CONVERTIBLE DEBENTURES | Short-term Convertible Debentures: Conversion Feature Issuance Net Discount ($) Carrying Value ($) Interest Rate Maturity Date a) 02-Apr-13 5,054 — 5,054 0 % 02-Jan-14 b) 05-Aug-15 737,630 160,001 577,629 7 % 05-Feb-17 b) 05-Aug-15 18,249 4,001 14,248 7 % 05-Feb-17 d) 15-Jan-15 40,000 — 40,000 8 % 15-Jan-16 d) 15-Feb-15 35,000 — 35,000 8 % 15-Feb-16 d) 17-Feb-15 102,135 — 102,135 8 % 17-Feb-16 d) 17-Feb-15 5,000 — 5,000 8 % 17-Feb-16 c) 27-Feb-15 37,500 — 37,500 8 % 27-Feb-16 c) 12-Mar-15 12,500 — 12,500 8 % 11-Mar-16 d) 19-Mar-15 53,551 — 53,551 8 % 19-Mar-16 d) 19-Mar-15 8,000 — 8,000 8 % 19-Mar-16 c) 27-Mar-15 50,000 — 50,000 8 % 26-Mar-16 c) 11-May-15 50,000 — 50,000 8 % 10-May-16 d) 02-Jun-15 29,500 — 29,500 8 % 01-Jun-16 d) 02-Jun-15 45,965 — 45,965 8 % 01-Jun-16 d) 02-Jun-15 10,000 — 10,000 8 % 01-Jun-16 d) 02-Jun-15 58,540 — 58,540 8 % 01-Jun-16 d) 02-Jun-15 35,408 — 35,408 8 % 01-Jun-16 d) 02-Jun-15 20,758 — 20,758 8 % 01-Jun-16 c) 11-Jun-15 50,000 — 50,000 8 % 10-Jun-16 d) 16-Jun-15 30,464 — 30,464 8 % 15-Jun-16 d) 19-Jun-15 30,000 — 30,000 8 % 18-Jun-16 d) 19-Jun-15 35,408 — 35,408 8 % 18-Jun-16 c) 24-Jun-15 37,500 — 37,500 8 % 23-Jun-16 d) 24-Jun-15 35,000 — 35,000 8 % 23-Jun-16 c) 24-Jun-15 37,500 — 37,500 8 % 23-Jun-16 d) 07-Jul-15 75,000 — 75,000 8 % 07-Oct-15 d) 01-Aug-15 17,408 — 17,408 8 % 04-Aug-16 d) 01-Aug-15 30,000 — 30,000 8 % 01-Aug-16 d) 01-Aug-15 35,408 — 35,408 8 % 01-Aug-16 d) 21-Sep-15 64,744 — 64,744 8 % 21-Sep-16 b) 03-May-16 50,000 40,035 9,965 8 % 03-May-17 c) 03-May-16 50,000 — 50,000 8 % 03-May-17 d) 03-May-16 29,500 — 29,500 8 % 03-May-17 d) 03-May-15 45,965 — 45,965 8 % 03-May-17 b) 24-May-16 61,571 52,609 8,962 8 % 24-May-17 d) 24-May-16 30,464 — 30,464 8 % 24-May-17 b) 26-May-16 157,500 142,197 15,303 8 % 26-May-17 d) 15-Jun-16 50,000 46,146 3,854 8 % 15-Jun-17 c) 07-Apr-16 18,000 12,449 5,551 8 % 07-Apr-17 b) 02-Jun-16 160,000 152,829 7,171 7 % 02-Jun-17 b) 02-Jun-16 4,000 3,625 375 7 % 02-Jun-17 b) 15-Jun-16 50,000 43,810 6,190 7 % 15-Jun-17 b) 15-Jun-16 1,250 1,042 208 7 % 15-Jun-17 b) 17-May-16 100,000 93,640 6,360 7 % 08-Sep-17 b) 17-May-16 2,500 2,175 325 7 % 08-Sep-17 b) 19-May-16 110,000 103,446 6,554 7 % 08-Sep-17 b) 19-May-16 2,750 2,413 337 7 % 08-Sep-17 b) 27-Jan-16 248,540 36,331 212,209 7 % 27-Jul-17 b) 08-Mar-16 110,000 100,645 9,335 7 % 08-Sep-17 b) 27-Jan-16 10,929 — 10,929 7 % 27-Jul-17 b) 08-Mar-16 5,000 3,257 1,743 7 % 08-Sep-17 b) 08-Mar-16 90,000 81,615 8,385 7 % 08-Sep-17 b) 07-Jul-16 50,000 46,719 3,281 7 % 08-Sep-17 b) 04-Aug-16 110,000 106,095 3,905 7 % 08-Sep-17 b) 15-Aug-16 157,000 152,850 4,150 7 % 08-Sep-17 b) 12-Sep-16 83,000 80,468 2,532 7 % 08-Sep-17 b) 07-Jul-16 1,250 1,063 187 7 % 08-Sep-17 b) 04-Aug-16 2,750 2,522 228 7 % 08-Sep-17 b) 15-Aug-16 3,925 3,679 246 7 % 08-Sep-17 b) 12-Sep-16 2,075 1,914 161 7 % 08-Sep-17 b) 07-Jul-16 50,000 45,429 4,571 7 % 07-Jul-17 b) 04-Aug-16 110,000 105,438 4,562 7 % 04-Aug-17 b) 15-Aug-16 157,500 152,903 4,597 7 % 15-Aug-17 b) 08-Sep-16 80,000 77,384 2,616 7 % 08-Sep-17 b) 11-Nov-16 80,000 78,877 1,123 7 % 11-Nov-17 b) 06-Dec-16 88,000 87,161 839 7 % 06-Dec-17 4,196,691 2,024,768 2,171,923 Long-term Convertible Debentures: Issuance Net Principal ($) Discount ($) Carrying Value ($) Interest Rate Maturity Date b) 07-Oct-16 465,000 463,533 1,467 7 % 18-Apr-18 b) 7-Nov-16 283,443 253,145 30,298 7 % 18-Apr-18 b) 12-Dec-16 284,379 97,180 187,199 7 % 18-Apr-18 1,032,822 813,858 218,964 a) The conversion price per share equal to the lower of: i. 100% of the average price of the Company’s common stock for the 5 trading days preceding the conversion date; ii. 70% of the daily average price of the Company’s common stock for the 10 trading days preceding the conversion date. b) The conversion price is a range of $0.0025-$0.0078. c) The conversion price equal to 50% of the lowest closing bid price of the Company’s common stock in the 20-25 trading days prior to the conversion. d) The conversion price of $0.0005. During the year ended December 31, 2016, the Company received net proceeds from convertible debentures of $3,496,442. During the year ended December 31, 2016, $376,455 of convertible debentures were settled by issuing 652,069,721 shares of common stock of the Company. During the year ended December 31, 2016, the Company incurred $175,894 in transaction costs in connection with the issuance of the convertible debentures that have been offset against the carrying values of the related debentures on the issuance date. During the year ended December 31, 2016, the Company incurred $2,073,893 in accretion and interest expense in connection with the convertible debentures. At December 31, 2016, convertible debentures with the principal amount of $5,229,513 are subject to a General Security Agreement covering substantially all of the Company’s assets. The Company has evaluated whether separate financial instruments with the same terms as the conversion features above would meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25. The terms of the contracts do not permit net settlement, as the shares delivered upon conversion are not readily convertible to cash. The Company’s trading history indicated that the shares are thinly traded and the market would not absorb the sale of the shares issued upon conversion without significantly affecting the price. As the conversion features would not meet the characteristics of a derivative instrument as described in paragraphs ASC 815-15-25, the conversion features are not required to be separated from the host instrument and accounted for separately. As a result, at December 31, 2016 and 2015 the conversion features and non-standard anti-dilutions provisions would not meet derivative classification. Convertible debentures with maturity dates prior to December 31, 2016 are now due on demand. |