Note 4 - Convertible Debt | Convertible debt outstanding, net of debt discount of $103,836, on March 31, 2015 $ 131,089 Add: reclassification from non-convertible debts to convertible debts 255,044 Add: reclassification from accrued interest to convertible debts 161,576 Less: debt discount originated from beneficial conversion feature 380,375 Less: principal converted into common stock (422,370 ) Add: amortization of debt discount 484,211 Convertible debt outstanding, net of debt discount of $0 on March 31, 2016 $ 229,175 Add: reclassification from non-convertible debts to convertible debts 8,300 Add: reclassification from accrued interest to convertible debts 1,520 Less: debt discount originated from beneficial conversion feature (4,475 ) Less: principal converted into common stock (9,820 ) Add: amortization of debt discount 4,475 Convertible debt outstanding, net of debt discount of $0 on March 31, 2017 $ 229,175 During the year ended March 31, 2017, $9,820 of convertible debts with accrued interest of $0 was converted into 178,375 shares of common stock. During the year ended March 31, 2016, $422,370 of convertible debts with accrued interest of $2,829 was converted into 6,109,019 shares of common stock. FOR THE YEAR ENDED MARCH 31, 2017 Magna Group LLC/Hanover Holdings On July 10, 2014, the Company borrowed a convertible promissory note of $22,000 from Hanover Holdings I, LLC. The maturity date of this note is July 10, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. An amount equal to $2,500 of the principal balance of the note was converted into 4,545 common shares on February 4, 2015, leaving a principal balance of $19,500 as of March 31, 2015. An amount equal to $3,000 of the principal balance of the note was converted into 8,021 common shares on April 1, 2015. An amount equal to $2,750 of the principal balance of the note was converted into 17,857 common shares on April 27, 2015, leaving a principal balance of $13,750 as of March 31, 2016. As of today the debt is still outstanding and therefore is in default. On September 10, 2014, the Company borrowed a convertible promissory note of $33,000 from Magna Equities II, LLC. The maturity date of this note is September 10, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2017, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default. On October 28, 2014, the Company borrowed a convertible promissory note of $25,000 from Magna Equities II, LLC. The maturity date of this note is October 28, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2017, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default. On December 17, 2014, the Company borrowed a convertible promissory note of $14,000 from Magna Equities II, LLC. The maturity date of this note is December 17, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2017, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default. The Company evaluated the embedded conversion feature within the above Magna convertible notes payable under ASC 815-15 and ASC 815 -40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible notes payable and a total debt discount of $126,010 was recorded on the Magna notes. The debt discount had been fully amortized as of March 31, 2016. KBM Worldwide Inc. On June 3, 2014, the Company borrowed $53,000 from KBM Worldwide Inc. The maturity date of this note is March 5, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the CompanyÂ’s Common Stock. The conversion price will be 55% multiplied by the lowest three trading prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2017, KBM Worldwide Inc. had converted debt principal of $5,735 into 8,193 common shares, bringing the note balance to $47,265. As of today the debt is still outstanding and therefore is in default. On July 29, 2014, the Company borrowed a convertible promissory note of $32,500 from KBM Worldwide, Inc. The maturity date of this note is May 1, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the CompanyÂ’s Common Stock. The conversion price is 55% multiplied by the average of the lowest 3 trading day prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. On July 30, 2014, an amendment to the note defined a floor to the conversion price to be $.008 per share. As of March 31, 2017, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default. On September 15, 2014, the Company borrowed a convertible promissory note of $63,000 from KBM Worldwide, Inc. The maturity date of this note is June 17, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the CompanyÂ’s Common Stock. The conversion price is 55% multiplied by the average of the lowest 3 trading day prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2017, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default. The Company evaluated the embedded conversion feature within the above KBM convertible notes payable under ASC 815-15 and ASC 815-40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible notes payable and a total debt discount of $148,500 was recorded on the KBM notes. The debt discount had been fully amortized as of March 31, 2016. JL Shaw On February 10, 2017 the Company entered into a debt modification agreement with debt holder JL Shaw (see Note 3). The modified note is convertible into common stock at a price of $0.04, bears an extended maturity date of June 22, 2017, and an interest rate of 8% per annum. The principal amount of the modified note is $5,345 which includes the original principal balance of $5,000 plus accrued interest of $345, and on February 10, 2017, it was converted into 133,625 common shares. This note has been converted in its entirety and has been surrendered to the Company. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the addition of a conversion feature constituted a debt extinguishment rather than a troubled debt restructuring, with the old debt written off and the new debt initially recorded at fair value with a new effective interest rate. No gain or loss was resulted from the debt extinguishment since the fair value the new debt was the same as the old debt. The Company evaluated the embedded conversion feature within the JL Shaw convertible note payable under ASC 815-15 and ASC 815-40 and determined that the embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception noting that there was none. S. Karban On April 4, 2016 the Company entered into a debt modification agreement with debt holder S Karban (see Note 3). The modified note is convertible into common stock at a price of $0.10, bears an extended maturity date of October 14, 2016, and an interest rate of 8% per annum. The principal amount of the modified note is $4,475 which includes the original principal balance of $3,300 plus accrued interest of $1,175, and on April 5, 2016, it was converted into 44,750 common shares. This note has been converted in its entirety and has been surrendered to the Company. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the addition of a conversion feature constituted a debt extinguishment rather than a troubled debt restructuring, with the old debt written off and the new debt initially recorded at fair value with a new effective interest rate. No gain or loss was resulted from the debt extinguishment since the fair value the new debt was the same as the old debt. The Company evaluated the embedded conversion feature within the S. Karban convertible note payable under ASC 815-15 and ASC 815-40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a beneficial conversion feature inherent to the convertible note payable and a total debt discount of $4,475 was recorded on the S. Karban note. During the period ended March 31, 2017, debt discount of $4,475 was amortized, and the unamortized debt discount is $0 as of March 31, 2017. Other Convertible Notes Convertible debts were issued September 2009, bearing interest at a rate of 8% per annum, due in one year, and are convertible at $2.00 per share, and the total balance outstanding as of March 31, 2016 was $660. The note is in default. As of March 31, 2017, other convertible notes have a principal balance of $660. FOR THE YEAR ENDED MARCH 31, 2016 Magna Group LLC/Hanover Holdings On July 10, 2014, the Company borrowed a convertible promissory note of $22,000 from Hanover Holdings I, LLC. The maturity date of this note is July 10, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. An amount equal to $2,500 of the principal balance of the note was converted into 4,545 common shares on February 4, 2015, leaving a principal balance of $19,500 as of March 31, 2015. An amount equal to $3,000 of the principal balance of the note was converted into 8,021 common shares on April 1, 2015. An amount equal to $2,750 of the principal balance of the note was converted into 17,857 common shares on April 27, 2015, leaving a principal balance of $13,750 as of March 31, 2016. As of today the debt is still outstanding and therefore is in default. On September 10, 2014, the Company borrowed a convertible promissory note of $33,000 from Magna Equities II, LLC. The maturity date of this note is September 10, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2016, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default. On October 28, 2014, the Company borrowed a convertible promissory note of $25,000 from Magna Equities II, LLC. The maturity date of this note is October 28, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2016, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default. On December 17, 2014, the Company borrowed a convertible promissory note of $14,000 from Magna Equities II, LLC. The maturity date of this note is December 17, 2015. This loan bears an interest rate of 12% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. The conversion price is 55% multiplied by the lowest value weighted average price (VWAP) for the Common Stock during the 5 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2016, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default. The Company evaluated the embedded conversion feature within the above Magna convertible notes payable under ASC 815-15 and ASC 81 -40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible notes payable and a total debt discount of $126,010 was recorded on the Magna notes. During the year ended March 31, 2016, debt discount of $41,615 was amortized, and the unamortized debt discount is $0 as of March 31, 2016. KBM Worldwide Inc. On June 3, 2014, the Company borrowed $53,000 from KBM Worldwide Inc. The maturity date of this note is March 5, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the CompanyÂ’s Common Stock. The conversion price will be 55% multiplied by the lowest three trading prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2016, KBM Worldwide Inc. had converted debt principal of $5,735 into 8,193 common shares, bringing the note balance to $47,265. As of today the debt is still outstanding and therefore is in default. On July 29, 2014, the Company borrowed a convertible promissory note of $32,500 from KBM Worldwide, Inc. The maturity date of this note is May 1, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the CompanyÂ’s Common Stock. The conversion price is 55% multiplied by the average of the lowest 3 trading day prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. On July 30, 2014, an amendment to the note defined a floor to the conversion price to be $.008 per share. As of March 31, 2016, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default. On September 15, 2014, the Company borrowed a convertible promissory note of $63,000 from KBM Worldwide, Inc. The maturity date of this note is June 17, 2015. This loan bears an interest rate of 8% per annum. Interest on overdue principal after default accrues at an annual rate of 22%. After 180 days following the date of the note, KBM Worldwide Inc. has the right to convert all or a portion of the remaining outstanding principal amount of this note into shares of the CompanyÂ’s Common Stock. The conversion price is 55% multiplied by the average of the lowest 3 trading day prices for the Common Stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date. The conversion price has a floor price of $.008 per share. As of March 31, 2016, the note is not converted yet and is still outstanding. As of today the debt is still outstanding and therefore is in default. The Company evaluated the embedded conversion feature within the above KBM convertible notes payable under ASC 815-15 and ASC 81 -40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible notes payable and a total debt discount of $148,500 was recorded on the KBM notes. During the year ended March 31, 2016, debt discount of $62,221 was amortized, and the unamortized debt discount is $0 as of March 31, 2016. DK International Investments Corp On February 22, 2016, Burnside Digital LLC assigned the note to DK International Investments Corp along with accrued default interest of $34,622 (see Note 3). The maturity date of this amended note is November 4, 2016. This loan bears an interest rate of 8% per annum. The note is convertible into common stock at a price of 45% multiplied by the lowest bid price for the Common Stock during the nine month trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.01. On February 22, 2016, DK International Investments Corp. converted $101,646 of principal and $799 of interest into 1,138,278 common shares. This note has been converted in its entirety and has been surrendered to the Company. On February 19, 2016, Burnside Digital LLC assigned the note to DK International Investments Corp along with accrued default interest of $40,109 (see Note 3). The maturity date of this amended note is November 19, 2016. This loan bears an interest rate of 8% per annum. The note is convertible into common stock at a price of 45% multiplied by the lowest bid price for the Common Stock during the three month trading day period ending on the latest complete trading day prior to the conversion date. Additionally, in no event shall the conversion price be less than $0.01. On February 22, 2016, DK International Investments Corp. converted $115,629 of principal and $179 of interest into 1,286,754 common shares. This note has been converted in its entirety and has been surrendered to the Company. On February 22, 2016, DEVCAP Partners LLC assigned the note to DK International Investments Corp along with accrued default interest of $86,845 (see Note 3). The maturity date of this amended note is November 22, 2016. This loan bears an interest rate of 8% per annum. The note is convertible into common stock at a price of 55% multiplied by the lowest bid price for the Common Stock during the three month trading day period ending on the latest complete trading day prior to the conversion date. . On March 7, 2016, DK International Investments Corp. converted $75,000 of principal into 1,363,636 common shares. On March 9, 2016, DK International Investments Corp. converted $55,000 of principal into 1,000,000 common shares. On March 11, 2016, DK International Investments Corp. converted $69,345 of principal and $1,851 of interest into 1,294,473 common shares. This note has been converted in its entirety and has been surrendered to the Company. The Company evaluated the application of ASC 470-50 and ASC 470-60 and concluded the addition of a conversion feature constituted a debt extinguishment rather than a troubled debt restructuring, with the old debt written off and the new debt initially recorded at fair value with a new effective interest rate. The Company evaluated the embedded conversion feature within the three modified DK International convertible notes payable under ASC 815-15 and ASC 815-40 and determined embedded conversion feature does not meet the definition of a liability. Then the Company evaluated the conversion feature for a beneficial conversion feature at inception. The Company accounted for the intrinsic value of a Beneficial Conversion Feature inherent to the convertible notes payable and a total debt discount of $380,375 was recorded on the DK International notes. During the year ended March 31, 2016, debt discount of $380,375 was amortized, and the unamortized debt discount is $0 as of March 31, 2016. Other Convertible Notes Convertible debts were issued September 2009, bearing interest at a rate of 8% per annum, due in one year, and are convertible at $2.00 per share, and the total balance outstanding as of March 31, 2015 was $660. The note is in default. As of March 31, 2016, other convertible notes have a principal balance of $660. |