CONVERTIBLE NOTES PAYABLE | NOTE 6. CONVERTIBLE NOTES PAYABLE At September 30, 2015 and December 31, 2014, convertible notes and debentures consisted of the following: September 30, December 31, Convertible notes payable $ 465,608 $ 342,750 Unamortized debt discount (54,862 ) (113,927 ) Carrying amount $ 410,746 $ 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 September 30, 2015, the unamortized debt discount related to this note is $0. Accrued interest was $18,455 as of September 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 $5,312 as of September 30, 2015. Through September 30, 2015, the holder of this convertible promissory note elected to convert a total of $10,575 of principal to 102,428,571 shares of common stock at a share price of between $0.00044 and $0.00002 per share. 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 nine months ended September 30, 2015, the Company amortized $69,384 of debt discount related to this note, and as of September 30, 2015, the unamortized debt discount related to this note is $0. Accrued interest was $15,150 as of September 30, 2015. This convertible promissory note is currently in default. 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 nine months ended September 30, 2015, the Company amortized $19,779 of debt discount related to this note, and as of September 30, 2015, the unamortized debt discount related to this note is $0. Accrued interest was $10,682 as of September 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 nine months ended September 30, 2015, the Company amortized $24,764 of debt discount related to this note, and as of September 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 $7,950 as of September 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 nine months ended September 30, 2015, the Company amortized $37,527 of debt discount related to this note, and as of September 30, 2015, the unamortized debt discount related to this note is $5,473. Accrued interest was $2,156 as of September 30, 2015. Through September 30, 2015, the holder of this convertible promissory note elected to convert a total of $19,235 of principal to 221,502,230 shares of common stock at a share price of between $0.00017 and $0.00006 per share. This convertible promissory note is currently in default. 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 $(2,124) as of September 30, 2015. Through September 30, 2015, the holder of this convertible promissory note elected to convert a total of $7,082 of principal and $2,649 of accrued interest to 106,098,892 shares of common stock at a share price of between $0.00025 and $0.00005 per share. 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 nine months ended September 30, 2015, the Company amortized $15,000 of debt discount related to this note, and as of September 30, 2015, the unamortized debt discount related to this note is $0. Accrued interest was $50 as of September 30, 2015. Through September 30, 2015, the holder of this convertible promissory note elected to convert a total of $15,000 of principal to 56,250,000 shares of common stock at a share price of between $0.0004 and $0.0001 per share. This note has been paid in full. 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 nine months ended September 30, 2015, the Company amortized $17,687 of debt discount related to this note, and as of September 30, 2015, the unamortized debt discount related to this note is $15,313. Accrued interest was $1,085 as of September 30, 2015. On July 3, 2015, the Company issued a convertible promissory note for $66,000 to an unrelated party for consulting services. The note accrues interest at 12% per annum, compounded monthly and matures on January 3, 2016. 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 $0.01, 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 $144,983 on the date the note was executed, and a debt discount of $66,000, resulting in excess derivative liability expense of $78,983. See Note 7 for treatment of derivative liability associated with convertible notes payable. For the nine months ended September 30, 2015, the Company amortized $31,924 of debt discount related to this note, and as of September 30, 2015, the unamortized debt discount related to this note is $34,076. Accrued interest was $1,972 as of September 30, 2015. |