| CONVERTIBLE NOTES PAYABLE, NET | NOTE 7 CONVERTIBLE NOTES PAYABLE, NET On July 31, 2014, the Company entered into
a non-negotiable convertible promissory note payable for a principal sum of $16,562 with interest thereon at the rate of 6% per
annum. The whole principal sum and accrued, but unpaid, interest thereon was due six months from the date of note on January 31,
2015. The note is convertible, at the option of the Company, after six months from the date of note, as to both interest and principal,
into common shares of the Company at a price per share of $0.001. Since the note is convertible at the option of the Company and
not at the option of the holder, no beneficial conversion feature has been recorded in the accompanying consolidated financial
statements. The Company recorded an interest expense of $263 and $263 on the note for the three months ended November 30, 2015
and November 30, 2014 and an interest expense of $789 and $263 for the nine months ended November 30, 2015 and November 30, 2014. In September 2014, the Company entered into
another non-negotiable convertible promissory note payable for a principal sum of $199,975 with interest thereon at the rate of
3% per annum. The whole principal sum and accrued, but unpaid, interest thereon is due eighteen months from the date of note in
March 2016. The note is convertible, at the option of the Company, after six months from the date of note, as to both interest
and principal, into common shares of the Company at a 10% discount to the closing bid price on the date of notice of conversion
as reported on the OTC Electronic Bulletin Board, or any successor exchange. Since the note is convertible at the option of the
Company and not at the option of the holder, no beneficial conversion feature has been recorded in the accompanying consolidated
financial statements. The Company recorded an interest expense of $1,512 and $1,000 on the note for the three months ended November,
2015 and November 30, 2014 and recorded an interest expense of $4,467 and $1,000 on the note for the nine months ended November
30, 2015 and November 30, 2014. The Company entered into a convertible note
agreement on July 20, 2015 for an original principal amount of $107,000. Pursuant to the agreement, the Company received $100,000
against the $107,000 note, after the original issue discount of $7,000. The Maturity Date of the note is one year from the date
of advance. The Lender has the right, at any time after the issuance date, at its election, to convert all or part of the outstanding
and unpaid original principal sum and accrued interest (and any other fees) into shares of fully paid and non-assessable shares
of common stock of the Company as per the conversion formula. The conversion price shall be equal to 60% of the lowest trade price
in the 20 trading days previous to the conversion. The note holder cannot beneficially own more than 4.99% of the number of common
shares, immediately after giving effect to such conversion. The Company shall at all times reserve enough shares to effect the
conversion of all the principal amount on the Note then outstanding. The initial number of shares of Common Stock reserved for
conversions of the Notes shall be calculated as four times the number of shares necessary to convert the entire value of the Note
on the day it was executed. The Company has reserved 3,005,000, which was the initial number of shares to be reserved. The note
is unsecured and accrues interest at the rate of 8%. Since, the note did not have a conventional conversion feature and had
a variable conversion price indexed to the market price, the conversion feature was separately valued and was recorded as a derivative
liability. The Company computed the initial derivative liability on the date of issuance to be $130,981. The Company recorded $17,000
as loan fee for the note which comprised of the initial issue discount of $7,000 and the broker fee of $10,000. Of the $130,981
of derivative liability, the Company recorded $90,000 as a discount on debt and the balance of $40,981 as initial derivative liability.
They recalculated the derivative liability on the date of balance sheet as $114,238 and recorded the difference of $16,743 as a
change in fair value of derivative liability on the income statement. The loan fee and debt discount is being amortized over the
term of the note. For the nine month period ended November 30, 2015 and 2014, the Company recorded an amortization of loan fee
and debt discount of $26,604 and $0, respectively. For the three month period ended November 30, 2015 and 2014, the Company recorded
an interest expense of $2,140 and $0, respectively. The Company entered into a convertible note
agreement on August 7, 2015 for an original principal amount of $84,500. The Maturity Date of the note is six months from the date
of advance. The Lender has the right, at any time after the issuance date, at its election, to convert all or part of the outstanding
and unpaid original principal sum and accrued interest (and any other fees) into shares of fully paid and non-assessable shares
of common stock of the Company as per the conversion formula. The conversion price shall be equal to 47% of the lowest trade price
in the 25 trading days previous to the conversion. The note holder cannot beneficially own more than 4.99% of the number of common
shares, immediately after giving effect to such conversion. The Company will at all times reserve at least 3,200,000 shares of
common stock for conversion. The note is unsecured and accrues interest at the rate of 12%. Since the note did not have a
conventional conversion feature and had a variable conversion price indexed to the market price, the conversion feature was separately
valued and was recorded as a derivative liability. The Company computed the initial derivative liability on the date of issuance
to be $139,758. The Company recorded $9,500 as loan fee paid to the broker. Of the $139,758 of derivative liability, the Company
recorded $75,000 as a discount on debt and the balance of $64,758 as initial derivative liability. They recalculated the derivative
liability on the date of balance sheet as $107,747 and recorded the difference of $32,011 as a change in fair value of derivative
liability on the income statement. The loan fee and debt discount is being amortized over the term of the note. For the nine month
period ended November 30, 2015 and 2014, the Company recorded an amortization of loan fee and debt discount of $41,791 and $0,
respectively. For the three month period ended November 30, 2015 and 2014, the Company recorded an interest expense of $2,390 and
$0, respectively. Following is a summary of the convertible notes
payable:
November 30 February 28
2015 2015
Convertible at the option of the Holder
8% unsecured note payable, dated July 20, 2015 due July 20, 2016 $ 107,000 -
12% unsecured note payable, dated August 6, 2015 due February 6, 2016 84,500 -
191,500 -
Less: Debt discount (99,345 ) -
92,155 -
Convertible at the option of the Company
6% unsecured note payable, dated August 1, 2014, due July 31, 2015 25,000 25,000
3% 10,000 10,000
6% unsecured note payable, dated July 31, 2014, due January 31, 2015 16,562 16,562
3% unsecured note payable, dated September 22, 2014, due March 22, 2016 199,975 199,975
Convertible notes payable, net 343,692 251,537 |
