CONVERTIBLE NOTES PAYABLE | NOTE 6. CONVERTIBLE NOTES PAYABLE At June 30, 2015 and December 31, 2014, convertible notes and debentures consisted of the following: June 30, December 31, Convertible notes payable $ 428,800 $ 342,750 Unamortized debt discount (74,963 ) (113,927 ) Carrying amount $ 353,837 $ 228,823 On April 3, 2014, the Company issued a convertible promissory note for $63,000 to an unrelated party for consulting services. The note accrues interest at 12% per annum, compounded monthly and matures on October 3, 2014. In the event of default, any overdue amounts will accrue interest at 20% per annum, compounded monthly. The principal balance of the note is convertible to common stock at the lower of either $0.03, or 50% of the lowest traded price 20 days prior to conversion, and is limited to 4.99% of the Company’s outstanding common stock at the time of conversion. All interest that accrues is convertible at $0.0001. The Company determined the note qualified for derivative liability treatment under ASC 815, “Derivatives and Hedging” (“ASC 815”). The Company recorded initial derivative liabilities of $102,456 on the date the note was executed, and a debt discount of $63,000, resulting in excess derivative liability expense of $39,456. See Note 7 for treatment of derivative liability associated with convertible notes payable. For the year ended December 31, 2014, the Company fully amortized $63,000 of debt discount related to this note, and as of June 30, 2015, the unamortized debt discount related to this note is $0. Accrued interest was $14,483 as of June 30, 2015. This convertible promissory note is currently in default. On May 1, 2014, the Company issued a convertible promissory note for $50,000 to an unrelated party. The note was issued for $30,000 in cash and $20,000 in payments towards services rendered. The note is due on demand and accrues interest at a rate of 8% per annum. In the event of default, the interest rate increases to 22% per annum on a simple interest basis. The note is convertible at a rate of 10% of the average of the three lowest trading prices for the ten days prior to conversion, and can be converted at any time at the option of the holder. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $502,678 on the date the note was executed. See Note 7 for treatment of derivative liability associated with convertible notes payable. Accrued interest was $4,490 as of June 30, 2015. Through June 30, 2015, the holder of this convertible promissory note elected to convert a total of $8,950 of principal to 48,053,571 shares of common On August 26, 2014, the Company issued a convertible promissory note for $120,000 to the former CEO of the Company for consulting services. The note is due on August 26, 2015 and accrues interest at a rate of 10% per annum, compounded monthly. The principal balance of the note is convertible at X-(X*25%), where X is the lesser of the closing price on date of conversion, or the closing price on date the note was executed multiplied by 1.25, and can be converted at any time at the option of the holder of the note. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $106,408 on the date the note was executed, and a debt discount of $106,408. See Note 7 for treatment of derivative liability associated with convertible notes payable. For the six months ended June 30, 2015, the Company amortized $52,767 of debt discount related to this note, and as of June 30, 2015, the unamortized debt discount related to this note is $16,617. Accrued interest was $10,556 as of June 30, 2015. On September 3, 2014, the Company issued a convertible promissory note for $60,000 for consulting services. This note is due on March 3, 2015 and accrues interest at a rate of 10% per annum, compounded monthly. The principal balance of this note is convertible at the lesser of $0.0037 or the closing price on the date of conversion, and can be converted at any time at the option of the holder. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $57,743 on the date the note was executed, and a debt discount of $57,743. See Note 7 for treatment of derivative liability associated with convertible notes payable. For the six months ended June 30, 2015, the Company amortized $19,779 of debt discount related to this note, and as of June 30, 2015, the unamortized debt discount related to this note is $0. Accrued interest was $7,235 as of June 30, 2015. This convertible promissory note is currently in default. On September 10, 2014, the Company issued a convertible promissory note for $52,500 for consulting services. The note is due on April 10, 2015 and accrues interest at a rate of 10% per annum, compounded monthly. The principal balance of this note is convertible at the lesser of $0.0025 or the closing price on the date of conversion, and can be converted at any time at the option of the holder. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $77,675 on the date the note was executed, and a debt discount of $52,500, resulting in excess derivative liability expense of $25,175. See Note 7 for treatment of derivative liability associated with convertible notes payable. For the six months ended June 30, 2015, the Company amortized $24,764 of debt discount related to this note, and as of June 30, 2015, the unamortized debt discount related to this note is $0. In September 2014, an interest payment of $600 was made toward the balance of accrued interest. As a result, accrued interest was $5,002 as of June 30, 2015. This convertible promissory note is currently in default. On February 2, 2015, the Company issued a convertible promissory note for $43,000 to an unrelated party. The note was issued for $25,000 in cash and $18,000 in payments towards services rendered. The note is due on November 4, 2015 and accrues interest at a rate of 8% per annum. In the event of default, the interest rate increases to 22% per annum on a simple interest basis. The note is convertible at a rate of 55% of the average of the three lowest trading prices for the fifteen days prior to conversion, and can be converted at any time at the option of the holder. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $73,687 on the date the note was executed and a debt discount of $43,000, resulting in excess derivative liability expense of $30,687. See Note 7 for treatment of derivative liability associated with convertible notes payable. For the six months ended June 30, 2015, the Company amortized $23,142 of debt discount related to this note, and as of June 30, 2015, the unamortized debt discount related to this note is $19,858. Accrued interest was $1,404 as of June 30, 2015. On April 9, 2015, the Company issued a convertible promissory note for $15,000 to an unrelated party. The note was issued for $15,000 in payments towards services rendered. The note is due on demand and accrues interest at a rate of 8% per annum. In the event of default, the interest rate increases to 22% per annum on a simple interest basis. The note is convertible at a rate of 10% of the average of the three lowest trading prices for the ten days prior to conversion, and can be converted at any time at the option of the holder. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $220,486 on the date the note was executed resulting in excess derivative liability expense of $220,486. See Note 7 for treatment of derivative liability associated with convertible notes payable. Accrued interest was $273 as of June 30, 2015. On April 24, 2015, the Company issued a convertible promissory note for $15,000 to an unrelated party. The note was issued for $15,000 in cash, which was used to pay off the August 7, 2013 related party note payable from the former CEO. The note is due on April 24, 2016 and accrues interest at a rate of 5% per annum. The note is convertible at a rate of 40% of the lowest trading price for the forty days prior to conversion, and can be converted at any time at the option of the holder. Should the trading price for the Company’s common stock go below $0.0001 at any time, the note will then be convertible at the option of the holder at a rate of either the lower of (i) $0.0001 or (ii) 40% of the lowest trading price for the forty days prior to conversion. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $44,308 on the date the note was executed and a debt discount of $15,000, resulting in excess derivative liability expense of $29,308. See Note 7 for treatment of derivative liability associated with convertible notes payable. For the six months ended June 30, 2015, the Company amortized $2,746 of debt discount related to this note, and as of June 30, 2015, the unamortized debt discount related to this note is $12,254. Accrued interest was $50 as of June 30, 2015. Through June 30, 2015, the holder of this convertible promissory note elected to convert a total of $13,750 of principal to 43,750,000 shares of common stock at a share price of between $0.0004 and $0.0001 per share. On May 4, 2015, the Company issued a convertible promissory note for $33,000 to an unrelated party. The note was issued for $12,000 in cash and $21,000 in payments towards services rendered. The note is due on February 6, 2016 and accrues interest at a rate of 8% per annum. In the event of default, the interest rate increases to 22% per annum on a simple interest basis. The note is convertible at a rate of 55% of the average of the three lowest trading prices for the fifteen days prior to conversion, and can be converted at any time at the option of the holder. The Company determined the note qualified for derivative liability treatment under ASC 815. The Company recorded initial derivative liabilities of $87,139 on the date the note was executed and a debt discount of $33,000, resulting in excess derivative liability expense of $54,139. See Note 7 for treatment of derivative liability associated with convertible notes payable. For the six months ended June 30, 2015, the Company amortized $6,766 of debt discount related to this note, and as of June 30, 2015, the unamortized debt discount related to this note is $26,234. Accrued interest was $420 as of June 30, 2015. |