| NOTE 5 - Convertible Notes Payable | The
Company accounted for the conversion features embedded in the following Notes under ASC Topic 815-15 "Embedded Derivative."
The derivative component of the obligation isinitially valued and classified as a derivative liability with an offset to discounts
on convertible debt. Discounts are amortized to interest expense over the respective terms of the related notes. See Note 6. On
December 19, 2014, the Company issued a convertible note payable, with a face value of $156,000 and stated interest of 8% to a
third-party investor. The note is convertible at any time following the funding of the note into a variable number of the Company's
common stock, and based on a conversion ratio of 68% of the lowest closing bid prices for 20 days prior to conversion. For the
year ended March 31, 2017, the investor converted a total of $12,380 of the face value and $2,332 of accrued interest into 6,593,919
shares of common stock. During the year ended March 31, 2016, the investor converted a total of $142,495 of the face value and
$13,440 of accrued interest into 120,984 shares of common stock. For the year ended March 31, 2016, amortization of the debt discount
of $89,462 was charged to interest expense. As of March 31, 2017, and 2016, the outstanding principal amount of the note was $1,125
and $13,505, respectively. On
December 19, 2014, the Company issued a convertible back-end note, with a face value of $156,000 and stated interest of 8% to
a third-party investor. The note is convertible at any time following the funding of the note into a variable number of the Company's
common stock, based on a conversion ratio of 68% of the lowest closing bid prices for 20 days prior to conversion. The note was
funded on June 18, 2015, when the Company received proceeds of $143,333, net of $12,663 of OID and costs. For the year ended March
31, 2017, the investor converted a total of $24,300 of the face value and $4,146 of accrued interest into 373,844,490 shares of
common stock. The embedded conversion feature included in the note resulted in an initial debt discount of $150,000, an initial
derivative expense of $84,000 and an initial derivative liability of $234,000. For the years ended March 31, 2017, and 2016, amortization
of the debt discount of $32,055 and $117,945, respectively, was charged to interest expense. As of March 31, 2017, and 2016, the
outstanding principal amount of the note was $131,700 and $156,000, respectively. On
December 19, 2014, the Company issued a convertible note payable, with a face value of $156,000 and stated interest of 8% to a
third-party investor. The outstanding balance of this note is convertible into a variable number of the Company's common stock,
based on a conversion ratio of 68% of the lowest closing bid prices for 20 days prior to conversion. For the year ended March
31, 2017, the investor had converted a total of $12,543 of the face value into 102,692,184 shares of common stock. During the
year ended March 31, 2016, the investor converted a total of $97,500 of the face value into 247,818 shares of common stock. For
the year ended March 31, 2016, amortization of the debt discount of $89,462 was charged to interest expense. As of March 31, 2017,
and 2016, the outstanding principal amount of the note was $45,957 and $58,500, respectively. On
December 19, 2014, the Company issued a convertible back-end note, with a face value of $156,000 and stated interest of 8% to
a third-party investor. The note is convertible at any time following the funding of the note into a variable number of the Company's
common stock, based on a conversion ratio of 68% of the lowest closing bid prices for 20 days prior to conversion. The note was
funded on June 18, 2015, when the Company received proceeds of $143,333, net of $12,663 of OID and costs The embedded conversion
feature included in the note resulted in an initial debt discount of $150,000, an initial derivative expense of $84,000 and an
initial derivative liability of $234,000. For the years ended March 31, 2017, and 2016, amortization of the debt discount of $32,055
and $117,945, respectively, was charged to interest expense. As of March 31, 2017, and 2016, the outstanding principal amount
of the note was $156,000.
On
January 11, 2015, the Company entered in to a securities purchase agreement providing for the issuance of two convertible promissory
notes in the principal amount of $52,000 each. One of the notes was funded on January 13, 2015, with the Company receiving $47,500
of net proceeds after payment of legal and origination expenses. The note bears interest at the rate of 8% per annum, is due and
payable on January 9, 2015, and may be converted at any time after funding into shares of Company common stock at a conversion
price equal to 67% of the lowest closing bid price on the OTCQB during the 15 prior trading days. The second note, which was funded
on August 7, 2015, has the same interest and conversion terms as the first note. The embedded conversion feature included in the
second note resulted in an initial debt discount of $50,000, an initial derivative expense of $45,000 and an initial derivative
liability of $95,000. For the year ended March 31, 2016, amortization of the debt discount of $86,471 was charged to interest
expense. During the year ended March 31, 2017, the investor converted a total of $32,094 of the face value of the second
note and $4,154 of accrued interest into 308,572,080 shares of common stock. During the year ended March 31, 2016, the investor
converted a total of $52,000 of the face value of the first note and $3,357 of accrued interest into 82,604 shares of common stock.
As of March 31, 2017, and 2016, the outstanding principal amount of the second note was $19,906 and $52,000, respectively. On
January 19, 2015, the Company issued a convertible promissory note in the face amount of $100,000, which bears interest at the
rate of 12% per annum, is due and payable on July 16, 2015, and may be converted at any time after funding into shares of Company
common stock at a conversion price equal to the lesser of (a) 55% of the lowest trading price during the 20 days preceding the
execution of the note, or (b) 55% of the of the lowest traded price during the 20 trading days preceding conversion. The note
was funded on January 28, 2015, with the Company receiving $93,000 of net proceeds after payment of legal and origination expenses.
During the year ended March 31, 2017, the investor converted a total of $24,403 of the face value into 282,194,706 shares of common
stock. During the year ended March 31, 2016, the investor converted a total of $41,177 of the face value into 202,075 shares of
common stock. For the years ended March 31, 2017, and 2016, amortization of the debt discount of $35,732 and $54,214, respectively,
was charged to interest expense. As of March 31, 2017, and 2016, the outstanding principal amount of the note was $34,420 and
$58,823, respectively. On
January 21, 2015, the Company issued a convertible promissory note in the face amount of $400,000, of which the Company is to
assume $40,000 in original interest discount ("OID"), which together with any unpaid accrued interest is due two years
after any funding of the note. The note is to be funded at the note holder's discretion, and the initial tranche was funded on
January 21, 2015, when the Company received cash in the amount of $50,000, and received an additional $25,000 (the Second
Funding) on April 28, 2015. The note is pre-payable for 90 days without interest, and incurs a one-time interest charge
of 12% thereafter. The note balance funded (plus a pro rata portion of the OID together with any unpaid accrued interest) is convertible
into shares of Company common stock at a conversion price equal to the lesser of $0.08 or 60% of the lowest traded price during
the 25 prior trading days. During the year ended March 31, 2016, the investor converted a total of $67,885 of the face value and
$6,667 of accrued interest into 115,055 shares of common stock. The embedded conversion feature included in the Second Funding
resulted in an initial debt discount of $25,000, an initial derivative expense of $26,000 and an initial derivative liability
of $51,000. For the years ended March 31, 2017, and 2016, amortization of the debt discount of $29,635 and $45,221, respectively,
was charged to interest expense. As of March 31, 2017, and 2016, the outstanding principal amount of the note was $15,480. On
February 3, 2015, the Company issued a collateralized secured convertible promissory for a 10% convertible promissory note with
an aggregate principal amount of $252,500, of which the company is to assume an OID of $22,500 and legal fees and other expenses
totaling $5,000, which together with any unpaid accrued interest was due on November 3, 2015. The note is to be issued in tranches
with an initial tranche of $87,500, of which the company received $75,000 on February 6, 2015, with the remaining $5,000 being
used for legal and other expenses and the Company assuming $7,500 of the OID. This convertible note together with any unpaid accrued
interest is convertible into shares of Company common stock at a conversion price equal to the 60% of the average of the lowest
three closing bid prices during the 20 prior trading days. The remaining three tranches, which have not yet been funded, of $55,000
under the note will consist of $50,000 in principal and $5,000 of the OID, and may be offset by three $50,000 promissory notes
issued in favor of the Company, accruing interest at 8% per annum and maturing on November 3, 2015. In conjunction with the convertible
note issued by the Company and the three promissory notes issued to the Company for the three additional tranches of funding to
the Company, the Company issued four warrants for a total number of shares equal to $123,750 ($41,250 for the first warrant corresponding
to funding on February 6, 2015, and $27,500 for the other three warrants corresponding to the future tranches of funding to the
Company) divided by the conversion market price in the convertible note. The warrants have an exercise price of $0.10, subject
to adjustment, and expire on January 3, 2020. Each of the warrants is only exercisable after the corresponding tranche of funding
to the Company has been paid. Therefore,
the first warrant is currently exercisable, but the other three warrants are not. On or about September 17, 2015, the company
added $27,832 in principal and $3,333 of fees as part of a true up add back (the True Up). During the year ended
March 31, 2016, the investor converted a total of $71,853 of the face value and $5,383 of accrued interest into 2,808 shares of
common stock. The embedded conversion feature included in the True Up resulted in an initial debt discount of $27,832, an initial
derivative expense of $11,168 and an initial derivative liability of $39,000. For the year ended March 31, 2016, amortization
of the debt discount of $94,734 was charged to interest expense. On November 12, 2015, the investor sold the note and the Company
issued a replacement note of $47,808, as described below. On
April 10, 2015, the Company issued a convertible note, with a face value of $105,000, of which the company was to assume an OID
of $5,000, and stated interest of 10% to a third-party investor. The outstanding balance of this note was convertible into a variable
number of the Company's common stock, based on a conversion ratio of 65% of the lowest closing bid prices for 15 days prior to
conversion. The embedded conversion feature included in the note resulted in an initial debt discount of $100,000, an initial
derivative expense of $65,000 and an initial derivative liability of $165,000. For the years ended March 31, 2016, amortization
of the debt discount of $100,000 was charged to interest expense. On October 12, 2015, the investor sold the note and the Company
issued a replacement note of $110,351, as described below. On
August 17, 2015, the Company issued a convertible promissory note in the face amount of $325,000, which bears interest at the
rate of 10% per annum, was due and payable on August 17, 2016, and may be converted at any time after funding into shares of Company
common stock at a conversion price equals the lesser of $.02 or 70% of the closing trading prices immediately preceding the conversion
date. In conjunction with the convertible note issued by the Company, the Company issued 2,064 warrants valued at $412,698. The
warrants have an exercise price of $270, subject to adjustment, and expire on August 17, 2020. During the year ended March 31,
2017, the Company and the noteholder agreed to add $30,000 to the principal balance of the note in exchange for the noteholders
waiver of Liquidated Damages as defined in the note. During the year ended March 31, 2017, the investor converted $29,741 of accrued
interest into 435,574,242 shares of common stock. The embedded conversion feature included in the note resulted in an initial
debt discount and derivative liability of $139,286. For the years ended March 31, 2017, and 2016, amortization of the debt discount
of $52,661 and $86,624, respectively was charged to interest expense. The embedded conversion feature included in the warrant
resulted in an initial debt discount and derivative liability of $181,818. For the years ended March 31, 2017, and 2016, amortization
of the debt discount of $36,364 and $113,076, respectively, was charged to interest expense. As of March 31, 2017, and 2016, the
outstanding principal amount of the note was $355,000 and $325,000, respectively. On
October 12, 2015, the Company issued a replacement convertible promissory note in the face amount of $110,351, to Carebourn
Capital, LLC (Carebourn) that replaced the convertible promissory note issued on April 10, 2015, with a face
value of $105,000, and accrued interest of $5,351. The outstanding balance of this note is convertible into a variable number
of the Company's common stock, based on a conversion ratio of 60% of the average of the three lowest closing bid prices for 20
days prior to conversion. The note also bears an interest rate of 10% per annum. During the year ended March 31, 2017, Carebourn
converted a total of $24,308 of the face value into 189,121 shares of common stock. During the year ended March 31, 2016, Carebourn
converted a total of $61,043 of the face value into 189,121 shares of common stock. Additionally, on January 19, 2016, Carebourn
assigned $10,000 of the note to Carebourn Partners, LLC (Carebourn Partners). As of March 31, 2017, and 2016, the
outstanding principal amount of the note was $-0- and $34,308, respectively. Also
on October 12, 2015, Carebourn and the Company assigned $15,000 of the replacement issued to Carebourn, to More Capital. The outstanding
balance of this note is convertible into a variable number of the Company's common stock, based on a conversion ratio of 60% of
the average of the three lowest closing bid prices for 20 days prior to conversion. The note also bears an interest rate of 10%
per annum. During the year ended March 31, 2016, the investor converted a total of $12,950 of the face value into 28,726 shares
of common stock. As of March 31, 2017, and 2016, the outstanding principal amount of the note was $2,050. On
October 26, 2015, the Company issued a convertible note, with a face value of $110,000 and stated interest of 10% to a third-party
investor, of which the company was to assume an OID of $10,000. The outstanding balance of this note was convertible into a variable
number of the Company's common stock, based on a conversion ratio of 60% of the lowest average of the three lowest closing bid
prices for 20 days prior to conversion. The embedded conversion feature included in the note resulted in an initial debt discount
of $100,000, an initial derivative expense of $149,496 and an initial derivative liability of $249,496. For the years ended March
31, 2017, and 2016, amortization of the debt discount of $42,700 and $57,300, respectively, was charged to interest expense. The
investor sold $25,000 of the note on April 27, 2016, and the Company issued a replacement note to the buyer, as described below.
On June 7, 2016, the Company and the third-party investor agreed to extend the maturity of the note from July 26, 2016, to October
26, 2016, and to require daily payments of $250 per day via ACH. For the year ended March 31, 2017, the Company paid $6,003 of
the note. As of March 31, 2017, and 2016, the outstanding principal amount of the note was $78,997. On
October 27, 2015, the Company issued a convertible note, with a face value of $110,000 and stated interest of 8% to a third-party
investor, of which the company was to assume an OID of $10,000. The outstanding balance of this note was convertible into a variable
number of the Company's common stock, based on a conversion ratio of 60% of the lowest average of the three lowest closing bid
prices for 20 days prior to conversion. The embedded conversion feature included in the note resulted in an initial debt discount
of $100,000, an initial derivative expense of $102,000 and an initial derivative liability of $202,000. For the years ended March
31, 2017, and 2016, amortization of the debt discount of $57,377 and $42,623, respectively, was charged to interest expense. As
of March 31, 2017, and 2016, the outstanding principal amount of the note was $110,000. On
November 12, 2015, the Company issued a replacement convertible promissory note in the face amount of $47,808, to Carebourn
that replaces the collateralized secured convertible promissory issued on February 3, 2015, that had a remaining face value
of $43,479 and accrued interest of $4,326. The replacement note is convertible into a variable number of the Company's common
stock, based on a conversion ratio of 60% of the average of the three lowest closing bid prices for 20 days prior to conversion.
The note also bears an interest rate of 10% per annum. During the year ended March 31, 2017, the investor converted a total of
$5,445 of the face value into 90,748,151 shares of common stock. As of March 31, 2017, and 2016, the outstanding principal amount
of the note was $42,363 and $47,808, respectively. On
November 27, 2015, the Company issued a convertible note for legal services previously provided with a face value of $27,000 and
stated interest of 10% to a third-party investor. The note is convertible into a variable number of the Company's common stock,
based on a conversion ratio of 70% of the average of the three lowest closing bid prices for 10 days prior to conversion. The
embedded conversion feature included in the note resulted in an initial debt discount of $25,000, an initial derivative expense
of $851 and an initial derivative liability of $25,851. For the years ended March 31, 2017, and 2016, amortization of the debt
discount of $4,808 and $20,192, respectively, was charged to interest expense. As of March 31, 2017, and 2016, the outstanding
principal amount of the note was $27,000. On
January 5, 2016, the Company issued a convertible note for legal services previously provided with a face value of $20,000 and
stated interest of 10% to a third-party investor. The note is convertible into a variable number of the Company's common stock,
based on a conversion ratio of 70% of the average of the three lowest closing bid prices for 10 days prior to conversion. The
embedded conversion feature included in the note resulted in an initial debt discount and derivative liability of $19,149. For
the years ended March 31, 2017, and 2016, amortization of the debt discount of $10,101 and $9,048, respectively, was charged to
interest expense. As of March 31, 2017, and 2016, the outstanding principal amount of the note was $20,000. On
January 19, 2016, Carebourn assigned $10,000 of the October 12, 2015, replacement note to Carebourn Partners, LLC (Carebourn
Partners). As of March 31, 2017, and 2016, the outstanding principal amount of the replacement note was $10,000. On
February 4, 2016, the Company issued a convertible note, with a face value of $82,500 and stated interest of 8% to a third-party
investor, of which the Company assumed an OID of $7,500, and stated interest of 8% to a third-party investor. The outstanding
balance of this note is convertible into a variable number of the Company's common stock, based on a conversion ratio of 60% of
the average of the three lowest closing bid prices for 20 days prior to conversion. The embedded conversion feature included in
the note resulted in an initial debt discount of $80,000, an initial derivative expense of $70,000 and an initial derivative liability
of $150,000. For the years ended March 31, 2017, and 2016, amortization of the debt discount of $67,760 and $12,240, respectively,
was charged to interest expense. As of March 31, 2017, and 2016, the outstanding principal amount of the note was $82,500. On
February 8, 2016, the Company issued a convertible note, with a face value of $80,000 and stated interest of 10% to a third-party
investor, of which the Company assumed an original issue discount of $5,000. The outstanding balance of this note is convertible
into a variable number of the Company's common stock, based on a conversion ratio of 60% of the average of the three lowest closing
bid prices for 20 days prior to conversion and a maturity date of November 8, 2016. The embedded conversion feature included in
the note resulted in an initial debt discount of $80,000, an initial derivative expense of $67,009 and an initial derivative liability
of $147,009. For the years ended March 31, 2017, and 2016, amortization of the debt discount of $64,818 and $15,182, respectively,
was charged to interest expense. As of March 31, 2017, and 2016, the outstanding principal amount of the note was $80,000. On
March 24, 2016, the Company issued a convertible note, with a face value of $19,000 and stated interest of 10% to a third-party
investor, of which the Company received $16,000 in proceeds. The outstanding balance of this note is convertible into a variable
number of the Company's common stock, based on a conversion ratio of 60% of the average of the three lowest closing bid prices
for 20 days prior to conversion and a maturity date of December 24, 2016. The embedded conversion feature included in the note
resulted in an initial debt discount of $19,000, an initial derivative expense of $15,915 and an initial derivative liability
of $34,915. For the years ended March 31, 2017, and 2016, amortization of the debt discount of $18,516 and $484, respectively,
was charged to interest expense. As of March 31, 2017, and 2016, the outstanding principal amount of the note was $19,000. On
March 24, 2016, the Company issued a convertible note, with a face value of $18,000 and stated interest of 10% to a third-party
investor, of which the Company received $15,000 in proceeds. The outstanding balance of this note is convertible into a variable
number of the Company's common stock, based on a conversion ratio of 60% of the average of the three lowest closing bid prices
for 20 days prior to conversion and a maturity date of December 24, 2016. The embedded conversion feature included in the note
resulted in an initial debt discount of $15,000, an initial derivative expense of $18,077 and an initial derivative liability
of $33,077. For the years ended March 31, 2017, and 2016, amortization of the debt discount of $14,618 and $382, respectively,
was charged to interest expense. As of March 31, 2017, and 2016, the outstanding principal amount of the note was $18,000. On
April 11, 2016, the Company issued a convertible note, with a face value of $18,889 and stated interest of 10% to a third-party
investor. The note is convertible into a variable number of the Company's common stock, based on a conversion ratio of 60% of
the average of the three lowest closing bid prices for 20 days prior to conversion. The Company received net proceeds of $13,000
on April 28, 2016, after disbursements for the lenders transaction costs, fees, and expenses. The embedded conversion feature
included in the note resulted in an initial debt discount of $18,889 an initial derivative expense of $9,991 and an initial derivative
liability of $28,880. For the year ended March 31, 2017, amortization of the debt discount of $18,889 was charged to interest
expense. As of March 31, 2017, the outstanding principal amount of the note was $18,889. On
April 11, 2016, the Company issued a replacement convertible promissory note in the face amount of $26,123, to a third-party
investor that replaces part of the convertible promissory note issued on October 26, 2015, with a face value of $25,000,
and accrued interest of $1,123. The outstanding balance of this note is convertible into a variable number of the Company's common
stock, based on a conversion ratio of 60% of the average of the three lowest closing bid prices for 20 days prior to conversion.
The note also bears an interest rate of 10% per annum. During the year ended March 31, 2017, the investor converted a total of
$19,476 of the face value and $3,332 of accrued interest and fees into 356,215,238 shares of common stock. As of March 31, 2017,
the outstanding principal amount of the replacement note was $6,647. On
June 3, 2016, the Company issued a convertible note, with a face value of $42,350 and stated interest of 12% to a third-party
investor. The note is convertible into a variable number of the Company's common stock, based on a conversion ratio of 60% of
the average of the three lowest closing bid prices for 20 days prior to conversion. The Company received proceeds on June 3, 2016,
of $35,000, after disbursements for the lenders transaction costs, fees, and expenses. The embedded conversion feature
included in the note resulted in an initial debt discount of $42,350, an initial derivative liability expense of $24,323 and an
initial derivative liability of $66,673. The note also requires 177 daily payments of $239 per day via ACH. For the year ended
March 31, 2017, amortization of the debt discount of $35,292 was charged to interest expense. For the year ended March 31, 2017,
the Company paid $6,221 of the note. The balance of the note as of March 31, 2017, was $36,129. A
summary of the convertible notes payable balance as of March 31, 2017, and 2016 is as follows:
March
31, 2017 March
31, 2016
Principal
Balance $ 1,311,163 $ 1,385,974
Unamortized
discount (39,436 ) (531,578 )
Ending
Balance, net $ 1,271,727 $ 854,396 The
following is a roll-forward of the Companys convertible notes and related discounts for the years ended March 31, 2017,
and 2016:
Principal Balance Debt Discounts Total
Balance
April 1, 2015 $ 603,723 $ (422,099 ) $ 181,624
New
issuances 1,329,123 (1,262,085 ) 67,038
Conversions (546,872 ) - (546,872 )
Amortization - 1,152,606 1,152,606
Balance
March 31, 2016 1,385,974 (531,578 ) 854,396
New
issuances 62,362 (61,239 ) 1,123
Liquidated
damages added to note 30,000 - 30,000
Conversions (154,949 ) - (154,949 )
Cash
payments (12,224 ) - (12,224 )
Amortization - 553,381 553,381
Balance
at March 31, 2017 $ 1,311,163 $ (39,436 ) $ 1,271,727 |
