Short-Term Notes Payable | NOTE 4 - SHORT-TERM NOTES PAYABLE On March 10, 2015, the Company entered into a debt settlement agreement (the Debt Settlement Agreement) with Leone Group, LLC (Leone), American Capital Ventures, Inc. (ACV), Georgia Georgopoulos, Catherine Cozias and Trels Investments, Ltd. (Trels and collectively with Leone, ACV, Ms. Georgopoulos and Ms. Cozias, the Holders). Pursuant to the Debt Settlement Agreement, the Company and the Holders agreed to settle all of the outstanding debt owed under certain promissory notes and accounts payable, to Leone, ACV, Ms. Georgopoulos, Ms. Cozias and Trels, and the Holders agreed to convert their respective portions of the debt into shares of restricted common stock of the Company at $0.003 per share. The Company agreed to issue an aggregate of 346,319,970 shares of common stock in settlement of outstanding short-term notes payable with aggregate principal amounts of $625,000, accrued interest payable of $118,205 and accounts payable related parties of $295,754, as follows: a. 142,193,090 shares to Leone, in settlement of $234,375 in principal and $44,327 of accrued and unpaid interest pursuant to certain promissory notes, and $147,877 of accounts payable by the Company; b. 142,193,090 shares to ACV in settlement of $234,375 in principal and $44,327 of accrued and unpaid interest pursuant to a promissory note, and $147,877 of accounts payable by the Company; c. 21,225,001 shares to Ms. Georgopoulos, in settlement of $53,548 in principal and $10,127 of accrued and unpaid interest pursuant to a promissory note; d. 21,225,001 shares to Ms. Cozias, in settlement of $53,548 in principal and $10,127 of accrued and unpaid interest pursuant to a promissory note; and e. 19,483,788 shares to Trels, in settlement of $49,154 in principal and $9,297 of accrued and unpaid interest pursuant to a promissory note. Pursuant to the terms of the Debt Settlement Agreement, at any time before the Companys entrance into a definitive agreement for the effectuation of a merger or acquisition that results in a change of control of the Company, the Holders shall have a first right of refusal, subject to the terms of the Debt Settlement Agreement, to participate in any future financing sought by the Company, on a pro rata basis, with the maximum funding amount of each future financing for each respective party being in proportion to that respective partys total ownership percentage of the Company at that time, which shall only be triggered after a total of $50,000 in the aggregate in funding is obtained by the Company subsequent to the effective date of the Debt Settlement Agreement. If the Company, at any time before the Companys entrance into a definitive agreement for the effectuation of a merger or acquisition that results in a change of control of the Company, issues common stock at a price per share below $0.003 (the Settlement Price), or issues a security convertible at a conversion price per share below the Settlement Price, taking into account any applicable adjustments for a consolidation, recapitalization or reorganization of the Company (the Lower Issuance Price), the Holders shall have the right to receive additional shares of the Companys common stock, without additional payment, such that the effective Settlement Price pursuant to the Debt Settlement Agreement would be equal to the Lower Issuance Price. In connection with this debt settlement, for the three months ended May 31, 2015, the Company recorded debt settlement expense of $173,160. Additionally, remaining liabilities of $6,070 due to the Companys CEO and a Company controlled by him was forgiven by him in March 2015, resulting in a gain on settlement of $6,070. Accrued interest on promissory notes payable totaled $0 and $117,007 at May 31, 2015 and February 28, 2015, respectively, and is included in accounts payable and accrued liabilities on the accompanying balance sheets. At May 31, 2015 and February 28, 2015, short-term notes payables consisted of the following: May 31, 2015 February 28, 2015 Unsecured promissory note dated June 15, 2009, originally bearing interest at 5% per annum on the principal balance of $50,000, was originally due on June 15, 2011. Effective May 18, 2011 this promissory note was amended and the maturity date of the note was extended until February 28, 2013. The promissory note became past due on February 28, 2013 and the principal amount or such portion thereof as shall remain outstanding from time to time accrued simple interest, calculated monthly in arrears, at a rate of 12% per annum commencing on the date of the promissory note and payable at maturity. Effective September 1, 2013, this promissory note was again amended whereby the maturity date of the note was extended until June 30, 2014 and the interest rate was reduced to 7%. On March 10, 2015, this note and all accrued interest were settled by the issuance of the Companys common stock. $ - $ 50,000 Unsecured promissory note dated May 6, 2011, originally bearing interest at 5% per annum on the principal balance of $250,000, was originally due on February 28, 2013. The promissory note became past due on February 28, 2013 and the principal amount or such portion thereof as shall remain outstanding from time to time accrued simple interest, calculated monthly in arrears, at a rate of 12% per annum commencing on the date of the promissory note and payable at maturity. Effective September 1, 2013, this promissory note was again amended whereby the maturity date of the note was extended until June 30, 2014 and the interest rate was reduced to 7%. On March 10, 2015, this note and all accrued interest were settled by the issuance of the Companys common stock. - 250,000 Unsecured promissory note dated September 24, 2013, bearing interest at 7% per annum on the principal balance of $100,000 and due on June 30, 2014. On March 10, 2015, this note and all accrued interest were settled by the issuance of the Companys common stock. - 100,000 Unsecured promissory note dated February 13, 2014, bearing interest at 7% per annum on the principal balance of $50,000 and due on February 13, 2015. On March 10, 2015, this note and all accrued interest were settled by the issuance of the Companys common stock. - 50,000 Unsecured promissory note dated March 31, 2014, bearing interest at 7% per annum on the principal balance of $75,000 and due on March 31, 2015. On March 10, 2015, this note and all accrued interest were settled by the issuance of the Companys common stock. - 75,000 Unsecured promissory note dated July 15, 2014, bearing interest at 7% per annum on the principal balance of $100,000 and due on March 31, 2015. On March 10, 2015, this note and all accrued interest were settled by the issuance of the Companys common stock. - 100,000 Total short-term notes payable $ - $ 625,000 |