| Equity and Debt Financing Agreements | 8. Equity and Debt Financing Agreements Ironridge Series F Preferred Stock
Financings Beginning in July
2011, the Company entered into a series of financings with Ironridge involving the Companys Series F convertible preferred
stock. Between July 2011 and December 31, 2014, a total of 3,150 Series F shares have been issued and fully converted into a total
of 60,104,701 shares of common stocks, as of the year ended December 31, 2014. No Series F shares have been redeemed. As of December
31, 2015 and 2014, there are no shares of Series F outstanding. At December 31,
2013, there were 600 Series F shares outstanding. During the year ended December 31, 2014, these 600 shares of Series F were converted
into 22,992,056 shares of common stock. The Company had the
option to buy back any shares of Series F at the liquidation value plus accrued dividends, without any premium. The Company also
agreed to file a Registration Statement covering the common shares underlying the Series F within 30 days of closing and to use
its best efforts to get the Registration Statement effective. As the Registration Statement was not effective within 90 days of
closing on January 10, 2014, the Company issued 150 shares of Series F to Ironridge as liquidated damages, for which an expense
in the amount of $150,000 has been recorded during the year ended December 31, 2014. On February 25, 2014, these 150 shares of
Series F were converted into 3,398,389 shares of common stock. On February 27,
2014, the Company entered into a Stock Purchase Agreement with Ironridge. Pursuant to the agreement, the Company agreed to issue
150 shares of Series F to Ironridge in exchange for $100,000. Additionally, the Company issued 50 shares of Series F as commitment
and documentation fees which were recorded at face value of $50,000, and in March 2014 issued an additional 100 shares of Series
F as liquidated damages, for which an expense in the amount of $100,000 was recorded, in fulfillment of its obligations under the
agreement. During the year ended December 31, 2014, all of the 300 Series F shares were converted into 17,607,041 shares of common
stock. In connection with
the Series F conversions, the Company recorded beneficial conversion dividends totaling nil and $0.9 million during years ended
December 31, 2015 and 2014 which represents the excess of fair value of the Companys common stock at the date of issuance
of the converted Series F Preferred Stock over the effective conversion rate, multiplied by the common shares issued upon conversion.
These charges are non-cash charges. Certificate of Designations for Series
F Preferred Stock On July 27, 2011,
the Company filed a Certificate of Designations of Preferences, Rights and Limitations of Series F Preferred Stock with the Secretary
of State of the State of Delaware. On December 19, 2013, the Certificate of Designations was amended. A summary of the Certificate
of Designations, as amended, is set forth below: Dividends and
Other Distributions. Redemption In addition, if the
Company determines to liquidate, dissolve or wind-up its business, or engage in any deemed liquidation event, it must redeem the
Series F Preferred Stock at the applicable early redemption price set forth above. Conversion. If the Company or
Ironridge elects to convert the Series F Preferred Stock into common stock and the closing bid price of the Companys common
stock exceeds 150% of the Series F Conversion Price for any 20 consecutive trading days, the Company will issue that number of
shares of its common stock equal to the early redemption price set forth above multiplied by the number of shares subject to conversion,
divided by the Series F Conversion Price. If the Company elects to convert the Series F Preferred Stock into common stock and the
closing bid price of the Companys common stock is less than 150% of the Series F Conversion Price, the Company will issue
an initial number of shares of its common stock equal to 130% of the early redemption price set forth above multiplied by the number
of shares subject to conversion, divided by the lower of (i) the Series F Conversion Price and (ii) 100% of the closing bid price
of a share of the Companys common stock on the trading day immediately before the date of the conversion notice. After 20 trading
days, the Ironridge Entity shall return, or the Company shall issue, a number of conversion shares (the Series F Reconciling
Conversion Shares), so that the total number of conversion shares under the conversion notice equals the early redemption
price set forth above multiplied by the number of shares of subject to conversion, divided by the lower of (i) the Series F Conversion
Price and (ii) 85% of the average of the daily volume-weighted average prices of the Companys common stock for the lowest
three is the twenty trading days following the Ironridge Entitys receipt of the conversion notice. However, if the trading
price of the Companys common stock during any one or more of the 20 trading days following the Ironridge Entitys
receipt of the conversion notice falls below 70% of the closing bid price on the day prior to the date the Company gives notice
of its intent to convert, the Ironridge Entity will return the Series F Reconciling Conversion Shares to the Company and the pro
rata amount of the conversion notice will be deemed canceled. The Company cannot
issue any shares of common stock upon conversion of the Series F Preferred Stock if it would result in an Ironridge Entity being
deemed to beneficially own, within the meaning of Section 13(d) of the Securities Exchange Act, more than 9.99% of the total shares
of common stock then outstanding. Furthermore, until stockholder approval is obtained or the holder obtains an opinion of counsel
reasonably satisfactory to the Company and its counsel that such approval is not required, both the holder and the Company are
prohibited from delivering a conversion notice if, as a result of such exercise, the aggregate number of shares of common stock
to be issued, when aggregated with any common stock issued to holder or any affiliate of holder under any other agreements or arrangements
between the Company and the holder or any applicable affiliate of the holder, such aggregate number would, under NASDAQ Marketplace
rules (or the rules of any other exchange where the common stock is listed), exceed the Cap Amount (meaning 19.99% of the common
stock outstanding on the date of the Series F Agreement). If delivery of a conversion notice is prohibited by the preceding sentence
because the Cap Amount would be exceeded, the Company must, upon the written request of the holder, hold a meeting of its stockholders
within sixty (60) days following such request, and use its best efforts to obtain the approval of its stockholders for the transactions
described herein. Due to the above
variations in the conversion price, the beneficial conversion feature is considered contingent and not measurable or recorded until
the actual conversion dates. The beneficial conversion feature is recorded as a constructive dividend and was nil and $0.9 million,
respectively, during 2015 and 2014. Convertible Note Financings Short-term convertible debt for the
years ended December 31, 2015 and 2014 are as follows (In thousands):
2015 2014
Notes Accrued Interest Total Notes Accrued Interest Total
Convertible notes with accrued interest accounted for as stock settled debt $ 200 $ $ 200 $ 534 $ 47 $ 581
Conversion premiums 237 237
200 200 771 47 818
Convertible notes with embedded derivatives 5,984 650 6,634 1,900 68 1,968
Derivative discounts (4,054 ) (4,054 ) (1,038 ) (1,038 )
1,930 650 2,580 862 68 930
Original issue discounts and loan fee discounts (652 ) (652 ) (221 ) (221 )
$ 1,478 $ 650 $ 2,128 $ 1,412 $ 115 $ 1,527 On June 4,
2013, the Company borrowed $50,000 pursuant to a convertible note, in connection with which it issued the lender immediately exercisable
warrants to purchase 104,167 shares of common stock at an initial exercise price of $0.24 per share. The debt was recorded at a
discount in the amount of $23,684, representing the relative fair value of the warrants. The debt shall accrete in value over its
one year term to its face value of approximately $50,000. Additionally, a liability of $23,223 was recorded as the fair value of
the warrant as a result of a down round adjustment to the exercise price of the warrants. In connection with the issuance of the
$50,000 note there is a beneficial conversion feature of approximately $12,500, which will be amortized over the one year term
of the note. In 2013, $47,850 principal balance of the convertible note was converted into 2,600,000 shares of common stock. In
the year ended December 31, 2014, the remaining balance of the note principal and interest was fully converted into 725,734 shares
of common stock. All related debt discount and beneficial conversion feature were fully amortized in conjunction with the conversion
of the note. In the year ended December 31, 2014, the warrants were converted, on a cashless basis, into 1,508,848 shares of common
stock. On July 3, 2013,
the Company entered into a Securities Purchase Agreement for a new convertible promissory note (the Purchase Agreement).
Pursuant to the terms of the Purchase Agreement the investor committed to purchase an 8% Convertible Promissory Note (the Convertible
Promissory Note) in the principal amount of $78,500, with a maturity date of April 8, 2014, convertible into shares of common
stock, $0.01 par value per share, of the Company, upon the terms and subject to the limitations and conditions set forth in such
Convertible Promissory Note. Interest shall commence accruing on the date that the Note is issued and shall be computed on the
basis of a 365-day year and the actual number of days elapsed. The holder may convert the Convertible Promissory Note into common
shares of stock at a 42% discount to the price of common shares in the ten days prior to conversion. In connection with the issuance
of the Convertible Promissory Note, the Company recorded a premium of $56,845 which was amortized over the life of the Note. In
the year ended December 31, 2014, the outstanding principal and interest on the Convertible Promissory Note was converted, into
5,790,072 shares of common stock. On December 13, 2013,
the Company entered into a Securities Purchase Agreement for a new convertible promissory note (the December Purchase Agreement).
Pursuant to the terms of the December Purchase Agreement the investor committed to purchase an 8% Convertible Promissory Note (the
December Convertible Promissory Note) in the principal amount of $103,500, with a maturity date of September 17,
2014, convertible into shares of common stock, $0.01 par value per share, of the Company (the Common Stock), upon
the terms and subject to the limitations and conditions set forth in such December Convertible Promissory Note. Interest shall
commence accruing on the date that such note is issued and shall be computed on the basis of a 365-day year and the actual number
of days elapsed. The holder may convert the December Convertible Promissory Note into common shares of stock at a 39% discount
to the price of common shares in the ten days prior to conversion. In connection with the issuance of the December Convertible
Promissory Note, the Company computed a premium of $66,172 all of which was amortized and the outstanding principal and interest
on the December Convertible Promissory Note was converted, into 3,294,466 shares of common stock in the year ended December 31,
2014. On January 24, 2014,
the Company entered into a Securities Purchase Agreement for a convertible promissory note (the January Purchase Agreement).
Pursuant to the terms of the January Purchase Agreement the investor committed to purchase an 8% Convertible Promissory Note (the
January Convertible Promissory Note) in the principal amount of $78,500 with a maturity date of October 28, 2014,
convertible into shares Common Stock, upon the terms and subject to the limitations and conditions set forth in such Convertible
Promissory Note. Interest shall commence accruing on the date that such note is issued and shall be computed on the basis of a
365-day year and the actual number of days elapsed. The holder may convert the January Convertible Promissory Note into common
shares of stock at a 39% discount to the price of common shares in the ten days prior to conversion. In connection with the issuance
of the January Convertible Promissory Note, the Company recorded a computed of $50,189 as the note is considered stock settled
debt under ASC 480, all of which was amortized and the outstanding principal and interest on the January Convertible Promissory
Note was converted, into 3,132,485 shares of common stock in the year ended December 31,2014. On February 20, 2014,
the Company borrowed $82,500 pursuant to a convertible note with an OID of $7,500 resulting in cash received of $75,000. The debt
matures twenty four months from the date funded, has a one-time 10% interest charge if not paid within 90 days, and is convertible
at the option of the lender into shares of the Companys common stock at the lesser of $0.042 per share or 60% of the average
of the two lowest closing bid prices in the 25 trading days prior to conversion. The note might be accelerated if an event of default
occurs under the terms of the note, including the Companys failure to pay principal and interest when due, certain bankruptcy
events or if the Company is delinquent in its SEC filings. In connection with the issuance of the notes, the Company recorded a
debt discount of $75,000 which has been fully amortized and the outstanding principal and interest of the Note was converted, into
4,756,739 shares of common stock in the year ended December 31, 2014. As the note conversion includes a lesser of
pricing provision, a derivative liability of $91,061 was recorded when the note was entered into. The derivative liability was
remeasured at each balance sheet date and was reclassified to equity on a pro-rata basis upon conversion of the note. On February 21, 2014,
the Company entered into a financing arrangement pursuant to which it borrowed $100,000 in unsecured debt, convertible at the discretion
of the lender. The debt was issued at a 10% discount, matures on August 21, 2014, has an interest rate of 10%, and is convertible
at the option of the lender into shares of the Companys common stock at a 40% discount to the lowest closing bid price in
the 20 trading days prior to conversion. In connection with the issuance of the note, the Company computed a premium of $66,667
as the note is considered stock settled debt under ASC 480, all of which was accreted and charged to interest expense in the year
ended December 31, 2014. In the year ended December 31, 2014, the outstanding principal and interest on the Convertible Promissory
Note was converted, into 4,149,378 shares of common stock. On March 13, 2014,
the Company borrowed two notes of $75,000, each from a separate lender with maturity dates of March 4, 2015. Under each agreement
the Company received $65,750, which was net of legal and due diligence fees. The notes bear interest at 8% per annum and are convertible
at the option of the lender into shares of the Companys common stock at a 40% discount to the lowest closing bid price in
the 20 trading days prior to conversion. The notes might be accelerated if an event of default occurs under the terms of the note,
including the Companys failure to pay principal and interest when due, certain bankruptcy events or if the Company is delinquent
in its SEC filings. In conjunction with each note the Company also issued an additional note, of identical terms, each for $75,000.
The additional note was paid for by the issuance of a note payable from the lenders to the Company. In the event that the original
note is not repaid prior to six months from its issuance, the lender has the option of converting the additional note into shares
of the Companys common stock at a 40% discount to lowest closing bid price in the 20 trading days prior to conversion, subject
to the notes payable to the Company having been paid in full. The additional note payable has been netted with the related note
receivable. In connection with the issuance of the notes, the Company computed a premium of $100,000 as the debt is considered
a stock settled debt under ASC 480, all of which was amortized during the year ended December 31, 2014. As of December 31, 2014
the outstanding principal and interest was converted, into 16,386,485 shares of common stock. On May 5, 2014 one of the $75,000
notes receivable due to the company was paid, for which the Company received $65,750, net of fees. The Company computed a premium
of $50,000 as the debt is considered a stock settled debt under ASC 480, all of which was amortized during the year ended December
31, 2014. As of December 31, 2014 the outstanding principal and interest was converted, into 4,117,795 shares of common stock.
Concurrent with the repayment the Company and the lender entered into two new convertible notes, for $75,000 each, on identical
terms to the March 4, 2014 convertible notes. Each of these two notes was paid for by the issuance of notes payable from the lenders
to the Company, each for $75,000, on identical terms to the March 4, 2014 notes. These two new notes have been netted for presentation
purposes. In connection with the payment of the note receivable to the Company, the Company recorded a premium of $50,000 related
to one of the additional notes that had been entered into on March 4, 2014, all of which was amortized and the outstanding principal
and interest was converted, into 4,166,386 shares of common stock in the year ended December 31, 2014. On March 24, 2014,
the Company borrowed $52,500 with a maturity date of March 19, 2015, pursuant to a financing agreement. Under the agreement the
Company received $46,000, which was net of legal and due diligence fees. The note bears interest at 8% per annum and is convertible
at the option of the lender into shares of the Companys common stock at a 40% discount to the lowest closing bid price in
the 20 trading days prior to conversion. The note might be accelerated if an event of default occurs under the terms of the note,
including the Companys failure to pay principal and interest when due, certain bankruptcy events or if the Company is delinquent
in its SEC filings. In connection with the issuance of the notes, the Company recorded a premium of $35,000 as the note is considered
stock settled debt under ASC 480, all of which was accreted and charged to interest expense and the outstanding principal and interest
on the note was converted, into 3,043,515 shares of common stock in the year ended December 31, 2014. On April 7, 2014,
the Company borrowed $50,000 with a maturity date of April 4, 2015, pursuant to a financing agreement. Under the agreement the
Company received $44,000, which was net of legal and due diligence fees. The note bears interest at 8% per annum and is convertible
at the option of the lender into shares of the Companys common stock at a 40% discount to the price of common shares in
the twenty days prior to conversion. The note might be accelerated if an event of default occurs under the terms of the note, including
the Companys failure to pay principal and interest when due, certain bankruptcy events or if the Company is delinquent in
its SEC filings. In connection with the issuance of the note, the Company computed a premium of $33,333 as the note is considered
stock settled debt under ASC 480, all of which was accreted and charged to interest expense and the outstanding principal and interest
on the note was converted, into 2,888,888 shares of common stock in the year ended December 31, 2014. On April 14, 2014,
the Company borrowed $63,000 with a maturity date of January 2, 2015, pursuant to a financing agreement. Under the agreement the
Company received $60,000, which was net of legal fees. The note bears interest at 8% per annum and is convertible at the option
of the lender into shares of the Companys common stock at a 39% discount to the price of common shares in the ten days prior
to conversion. The note might be accelerated if an event of default occurs under the terms of the note, including the Companys
failure to pay principal and interest when due, certain bankruptcy events or if the Company is delinquent in its SEC filings. In
connection with the issuance of the note, the Company computed a premium of $40,279 as the note is considered stock settled debt
under ASC 480, all of which was accreted and charged to interest expense and the outstanding principal and interest on the note
was converted, into 3,102,713 shares of common stock in the year ended December 31, 2014. On April 16, 2014,
the Company borrowed $110,000 pursuant to a convertible note with an OID of $10,000 resulting in cash received of $100,000. The
debt matures twenty four months from the date funded, has a one-time 10% interest charge if not paid within 90 days, and is convertible
at the option of the lender into shares of the Companys common stock at the lesser of $0.042 per share or 60% of the average
of the two lowest closing bid prices in the 25 trading days prior to conversion. The note might be accelerated if an event of default
occurs under the terms of the note, including the Companys failure to pay principal and interest when due, certain bankruptcy
events or if the Company is delinquent in its SEC filings. In connection with the issuance of the notes, the Company recorded a
debt discount of $139,997, which has been fully amortized and the outstanding principal and interest of the Note was converted,
into 6,910,704 shares of common stock in the year ended December 31, 2014. As the note conversion includes a lesser of
pricing provision, a derivative liability of $139,997 was recorded when the note was entered into. The derivative liability was
remeasured at each balance sheet date and was reclassified to equity on a pro-rata basis upon conversion of the note. On April 25, 2014,
the Company borrowed $50,000 with a maturity date of January 25, 2015, pursuant to a financing agreement. Under the agreement the
Company received $45,000, which was net of legal and due diligence fees. The note bears interest at 8% per annum and is convertible
at the option of the lender into shares of the Companys common stock at a 40% discount to the price of common shares in
the ten days prior to conversion. The note might be accelerated if an event of default occurs under the terms of the note, including
the Companys failure to pay principal and interest when due, certain bankruptcy events or if the Company is delinquent in
its SEC filings. In connection with the issuance of the note, the Company computed a premium of $33,333 as the note is considered
stock settled debt under ASC 480, all of which was accreted and charged to interest expense and the outstanding principal and interest
on the note was converted, into 2,890,411 shares of common stock in the year ended December 31, 2014. On May 30, 2014,
the Company borrowed $63,000 with a maturity date of February 27, 2015, pursuant to a financing agreement. Under the agreement
the Company received $60,000, which was net of legal fees. The note bears interest at 8% per annum and is convertible at the option
of the lender into shares of the Companys common stock at a 39% discount to the price of common shares in the ten days prior
to conversion. The note might be accelerated if an event of default occurs under the terms of the note, including the Companys
failure to pay principal and interest when due, certain bankruptcy events or if the Company is delinquent in its SEC filings. In
connection with the issuance of the note, the Company computed a premium of $40,279 as the note is considered stock settled debt
under ASC 480, all of which was accreted and charged to interest expense and the Company exercised its right to prepay the outstanding
principal and interest for a total redemption amount of $87,536 in the year ended December 31, 2014. On June 18, 2014,
the Company closed a financing agreement whereby the Company borrowed an aggregate principal amount of $247,500 with a 10% original
note discount. The note has an interest rate of 10%, and is convertible at the option of the lender into shares of the Companys
common stock at the lesser of (i) a 40% discount to the lowest closing bid price in the 20 trading days prior to conversion or
(ii) $0.075. The note might be accelerated if an event of default occurs under the terms of the note, including the Companys
failure to pay principal and interest when due, certain bankruptcy events or if the Company is delinquent in its SEC filings. The
first tranche was funded on June 18, 2014 with a principal amount of $55,000 and net proceeds of $50,000, with a maturity date
of June 17, 2016, pursuant to the convertible note. In connection with the issuance of the note, the Company recorded a debt discount
of $50,000 related to the derivative liability which was fully amortized as of June 30, 2015. As of June 30, 2015, the outstanding
principal and interest of the note was fully converted into 4,425,894 shares of common stock. As the note conversion includes a
lesser of pricing provision, a derivative liability of $59,623 was recorded when the note was entered into. The derivative
liability was re-measured at each balance sheet date and was reclassified to equity upon conversion of the note. The second tranche
was funded on September 19, 2014, with a principal amount of $55,000 and net proceeds of $50,000, with a maturity date of September
19, 2015, pursuant to a convertible note. In connection with the issuance of the notes, the Company recorded a debt discount of
$50,000 related to the derivative liability which was fully amortized as of June 30, 2015. As of June 30, 2015, the outstanding
principal and interest on the notes was fully converted into 6,980,938 shares of common stock. As the note conversion includes
a lesser of pricing provision, a derivative liability of $59,623 was recorded when the note was entered into. The
derivative liability was re-measured at each balance sheet date and was reclassified to equity upon conversion of the note. The
third tranche was funded on December 22, 2014, with a principal amount of $55,000 and net proceeds of $50,000, with a maturity
date of December 22, 2015, pursuant to a convertible note. The Company recorded a debt discount of $50,000 related to the derivative
liability which was fully amortized as of September 30, 2015. As of September 30, 2015, the outstanding principal and interest
of the note was fully converted into 5,857,374 shares of common stock. As the note conversion includes a lesser of
pricing provision, a derivative liability of $62,118 was recorded when the note was entered into. The derivative liability was
re-measured at each balance sheet date and was reclassified to equity upon conversion of the note. The fourth tranche was funded
on January 13, 2016, with a principal amount of $82,500 and net proceeds of $75,000, with a maturity date of January 13, 2018,
pursuant to a convertible note. As the note conversion includes a lesser of pricing provision, a derivative liability
The Company will record a derivative liability and debt discount related to the derivative liability On June 19, 2014,
the Company borrowed of $25,000, with a maturity date of June 17, 2015, pursuant to a financing agreement. Under the agreement
the Company received $22,000, which was net of legal and due diligence fees. The notes bear interest at 8% per annum and are convertible
at the option of the lender into shares of the Companys common stock at a 40% discount to the lowest closing bid price in
the 20 trading days prior to conversion. The note might be accelerated if an event of default occurs under the terms of the note,
including the Companys failure to pay principal and interest when due, certain bankruptcy events or if the Company is delinquent
in its SEC filings. In connection with the issuance of the note, the Company computed a premium of $16,667 as the note is considered
stock settled debt under ASC 480, all of which was accreted and charged to interest expense in the year ended and the Company exercised
its right to prepay the outstanding principal and interest for a total redemption amount of $35,956 in the year ended December
31, 2014. On June 20, 2014,
the Company borrowed $40,000 with a maturity date of June 17, 2015, pursuant to a financing agreement. Under the agreement the
Company received $36,000, which was net of legal and due diligence fees. The note bears interest at 8% per annum and is convertible
at the option of the lender into shares of the Companys common stock at a 40% discount to the lowest closing bid price in
the 20 trading days prior to conversion. The note might be accelerated if an event of default occurs under the terms of the note,
including the Companys failure to pay principal and interest when due, certain bankruptcy events or if the Company is delinquent
in its SEC filings. In connection with the issuance of the notes, the Company computed a premium of $26,667 as the note is considered
stock settled debt under ASC 480, all of which was accreted and charged to interest expense and the Company exercised its right
to prepay the outstanding principal and interest for a total redemption amount of $57,517 in the year ended December 31, 2014. On July 3, 2014,
the Company borrowed $115,000 with a maturity date of July 3, 2015, pursuant to a convertible note. Under the agreement the Company
received $100,000, which was net of legal and due diligence fees. The Note has an interest rate of 8%, and is convertible at the
option of the lender into shares of the Companys common stock at the lesser of $0.06 per share or a 40% discount of the
lowest closing bid prices in the 15 trading days prior to conversion. The note might be accelerated if an event of default occurs
under the terms of the note, including the Companys failure to pay principal and interest when due, certain bankruptcy events
or if the Company is delinquent in its SEC filings. In connection with the issuance of the notes, the Company recorded a debt discount
of $58,571 relating to derivative liability which was fully amortized as of March 31, 2015. As of March 31, 2015, the outstanding
principal and interest on the note was fully converted into 8,248,677 shares of common stocks. In conjunction with the Note, the
Company granted the lender a warrant for 1,000,000 common shares at a strike price of $0.08. The warrant has a life of three years
and its relative fair value of $41,429 has been recorded as a debt discount and additional paid in capital as of March 31, 2015.
As the note conversion includes a lesser of pricing provision, a derivative liability of $59,623 was recorded when
the note was entered into. The derivative liability was re-measured at each balance sheet date and was reclassified to equity upon
conversion of the note. On July 7, 2014,
the Company borrowed $53,000 with a maturity date of March 25, 2015, pursuant to a financing agreement. Under the agreement the
Company received $50,000, which was net of legal fees. The note bears interest at 8% per annum and is convertible at the option
of the lender into shares of the Companys common stock at a 39% discount to the price of common shares in the 10 days prior
to conversion. The note might be accelerated if an event of default occurs under the terms of the note, including the Companys
failure to pay principal and interest when due, certain bankruptcy events or if the Company is delinquent in its SEC filings. In
connection with the issuance of the note, the Company computed a premium of $33,885 as the note is considered stock settled debt
under ASC 480, all of which was accreted and charged to interest expense in the year ended December 31, 2014. As of June 30, 2015,
the Company exercised its right to prepay the outstanding principal and interest for a total redemption amount of $73,629 and recorded
a loss on extinguishment of approximately $18,550. On July 9, 2014
and August 21, 2014 the Company borrowed from a lender, notes each amounting to $110,000, which matures twelve months from the
date of the respective notes, pursuant the agreement. Each debt was issued at a 10% original issue discount resulting in net total
proceeds of $180,000, net of legal fees. The notes bear |
