible notes of $248,782 and the amortization of deferred financing fees of $35,379 related to the convertible promissory
notes. Additional non-cash expenses for the year ended December 31, 2014 was a write-off to licensing costs of $15,000 and bad
debt expense of $16,654, offset by the change in fair value of the derivative liability of $30,347. Changes in operating assets
and liabilities included an increase in accounts payable and accrued expenses of $62,063, an increase in deferred compensation
of $149,224 and the receipt of tenant deposits of $90,000. These amounts were offset by increases in prepaid expenses of $73,540
and a decrease in inventory of $6,423.



Negative cash flows from operations for 2013
was due to the net loss of $4,421,662 and was impacted by stock and warrant compensation expense of $3,255,947 comprised of $2,821,275
of preferred stock compensation, the amortization of deferred stock compensation of $192,472 from the previous issuance of Series
B preferred stock, $124,200 warrant based compensation for issuance of warrants to purchase 300,000 shares of common stock to our
advisor to the board of directors, $80,000 for the one time issuance of 200,000 shares of common stock to the same advisor, 75,000
shares of common stock (with an additional 25,000 shares to be issued each quarter the advisor continues his relationship with
the Company) valued at $22,500 and $15,500 for the issuance of 25,000 shares for the services provided to the Company. Additional
non-cash expenses for the year ended December 31, 2013 were the amortization of the initial discounts of $185,612 on the convertible
notes, the initial derivative liability expense and the change in fair market value of the derivatives of $353,761, amortization
of deferred financing fees of $38,808 also related to the convertible promissory notes, loss related to the conversion of the contingent
liability to common stock of $29,561 and a gain on discontinuance of equity method of $67,186.



During the year ended December 31, 2014, net
cash used in investing activities was $532,573 compared to $19,060 for the year ended December 31, 2013. The 2014 period was the
result of land acquisition costs of $268,531, investments of $50,000 in non-marketable securities, advances to a related party
of $169,573, security deposits paid of $14,700 and the purchase of office furniture of $9,769 and the cash payment portion of $20,000
for the acquisition of Dry Vapes, Holdings, Inc. The net cash used in investing activity for the year ended December 31, 2013 was
the result of the acquisition of licensing rights and the purchase of office furniture.



Net cash provided by financing activities was
$1,292,000and $579,500 for the years ended December 31, 2014 and 2013, respectively. The 2014
activity was comprised of proceeds received related to the Typenex notes receivable of $200,000, the issuance of convertible promissory
notes of $1,100,000 and the payment of deferred financing fees of $8,000. The 2013 amount was comprised of issuance of convertible
promissory notes of $227,500, proceeds of $400,000 related to the Typenex convertible note (see Note 6 to the consolidated financial
statements contained herein) and the payment of deferred financing fees of $48,000.



For the year ended December 31, 2014, cash
and cash equivalents increased by $9,663 compared to $106,874 for the year ended December 31, 2013. Ending cash and cash equivalents
at December 31, 2014 was $118,429 compared to $108,766 at December 31, 2013.



We have cash and cash equivalents on hand to
meet our obligations. We presently maintain our daily operations and capital needs through the sale of our products and financings
available to us from our lender.



Off-Balance Sheet Arrangements



There are no off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.





20





Critical Accounting Policies



Accounting Policies and Estimates



The preparation of our financial statements
in conformity with accounting principles generally accepted in the United States of America requires our management to make certain
estimates and assumptions that affect 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. Our management
periodically evaluates the estimates and judgments made. Management bases its estimates and judgments on historical experience
and on various factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates
as a result of different assumptions or conditions.



As such, in accordance with the use of accounting
principles generally accepted in the United States of America, our actual realized results may differ from management’s initial
estimates as reported. A summary of significant accounting policies are detailed in notes to the financial statements which are
an integral component of this annual report on Form 10-K.



Revenue Recognition



The Company recognizes revenue in accordance
with the Securities and Exchange Commission, Staff Accounting Bulletin (SAB) No. 104, “Revenue Recognition” (“SAB
No. 104”). SAB 104 clarifies application of generally accepted accounting principles related to revenue transactions. The
Company also follows the guidance in EITF Issue No. 00-21, Revenue Arrangements with Multiple Deliverables (“EITF Issue No.
00-21”), in arrangements with multiple deliverables.



The Company recognizes revenues when all of
the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery of products and services has occurred,
(3) the fee is fixed or determinable and (4) collectability is reasonably assured.



The Company recognizes revenue during the month
in which products are shipped or commissions were earned.



Use of Estimates



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



Cash and Cash Equivalents



The Company considers all highly liquid investments
with an original term of three months or less to be cash equivalents.



Accounts Receivable



The Company records accounts receivable from
amounts due from its customers upon the shipment of products. The allowance for losses is established through a provision for losses
charged to expenses. Receivables are charged against the allowance for losses when management believes collectibility is unlikely.
The allowance is an amount that management believes will be adequate to absorb estimated losses on existing receivables, based
on evaluation of the collectability of the accounts and prior loss experience. While management uses the best information available
to make its evaluations, this estimate is susceptible to significant change in the near term.





21





Inventory



Inventory is valued at the lower of cost or
market value. Cost is determined using the first in first out (FIFO) method. Provision for potentially obsolete or slow moving
inventory is made based on management analysis or inventory levels and future sales forecasts.



Investment of Non-Marketable Securities



The Company’s investment in non-marketable
securities consist of cash investments in a less than 10% interest in privately held companies that provide merchant processing
services.



Impartment of Long-Lived Assets and Long-Lived
Assets to be Disposed



We evaluate long-lived assets and identifiable
intangible assets with finite useful lives in accordance with ASC 350-30 and ASC 360 (formerly SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets), and accordingly, management reviews our long-lived assets and identifiable intangible
assets with finite useful lives for impairment whenever events or changes in circumstances indicate that the carrying amount of
such assets may not be recoverable. We recognize an impairment loss when the sum of the future undiscounted net cash flows expected
to be realized from the asset is less than its carrying amount. If an asset is considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Considerable judgment is
necessary to estimate the fair value of the assets and accordingly, actual results could vary significantly from such estimates.
Our most significant estimates and judgments relating to the long-lived asset impairments include the timing and amount of projected
future cash flows.



Fair Value of Financial Instruments



Fair value measurements are determined under
a three-level hierarchy for fair value measurements that prioritizes the inputs to valuation techniques used to measure fair value,
distinguishing between market participant assumptions developed based on market data obtained from sources independent of the reporting
entity (“observable inputs”) and the reporting entity’s own assumptions about market participant assumptions
developed based on the best information available in the circumstances (“unobservable inputs”).



Fair value is the price that would be received
to sell an asset or would be paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between
market participants at the measurement date. In determining fair value, the Company primarily uses prices and other relevant information
generated by market transactions involving identical or comparable assets (“market approach”). The Company also considers
the impact of a significant decrease in volume and level of activity for an asset or liability when compared with normal activity
to identify transactions that are not orderly.



The highest priority is given to unadjusted
quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level
3 measurements). Securities are classified in their entirety based on the lowest level of input that is significant to the fair
value measurement.



The three hierarchy levels are defined as follows:



Level 1 – Quoted prices in active markets
that is unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;



Level 2 – Quoted prices for identical
assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial
instruments for which significant inputs are observable, either directly or indirectly;



Level 3 – Prices or valuations that require
inputs that are both significant to the fair value measurement and unobservable.

22









Credit risk adjustments are applied to reflect
the Company’s own credit risk when valuing all liabilities measured at fair value. The methodology is consistent with that
applied in developing counterparty credit risk adjustments, but incorporates the Company’s own credit risk as observed in
the credit default swap market.



The Company’s financial instruments consist
primarily of cash, accounts payable and accrued expenses, and convertible debt. The carrying amounts of such financial instruments
approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these
instruments. The estimated fair value is not necessarily indicative of the amounts the Company would realize in a current market
exchange or from future earnings or cash flows.



Earnings (Loss) Per Share



Earnings (loss) per share are computed in accordance
with ASC 260, “Earnings per Share”. Basic earnings (loss) per share is computed by dividing net income (loss), after
deducting preferred stock dividends accumulated during the period, by the weighted-average number of shares of common stock outstanding
during each period. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common
stock, common stock equivalents and other potentially dilutive securities, if any, outstanding during the period. As of December
31, 2014 there were warrants to purchase 300,000 shares of common stock, the Company’s outstanding convertible debt is convertible
into 20,860,466 shares of common stock. These amounts are not included in the computation of dilutive loss per share because their
impact is antidilutive.



Accounting for Stock-Based Compensation



The Company accounts for stock awards issued
to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non-Employees. The measurement date is the earlier of
(1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date
at which the counterparty’s performance is complete. Stock awards granted to non-employees are valued at their respective
measurement dates based on the trading price of the Company’s common stock and recognized as expense during the period in
which services are provided.



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK



Not required for smaller reporting companies.



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA



See Index to Financial Statements and Financial
Statement Schedules appearing on pages F-1 to F-12 of this annual report on Form 10-K.



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.



None.





23





ITEM 9A. CONTROLS AND PROCEDURES



Evaluation of Disclosure Controls and
Procedures



A review and evaluation was performed by the
Company’s management, including the Company’s Chief Executive Officer (the “CEO”) and Chief Financial Officer
(the “CFO”), as of the end of the period covered by this annual report on Form 10-K, of the effectiveness of the design
and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this annual report.
Based on that review and evaluation, the CEO and CFO have concluded that as of December 31, 2014 disclosure controls and procedures
were not effective at ensuring that the material information required to be disclosed in our Exchange Act reports is recorded,
processed, summarized and reported as required in the application of SEC rules and forms.



Management’s Report on Internal Controls
over Financial Reporting



Our management is responsible for establishing
and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) under
the Exchange Act. Internal control over financial reporting is a set of processes designed by, or under the supervision of, a
company’s principal executive and principal financial officers, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with GAAP and includes those policies and procedures that:



|• | Pertain
    to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and disposition of
    our assets;                                                                                                                                       
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|• | Provide
    reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance
    with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and
    directors; and
|• | Provide
    reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets
    that could have a material effect on the financial statements.                                                                                  



Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. It should be noted
that any system of internal control, however well designed and operated, can provide only reasonable, and not absolute,
assurance that the objectives of the system will be met. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.



Our CEO and CFO have evaluated the
effectiveness of our internal control over financial reporting as described in Exchange Act Rules 13a-15(e) and 15d-15(e) as
of the end of the period covered by this report based upon criteria established in “Internal Control-Integrated
Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). As
a result of this evaluation, we concluded that our internal control over financial reporting was not effective as of December
31, 2014 as described below.



We assessed the effectiveness of the Company’s
internal control over financial reporting as of evaluation date and identified the following material weaknesses:



Insufficient Resources:We have an inadequate number of personnel with requisite expertise in the key functional areas of finance and accounting.



Inadequate Segregation
of Duties: We have an inadequate number of personnel to properly implement control procedures.



Lack of Audit Committee:We do not have a functioning audit committee, resulting in lack of independent oversight in the establishment and monitoring
of required internal controls and procedures.





24





We are committed to improving the internal
controls and will (1) consider to use third party specialists to address shortfalls in staffing and to assist us with accounting
and finance responsibilities, (2) increase the frequency of independent reconciliations of significant accounts which will mitigate
the lack of segregation of duties until there are sufficient personnel and (3) may consider appointing additional outside directors
and audit committee members in the future.



We have discussed the material weakness noted
above with our independent registered public accounting firm. Due to the nature of these material weaknesses, there is a more than
remote likelihood that misstatements which could be material to the annual or interim financial statements could occur that would
not be prevented or detected.



This Annual Report does not include an attestation
report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s
report was not subject to attestation by our independent registered public accounting firm pursuant to the rules of the SEC that
permit us to provide only management’s report in this annual report.



Changes in Internal Control over Financial
Reporting



There have been no changes in the Company’s
internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s
internal controls over financial reporting.



ITEM 9B. OTHER INFORMATION



None.





25





PART III



ITEM 10, DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE



Identification of directors and executive
officers.



Set forth below is information regarding the
Company’s current directors and executive officers. There are no family relationships between any of our directors or executive
officers. The directors are elected annually by stockholders. The executive officers serve at the pleasure of the Board of Directors:



|Name          | Age | Positions Held and Tenure                      
|------------- | --- | -----------------------------------------------
|Justin Braune | 33  | Chief Executive Officer, President and Director
|Heather Bush  | 32  | Chief Financial
    Officer                    



Justin Braune. Mr. Braune became the
Chief Executive Officer of the Registrant in March 2015. From 2014 through 2015, Mr. Braune served as the Chief Operating Officer
of Voodoo Science, LLC and Vapor Wild. From 2013 through 2014, Mr. Braune served as the Chief of Operations for Veracity Security,
a technology company located in San Diego. From 2013 through 2014 Mr. Braune was the Director of Sales at Lear Capital. Since 2010
he owned and operated Braune Enterprises, a real estate and investment brokerage firm. Mr. Braune graduated from the United States
Naval Academy with a B.S. degree in electrical engineering and was commissioned as an officer in the U.S. Navy. After earning his
master’s degree in nuclear engineering, Mr. Braune operated the nuclear reactors onboard the USS RONALD REAGAN aircraft carrier.
He served in the U.S. Navy until 2009 and subsequently earned his MBA at the University of Southern California, Marshall School
of Business.



Mr. Braune’s
business experience in marketing, sales and technology qualifies him to serve as a member of our board of directors.





Ms. Heather Bush.
On September 16, 2015, the Company appointed Ms. Bush, age 32, to the position of CFO. Since September 2014, Ms. Bushserved
as Controller of Medimix Specialty Pharmacy and its affiliated pharmaceutical compounding companies.  Ms. Bush’s
financial experience includes employment at PSS World Medical Inc. (“PSS), a national distributor
of medical supplies, diagnostic equipment, and pharmaceutical related products to primary care office-based physicians, from 2011until it was acquired by McKesson Corporation in 2013. PSS was integrated into the McKesson Medical Surgical business unit,
at which point Ms. Bush became the Assistant Controller of the Extended Care division until 2014. Prior to this, Ms. Bush worked
as the Assistant Controller at Bumbleride, Inc., a supplier of strollers and accessories from 2010 to 2011. Ms. Bush has received
a B.A. in Business Economics with an emphasis in Accounting from the University of California, Santa Barbara. She is a Certified
Public Accountant in the state of California as well as a Certified Fraud Examiner.

Involvement in Certain Legal Proceedings



No director, executive officer, significant
employee or control person of the Company has been involved in any legal proceeding listed in Item 401(f) of Regulation S-K in
the past 10 years.





26





Code of Ethics



We
adopted a Code of Ethics for Senior Financial Management to promote honest and ethical conduct and to deter wrongdoing. This Code
applies to our Chief Executive Officer and Chief Financial Officer and other employees performing similar functions. The obligations
of the Code of Ethics supplement, but do not replace, any other code of conduct or ethics policy applicable to our employees generally.



Under
the Code of Ethics, all members of the senior financial management shall:



|• | Act
    honestly and ethically in the performance of their duties at our company,                                                                                                                                                                                                                                                                                                                                                              
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|• | Avoid
    actual or apparent conflicts of interest between personal and professional relationships,                                                                                                                                                                                                                                                                                                                                            
|• | Provide
    full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submits to, the
    SEC and in other public communications by our company,                                                                                                                                                                                                                                               
|• | Comply
    with rules and regulations of federal, state and local governments and other private and public regulatory agencies that effect
    the conduct of our business and our financial reporting,                                                                                                                                                                                                                                        
|• | Act
    in good faith, responsibly, with due care, competence and diligence, without misrepresenting material facts or allowing the
    member’s independent judgment to be subordinated                                                                                                                                                                                                                                                       
|• | Respect
    the confidentiality of information in the course of work, except when authorized or legally obtained to disclosure such information,                                                                                                                                                                                                                                                                                               
|• | Share
    knowledge and maintain skills relevant to carrying out the member’s duties within our company,                                                                                                                                                                                                                                                                                                                                       
|• | Proactively
    promote ethical behavior as a responsible partner among peers and colleagues in the work environment and community,                                                                                                                                                                                                                                                                                                            
|• | Achieve
    responsible use of and control over all assets and resources of our company entrusted to the member, and                                                                                                                                                                                                                                                                                                                           
|• | Promptly
    bring to the attention of the Chief Executive Officer any information concerning (a) significant deficiencies in the design
    or operating of internal controls which could adversely affect to record, process, summarize and report financial data or
    (b) any fraud, whether or not material, that involves management or other employees who have a significant role in our financial
    reporting or internal controls.



Corporate
Governance



During
the quarter ended December 31, 2014, there were no material changes to procedures by which security holders may recommend
nominees to our board of directors.



We currently
have no standing audit, nominating or compensation committees of our board of directors. Our entire board of directors currently
performs these functions. The functions of those committees are being undertaken by our officers
and directors. Because we do not have any independent directors, our officers and directors believe that the establishment of committees
of the Board would not provide any benefits to our company and could be considered more form than substance.



Director Independence



None of the members of our Board of Directors
qualifies as an independent director in accordance with the published listing requirements of the NASDAQ Global Market. The NASDAQ
independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three
years, one of our employees and that neither the director, nor any of his family members has engaged in various types of business
dealings with us. In addition, our Board has not made a subjective determination as to each director that no relationships exist
which, in the opinion of our Board, would interfere with the exercise of independent judgment in carrying out the responsibilities
of a director, though such subjective determination is required by the NASDAQ rules. Had our Board of Directors made these determinations,
our Board would have reviewed and discussed information provided by the directors and us with regard to each director’s business
and personal activities and relationships as they may relate to us and our management.





27





In performing the functions of the audit committee,
our board oversees our accounting and financial reporting process. In this function, our board performs several functions. Our
board, among other duties, evaluates and assesses the qualifications of the Company’s independent auditors; determines whether
to retain or terminate the existing independent auditors; meets with the independent auditors and financial management of the Company
to review the scope of the proposed audit and audit procedures on an annual basis; reviews and approves the retention of independent
auditors for any non-audit services; reviews the independence of the independent auditors; reviews with the independent auditors
and with the Company’s financial accounting personnel the adequacy and effectiveness of accounting and financial controls
and considers recommendations for improvement of such controls; reviews the financial statements to be included in our annual and
quarterly reports filed with the Securities and Exchange Commission; and discusses with the Company’s management and the
independent auditors the results of the annual audit and the results of our quarterly financial statements.



Our board as a whole considers executive officer
compensation, and our entire board participates in the consideration of director compensation. Our board as a whole oversees our
compensation policies, plans and programs, reviews and approves corporate performance goals and objectives relevant to the compensation
of our executive officers, if any, and reviews the compensation and other terms of employment of our Chief Executive Officer and
our other executive officers. Our board also administers our equity incentive and stock option plans, if any.



Each of our directors participates in the consideration
of director nominees. In addition to nominees recommended by directors, our board will consider nominees recommended by shareholders
if submitted in writing to our secretary. Our board believes that any candidate for director, whether recommended by shareholders
or by the board, should be considered on the basis of all factors relevant to our needs and the credentials of the candidate at
the time the candidate is proposed. Such factors include relevant business and industry experience and demonstrated character and
judgment.



Compliance with Section 16(a) of the
Securities Exchange Act of 1934



Section 16(a) of the Securities Exchange Act
of 1934, as amended, requires our executive officers and directors, and persons who beneficially own more than 10% of a registered
class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership
and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively.
Executive officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of
all Section 16(a) reports they file. Based solely upon a review of such reports, and on written representations from certain reporting
persons, the Company believes that, with respect to the fiscal year ended December 31, 2014, each director, executive officer and
10% stockholder made timely filings of all reports required by Section 16 of the Exchange Act.



ITEM 11. EXECUTIVE COMPENSATION.



The following tables set forth all of the compensation
awarded to, earned by or paid to: (i) each individual serving as our principal executive officer; and (ii) each other individual
that served as an executive officer at the conclusion of the fiscal year ended December 31, 2014 and who received in excess of
$100,000.





28





2014 Summary Compensation Table



|Name & Principal Position      |  | Year |      | Salary |  | Stock Awards |         | Option Awards |  | All Other Compensation (2) |   | Total
|------------------------------ |  | ---- | ---- | ------ |  | ------------ | ------- | ------------- |  | -------------------------- | - | -----
|B. Michael Friedman (1)        |  |      | 2014 |        |  | $            | 150,000 |               |  | $                          | — |      
|Former Chief Executive Officer |  |      | 2013 |        |  | $            | 153,500 |               |  | $                          | — |      
|                               |  |      |      |        |  |              |         |               |  |                            |   |      
|Barry Hollander (3)            |  |      | 2014 |        |  | $            | 96,000  |               |  | $                          | — |      
|Former Chief Financial Officer |  |      | 2013 |        |  | $            | 96,000  |               |  | $                          | — |      



|(1) | Mr. Friedman resigned as an officer and director of the Company effective March 20, 2015. Includes $80,082 (2014) and $32,347 (2013) expensed (unpaid) to our CEO as deferred compensation authorized by the Board of Directors of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Relates to the issuance of 450,000 shares of Class B Preferred Stock and includes the accounting value of the excess shares on an as if converted basis, over the 3,033,500 shares of common stock Mr. Friedman returned to the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(3) | Mr. Hollander
    resigned as an officer and director of the Company effective September 15, 2015. Mr. Hollander’s 2014 and 2013 salary
    includes $40,000 and $60,000 of unpaid and accrued expenses to be paid in restricted shares of common stock, based on the
    market value of the common stock at the end of the period. The Company issued 545,454 shares of common stock in January 2014
    for the 2013 accrued expenses of $60,000 and 444,444 shares of common stock on December 31, 2014 for the 2014 accrued
    expenses of $40,000. The shares were issued at $0.09 and $0.11 per share, respectively, the market price of the common stock
    when issued.



We do not presently have pension, health, annuity,
insurance, profit sharing or similar benefit plans; however, we may adopt plans in the future. There are presently no personal
benefits available to our directors and officers.



Employment Agreements; Termination of Employment
and Change of Control Arrangements



There are no current employment agreements
between the Company and our executive officers or understandings regarding future compensation. There are no compensatory plans
or arrangements, including payments to be received from the Company, with respect to any person named in the summary compensation
table set out above which would in any way result in payments to any such person because of his resignation, retirement, or other
termination of such person’s employment with the Company or its subsidiaries, or any change in control of the Company, or
a change in the person’s responsibilities following a changing in control of the Company.



Outstanding Equity Awards at Fiscal Year-End



No executive officer
received any equity awards during 2014, or holds exercisable or unexercisable options, as of December 31, 2014.



Long-Term Incentive
Plans



There are no arrangements
or plans in which the Company would provide pension, retirement or similar benefits for directors or executive officers.



Compensation Committee



We currently do not have a compensation committee
of our Board of Directors. The Board as a whole determines executive compensation.



Director Compensation



We do not pay fees to our directors for attendance
at meetings of the board; however, we may adopt a policy of making such payments in the future. We will reimburse out-of-pocket
expenses incurred by directors in attending board and committee meetings.





29





ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS.



The following table sets forth information
known to the Company with respect to the beneficial ownership (as such term is defined in Rule 13d-3 under the Securities Exchange
Act of 1934, as amended) of the outstanding common stock of the Company as of March 31, 2015 by: (1) each person known by the Company
to beneficially own 5% or more of the Company’s outstanding common stock; (2) each of the named executive officers as defined
in Item 402(m)(2); (3) each of the Company’s directors; and (4) all of the Company’s executive officers and directors
as a group. The number of shares beneficially owned is determined under rules promulgated by the SEC, and the information is not
necessarily indicative of beneficial ownership for any other purpose. Including those shares in the tables does not, however, constitute
an admission that the named stockholder is a direct or indirect beneficial owner of those shares.



|                                                                                               | Common Stock                             
|---------------------------------------------------------------------------------------------- | -----------------------------------------
|Name and Address of Beneficial Owner                                                           | Amount and Nature of Beneficial Ownership
|B. Michael Friedman (2)
        319 Clematis St., Suite 1008
        West Palm Beach, FL 33401 | 19,026,778                               
|                                                                                               |                                          
|                                                                                               |                                          
|Justin Braune
        319 Clematis St. Suite 1008
        West Palm Beach, FL 33401            | 15,000,000                               
|                                                                                               |                                          
|Barry Hollander (3)
        319 Clematis St., Suite 1008
        West Palm Beach, FL 33401     | 2,220,382                                
|                                                                                               |                                          
|All directors and executive officers as a group – 2 persons                                    | 17,220,382                               



|(1) | Based on a total of an aggregate of 117,166,406 shares of common stock outstanding.               
|--- | --------------------------------------------------------------------------------------------------
|(2) | Mr. Friedman resigned as an officer and director of the Company effective March 20, 2015.         
|(3) | Mr. Hollander resigned as an officer and director
    of the Company effective September 15, 2015.



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE.



Management fees



Effective January 1, 2013, the Company has
agreed to annual compensation of $150,000 for the CEO and $96,000 for the CFO. For 2013, the Company and the CFO agreed that $3,000
per month will be paid in cash and $5,000 per month will be paid in restricted shares of common stock. For 2014, the Company and
the CFO agreed that up to $5,000 per month can be paid in cash and the balance in restricted shares of common stock. For the years
ended December 31, 2014 and 2013, the Company expensed $246,000 and $249,500 included in Administrative and Management Fees in
the Consolidated Statements of Operations, included herein. In June 2013, Mr. Friedman and the Company, agreed to exchange 3,033,500
shares of common stock in partial consideration for the issuance of 450,000 shares of Class B Preferred Stock. The Company reduced
accrued compensation of Mr. Friedman by $100,022 and recognized stock compensation expense of $2,821,275. As of December 31, 2014,
the Company owed the CEO $63,332 and the CFO $1,549 included in deferred compensation on the Company’s consolidated balance
sheet.



On January 13, 2014, the Company issued 545,454
shares of common stock to Venture Equity, LLC, (“Venture Equity”) a Florida limited liability Company, controlled by
the Company’s CFO, upon the conversion of $60,000 of accrued management fees. The shares were issued at $0.11 per share,
the market price of the common stock on December 31, 2013. On December 31, 2014, the Company issued 444,444 shares of restricted
common stock to Venture Equity, upon the conversion of $40,000 of accrued and unpaid management fees as of December 31, 2014 the
date on which the board of directors approved the issuance. The shares were issued at $0.09 per share, the average market price
of the common stock for the period.

30









On December 31, 2014, the Company issued 17,226,778
shares of restricted common stock to Mr. Friedman upon the conversion of 450,000 shares of Class B Preferred Stock.



On December 31, 2014, the Company issued 1,230,484
shares of restricted common stock to Venture Equity upon the conversion of 50,000 shares of Class B Preferred Stock.



In August 2012, the Company issued 250,000
shares of Class B Preferred Stock to the President, valued at $177,667 and recorded the amount as deferred stock compensation to
be amortized over one year. As of June 13, 2013, the Company accepted the resignation of Mr. Rodriguez as an Officer and Director
of the Company. The Company has cancelled the Preferred Stock and returned the shares to the treasury of the Company for failure
to complete the Employment Agreement and SweetMD transaction. Therefore, the Company stopped amortizing the deferred compensation
during the quarter ended June 30, 2013, and recorded an entry to eliminate the remaining unamortized compensation of $29,611 with
the corresponding entry to additional paid in capital. For the years ended December 31, 2013, the Company amortized $81,431.



Agreements with prior management



In December 2011 the Company issued a $50,000
convertible promissory note (see Note 6) as part of a guaranty fee due to a Company that is affiliated with a former officer of
the Company. Terms of the note include an eight percent per annum interest rate and the note matured on the one year anniversary
on December 20, 2012. Additionally, the holder of the Note has the right to convert the note into shares of common stock of the
Company at a conversion price equal to eighty percent (80%) of the lowest closing bid price of the common stock within five (5)
days of the conversion. On March 31, 2013, the Company and the noteholder elected to convert the remaining balance of the note
of $32,000 and accrued and unpaid interest of $6,060 into 369,928 shares of common stock.



Also in December 2011, the Company agreed to
pay an additional $50,000 in common stock, which is included in accounts payable and accrued expenses on the December 31, 2014
and 2013 balance sheets.



Amounts Due from 800 Commerce, Inc.



As of December 31, 2012, the Company owned
6,000,000 shares of 800 Commerce’s common stock, representing approximately 32% of 800 Commerce’s outstanding common
stock. Effective September 4, 2013, Agritek distributed the 6,000,000 shares of the Company’s common stock to their shareholders
of record as of September 3, 2013. The Company and 800 Commerce are commonly controlled due to common management and board members.
800 Commerce, a commonly controlled entity, owes Agritek $236,759 and $74,895 as of December 31, 2014 and December 31, 2013, respectively,
as a result of advances received from Agritek. These advances are non-interest bearing and are due on demand and are included in
amounts due related parties on the December 31, 2014, balance sheet herein.



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES



The following
table shows the fees that were billed for the audit and other services provided by D. Brooks and Associates CPA’s P.A. for
the years ended December 31, 2014 and 2013.



|                   |  | 2014 |        | 2013
|------------------ |  | ---- | ------ | ----
|Audit Fees         |  | $    | 14,050 |     
|Audit-Related Fees |  |      | —      |     
|Tax Fees           |  |      | —      |     
|All Other Fees     |  |      | —      |     
|Total              |  | $    | 14,050 |     





31





Audit Fees
— This category includes the audit of our annual financial statements, review of financial statements included in our Quarterly
Reports on Form 10-Q and services that are normally provided by the independent registered public accounting firm in connection
with engagements for those fiscal years. This category also includes advice on audit and accounting matters that arose during,
or as a result of, the audit or the review of interim financial statements.



Audit-Related Fees
— This category consists of assurance and related services by the independent registered public accounting firm that are
reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit
Fees.” The services for the fees disclosed under this category include consultation regarding our correspondence with the
SEC and other accounting consulting.



Tax Fees —
This category consists of professional services rendered by our independent registered public accounting firm for tax compliance
and tax advice.



All Other Fees — This category
consists of fees for other miscellaneous items.



Our board of directors has adopted
a procedure for pre-approval of all fees charged by our independent registered public accounting firm. Under the procedure, the
board approves the engagement letter with respect to audit, tax and review services. Other fees are subject to pre-approval by
the board. All audit and permissible non-audit services provided by the auditors with respect
to 2014 and 2013 were pre-approved by the board of directors.



PART IV



ITEM 15. EXHIBITS AND REPORTS.



|(a) | 1. | Financial Statements                                                                                                                                                                                                                                                                                                                              
|--- | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |    |                                                                                                                                                                                                                                                                                                                                                   
|    |    | The consolidated financial statements and Report of Independent Registered Public Accounting Form are included on pages F-1 through F-xx                                                                                                                                                                                                          
|    |    |                                                                                                                                                                                                                                                                                                                                                   
|    | 2. | Financial Statement Schedules                                                                                                                                                                                                                                                                                                                     
|    |    |                                                                                                                                                                                                                                                                                                                                                   
|    |    | All schedules for which provisions made in the applicable accounting regulations of the Securities and Exchange Commission (the “Commission”) are either not required under the related instructions, are not applicable (and therefore have been omitted), or the required disclosures are contained in the financial statements included herein.
|    |    |                                                                                                                                                                                                                                                                                                                                                   
|    | 3. | Exhibits (including those incorporated by reference).                                                                                                                                                                                                                                                                                             



|Exhibit
        Number |  | Description of Exhibit                                                                   
|---------------------- |  | -----------------------------------------------------------------------------------------
|31.1*                  |  | Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer                    
|31.2*                  |  | Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer                    
|32.1*                  |  | Section 1350 Certification of Principal Executive Officer and Principal Financial Officer
|101.INS                |  | XBRL Instance                                                                            
|101.SCH                |  | XBRL Taxonomy Extension Schema                                                           
|101.CAL                |  | XBRL Taxonomy Extension Calculation Linkbase                                             
|101.DEF                |  | XBRL Taxonomy Extension Definition Linkbase                                              
|101.LAB                |  | XBRL Taxonomy Extension Labels Linkbase                                                  
|101.PRE                |  | XBRL Taxonomy Extension Presentation Linkbase                                            



*Filed herewith





32





Signatures



Pursuant to the requirements of Section 13
or 15(d) 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.



|Agritek Holdings, Inc.
|----------------------



|By:   | /s/ Justin Braune                    
|----- | -------------------------------------
|      | Justin Braune                        
|      | Chief Executive Officer and President
|      |                                      
|Date: | September 22, 2015                   
|      |                                      
|By:   | /s/ Heather Bush                     
|      | Heather Bush                         
|      | Chief Financial Officer              
|      |                                      
|Date: | September 22, 2015                   



Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.



|Signature         |  | Title                                                                                    |  | Date              
|----------------- |  | ---------------------------------------------------------------------------------------- |  | ------------------
|                  |  |                                                                                          |  |                   
|/s/ Justin Braune |  | Chief Executive Officer, President and Director (principal executive officer)            |  | September 22, 2015
|Justin Braune     |  |                                                                                          |  |                   
|                  |  |                                                                                          |  |                   
|/s/
Heather Bush  |  | Chief Financial Officer   (principal financial officer and principal accounting officer) |  | September 22, 2015
|Heather Bush      |  |                                                                                          |  |                   





33





AGRITEK HOLDINGS, INC.

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

INDEX TO FINANCIAL STATEMENTS





|Report of Independent Registered Public Accounting Firm                                     | F-2       
|------------------------------------------------------------------------------------------- | ----------
|Balance Sheets as of December 31, 2014 and 2013                                             | F-3       
|Statements of Operations for the years ended December 31, 2014 and 2013                     | F-4       
|Statement of Changes in Stockholders Deficit for the years ended December 31, 2014 and 2013 | F-5       
|Statements of Cash Flows for the years ended December 31, 2014 and 2013                     | F-6       
|Notes to Financial Statements                                                               | F-7 – F-22









F-1













REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To
the Board of Directors andStockholders of Agritek Holdings, Inc.

We have audited the accompanying balance
sheets of Agritek Holdings, Inc. as of December 31, 2014, and 2013 and the related statements of operations, stockholders’
deficiency, and cash flows for the years then ended. Agritek Holdings, Inc.’s management is responsible for these financial
statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.

In our opinion, the financial statements
referred to above present fairly, in all material respects, the financial position of Agritek Holdings, Inc. as of December 31,
2014, and 2013 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern. As discussed in Note 11 to the financial statements,
the Company has incurred operating losses, has incurred negative cash flows from operations and has a working capital deficit.
These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s
plan regarding these matters is also described in Note 11 to the financial statements. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.





D. Brooks and Associates CPA’s, P.A.

West
Palm Beach, Florida

April
14, 2015













F-2









|AGRITEK HOLDINGS, INC.                                                                                                                                 
|-------------------------------------------------------------------------------------------------------------------------------------------------------
|CONSOLIDATED BALANCE SHEETS                                                                                                                            
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|                                                                                                                                                       
|ASSETS                                                                                                                                                 
|                                                                                                                                                       
|Current Assets:                                                                                                                                        
|Cash and cash equivalents                                                                                                                              
|Accounts receivable, net                                                                                                                               
|Inventory                                                                                                                                              
|Notes receivable                                                                                                                                       
|Interest receivable                                                                                                                                    
|Deferred financing costs                                                                                                                               
|Due from related party                                                                                                                                 
|Prepaid assets and other                                                                                                                               
|Total current assets                                                                                                                                   
|                                                                                                                                                       
|Licensing rights                                                                                                                                       
|Other                                                                                                                                                  
|Goodwill                                                                                                                                               
|Property and equipment, net of accumulated depreciation of $1,976 (2014) and $187 (2013)                                                               
|Investments in non-marketable securities                                                                                                               
|                                                                                                                                                       
|Total assets                                                                                                                                           
|                                                                                                                                                       
|LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                                                  
|                                                                                                                                                       
|Current Liabilities:                                                                                                                                   
|Accounts payable and accrued expenses                                                                                                                  
|Deferred compensation                                                                                                                                  
|Note payable, current portion                                                                                                                          
|Tenant deposits                                                                                                                                        
|Convertible debt, net of discount of $81,537 (2013)                                                                                                    
|Convertible note payable, net of discounts of $22,755 (2014) and $40,000 (2013)                                                                        
|Derivative liabilities                                                                                                                                 
|Total current liabilities                                                                                                                              
|                                                                                                                                                       
|Note payable, net of current portion                                                                                                                   
|                                                                                                                                                       
|Total liabilities                                                                                                                                      
|                                                                                                                                                       
|Commitments and Contingencies                                                                                                                          
|                                                                                                                                                       
|Stockholders' Deficit:                                                                                                                                 
|Series B convertible preferred stock, $0.0001 par value; 1,000,000 shares
    authorized, -0- (2014) and 1,000,000 (2013) shares issued and outstanding
|Common stock, $.0001 par value; 250,000,000 shares authorized; 93,500,420
    (2014) shares and 45,655,245 (2013) shares issued and outstanding        
|Additional paid-in capital                                                                                                                             
|Accumulated deficit                                                                                                                                    
|Total stockholders' deficit                                                                                                                            
|                                                                                                                                                       
|Total liabilities and stockholders' deficit                                                                                                            
|                                                                                                                                                       
|See accompanying notes to consolidated financial statements.                                                                                           



F-3











|AGRITEK HOLDINGS, INC.                                                                                                                                                        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|CONSOLIDATED STATEMENTS OF OPERATIONS                                                                                                                                         
|                                                                                                                                                                              
|                                                                                                                                                                              
|                                                                                                                                                                              
|                                                                                                                                                                              
|Product revenue                                                                                                                                                               
|Fee revenue, net                                                                                                                                                              
|Total revenue                                                                                                                                                                 
|Cost of revenue                                                                                                                                                               
|                                                                                                                                                                              
|Gross profit (loss)                                                                                                                                                           
|                                                                                                                                                                              
|Operating Expenses:                                                                                                                                                           
|Administrative and management fees (including $3,129,405 of stock based compensation for year
    ended December 31, 2013)                                                    
|Professional and consulting fees (including stock compensation expense of $379,000 for the
    year ended December 31, 2014 and $126,542 for the year ended December 31, 2013)
|Bad debt expense                                                                                                                                                              
|Commissions and license fees                                                                                                                                                  
|Rent and other occupancy costs                                                                                                                                                
|Leased property expense                                                                                                                                                       
|Advertising and promotion                                                                                                                                                     
|Property maintenance costs                                                                                                                                                    
|Travel and entertainment                                                                                                                                                      
|Other general and administrative expenses                                                                                                                                     
|                                                                                                                                                                              
|Total operating expenses                                                                                                                                                      
|                                                                                                                                                                              
|Operating loss                                                                                                                                                                
|                                                                                                                                                                              
|Other Income (Expense):                                                                                                                                                       
|Interest income                                                                                                                                                               
|Interest expense                                                                                                                                                              
|Derivative liability (expense) income                                                                                                                                         
|Gain on distribution of interest in unconsolidated investee                                                                                                                   
|                                                                                                                                                                              
|Total other expense, net                                                                                                                                                      
|                                                                                                                                                                              
|Net loss                                                                                                                                                                      
|                                                                                                                                                                              
|Basic and diluted loss per share                                                                                                                                              
|                                                                                                                                                                              
|Weighted average number of common shares outstanding
    Basic and diluted                                                                                                    
|                                                                                                                                                                              
|See accompanying notes to consolidated financial statements.                                                                                                                  



F-4









|AGRITEK HOLDINGS, INC.                                                                                                    
|--------------------------------------------------------------------------------------------------------------------------
|CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT                                                                           
|                                                                                                                          
|                                                                                                                          
|                                                                                                                          
|                                                                                                                          
|Balances, January 1, 2013                                                                                                 
|                                                                                                                          
|Common stock issued for services                                                                                          
|                                                                                                                          
|Common stock issued upon conversion of convertible
    debt and accrued interest                                          
|                                                                                                                          
|Reclassification of embedded derivatives upon
    conversion of convertible debt                                          
|                                                                                                                          
|Common stock issued upon settlement of litigation
    contingency and accrued interest                                    
|                                                                                                                          
|Amortization of deferred stock compensation                                                                               
|                                                                                                                          
|Cancellation of preferred stock                                                                                           
|                                                                                                                          
|Issuance of preferred stock in exchange for common
    stock, satisfaction of deferred compensation liability and services
|                                                                                                                          
|Options to purchase common stock issued for services                                                                      
|                                                                                                                          
|Loss on settlement of contingent litigation liability                                                                     
|                                                                                                                          
|Net loss                                                                                                                  
|                                                                                                                          
|Balances, December 31, 2013                                                                                               
|                                                                                                                          
|Issuance of common stock upon conversion of preferred stock                                                               
|                                                                                                                          
|Common stock issued upon conversion of convertible
    debt and accrued interest                                          
|                                                                                                                          
|Common stock issued for services                                                                                          
|                                                                                                                          
|Common stock issued upon settlement of accounts payable                                                                   
|                                                                                                                          
|Common stock issued upon settlement of deferred
    compensation, related party                                           
|                                                                                                                          
|Common stock issued for acquisition                                                                                       
|                                                                                                                          
|Reclassification of embedded derivatives upon
    conversion of convertible debt                                          
|                                                                                                                          
|Net loss                                                                                                                  
|                                                                                                                          
|Balances, December 31, 2014                                                                                               
|                                                                                                                          
|See accompanying notes to consolidated financial statements.                                                              



F-5









|AGRITEK HOLDINGS, INC.                                                                              
|----------------------------------------------------------------------------------------------------
|CONSOLIDATED STATEMENTS OF CASH FLOWS                                                               
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Cash flows from operating activities:                                                               
|Net loss                                                                                            
|Adjustments to reconcile net loss to net cash used in operating activities:                         
|Stock based compensation                                                                            
|Amortization of deferred stock compensation                                                         
|Preferred stock issued for services                                                                 
|Fair value of stock options issued                                                                  
|Amortization of deferred financing costs                                                            
|Depreciation                                                                                        
|Non cash interest expense for excess value of common stock issued for convertible notes payable     
|Amortization of discounts on convertible notes                                                      
|Write off of licensing costs                                                                        
|Change in fair values of derivative liabilities                                                     
|Loss on settlement of contingent litigation liability                                               
|Bad debt expense                                                                                    
|Initial derivative liability expense on convertible notes                                           
|Gain on distribution of interest in unconsolidated investee                                         
|Changes in operating assets and liabilities:                                                        
|(Increase) decrease in :                                                                            
|Accounts receivable                                                                                 
|Inventory                                                                                           
|Prepaid assets and other                                                                            
|Increase in:                                                                                        
|Accounts payable and accrued expenses                                                               
|Deferred compensation                                                                               
|Tenant deposits                                                                                     
|Net cash used in operating activities                                                               
|                                                                                                    
|Cash flows from investing activities:                                                               
|Acquisition of licensing rights                                                                     
|Land acquisition costs                                                                              
|Purchase of equipment and furniture                                                                 
|Advances to related party                                                                           
|Investments in non-marketable securities                                                            
|Cash payment portion of acquisition                                                                 
|Security deposits paid                                                                              
|Net cash used in investing activities                                                               
|                                                                                                    
|Cash flows from financing activities:                                                               
|Payments received on notes receivable issued for convertible debt                                   
|Proceeds from issuance of convertible debt                                                          
|Payment of deferred financing costs                                                                 
|Net cash provided by financing activities                                                           
|                                                                                                    
|Net increase in cash and cash equivalents                                                           
|                                                                                                    
|Cash and cash equivalents, Beginning                                                                
|                                                                                                    
|Cash and cash equivalents, Ending                                                                   
|                                                                                                    
|Supplemental disclosure of cash flow information:                                                   
|Cash paid for interest                                                                              
|Cash paid for income taxes                                                                          
|                                                                                                    
|Schedule of non-cash, investing and financing activities:                                           
|Conversion of notes payable and interest into common stock                                          
|Conversion of litigation contingency liability into common stock                                    
|Conversion of deferred compensation into common stock                                               
|Reclass of derivative liabilities to additional paid in capital upon conversion of convertible notes
|Conversion of accounts payable and accrued expenses into common stock                               
|Issuance of note payable for land acquisition                                                       
|                                                                                                    
|Common stock issued for acquisition                                                                 
|Cash paid for acquisition                                                                           
|Total consideration for acquisition                                                                 
|Allocation of purchase price to inventory                                                           
|Allocation of purchase price to goodwill                                                            
|Cash acquired                                                                                       
|                                                                                                    
|See accompanying notes to consolidated financial statements.                                        



F-6











AGRITEK HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 1 - Organization



Business



Agritek Holdings, Inc. (the “Company”
or “Agritek”), formerly known as Mediswipe, Inc., and its wholly owned subsidiary, Agritek Venture Holdings, Inc. (“AVHI”),
acquires and leases real estate to licensed marijuana operators, including providing complete turnkey growing space and related
facilities to licensed marijuana growers and dispensary owners. Additionally, the Company offers a variety of services and
product lines to the medicinal marijuana sector including the distribution of hemp based nutritional products, a line of innovative
solutions for electronically processing merchant transactions and recently, the Company began importing and distributing vaporizers
and e-cigarettes under the Company's Mont Blunt brand.

The Company does not grow, harvest,
distribute or sell marijuana or any substances that violate the laws of the United States of America.

On March 18, 2014,
the Company completed the purchase of 80 acres zoned for agricultural use in Pueblo County, Colorado. The Company plans to
lease individual parcels of the 80 acre parcel to fully-licensed and compliant growers and dispensaries within the regulated medicinal
and recreational market of Colorado. The Company plans include receiving rents and management fees for providing infrastructure,
water, electricity, equipment leasing and security services. As of March 31, 2015, the Company
has not realized any revenue from the property.



On April 28, 2014,
the Company executed and closed a lease agreement for 20 acres of an agricultural farming facility located in South Florida following
the approval of the so-called “Charlotte’s Web” legislation, aimed at decriminalizing low grade marijuana specifically
for the use of treating epilepsy and cancer patients.  Pursuant to the lease agreement, through November 1, 2014, the Company
had an option to purchase the land for $1,100,000, which it did not exercise, and maintains a first right of refusal to purchase
the property for three years.As of March 31, 2015, the Company has not realized any revenue
from the property.



On July 11, 2014,
the Company signed a ten yearlease agreement for 40 acres in Pueblo, Colorado, now bringing
total land holdings in the country's first recreational cannabis state to over 120 acres zoned for its planned agricultural and
cultivation facilities located in Pueblo County, Colorado. The lease requires monthly rent payments of $10,000 during the
first year and is subject to a 2% annual increase over the life of the lease. The lease also provides rights to 50 acres of certain
tenant water rights for $50,000 annually plus cost of approximately $2,400 annually. The water rights ensure the Company’s
non-interruption of operations on behalf of new tenants qualified as fully registered and licensed grow and manufacturing operations.
As of March 31, 2015, the Company has not realized any revenue from the property.



On
July 26, 2014, the Company executed a Real Property Purchase Agreement to acquire approximately 3.2 acres for $224,000, in the
Apex Industrial Park Complex, otherwise known as Nevada “Green Zone”. The Company had also entered into a 99 year lease
agreement with My Life Organics, Inc. (“My Life”). My Life has been issued a provisional license for cultivation of
marijuana to be grown on the Company’s property. The closing of the property occurred in November 2014 and the Company also
advanced $50,000 to MYLO Construction, LLC (“MYLO”), a newly formed Company to manage the construction of the proposed
building. The Company expensed the $50,000 advanced to MYLO during the year ended December 31, 2014. On January 7, 2015, My Life
notified the Company that it was terminating the lease with the Company, claiming the Company has defaulted on certain provisions
of the lease.



On September
12, 2014, the Company completed the asset acquisition of the entire line of products, technology and customers of Dry Vapes
Holdings, Inc. (“Dry Vapes”). Dry Vapes is an importer, marketer and distributor of innovative vaporizers and accessories
with over 11,000 social network followers. Dry Vapes has historically sold its’ product under the logo DV on eBay and other
websites. The Company, under its’ wholly owned subsidiary Prohibition Products, Inc. (“PPI”) plans to develop
a full line of products under the "Mont Blunt" brand name and market it to brick and mortar smoke shops nationally. See
Note 4.



The Company is continuing
its focus to acquire real property through purchase or lease, and subsequently lease the real estate to licensed marijuana and/or
dispensary owners.





F-7





Note 2 – Summary of Significant
Account Policies



Basis of Presentation and Principles
of Consolidation



The accompanying consolidated financial
statements are prepared in accordance with Generally Accepted Accounting Principles in the United States of America ("US GAAP").
The consolidated financial statements of the Company include the consolidated accounts of
Agritek and its’ wholly owned subsidiaries AVHI and PPI. PPI, a Florida corporation, was originally formed on July 1, 2013
as The American Hemp Trading Company, Inc. (“AHTC”) and on August 27, 2014, AHTC changed its’ name to PPI. All
intercompany accounts and transactions have been eliminated in consolidation.



Cash and Cash Equivalents



The Company considers all highly liquid
investments with an original term of three months or less to be cash equivalents.



Accounts Receivable



The Company records accounts receivable
from amounts due from its customers upon the shipment of products. The allowance for losses is established through a provision
for losses charged to expenses. Receivables are charged against the allowance for losses when management believes collectability
is unlikely. The allowance is an amount that management believes will be adequate to absorb estimated losses on existing receivables,
based on evaluation of the collectability of the accounts and prior loss experience. While management uses the best information
available to make its evaluations, this estimate is susceptible to significant change in the near term. As of December 31, 2014,
based on the above criteria, the Company has an allowance for doubtful accounts of $43,408.



Inventory



Inventory consists of finished goods and is
valued at the lower of cost or market value. Cost is determined using the first in first out (FIFO) method. Provision for potentially
obsolete or slow moving inventory is made based on management analysis or inventory levels and future sales forecasts.



Deferred Financing Costs



The costs related to the issuance of debt are
capitalized and amortized to interest expense using the effective interest method through the maturities of the related debt.



Investment of Non-Marketable Securities



The Company’s investment in non-marketable
securities consist of cash investments in a less than 10% interest in privately held companies that provide merchant processing
services.



Property and Equipment



Property and equipment are
stated at cost, and except for land, depreciation is provided by use of accelerated and straight-line methods over the estimated
useful lives of the assets. The Company reviews property and equipment for potential impairment whenever events or changes in circumstances
indicate that the carrying amounts of assets may not be recoverable. The estimated useful lives of property and equipment are as
follows:



Office
equipment, furniture and vehicles	          5 years





F-8





The Company's property and equipment consisted of the
following at December 31, 2014 and December 31, 2013:

|                         |  | 2014 |         | 2013
|------------------------ |  | ---- | ------- | ----
|Land                     |  | $    | 354,269 |     
|Furniture and Equipment  |  |      | 13,829  |     
|Accumulated depreciation |  |      | (1,976  | )   
|Balance                  |  | $    | 366,122 |     



Depreciation expense of $1,789 and $187
was recorded for the years ended December 31, 2014 and 2013, respectively.



Long-Lived Assets



Long-lived assets are reviewed
for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.



Revenue Recognition



The Company recognizes revenue in accordance
with FASB ASC 605, Revenue Recognition. ASC 605 requires that four basic criteria are met: (1) persuasive evidence of an arrangement
exists, (2) delivery of products and services has occurred, (3) the fee is fixed or determinable and (4) collectability is reasonably
assured. The Company recognizes revenue during the month in which products are shipped or commissions are earned. No revenue has
been recognized from leasing arrangements to date.



Fair Value of Financial Instruments



Fair value measurements are determined
under a three-level hierarchy for fair value measurements that prioritizes the inputs to valuation techniques used to measure fair
value, distinguishing between market participant assumptions developed based on market data obtained from sources independent of
the reporting entity (“observable inputs”) and the reporting entity’s own assumptions about market participant
assumptions developed based on the best information available in the circumstances (“unobservable inputs”).



Fair value is the price that would be
received to sell an asset or would be paid to transfer a liability (i.e., the “exit price”) in an orderly transaction
between market participants at the measurement date. In determining fair value, the Company primarily uses prices and other relevant
information generated by market transactions involving identical or comparable assets (“market approach”). The Company
also considers the impact of a significant decrease in volume and level of activity for an asset or liability when compared with
normal activity to identify transactions that are not orderly.



The highest priority is given to unadjusted
quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level
3 measurements). Securities are classified in their entirety based on the lowest level of input that is significant to the fair
value measurement.



The three hierarchy levels are
defined as follows:



Level 1 – Quoted
prices in active markets that is unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;



Level 2 – Quoted
prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in
active markets or financial instruments for which significant inputs are observable, either directly or indirectly;



Level 3 – Prices
or valuations that require inputs that are both significant to the fair value measurement and unobservable.





F-9





Credit risk adjustments are applied
to reflect the Company’s own credit risk when valuing all liabilities measured at fair value. The methodology is consistent
with that applied in developing counterparty credit risk adjustments, but incorporates the Company’s own credit risk as observed
in the credit default swap market.



The Company's financial instruments
consist primarily of cash, accounts receivable, notes receivable, accounts payable and accrued expenses, note payable and convertible
debt. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term
maturities and approximate market interest rates of these instruments.  The estimated fair value is not necessarily indicative
of the amounts the Company would realize in a current market exchange or from future earnings or cash flows.



Income Taxes



The Company accounts for income taxes
in accordance with ASC 740-10, Income Taxes. Deferred tax assets and liabilities are recognized to reflect the estimated future
tax effects, calculated at the tax rate expected to be in effect at the time of realization. A valuation allowance related to a
deferred tax asset is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment.



ASC 740-10 prescribes a recognition
threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on
recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues.
Interest and penalties are classified as a component of interest and other expenses. To date, the Company has not been assessed,
nor paid, any interest or penalties.



Uncertain tax positions are measured
and recorded by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected
to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may
be recognized or continue to be recognized. The Company’s tax years subsequent to 2005 remain subject to examination by federal
and state tax jurisdictions.



Earnings (Loss) Per Share



Earnings (loss) per share are computed
in accordance with ASC 260, "Earnings per Share". Basic earnings (loss) per share is computed by dividing net income
(loss), after deducting preferred stock dividends accumulated during the period, by the weighted-average number of shares of common
stock outstanding during each period. Diluted earnings per share is computed by dividing net income by the weighted-average number
of shares of common stock, common stock equivalents and other potentially dilutive securities, if any, outstanding during the period.
As of December 31, 2014 there were warrants to purchase 300,000 shares of common stock and the Company’s outstanding convertible
debt is convertible into 20,860,466 shares of common stock These amounts are not included in the computation of dilutive loss per
share because their impact is antidilutive.



Accounting for Stock-based Compensation



The Company accounts for stock awards
issued to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non-Employees. The measurement date is the earlier
of (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the
date at which the counterparty's performance is complete. Stock awards granted to non-employees are valued at their respective
measurement dates based on the trading price of the Company’s common stock and recognized as expense during the period in
which services are provided.



For the years ended December 31, 2014
and December 31, 2013, the Company recorded stock and warrant based compensation of $379,000 and $118,000, respectively. (See Notes
7 and 8).





F-10





Use of Estimates



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



Advertising



The Company records advertising costs
as incurred. For the years ended December 31, 2014 and December 31, 2013, advertising expense was $72,091 and $15,077, respectively.



Note 3 – Recent Accounting Pronouncements



Accounting standards that have been
issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected
to have a material impact on the consolidated financial statements upon adoption.



Note 4 - Acquisition



On September
12, 2014, the Company completed the asset acquisition of the entire line of products, technology and customers of Dry Vapes
Holdings, Inc. (“Dry Vapes”). Dry Vapes is an importer, marketer and distributor of innovative vaporizers and accessories
with over 11,000 social network followers. Dry Vapes has historically sold its’ product under the logo DV on eBay and other
websites. The Company plans to develop a full line of products under the "Mont Blunt" brand name and market it to Brick
and Mortar smoke shops nationally in the upcoming months. The company will operate the business under PPI.



The Company recorded the acquisition
using the acquisition method, which requires the Company to record the acquired assets and assumed liabilities (if any) at their
acquisition date fair values and record any excess of the consideration given, including liabilities assumed (if any) over the
fair value of the assets acquired as goodwill. The acquired assets consisted solely of inventory. The Company determined the fair
value of the inventory acquired on a cost basis.



The fair value of the acquired assets
and liabilities, and the resulting amount of goodwill was determined as follows:



|Common stock 1,500,000 shares at $0.12 per share |  | $ | 180,000 |  
|------------------------------------------------ |  | - | ------- | -
|Cash                                             |  |   | 20,000  |  
|Total consideration                              |  |   | 200,000 |  
|Fair value of inventory acquired                 |  |   | (7,151  | )
|Goodwill                                         |  | $ | 192,849 |  



Note 5 – Sales Concentration
and Concentration of Credit Risk



Cash



Financial   instruments   that   potentially   subject   the   Company to concentrations
of credit risk consist principally of cash. The Company maintains cash balances at one financial institution,
which is insured by the Federal Deposit Insurance Corporation (“FDIC”). The FDIC insured institution insures
up to $250,000 on account balances. The company maintains its’ cash balance at a large financial institution and has not
experienced any losses in such accounts.





F-11





Sales and Accounts Receivable



Following is a summary of customers
who accounted for more than ten percent (10%) of the Company’s revenues for the years ended December 31, 2014 and 2013 and
the accounts receivable balance as of December 31, 2014:



| | Customer |  | Sales % Year
                                                                               Ended
                                                                               December 31, 2013 |  | Sales % Year
                                                                               Ended
                                                                               December 31, 2014 |   | Accounts Receivable
                                                                               Balance as of
                                                                               December 31, 2014
| | -------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A        |  |                                                                                                                                                                                                    |  | 34.4                                                                                                                                                                                               | % |                                                                                                                                                                                                                  
| | B        |  |                                                                                                                                                                                                    |  | 21.9                                                                                                                                                                                               | % |                                                                                                                                                                                                                  
| | C        |  |                                                                                                                                                                                                    |  | —                                                                                                                                                                                                  |   |                                                                                                                                                                                                                  
| | D        |  |                                                                                                                                                                                                    |  | —                                                                                                                                                                                                  |   |                                                                                                                                                                                                                  
| | E        |  |                                                                                                                                                                                                    |  | —                                                                                                                                                                                                  |   |                                                                                                                                                                                                                  



Sales to customer B were during the year ended
December 31, 2013. The Company has not received payment and has recorded an allowance for doubtful accounts for this amount.



Purchases



For the year end December 31, 2014,
the Company’s purchases were from two vendors related to the purchase of our tobacco product line.



Note 6 – Convertible Debt
and Note Payable



Convertible Debt



On January 2, 2013, February 11, 2013,
April 10, 2013, July 29, 2013 and October 16, 2013, the Company entered convertible note agreements (the “2013 Notes”)
with Asher Enterprises, Inc. (“Asher”) for $37,500, $27,500, $27,500, $65,000 and $70,000, respectively. We received
net proceeds of $214,000 from the 2013 Notes after debt issuance costs of $13,500 paid for lender legal fees. These debt issuance
costs have been amortized over the earlier of the terms of the Note or any redemptions and accordingly $4,511 and $8,989 has been
expensed as debt issuance costs (included in interest expense) for the years ended December 31, 2014 and 2013, respectively. There
are no remaining debt issuance costs to be amortized.



Among other terms the 2013 Notes were
due nine months from their issuance date, bearing interest at 8% per annum, payable in cash or shares at a conversion price (the
“Conversion Price”) for each share of common stock equal to 50% of the average of the lowest three trading prices (as
defined in the note agreements) per share of the Company’s common stock for the ten trading days immediately preceding the
date of conversion. Upon the occurrence of an event of default, as defined in the 2013 Notes, the Company was required to pay interest
at 22% per annum and the holders could at their option declare a Note, together with accrued and unpaid interest, to be immediately
due and payable. In addition, the 2013 Notes provided for adjustments for dividends payable other than in shares of common stock,
for reclassification, exchange or substitution of the common stock for another security or securities of the Company or pursuant
to a reorganization, merger, consolidation, or sale of assets, where there is a change in control of the Company.



The Company determined that the conversion
feature of the 2013 Notes represented an embedded derivative since the Notes were convertible into a variable number of shares
upon conversion. Accordingly, the 2013 Notes were not considered to be conventional debt under EITF 00-19 and the embedded conversion
feature was bifurcated from the debt host and accounted for as a derivative liability. Accordingly, the fair value of these derivative
instruments being recorded as a liability on the consolidated balance sheet with the corresponding amount recorded as a discount
to each Note. Such discount was being amortized from the date of issuance to the maturity dates of the Notes. The change in the
fair value of the liability for derivative contracts were recorded in other income or expenses in the consolidated statements of
operations at the end of each quarter, with the offset to the derivative liability on the balance sheet. The embedded feature included
in the 2013 Notes resulted in an initial debt discount of $227,500 and an initial loss on the valuation of derivative liabilities
of $35,029 for a derivative liability initial balance of $262,529.





F-12





During the year ended December 31, 2014,
the Company issued 760,375 shares of common stock in satisfaction of $135,000 of the 2013 Notes and $5,400 of accrued and unpaid
interest. The shares were issued at approximately $0.18 per share. The fair value of the derivative liability on the dates of conversion
totaling $175,575 was reclassified to paid-in-capital during the year ended December 31, 2014. As
of December 31, 2013, the balance of the Asher Notes was carried at $53,463, net of unamortized discounts of $81,537. As of December
31, 2014, the 2013 Asher Notes have been fully satisfied.



On May 20, 2013, the Company entered into a
Securities Purchase Agreement with Typenex Co-Investment, LLC ("Typenex"), for the sale of an 8% convertible note in
the principal amount of up to $667,500 (which includes Typenex legal expenses in the amount of $7,500 and a $60,000 original issue
discount) (the “2013 Company Note”) for a purchase price of $600,000, consisting of $100,000 paid in cash at closing
on May 21, 2013 (the “Initial Cash Purchase Price”) and five secured promissory notes, aggregating $500,000 (the “Investor
Notes”), bearing interest at the rate of 8% per annum. Three of the Investor Notes aggregating $300,000 were funded in 2013
and the two remaining Investor Notes of $100,000 each were funded in January 2014.



The 2013 Company Note included interest at
the rate of 8% per annum, due in four equal monthly installments (the “Redemption Price”) beginning on the nine month
anniversary of the initial funding. All interest and principal was to be repaid on February 21, 2014. The 2013 Company Note was
convertible into common stock, at Typenex’s option, at a price of $0.055 per share. In the event the Company elected to prepay
all or any portion of the 2013 Company Note, the Company was required to pay to Typenex an amount in cash equal to 125% multiplied
by the sum of all principal, interest and any other amounts owing. Beginning on the date that is nine (9) months after the later
of (i) the Issuance Date, and (ii) the date the Initial Cash Purchase Price is paid to the Company (the “Initial Installment
Date”), and on each applicable Installment Date thereafter, the Company was to pay the Holder of this Note the applicable
Installment Amount due on such date. Payments of the Installment Amount may be made (a) in cash (a “Company Redemption”),
(b) by converting such Installment Amount into shares of Common Stock (a “Company Conversion”), or (c) by any combination
of a Company Conversion and a Company Redemption so long as the entire amount of such Installment Amount due shall be converted
and/or redeemed by the Company on the applicable Installment Date.



At any time prior to the payment of the applicable
Redemption Price by the Company, the Holder had the option, in lieu of redemption, to cancel the Event of Default Redemption Notice
by written notice to the Company (the “Redemption Cancellation Notice”). Upon the Company’s receipt of a Redemption
Cancellation Notice, the Outstanding Balance of the Note as of the date of the Redemption Notice shall thereafter be due and payable
upon demand, with payment of the Outstanding Balance being due ten (10) Trading Days after written demand therefor from the Holder;
(y) the Conversion Price of this Note shall be automatically adjusted with respect to each conversion under this Note effected
thereafter by the Holder to the lowest of (A) 75% of the lowest Closing Bid Price of the Common Stock during the period beginning
on and including the date on which the applicable Redemption Notice is delivered to the Company and ending on and including the
date of the Redemption Cancellation Notice, (B) the Market Price as of the date of the Redemption Cancellation Notice, (C) the
then current Market Price, and (D) the then current Conversion Price.



The Company determined that the conversion
feature of the 2013 Company Note represented an embedded derivative since the Note is convertible into a variable number of shares
upon conversion. Accordingly, the 2013 Company Note is not considered to be conventional debt under EITF 00-19 and the embedded
conversion feature was be bifurcated from the debt host and accounted for as a derivative liability. Accordingly, the fair value
of this derivative instrument has been recorded as a liability on the consolidated balance sheet with since the corresponding amount
recorded as an expense



During the year ended December 31, 2013,
the Company issued 570,090 shares of common stock in satisfaction of $70,000 of the 2013 Company Note. As of December 31, 2013,
the balance of the 2013 Company Note was $557,500, net of unamortized discounts of $40,000.



During the year ended December 31,
2014, the Company issued 9,311,042 shares of common stock in satisfaction of $597,500 of the 2013 Company Note and $46,391 of
accrued and unpaid interest. The shares were issued at approximately $0.069 per share. As of December 31, 2014, the 2013 Company
Note was fully satisfied.





F-13





A summary of the derivative liability balance as of December
31, 2013 and December 31, 2014 is as follows:



|                             |  | 2013 |          | 2014
|---------------------------- |  | ---- | -------- | ----
|Beginning Balance            |  | $    | 38,590   |     
|Initial Derivative Liability |  |      | 542,768  |     
|Notes Converted              |  |      | (133,692 | )   
|Fair Value Change            |  |      | 38,494   |     
|Ending Balance               |  | $    | 486,160  |     





In January 2014, the Company entered into
a Secured Promissory Note for $1,660,000 (the “2014 Company Note”) to Tonaquint, Inc. (“Tonaquint”) (the
same principals as Typenex) which includes a purchase price of $1,500,000 and transaction costs of $160,000. On January 31, 2014,
the Company received $300,000 of the purchase price. Tonaquint also issued to the Company 6 secured promissory notes, each in
the amount of $200,000 (the 2014 “Investor Notes”). All or any portion of the outstanding balance of the 2014 Investor
Notes may be prepaid, without penalty, along with accrued but unpaid interest at any time prior to maturity. The Company has no
obligation to pay Tonaquint any amounts on the unfunded portion of the 2014 Company Note. The 2014 Company Note bears interest
at 8% per annum (increases to 22% per annum upon an event of default) and is convertible into shares of the Company’s common
stock at Tonaquint’s option at a price of $0.55 per share, exercisable in seven tranches, consisting of a first tranche
of $340,000 of principal and any interest, fees costs or charges, and nine additional tranches of $220,000 each, plus any interest,
costs, fees or charges.



Beginning on the date that is nine (9) months
after the later of (i) the Issuance Date, and (ii) the date the Initial Cash Purchase Price is paid to the Company (the “Initial
Installment Date”), and on each applicable Installment Date thereafter, the Company is to pay the Holder, the applicable
Installment Amount due on such date. Ten Installment Amounts of $166,000 plus the sum of any accrued and unpaid interest, fees,
costs or charges may be made (a) in cash (a “Company Redemption”), (b) by converting such Installment Amount into shares
of Common Stock (a “Company Conversion”), or (c) by any combination of a Company Conversion and a Company Redemption
so long as the entire amount of such Installment Amount due shall be converted and/or redeemed by the Company on the applicable
Installment Date. The 2014 Company Note matures fifteen months after the Issuance Date.



During the year ended December 31, 2014,
the Company received an additional $800,000 of the purchase price, and as of December 31, 2014, the balance of the purchase price
of $400,000 is included in Notes receivable on the consolidated financial statements included herein, as well as $28,954 of interest
receivable. As of December 31, 2014, Tonaquint owes the Company $400,000 of the balance of the 2014 Investor Notes. During the
year ended December 31, 2014, the Company issued 7,324,256 shares of common stock in satisfaction of $403,342 of the 2014 Company
Note and $123,289 of accrued and unpaid interest. The shares were issued at approximately $0.07 per share. During the year ended
December 31, 2014, the Company recorded interest expense of $123,572 and increased accrued interest expense by $123,572 for amounts
due Tonaquint, pursuant to the 2014 Company Note. As of December 31, 2014, $1,256,658 of principal and accrued interest of $122,063
is outstanding on the 2014 Company Note, and the principal amount is carried at $1,233,903, net of a remaining note discount of
$22,755.



Note Payable



On March 18, 2014, in conjunction with
the land purchase of 80 acres in Pueblo County, Colorado, the Company paid $36,000 cash and entered into a promissory note in the
amount of $85,750. The promissory note is being amortized on the basis of five (5) years, with principal payments of $17,150 plus
interest at 3.5% due annually on December 1 of each year. Payments begin December 1, 2014, and shall be due on the first day of
each succeeding December, with any balance of principal and accrued interest due December 1, 2020. The December 1, 2014 payment
was not paid. On March 4, 2015, the Company paid $9,000 of the December 1, 2014 amount.





F-14





Future principle payments due on the
Company’s convertible debt and note payable as of December 31, 2014, are as follows



| | Twelve months ending December 31, |  | Amount
| | --------------------------------- |  | ------
| | 2015                              |  |       
| | 2016                              |  |       
| | 2017                              |  |       
| | 2018                              |  |       
| | Total debt                        |  |       
| | Less current portion              |  |       
| | Less discounts                    |  |       
| | Long term portion                 |  |       



Note 7 – Related Party Transactions



Management Fees and Stock Compensation
Expense



Effective January 1, 2013, the Company
has agreed to annual compensation of $150,000 for its CEO and $96,000 for the CFO. For 2013, the Company and the CFO have agreed
that $3,000 per month will be paid in cash and $5,000 per month will be paid in restricted shares of common stock. For 2014, the
Company and the CFO agreed that up to $5,000 per month can be paid in cash and the balance in restricted shares of common stock.
For the year ended December 31, 2014 and December 31, 2013, the Company expensed $246,000 and $249,500, respectively, included
in Administrative and Management Fees in the Consolidated Statements of Operations, included herein. As of December 31, 2014 and
2013, the Company owed the CEO $80,082 and $32,437, respectively, and the CFO $1,549 and $60,000, respectively, included in deferred
compensation on the Company’s consolidated balance sheet.



On January 13, 2014, the Company issued
545,454 shares of common stock to Venture Equity, LLC, (“Venture Equity”) a Florida limited liability Company, controlled
by the Company’s CFO, upon the conversion of $60,000 of accrued management fees. The shares were issued at $0.11 per share,
the market price of the common stock on December 31, 2013, the date on which the board of directors approved the issuance. On December
31, 2014, the Company issued 444,444 shares of restricted common stock to Venture Equity, upon the conversion of $40,000 of accrued
and unpaid management fees as of December 31, 2014, the date on which the board of directors approved the issuance. The shares
were issued at $0.09 per share, the average market price of the common stock for the period.



In June 2013, Mr. Friedman agreed to
exchange 3,033,500 shares of common stock in partial consideration for the issuance of 450,000 shares of Class B preferred stock
(see note 8).



On December 31, 2014, the Company issued
17,226,778 shares of restricted common stock to Mr. Friedman upon the conversion of 450,000 shares of Class B Preferred Stock.



On December 31, 2014, the Company issued
1,230,484 shares of restricted common stock to Venture Equity upon the conversion of 50,000 shares of Class B Preferred Stock.



Amounts Due from 800 Commerce, Inc.



800 Commerce, Inc., a commonly controlled entity,
owed Agritek $236,759 and $67,186 as of December 31, 2014 and December 31, 2013, respectively, as a result of advances received
from or payments made by Agritek on behalf of 800 Commerce. These advances are non-interest bearing and are due on demand and are
included in Due from Related Party on the balance sheet herein.





F-15





Note 8 – Common and Preferred
Stock



Common Stock



On November 12, 2013, the Board of Directors
of the Company approved by unanimous written consent a 1-for-10 Reverse Stock Split and to decrease the authorized common stock
of the Company to 250,000,000. Pursuant to the Reverse Stock Split, each ten (10) shares of the Company’s Common Stock automatically
converted into one share of Common Stock.



On November 12, 2013, the Financial
Industry Regulatory Authority approved the company’s 1-for-10 reverse stock split (the “Reverse Stock Split”)
on the Company’s common stock outstanding with an effective date of December 11, 2013. All the following share issuances
are stated to reflect the reverse stock split.



On March 19, 2013, the Company issued
25,000 shares of restricted common stock, to Empire Relations Holdings, LLC, as consideration under a consulting agreement dated
March 7, 2013 for public and financial relations services. The fair value was $15,500 based on the closing stock price of $0.62
per share on the measurement date as the shares are non-refundable and no future performance obligation exists.



On March 31, 2013, the Company agreed
to issue 369,928 shares of common stock upon the conversion of the remaining balance of $32,000 of a note payable and accrued and
unpaid interest of $6,060.



Previously the Company appointed Mr. James
Canton to be an advisor to the Company’s Board of Directors. In April 2013, the Company agreed to issue to Mr. Canton 200,000
shares of common stock, a warrant to purchase 300,000 shares of common stock at an exercise price of $0.50 per share with an expiration
date on the third year anniversary of the grant, and $25,000 to be paid in shares of common stock to be issued at the end of each
calendar quarter beginning on June 30, 2013 and ending on the earlier of March 31, 2015 (the term of Canton’s advisor role)
or the date Canton is no longer serving as an advisor to the board of directors. During the year ended December 31, 2014, the Company
issued 543,059 shares of common stock, valued at $75,000
based on the market price of the common stock when issued. The Company included $100,000 in stock based compensation expense for
the year ended December 31, 2014. As of December 31, 2014, the Company owed Mr. Canton $25,000, which is included in accounts payable
and accrued expenses on the condensed consolidated balance sheet herein.



In January 2014 the Company issued in the aggregate
8,467,388 shares of common stock to Typenex upon the conversion of $523,564 of the Company Note and accrued and unpaid interest
of $3,716. The shares were issued at approximately $0.06227 per share.



On January 13, 2014, the Company issued
545,454 shares of common stock to Venture Equity upon the conversion of $60,000 of accrued management fees. The shares were issued
at $0.11 per share, the market price of the common stock on December 31, 2013.



On January 14, 2014, the Company issued
2,460,968 shares of common stock upon the conversion of 100,000 shares of Class B Preferred Stock.



On January 30, 2014, February 3, 2014
and February 5, 2014, the Company issued in the aggregate 369,420 shares of common stock to Asher upon the conversion of $65,000
of the 2013 Notes and accrued and unpaid interest of $2,600. The shares were issued at approximately $0.18299.



In March 2014, the Company issued in
the aggregate 843,654 shares of common stock to Typenex upon the conversion of $116,611 of the Company note and accrued and unpaid
interest. The shares were issued at approximately $0.1382 per share.



On March 17, 2014, the Company issued
4,312,420 shares of common stock upon the conversion of 150,000 shares of Class B Preferred Stock.



On March 31, 2014, the Company issued
56,948 shares of common stock to James Canton upon the conversion of $25,000 of accrued stock compensation.





F-16





On April 17, 2014, the Company issued
188,088 shares of common stock in satisfaction of $36,000 of the October 2013 Asher Note. The shares were issued at approximately
$0.19 per share.



On April 20, 2014, the Company issued
202,867 shares of common stock in satisfaction of $34,000 of the October 2013 Asher convertible note and accrued and unpaid interest
of $2,800. The shares were issued at approximately $0.18 per share.



On July 22, 2014, the Company issued
150,000 shares of Company common stock to Mr. Bartoletta as an advisor to the Board of the
Directors of the Company. The Company recorded an expense of $33,000 (based on the market price of the Company’s common stock
of $0.22 per share) and is included in professional and consulting fees in the consolidated statements of operations for the year
ended December 31, 2014, respectively.



On August 6, 2014, the Company issued
625,978 shares of common stock upon the conversion of $19,933 of principal of the 2014 Company Note and $80,067 of accrued and
unpaid interest. The shares were issued at approximately $0.16 per share.



On September 5, 2014, the Company issued
871,460 shares of common stock upon the conversion of $88,804 of principal of the 2014 Company Note and $11,196 of accrued and
unpaid interest. The shares were issued at approximately $0.115 per share.



On September 18, 2014, the Company issued
208,333 shares of common stock to James Canton upon the conversion of $25,000 of accrued stock compensation.



On September 18, 2014, the Company issued
1,300,000 shares of common stock to Philip Johnston pursuant to a consulting agreement for services including but not limited to
business modeling and strategies, strategic alliances, introduction to investment bankers, identify property acquisitions for agricultural
use in Canada and to identify retail chains/outlets for wellness products throughout Canada. The
Company recorded an expense of $156,000 (based on the market price of the Company’s common stock of $0.12 per share) and
is included in professional and consulting fees in the consolidated statements of operations for the year ended December 31, 2014,
respectively.



On September 18, 2014, the Company issued
in the aggregate 1,500,000 shares of common stock pursuant to the APA for the acquisition of Dry Vapes Holdings, Inc. The shares
were valued at $0.12 per share.



On October 13, 2014, the Company issued
562,272 shares of common stock upon the conversion of $38,745 of principal of the 2014 Company Note and $11,255 of accrued and
unpaid interest. The shares were issued at approximately $0.089 per share.



On October 21, 2014, the Company issued
2,011,142 shares of common stock upon the conversion of $89,369 of principal of the 2014 Company Note and $10,631 of accrued and
unpaid interest. The shares were issued at approximately $0.05 per share.



On October 21, 2014 the Company issued
735,895 shares of common stock to a consultant for investor relation services. The Company
recorded an expense of $90,000 (based on the market price of the Company’s common stock of approximately $0.12 per share)
and is included in professional and consulting fees in the consolidated statements of operations for the year ended December 31,
2014, respectively.



On October 24, 2014, the Company received
a payment of $100,000 on notes receivable issued in exchange for convertible promissory note.



On November 11, 2014, the Company issued
1,541,163 shares of common stock upon the conversion of $76,483 of principal of the 2014 Company Note and $147 of accrued and unpaid
interest. The shares were issued at approximately $0.05 per share.



On December 5, 2014, the Company issued
1,712,241 shares of common stock upon the conversion of $90,007 of principal of the 2014 Company Note and $9,993 of accrued and
unpaid interest. The shares were issued at approximately $0.058 per share.



On December 31, 2014, the Company issued
17,226,778 shares of restricted common stock to Mr. Friedman upon the conversion of 450,000 shares of Class B Preferred Stock.





F-17





On December 31, 2014, the Company issued
1,230,484 shares of restricted common stock to Venture Equity upon the conversion of 50,000 shares of Class B Preferred Stock.
The Company also issued Venture Equity 444,444 shares of restricted common stock for accrued and unpaid management fees of $40,000
owed to Venture Equity.



On December 31, 2014, the Company issued
277,778 shares of common stock to James Canton upon the conversion of $25,000 of accrued stock compensation.



Preferred
Stock



On June 20, 2012 the Company cancelled
and returned to authorized but unissued one million shares of Preferred A Stock, and authorized 1,000,000 shares of Class B Convertible
Preferred Stock (the “Class B Preferred Stock”), par value $0.01. The rights, preferences and restrictions of the Class
B Preferred Stock as amended, state; i) each share of the Class B Convertible Preferred Stock shall automatically convert (the
“Conversion”) into shares of the Corporation’s common stock at the moment there are sufficient authorized and
unissued shares of common stock to allow for the Conversion. The Class B Convertible Preferred Stock will convert in their entirety,
simultaneously to equal one half (1/2) the amount of shares of common stock outstanding on a fully diluted basis immediately prior
to the Conversion. The Conversion shares will be issued pro rata so that each holder of the Class B Convertible Preferred Stock
will receive the appropriate number of shares of common stock equal to their percentage ownership of their Class B Convertible
Preferred Stock and ii) all of the outstanding shares of the Class B Preferred Stock in their entirety will have voting rights
equal to the amount of shares of common stock outstanding on a fully diluted basis immediately prior to any vote. The shares eligible
to vote will be calculated pro rata so that each holder of the Class B Convertible Preferred Stock will be able to vote the appropriate
number of shares of common stock equal to their percentage ownership of their Class B Convertible Preferred Stock. The Class B
Convertible Preferred Stock shall have a right to vote on all matters presented or submitted to the Corporation’s stockholders
for approval in pari passu with holders of the Corporation’s common stock, and not as a separate class.



As of December 31, 2014 there were no
shares of Class B Preferred Stock outstanding. As of December 31, 2013, the Company had 1,000,000 shares of Class B Preferred Stock
outstanding.



Warrants



On April 26, 2013 and in connection
with the appointment of Mr. Jayme Canton to the Company’s advisory board, the Company issued a warrant to Mr. Canton to purchase
300,000 shares of common stock. The warrant has an exercise price of $0.50 per share, remains outstanding and expires April 26,
2016.



Note 9 – Income Taxes



Deferred income taxes reflect the net
tax effects of operating loss and tax credit carry forwards and temporary differences between carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes. In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in
which temporary differences representing net future deductible amounts become deductible. Due to the uncertainty of the Company’s
ability to realize the benefit of the deferred tax assets, the deferred tax assets are fully offset by a valuation allowance at
December 31, 2014 and 2013.





F-18





Income tax expense for 2014 and 2013
is as follows:



|                              |  | 2014 |          | 2013
|----------------------------- |  | ---- | -------- | ----
|                              |  |      |          |     
|Current:                      |  |      |          |     
|Federal                       |  | $    | —        |     
|State                         |  |      | —        |     
|                              |  |      | —        |     
|Deferred:                     |  |      |          |     
|Federal                       |  | $    | (682,302 | )   
|State                         |  |      | (72,846  | )   
|Change in Valuation allowance |  |      | 755,148  |     
|                              |  | $    | —        |     



The following is a summary of the Company’s
deferred tax assets at December 31, 2014 and 2013:



|                               |  | 2014 |            | 2013
|------------------------------ |  | ---- | ---------- | ----
|                               |  |      |            |     
|Deferred Tax Assets:           |  |      |            |     
|Net operating losses           |  | $    | 1,005,711  |     
|Stock compensation             |  |      | 1,491,934  |     
|Debt discounts and derivatives |  |      | 199,228    |     
|Other                          |  |      | 20,487     |     
|Net deferred tax assets        |  |      | 2,717,360  |     
|Valuation allowance            |  |      | (2,717,360 | )   
|                               |  | $    | —          |     



A reconciliation between the expected
tax expense (benefit) and the effective tax rate for the years ended December 31, 2014 and 2013 are as follows:



|                                        |  | 2014 |        | 2013
|--------------------------------------- |  | ---- | ------ | ----
|                                        |  |      |        |     
|Statutory federal income tax rate       |  |      | (34.00 | %)  
|State taxes, net of federal income tax  |  |      | (3.63  | %)  
|Effect of change in valuation allowance |  |      | —      |     
|Non-deductible expenses                 |  |      | 37.63  | %   
|                                        |  |      | 0      | %   



As of December 31, 2014, the Company
had a tax net operating loss carry forward of approximately $2,681,000. Any unused portion of this carry forward expires in 2030.
Utilization of this loss may be limited in the event of an ownership change pursuant to IRS Section 382.



Note 10 – Commitments and Contingencies



Office Space



Effective on April 1, 2013, the Company
entered into a three year agreement to rent approximately 2,500 square feet of office space (the “Office Lease”) in
Detroit, Michigan. The monthly rent under this lease was $2,200 per month.





F-19





Effective August 28, 2013, the Company
and the landlord amended the Office Lease allowing the Company to move to a new location in downtown Detroit. The lease was for
3,657 square feet for monthly rent of $3,047. In November 2013, the Company was notified that the owner of the building (the Company’s
landlord) was delinquent in their obligations to the mortgage holder of the building. In January 2014, due to the uncertainty of
the Company’s Office Lease in Detroit, Michigan, the Company decided to relocate its administrative offices to West Palm
Beach, Florida. Effective April 1, 2014, the Company has entered into a rent sharing agreement for the use of 1,300 square feet
with a company controlled by the Company’s CFO. The Company has agreed to pay $1,350 per month for the space.



In April 2014, the Company entered into
a ten year sublease agreement for the use of up to 7,500 square feet with a Colorado based
oncology clinical trial and drug testing company and facility presently doing cancer research and testing for established pharmaceutical
companies seeking FDA approval for new drugs. Pursuant to the lease as amended, the Company has agreed to pay $3,500 per
month for the space, and it will be utilized to market, sell and distribute products to Colorado dispensaries.



For the years ended December 31, 2014
and 2013, the Company recorded rent expense of $74,936 and $34,954, respectively.



Leased Properties



On April 28, 2014,
the Company executed and closed a 10 year lease agreement for 20 acres of an agricultural farming facility located in South Florida
following the approval of the so-called “Charlotte’s Web” legislation, aimed at decriminalizing low grade marijuana
specifically for the use of treating epilepsy and cancer patients.  Pursuant to the lease agreement, through November 1, 2014,
the Company had an option to purchase the land for $1,100,000 (the option has expired) and maintains a first right of refusal to
purchase the property for three years. The Company prepaid the first year lease amount of $24,000 and has recorded $25,496 of expense
(included in leased property expenses) for the year ended December 31, 2014.



On July 11, 2014,
the Company signed a ten yearlease agreement for an additional 40 acres in Pueblo, Colorado.
The lease requires monthly rent payments of $10,000 during the first year and is subject to a 2% annual increase over the life
of the lease. The lease also provides rights to 50 acres of certain tenant water rights for $50,000 annually plus cost of approximately
$2,400 annually. The Company paid the $50,000 in July 2014. The water rights ensure the Company’s non-interruption of operations
on behalf of new tenants qualified as fully registered and licensed grow and manufacturing operations. The Company has recorded
$77,667 of expense for the year ended December 31, 2014 (included in leased property expenses) related to the land and water rights.



Future
rent payments for the next five years and thereafter are as follows:





|Twelve months ending
                                                                               December 31, |            | Amount
|---------------------------------------------------------------------------------------------------------------- | ---------- | ------
|                                                                                                                 | 2015       |       
|                                                                                                                 | 2016       |       
|                                                                                                                 | 2017       |       
|                                                                                                                 | 2018       |       
|                                                                                                                 | 2019       |       
|                                                                                                                 | Thereafter |       
|                                                                                                                 |            |       



Other



On July 1, 2014, the Company, along
with its officers and directors and a company controlled by the Company’s CEO at the time, was named in a Summons and Complaint.
On July 18, 2014, the parties settled the complaint and paid $16,750 and the Summons and Complaint has been dismissed with prejudice.
The Company applied the payment to amounts owed related parties.





F-20





Note 11 – Going Concern



The accompanying consolidated financial
statements have been prepared assuming the Company will continue as a going concern. As of December 31, 2014 the Company had an
accumulated deficit of $11,331,050and working capital deficit of $810,241. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.The consolidated
financial statements do not include any adjustments that might result from the outcome of this uncertainty.



Note 12 – Segment Reporting



Description of Segments



During the year ended December 31, 2014,
the Company operated in one reportable segment, wholesale sales.



During the year ended December 31, 2013,
the Company operated in two reportable segments: accounts receivable financing and wholesale sales. Prior to April 1, 2013, the
Company was receiving fees as the agent of record for fees pursuant to the ACS agreement. Beginning April 1, 2013, the Company
began wholesaling products (Chillo drinks). The accounting policies of the segments are the same as those described in Note 2. 
The Company’s reportable segments are strategic business units that offer products.



Note 13 – Subsequent Events



On January
13, 2015, the Company received $50,000 on notes receivable issued in exchange for a convertible promissory note.



On February
10, 2015, the Company executed a Revenue Participation Agreement with Genie Gateway, for the resale and use of a customized virtual
wallet and ecommerce platform to provide cashless merchant and payment services to the healthcare, wellness and unbanked merchants
nationally.



On March 2, 2015, the Company and the
Company’s CEO, at the time, and the Company’s CFO were named in a civil complaint filed by Erick Rodriguez in the District
Court in Clark County, Nevada. The complaint alleges that Mr. Rodriguez never received 250,000 shares of Series B preferred stock
that were initially approved by the Board of Directors in 2012. Mr. Rodriguez resigned in June 2013, and the Company cancelled
the issuance of the shares to Mr. Rodriguez on the Company’s books and records.



On March 2, 2015, the Company issued
a Convertible Promissory Note for $79,000 to Vis Vires Group (“Vis Vires”). The Company received net proceeds of $75,000
after debt issuance costs of $4,000 paid for lender legal fees. The Note matures November 25, 2015 and converts at a 42% discount
to the market price as defined in the Note.



On March 17, 2015, the Company announced
Mr. Justin Braune will be joining Agritek Holdings on March 20, 2015 as Chief Executive Officer (“CEO”) and President.
Mr. Braune will also be joining the Agritek Holdings Board of Directors. B. Michael Friedman resigned his role as CEO and also
from the Board of Directors, and was named to the Advisory Board to the Company’s Board of Directors.



On March 19, 2015, the Company received
a payment of $50,000 on notes receivable issued in exchange for a convertible promissory note.



On March 20, 2015, Montblanc-Simplo
GmbH (“Montblanc”) filed a Combined Notice of Opposition and Petition for Cancellation with the United States Patent
and Trademark Office. Montblanc believes that it will be damaged by the registration of the mark MONT BLUNT filed on April 26,
2014 in Application Serial No. 86/263,737 (the “Application”) and by the previously issued U.S. Registration NO. 4,608,789
(the “Registration”). The Company believes that the logos and product of Mont Blunt pursuant to the Registration and
Application significantly differ from Montblanc and accordingly does not believe it subjects Montblanc to any damages.





F-21





On March 23, 2015, the Company signed
an operational and licensing agreement with Green Leaf Farms Holdings Inc. (“Green Leaf”) an 80% owned subsidiary of Player's
Network (PNTV) a fully reporting diversified company with holdings in two primary areas, Media and Medical Marijuana. The
five year agreement provides for the Company to be the exclusive consultant regarding the build out on behalf of Green Leaf for
the 22,000 sq. ft. facility presently under contract for purchase by Green Leaf. Green Leaf presently holds two provisional or
"MME" licenses in North Las Vegas for both medicinal cannabis cultivation and production. Under the terms of the agreement,
the Company will provide consulting services and specialists related to grow and production, operational build out, equipment lease
financing, and an infrastructure funding commitment of up to one million dollars ($1,000,000).  Under the agreement, both
Companies expect to complete an approximate 12,000 sq. foot cultivation operation as well as a commercial extraction facility on
behalf of Green Leaf. The Company will provide direct to manufacturer relationships with lighting, extraction equipment, chillers
and hydroponic equipment, edibles production as well as cultivation specialists. In addition to monthly consulting fees once the
facility is operational, the Company will receive licensing fees as the provider of vaporizers, cartridges and infused edibles.



On March 27, 2015, the Company issued
a Convertible Promissory Note for $27,000 to GW Holding Group, LLC. On March 31, 2015, the Company received net proceeds of $25,000
after debt issuance costs of $2,000 paid for lender legal fees. The Note matures March 27, 2016 and converts at a 42% discount
to the market price as defined in the Note.



March 27, 2015, the Company issued a
Convertible Promissory Note for $78,750 to LG Capital Funding, LLC. On March 30, 2015, the Company received net proceeds of $75,000
after debt issuance costs of $3,750 paid for lender legal fees. The Note matures March 27, 2016 and converts at a 42% discount
to the market price as defined in the Note.



In March 2015, the Company returned
$90,000 of tenant deposits in the aggregate that the Company had received during 2014, for the sublease of certain property within
the Company’s 40 acre lease in Pueblo County. In conjunction with the returned deposits, the Company terminated the services
of the individual who was previously engaged to manage the property.



On
March 30, 2015,the Company issued a Convertible Promissory Note for $27,000 to Service Trading Company, LLC. On April 6,
2015, the Company received net proceeds of $25,000 after debt issuance costs of $2,000 paid for lender legal fees. The Note matures
March 30, 2016 and converts at a 42% discount to the market price as defined in the Note.



During the three months ended March
31, 2015, the Company issued the following shares of common stock upon the conversions of portions of the 2014 Company Note (see
Note 6):



|Date    |  | Principal
                                                                               Conversion |        | Interest
                                                                               Conversion |         | Total
                                                                               Conversion |       | Conversion
                                                                               Price |        | Shares
                                                                               Issued
|------- |  | --------------------------------------------------------------------------------------------------- | ------ | -------------------------------------------------------------------------------------------------- | ------- | ----------------------------------------------------------------------------------------------- | ----- | ----------------------------------------------------------------------------------------------- | ------ | --------------------------------------------------------------------------------------------
|1/3/15  |  | $                                                                                                   | 65,460 |                                                                                                    |         | $                                                                                               | 9,540 |                                                                                                 |        | $                                                                                           
|1/28/15 |  | $                                                                                                   | 54,123 |                                                                                                    |         | $                                                                                               | 8,377 |                                                                                                 |        | $                                                                                           
|2/20/15 |  | $                                                                                                   | 55,901 |                                                                                                    |         | $                                                                                               | 9,099 |                                                                                                 |        | $                                                                                           
|3/13/15 |  | $                                                                                                   | 60,000 |                                                                                                    |         | $                                                                                               | —     |                                                                                                 |        | $                                                                                           
|3/31/15 |  | $                                                                                                   | 66,555 |                                                                                                    |         | $                                                                                               | 8,445 |                                                                                                 |        | $                                                                                           
|        |  |                                                                                                     |        | $                                                                                                  | 302,039 |                                                                                                 |       | $                                                                                               | 35,461 |                                                                                             





F-22