| Equity and Debt Financing Agreements | 4. Equity and Debt Financing Agreements Convertible Note Financings Short-term convertible debt as of September
30, 2016 is as follows (In thousands):
Notes Accrued Interest Total
Convertible notes with accrued interest accounted for as stock settled debt $ 844 $ 25 $ 869
Conversion premiums 418 418
1,262 25 1,287
Convertible notes with embedded derivatives 5,420 934 6,354
Derivative discounts (2,086 ) (2,086 )
3,334 934 4,268
Original issue discounts and loan fee discounts (320 ) (320 )
$ 4,276 $ 959 $ 5,235 Dominion Convertible Debt Financings On November 25,
2014, the Company closed a financing transaction by entering into a Securities Purchase Agreement dated November 25, 2014 (the
Note I SPA) with Dominion Capital LLC (the Purchaser) for an aggregate subscription amount of $4,000,000
(the Purchase Price). Pursuant to the Note I SPA, the Company issued a series of 4% Original Issue Discount Senior
Secured Convertible Promissory Notes (collectively, the Note I) to the Purchaser. The Purchase Price will be paid
in eight equal monthly payments of $500,000. Each individual Note was issued upon payment and will be amortized beginning six months
after issuance, with amortization payments being 1/24 th On August 14, 2015,
the Company closed a financing transaction by entering into a Securities Purchase Agreement dated August 14, 2015 (the Note
II SPA) with Dominion Capital LLC (the Purchaser) for an aggregate subscription amount of $2,400,000 (the
Purchase Price). Pursuant to the Note II SPA, the Company issued a series of 4% Original Issue Discount Senior Secured
Convertible Promissory Note (collectively, the Note II) to the Purchaser. The Purchase Price was paid in six equal
monthly payments of $400,000. Each individual Note was issued upon payment and is amortized beginning six months after issuance,
with amortization payments being 1/24 th The aggregate principal
amount of both Notes I and II are issued with a 4% original issue discount whereby the aggregate principal amount of Notes I and
II is $6,400,000 but the actual purchase price of Notes I and II is $6,144,000. Each of Notes I and II accrue interest at a rate
equal to 12% per annum and with maturity dates, depending on the date funded, between June 26, 2016 and June 30, 2017. Notes I
and II are convertible any time after the issuance date of the notes. The Purchasers have the right to convert Note I into shares
of the Companys common stock at a conversion price equal to 95% of the daily VWAP on the trading day immediately prior to
the closing of each tranche. The Purchasers have the right to convert Note II into shares of the Companys common stock at
a conversion price equal to $1.40. Additionally, under certain conditions defined in Notes I and II, the notes would be convertible
into common stock at a price equal to 62.5% of the lowest VWAP during the 15 Trading Days immediately prior to the applicable amortization
date. In the event that there is an Event of Default or certain conditions are not met, the conversion price will be adjusted to
equal to 55% of the lowest VWAP during the thirty (30) Trading Days immediately prior to the applicable Conversion Date. Notes
I and II can be prepaid at any time upon five days notice to the Holder by paying an amount in cash equal to the outstanding
principal and interest and a 120% premium. During 2015, the
Company had received all eight tranches under the Note I SPA ($500,000 principal in 2014 and $3,650,000 principal in 2015 which
includes an additional $150,000 added to one of the agreed $500,000 monthly funding as requested by the Company), with maturity
dates, depending on the date funded, between June 26, 2016 and December 29, 2016, pursuant to a convertible note. Under the agreement
the Company received $3,540,600, which was net of the $448,400 Purchasers expenses and legal fees and $166,000 which represents
the 4% original issue discount. As of June 30, 2016, the Company has received, all six tranches under the Note II SPA ($2,281,250
in principal in 2015 and $208,333 in 2016) with maturity dates of February 15, 2017 and June 30, 2017, pursuant to a convertible
note. Under the agreement the Company received $2,143,000, which was net of Purchasers expenses, legal fees of $247,000
and a 4% original issue discount of $99,583. 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 connection with the issuance of Notes I and II, the Company recorded a debt discount of $387,000
in 2014, $5,116,600 in 2015 and $180,000 during the three months ended March 31, 2016, totaling to $5,683,600 of debt discount
recorded, related to the embedded conversion option derivative liability. The amortization expense related to that discount recorded
was approximately $3,331,000 through 2015 and $2,996,000 during the nine months ended September 30, 2016. During the quarter ended
September 30, 2016, $1,219,000 of the outstanding principal and interest on Notes I and II was converted into 29,034,805 shares
of common stock. As of September 30, 2016, the outstanding principal and interest on Notes I and II were $3,122,000. As the note
conversion includes a lesser of pricing provision, a derivative liability of $8,936,405 was recorded when Notes I
and II were entered into. The derivative liability is re-measured at each balance sheet date and reclassified to equity on a pro-rata
basis upon conversion of the note, the derivative liability balance for Notes I and II at September 30, 2016 was $2,459,000. On December 22,
2015, in order to finance the acquisition of ENG, the Company closed a financing transaction by entering into a Securities Purchase
Agreement dated December 22, 2015 (the Note III SPA) for an aggregate principal amount of $904,042 and subscription
amount of $865,000, net of OID (the Purchase Price). The Company also reimbursed the Purchaser $30,000 for legal
fees and expenses from the proceeds of the Note. Pursuant to the Note III SPA, the Company shall issue a 4% Original Issue Discount
Senior Secured Convertible Promissory Note (the Note III) to Dominion. Note III was issued upon payment and will
be amortized beginning six months after issuance, with amortization payments being 1/24th of the principal and accrued interest,
made in cash or common stock, on a semi-monthly basis, subject to certain conditions contained in the Note III SPA. The amortization
payments will begin to be due starting on the 15th day of the month immediately following the six-month anniversary of the Closing
Date. The Company received funding for Note III on December 24, 2015, net proceeds of $751,500 (net of the $152,542 of legal fees,
expenses and OID). Note III accrues interest at a rate equal to 12% per annum (interest is guaranteed for the first twelve months)
and has a maturity date of June 15, 2017. Note III is convertible any time after its issuance date and Dominion has the right to
convert any or all of Note III into shares of the Companys common stock at a conversion price equal to $1.10, subject to
adjustment as described in Note III. Additionally, under certain conditions defined in Note III, it may also be convertible into
common stock at a price equal to 62.5% of the lowest VWAP during the 15 Trading Days immediately prior to the applicable amortization
date. In the event that there is an Event of Default or certain conditions are not met, the conversion price will be adjusted to
equal to 55% of the lowest VWAP during the thirty (30) Trading Days immediately prior to the applicable Conversion Date. Note III
can be prepaid at any time upon five days notice to the Dominion by paying an amount in cash equal to the outstanding principal
and interest, and a 20% premium. In connection with the issuance of the Note III, the Company recorded a debt discount of $751,500
when Note III was entered into, related to the embedded conversion option derivative liability. The amortization expense related
to that discount recorded was approximately $382,000 for nine months ended September 30, 2016. As of September 30, 2016, the outstanding
principal and interest on Note III was $988,000. As the note conversion includes a lesser of pricing provision, a
derivative liability of $1,267,800 was recorded when Note III was entered into. The derivative liability is re-measured at each
balance sheet date, the derivative liability balance for Note III at September 30, 2016 was $964,000. On January 28, 2016,
the Company closed a financing transaction by entering into a Securities Purchase Agreement dated January 28, 2016 (the Note
IV SPA) with Dominion Capital LLC (the Purchaser) for an aggregate principal amount of $2,187,500 and subscription
amount of $2,100,000 (the Purchase Price), net of OID. Pursuant to the Note IV SPA, the Company shall issue a series
of 4% Original Issue Discount Senior Secured Convertible Promissory Notes (collectively, the Note IV) to the Purchaser.
The Purchase Price is scheduled to be paid in six equal monthly tranches of $350,000, subject to the discretion of the Purchaser.
Each individual Note will be issued upon payment and will be amortized beginning six months after issuance, with amortization payments
being 1/24th of the principal and accrued interest, made in cash or common stock at the option of the Company, on a semi-monthly
basis, subject to certain conditions and limitations contained in the Note IV SPA. The amortization payments will begin on the
15th day of the month immediately following the six-month anniversary of the Closing Date. The Company also reimbursed the Purchaser
$20,000 for expenses from the proceeds of the first tranche and the Purchasers counsel $10,000 from the first tranche. As
of nine months ended September 30, 2016, the Company has received a total of $437,178 net proceeds under Note IV (net of the $83,655
of legal fees, expenses and OID). Note IV accrues interest at a rate equal to 12% per annum (interest is guaranteed for the first
twelve months) and has a maturity dates between July 15, 2017 and December 21, 2017. Note IV is convertible any time after its
issuance date and Dominion has the right to convert any or all of Note IV into shares of the Companys common stock at a
conversion price equal to $1.10 subject to adjustment as described in Note IV. Additionally, under certain conditions defined in
Note IV, it may also be convertible into common stock at a price equal to 62.5% of the lowest VWAP during the 15 Trading Days immediately
prior to the applicable amortization date. In the event that there is an Event of Default or certain conditions are not met, the
conversion price will be adjusted to equal to 55% of the lowest VWAP during the thirty (30) Trading Days immediately prior to the
applicable Conversion Date. Note IV can be prepaid at any time upon five days notice to the Dominion by paying an amount
in cash equal to the outstanding principal and interest, and a 20% premium. Subsequent to the funding of the first tranche the
Purchaser and the Company agreed to delay further tranches, until such time as the Purchaser and Company mutually agree, both as
to timing and amount. In connection with the issuances of Note IV, the Company recorded a debt discount of $437,178 when the notes
were entered into, related to the embedded conversion option derivative liability. The amortization expense related to that discount
recorded was approximately $169,000 for the nine months ended September 30, 2016. As of September 30, 2016, the outstanding principal
and interest on Note IV was $557,000. As the note conversion includes a lesser of pricing provision, a derivative
liability of $507,252 was recorded when Note IV was entered into. The derivative liability is re-measured at each balance sheet
date, the derivative liability balance for Note IV at September 30, 2016 was $576,000. Subsequent to the three months ended September
30, 2016, the Company received $87,585 net proceeds under Not IV net of the $6,165 of legal fees, expenses and OID). In connection
with the funding of the fifth tranche, the Company will record a debt discount, related to the embedded conversion option derivative
liability. As the note conversion includes a lesser of pricing provision, a derivative liability will also be recorded. Pursuant to the
Companys obligations under Notes I, II, III and IV, the Company entered into a Security Agreement with the Purchaser, pursuant
to which the Company granted a lien on all assets of the Company, subject to existing security interests, (the Collateral)
for the benefit of the Purchaser, to secure the Companys obligations under the Note. In the event of a default as defined
in Notes I, II, III and IV, the Purchaser may, among other things, collect or take possession of the Collateral, proceed with the
foreclosure of the security interest in the Collateral or sell, lease or dispose of the Collateral. Other Convertible Debt Financing 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) $3.75. 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 488,518 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 139,619 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 117,147 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. In connection
with the issuance of the note, the Company recorded a debt discount of $75,000, related to the embedded conversion option derivative
liability which has been fully amortized during the nine months ended September 30, 2016. As of September 30, 2016, the outstanding
principal and interest on the note was fully converted into 2,078,000 shares of common stock. As the note conversion includes a
lesser of pricing provision, a derivative liability of $122,263 was recorded when the note was entered into. The
derivative liability is re-measured at each balance sheet date and reclassified to equity on a pro-rata basis upon conversion of
the note. On October 27, 2014,
the Company borrowed $161,000 with a maturity date of October 27, 2015, pursuant to a financing agreement. Under the agreement
the Company received $150,000, which was net of an original issue discount of $11,000. 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 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 conjunction with the Note, the Company granted the lender a warrant for 20,000 common shares
at a strike price of $4.0. The warrant has a life of three years and its relative fair value of $33,404 has been recorded as a
debt discount and additional paid in capital as of June 30, 2015. In connection with the issuance of the note, the Company computed
a premium of $107,333 as the note is considered stock settled debt under ASC 480. On April 6, 2015, Dominion Capital LLC entered
into a purchase and assignment of the note (see paragraph below), and the Company and Dominion amended the note, with the total
amount of $166,681, with terms and conditions identical to Purchasers notes pursuant to the $4 Million Financing Agreement.
Pursuant to the amendment the maturity date was extended to October 24, 2015. Additionally, on April 6, 2015, the Company and Purchaser
entered into an $88,319 Senior Convertible, Redeemable Debenture of the Company, which was issued without proceeds as consideration
for the Purchasers expenses in conjunction with the purchase and assignment with the Lender, including legal and transaction
fees. This amount was recorded as a loss on debt extinguishment. As of June 30, 2015, the Company no longer has any outstanding
debt owed to the Lender. The total recorded premium was accreted and charged to interest expense upon the assignment of the convertible
note. On April 6, 2015,
the Company issued a new note for $166,681 convertible at the lesser of a 37.5% discount to the common stock price on the date
of the note (which was $0.77) or a 37.5% discount to the price of our common stock price at the time of conversion. In conjunction
with the purchase and assignment, the Company and Purchaser entered into a new note with a principal value of $88,319 as compensation
for Purchasers costs related to the purchase and assignment. This $88,319 was expensed as a loss on debt extinguishment.
In connection with the issuance of the notes, the Company recorded a debt discount of $255,000 related to the embedded conversion
option derivative liability which has been fully amortized as of December 31, 2015. As of the quarter ended June 30, 2016, the
outstanding principal and interest of the note was fully converted into 636,490 shares of common stock. As of September 30, 2016,
the note has no outstanding balance. As the note conversions includes a lesser of pricing provision, a derivative
liability of $305,904 was recorded when these notes were entered into. The derivative liability is re-measured at each balance
sheet date and reclassified to equity on a pro-rata basis upon conversion of the notes. The recorded derivative liability balance
was reclassified to equity upon conversion of the note and has zero balance as of September 30, 2016. On March 9, 2016,
the Company closed a Securities Purchase Agreement (SPA) with a lender, providing for the purchase of two Convertible
Redeemable Notes in the aggregate principal amount of $270,400 (the Notes), with the first note being in the amount
of $135,200 (Note I) and the second note being in the amount of $135,200 (Note II) with a maturity
date of March 9, 2017. Pursuant to Note I, the Company received $125,000 of proceeds, net of original issue discount of $5,200
and legal fees of $5,000. Note II was initially paid for by the issuance of an offsetting $130,000 secured note issued by the Lender
to the Company (Secured Note). The Notes bear an interest rate of 12%; and may be at any time after 180 days of the
date of closing converted into shares of Company common stock convertible at the lesser of a 37.5% discount to the common stock
price on the date of the note (which was $1.40) or a 37.5% discount to the price of our common stock price at the time of conversion.
The Notes also contain certain representations, warranties, covenants and events of default, and increases in the amount of the
principal and interest rates under the Notes in the event of such defaults. In connection with the issuance of Note I, the Company
recorded a debt discount of $125,000, related to the embedded conversion option derivative liability. The amortization expense
related to that discount recorded was approximately $86,000 for the nine months ended September 30, 2016. As of September 30, 2016,
the outstanding principal and interest on Note I was $140,223. During the three months ended September 30, 2016, the Company received
$70,000 of proceeds and $55,000 was received subsequent to the three months ended September 30, 2016 pursuant to Note II, net of
original issue discount of $5,200 and legal fees of $5,000. As the note conversion includes a lesser of pricing provision,
a derivative liability of $249,000 was recorded when Notes were entered into. The derivative liability is re-measured at each balance
sheet date and reclassified to equity on a pro-rata basis upon conversion of the note, the derivative liability balance for Notes
at September 30, 2016 was $196,000. On March 16, 2016,
the Company borrowed $53,000 with a maturity date of on December 18, 2016, pursuant to a financing agreement. Under the agreement
the Company received $50,000 of proceeds, net of $3,000 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 35% discount to the price of common shares in
the ten days prior to conversion. The note also contains certain representations, warranties, covenants and events of default,
and increases in the amount of the principal and interest rates under the Notes in the event of such defaults. In connection with
the issuance of the note, the Company recorded a premium of $28,538 as the note is considered stock settled debt under ASC 480,
which was fully accreted as of June 30, 2016. On August 19, 2016, the lender entered into a purchase and assignment agreement with
a third lender to sell and assign the outstanding principal and interest of $54,731 (original note). Pursuant to the purchase and
assignment agreement, the third lender and the Company amended the original note (as discussed in the paragraph below) and issued
a replacement note with a principal amount of $61,331, which includes an additional amount of $6,600 from the original notes
outstanding balance. The additional amount was recorded as a loss on debt extinguishment. As of September 30, 2016, the Company
no longer has any outstanding debt owed to the lender. The total recorded premium was on the original note was reclassified to
equity upon extinguishment of the debt. On August 19, 2016,
The Company entered into an agreement with a lender to issue a replacement note (as discussed in the above paragraph). The note
bears an interest rate of 5%; and maybe converted into shares of Company common stock, convertible at variable conversion price
at a 40% discount of the average of the two lowest closing bid price of the common stock for the 20 trading days prior to conversion.
The note also contains certain representations, warranties, covenants and events of default, and increases in the amount of the
principal and interest rates under the Note in the event of such defaults. In connection with the issuance of replacement note,
the Company recorded a debt discount of $54,731, related to the embedded conversion option derivative liability. The amortization
expense related to that discount recorded was approximately $43,000 for the three months ended September 30, 2016. During the three
months ended September 30, 2016, $15,000 of the outstanding balance was converted into 877,193 shares of the Companys common
stock. As of September 30, 2016, the outstanding principal and interest on note was $47,040. As the note conversion includes a
lesser of pricing provision, a derivative liability of $54,770 was recorded when the note was entered into. The derivative
liability is re-measured at each balance sheet date and reclassified to equity on a pro-rata basis upon conversion of the note,
the derivative liability balance for the note at September 30, 2016 was $15,141. On April 1, 2016,
the Company closed a Securities Purchase Agreement (SPA) with a lender, providing for the purchase of two Convertible
Redeemable Notes in the aggregate principal amount of $270,400 (the Notes), with the first note being in the amount
of $135,200 (Note I) and the second note being in the amount of $135,200 (Note II). Note I was funded
on April 1, 2016, with a maturity date of April 1, 2017, pursuant to Note I, the Company received $125,000 of net proceeds, net
of original issue discount of $5,200 and legal fees of $5,000. Note II was initially paid for by the issuance of an offsetting
$130,000 secured note issued by the Lender to the Company (Secured Note). Note II was funded on August 2, 2016, with
a maturity date of April 1, 2017, pursuant to Note II, the Company received $125,000 of net proceeds, net of original issue discount
of $5,200 and legal fees of $5,000. The Notes bear an interest rate of 12%; and may be at any time after 180 days of the date of
closing converted into shares of Company common stock convertible at the lesser of a 37.5% discount to the common stock price on
the date of the note (which was $1.40) or a 37.5% discount to the price of our common stock price at the time of conversion. In
connection with the issuance of Notes, the Company recorded a debt discount of $250,000, related to the embedded conversion option
derivative liability. The amortization expense related to that discount recorded was approximately $93,000 for the nine months
ended September 30, 2016. As of September 30, 2016, the outstanding principal and interest on Notes were $281,100. As the note
conversion includes a lesser of pricing provision, a derivative liability of $311,756 was recorded when Notes were
entered into. The derivative liability is re-measured at each balance sheet date and reclassified to equity on a pro-rata basis
upon conversion of the note, the derivative liability balance for Notes at September 30, 2016 was $266,522. On April 12, 2016,
the Company closed a Securities Purchase Agreement (SPA) with a lender, providing for the purchase of a Convertible
Redeemable Note in the aggregate principal amount of $58,000, with a maturity date of April 7, 2017, pursuant to note, the Company
will receive $50,000 of net proceeds, net of original issue discount and legal fees. The note bears an interest rate of 5%; and
is convertible at variable conversion price at a 37% discount to the common shares price on the date of the note or at a 47% discount
of the lowest trading price equal to or is lower than $0.25, as described in the note. The note also contains certain representations,
warranties, covenants and events of default, and increases in the amount of the principal and interest rates under the Note in
the event of such defaults. In connection with the issuance of note, the Company recorded a debt discount of $50,000, related to
the embedded conversion option derivative liability. The amortization expense related to that discount recorded was approximately
$24,000 for the nine months ended September 30, 2016. As of September 30, 2016, the outstanding principal and interest on note
was $59,360. As the note conversion includes a lesser of pricing provision, a derivative liability of $73,505 was
recorded when the note was entered into. The derivative liability is re-measured at each balance sheet date and reclassified to
equity on a pro-rata basis upon conversion of the note, the derivative liability balance for the note at September 30, 2016 was
$52,790. On April 18, 2016,
the Company closed a Securities Purchase Agreement (SPA) with a lender, providing for the purchase of two Convertible
Redeemable Notes in the aggregate principal amount of $143,000 (the Notes), with the first note being in the amount
of $71,500 (Note I) and the second note being in the amount of $71,500 (Note II). Note I was funded
on April 18, 2016, with a maturity date of April 18, 2017, pursuant to Note I, the Company received $55,000 of net proceeds, net
of original issue discount of $6,500 and legal fees of $10,000. Note II was initially paid for by the issuance of an offsetting
$65,000 secured note issued by the Lender to the Company (Secured Note). The Notes bear an interest rate of 10%;
and maybe converted into shares of Company common stock, convertible at variable conversion price at a 38% discount of the average
of the three lowest closing bid price of the common stock for the 20 trading days prior to conversion. The Notes also contain certain
representations, warranties, covenants and events of default, and increases in the amount of the principal and interest rates under
the Notes in the event of such defaults. In connection with the issuance of the note, the Company recorded a premium of $42,900
as the note is considered stock settled debt under ASC 480, which was fully accreted as of September 30, 2016. As of September
30, 2016, the outstanding principal and interest on the note was $75,100. On April 18, 2016,
the Company closed a Securities Purchase Agreement (SPA) with a lender, providing for the purchase of two Convertible
Redeemable Notes in the aggregate principal amount of $126,000 (the Notes), with the first note being in the amount
of $63,000 (Note I) and the second note being in the amount of $63,000 (Note II). Note I was funded
on April 20, 2016, with a maturity date of April 19, 2017, pursuant to Note I, the Company received $57,000 of net proceeds, net
of original issue discount of $3,000 and legal fees of $3,000. Note II was initially paid for by the issuance of an offsetting
$60,000 secured note issued by the Lender to the Company (Secured Note). The Notes bear an interest rate of 10%;
and maybe converted into shares of Company common stock, convertible at variable conversion price at a 35% discount of the lowest
closing bid price of the common stock for the 15 trading days prior to conversion. The Notes also contain certain representations,
warranties, covenants and events of default, and increases in the amount of the principal and interest rates under the Notes in
the event of such defaults. In connection with the issuance of the note, the Company recorded a premium of $33,923 as the note
is considered stock settled debt under ASC 480, which was fully accreted as of September 30, 2016. As of September 30, 2016, the
outstanding principal and interest on the note was $66,150. On April 28, 2016,
the Company closed a Securities Purchase Agreement (SPA) with a lender, providing for the purchase of two Convertible
Redeemable Notes in the aggregate principal amount of $437,500 (the Notes), with the first note being in the amount
of $218,750 (Note I) and the second note being in the amount of $218,750 (Note II). Note I was funded
on April 28, 2016, with a maturity date of April 27, 2017, pursuant to Note I, the Company received $190,000 of net proceeds, net
of original issue discount of $8,750 and legal fees of $20,000. Note II was initially paid for by the issuance of an |
