CONVERTIBLE NOTES PAYABLE AND LOAN PAYABLE | NOTE 9 – CONVERTIBLE NOTES PAYABLE AND LOAN PAYABLE Convertible notes payable consisted of the following as of October 31, 2015 and July 31, 2015, respectively: Convertible Notes Payable October 31, July 31, 2015 2015 $250,000 face value, issued on September 27, 2013, interest rate of 10%, and a default rate of 10%, matures on September 27, 2015. $ 250,000 $ 250,000 $125,000 face value, issued on October 18, 2013, interest rate of 10% and a default rate of 10%, matures on October 18, 2015. 121,600 125,000 $150,000 face value, issued on November 22, 2013, interest rate of 10%, matures on November 22, 2015. 150,000 150,000 $63,000 face value, loan default resulted in loan balance 150% balance increase of $25,055, of which, $49,010 was converted, issued on May 15, 2014, interest rate of 8%, and a default rate of 22%, matured on February 2, 2015, net of unamortized discount of $0 and $0 as of October 31, 2015 and July 31, 2015. 39,045 64,095 $73,500 face value, of which, $6,360 was converted, issued on December 2, 2014, interest rate of 8%, matures on December 2, 2015, net of unamortized discount of $2,392 and $0 as of October 31, 2015 and July 31, 2015. 64,748 42,544 $59,000 face value, of which, $23,583 was converted, issued on December 2, 2014, interest rate of 8%, matures on September 2, 2016, net of unamortized discount of $17,099 and $0 as of October 31, 2015 and July 31, 2015. 18,318 2,780 $65,000 face value, of which, $16,538 was converted, issued on December 16, 2014, interest rate of 0%, matures on December 16, 2016, net of unamortized discount of $24,312 and $0 as of October 31, 2015 and July 31, 2015. 24,150 7,786 $33,000 face value, issued on March 17, 2015, interest rate of 8% maturing on December 19, 2015, net of unamortized discount of $2,499 and $0 as of October 31, 2015 and July 31, 2015. 30,501 18,870 $27,500 face value, issued on June 2, 2015, interest rate of 12% maturing on March 2, 2016, net of unamortized discount of $9,687 and $0 as of October 31, 2015 and July 31, 2015. 17,813 5,922 $299,382 face value, issued on September 15, 2015, interest rate of 0% maturing on March 15, 2016, net of unamortized discount of $3,206 and $0 as of October 31, 2015 and July 31, 2015. 296,176 - Total convertible notes payable – non-related parties 1,012,351 666,997 Current Portion of Notes 1,000,259 661,904 Discount on Notes 59,196 142,077 Convertible notes payable-current portion net of discount 941,063 519,827 Convertible notes payable, long-term $ 71,288 147,170 On September 27, 2013, the Company issued a convertible note to an unrelated party for $250,000 that matures in September 27, 2015. The note bears an interest rate of 10% per annum with a floor of $.005 per share, and principal is convertible at any time after September 27, 2013 in part or in whole into shares of the Company's common stock using the average closing prices for five trading days directly preceding the conversion date. Interest is not convertible and is due upon conversion or at maturity date. On October 18, 2013, the Company issued a convertible note to an unrelated party for $125,000 that matures in October 18, 2015. The note bears an interest rate of 10% per annum with a floor of $.005 per share, and principal is convertible at any time after October 18, 2013 in part or in whole into shares of the Company's common stock using the average closing prices for five trading days directly preceding the conversion date. Interest is not convertible and is due upon conversion or at the maturity date. On November 22, 2013, the Company issued a convertible note to an unrelated party for $150,000 that matures in November 22, 2015. The note bears an interest rate of 10% per annum with a floor of $.005 per share, and principal is convertible at any time after November 22, 2013 in part or in whole into shares of the Company's common stock using the average closing prices for five trading days directly preceding the conversion date. Interest is not convertible and is due upon conversion or at the maturity date. On January 14, 2014, the Company entered into a convertible promissory note with Asher Enterprises, Inc. ("Asher") a Delaware corporation for an 8% convertible promissory note with an aggregate principal amount of $78,500 which together with any unpaid accrued interest is due on October 17, 2014. This convertible note together with any unpaid accrued interest is convertible into shares of common stock at the holder's option 180 days from inception at a variable conversion price calculated as 58% of the Market Price, which means the average of the lowest three Trading Prices (defined as the closing bid prices) during the ten trading day period ending on the last complete trading day prior to the conversion date with a floor of $.00005 as stated in the conversion feature. In January 2014, the Company received cash in the amount of $58,600, with the remaining $19,900 being used for legal and accounting fees. The Company analyzed the note on the issuance date on January 14, 2014. The Company determined that the variable conversion price and the floor exceeding the authorized number of shares results in the need for bifurcation into a separate derivative liability valued at fair market value. On January 14, 2014, the Company estimated the fair market value of the derivative liability associated with the bifurcated conversion feature to be $87,968 and a discount on the note of $78,500. On September 24, 2014, Asher converted $15,000 of principal related to the January 14, 2014, convertible note into 583,658 shares of the Company's common stock at $0.0257 per share. On October 2, 2014, Asher converted an additional $15,000 of principal related to the January 14, 2014, convertible note into 810,811 shares of the Company's common stock at $0.0185 per share. On October 9, 2014, Asher converted an additional $12,000 of principal related to the January 14, 2014, convertible note, into 869,565 shares of the Company's common stock at $0.0138 per share. The remaining principal balance due after the conversions was $36,500. On March 19, 2014, the Company entered into a convertible promissory note with KBM Worldwide, Inc. ("KBM") a New York corporation for an 8% convertible promissory note with an aggregate principal amount of $53,000 which together with any unpaid accrued interest is due on December 26, 2014. This convertible note together with any unpaid accrued interest is convertible into shares of common stock at the holder's option 180 days from inception at a variable conversion price calculated as 58% of the Market Price, which means the average of the lowest three Trading Prices (defined as the closing bid prices) during the three trading day period ending on the last complete trading day prior to the conversion date with a floor of $.00005 as stated in the conversion feature. In March 2014, the Company received cash in the amount of $24,487, with the remaining $6,898 being used for legal and accounting fees. The Company analyzed the note on the issuance date on January 14, 2014. The Company determined that the variable conversion price and the floor exceeding the authorized number of shares results in the need for bifurcation into a separate derivative liability valued at fair market value. On March 19, 2014, the Company estimated the fair market value of the derivative liability associated with the bifurcated conversion feature to be $47,806 and a discount on the note of $49,010. On May 15, 2014, the Company entered into a convertible promissory note with KBM Worldwide, Inc. ("KBM") a New York corporation for an 8% convertible promissory note with an aggregate principal amount of $63,000 which together with any unpaid accrued interest is due on February 2, 2015. This convertible note together with any unpaid accrued interest is convertible into shares of common stock at the holder's option 180 days from inception at a variable conversion price calculated as 58% of the Market Price, which means the average of the lowest three Trading Prices (defined as the closing bid prices) during the three trading day period ending on the last complete trading day prior to the conversion date with a floor of $.00005 as stated in the conversion feature. In May 2014, the Company received cash in the amount of $42,500, with the remaining $17,500 being used for legal fees. The Company analyzed the note on the issuance date on January 14, 2014. The Company determined that the variable conversion price and the floor exceeding the authorized number of shares results in the need for bifurcation into a separate derivative liability valued at fair market value. On May 15, 2014, the Company estimated the fair market value of the derivative liability associated with the bifurcated conversion feature to be $56,591 and a discount on the note of $56,591. On November 14, 2014, Asher converted an additional $15,000 of principal related to the January 14, 2014, convertible note, into 931,677 shares of the Company's common stock at $0.0161 per share. The remaining principal balance due after the conversion was $21,500. On December 8, 2014, Asher converted an additional $12,500 of principal related to the January 14, 2014, convertible note, into 1,041,667 shares of the Company's common stock at $0.012 per share. The remaining principal balance due after the conversion was $9,000. On December 2, 2014, the Company entered into a collateralized secured convertible promissory note with LG Capital Funding, LLC ("LG"), a New York limited liability company, for an 8% convertible promissory note with an aggregate principal amount of $73,500, which together with any unpaid accrued interest is due on December 2, 2015. This convertible note together with any unpaid accrued interest is convertible into shares of common stock at the holder's option 180 days from inception at a variable conversion price calculated as 58% of the average of the lowest three closing bid prices during the ten trading day period ending on the conversion date. This note was funded on December 10, 2014, when the Company received cash in the amount of $70,000, with the remaining $3,500 being used for LG’s legal and other origination expenses. On December 2, 2014, the Company also entered into a second $73,500 convertible promissory note with LG on the same terms as the first note and due on December 2, 2015, which has not yet been funded. This note is collateralized by a secured promissory note issued by LG to the Company for $73,500, due on August 2, 2015, and accruing interest at the rate of 8% per annum. This note was canceled along with the derivative liability on December 2, 2014 due to the fact that the Company had not maintained a stock price in excess of .002 at all times. On December 2, 2014, the Company entered into a collateralized secured convertible promissory note with Typenex Co-Investment, LLC ("Typenex"), a Utah limited liability company, for an 10% convertible promissory note with an aggregate principal amount of $224,000, of which the Company is to assume $20,000 in original interest discount (“OID”) and legal fees and other expenses of Typenex totaling $4,000, which together with any unpaid accrued interest is due on September 10, 2016. The note is to be issued in tranches with an initial tranche of $59,000, of which the Company received $50,000 on December 10, 2014, with the remaining $4,000 being used for legal and other expenses of Typenex and the Company assuming $5,000 in OID. This convertible note together with any unpaid accrued interest is convertible into shares of common stock at a variable conversion price calculated as 58% of the average of the lowest three closing bid prices during the ten trading day period ending on the last complete trading day prior to the conversion date. The remaining three tranches of $55,000 of funding to the Company under the note will consist of $50,000 in principal and the $5,000 in OID, which have not yet been funded, and shall correspond to three $50,000 promissory notes issued by Typenex in favor of the Company, accruing interest at 8% per annum and maturing on September 2, 2016. In conjunction with the Company’s convertible note issued to Typenex and Typenex’s 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 $112,000 ($29,500 for the first warrant corresponding to funding on December 10, 2014, and $27,500 for the other three warrants corresponding to the future tranches of funding by Typenex to the Company) divided by the conversion market price in the Typenex convertible note. The warrants have an exercise price of $0.06, subject to adjustment, and expire on December 2, 2019. Each of the warrants are only exercisable after the corresponding tranche of funding by Typenex to the Company have been paid. Therefore, the first warrant is currently exercisable, but the other three warrants are not. On December 10, 2014, the Company estimated the fair market value of the derivative liability associated with the bifurcated conversion feature to be $84,512 and a discount on the note of $59,000. On December 2, 2014, the Company entered into a convertible promissory note with JMJ Financial, a Nevada sole proprietorship (“JMJ”), with a face amount of $350,000, of which the Company is to assume $35,000 in original interest discount (“OID”), which together with any unpaid accrued interest is due on Dec 2, 2016. The note is to be funded by JMJ at its discretion, and the initial tranche was funded on December 16, 2014, when the Company received cash in the amount of $55,000. The note balance funded (plus a pro rata portion of the OID) together with any unpaid accrued interest is convertible into shares of common stock at a variable conversion price calculated as 65% of the average of the lowest trade price during a 25-day period ending on the last complete trading day prior to the conversion date. On December 16, 2014, the Company estimated the fair market value of the derivative liability associated with the bifurcated conversion feature to be $71,321 and a discount on the note of $65,000. On December 23, 2014, Asher converted an additional $12,500 of principal related to the January 14, 2014, convertible note, into 1,686,111 shares of the Company's common stock at $0.0072 per share. The remaining principal balance due after the conversion was $0. On , KBM converted $5,000 of principal related to the March 19, 2014, convertible note, into shares of the Company's common stock at $0.0056 per share. The remaining principal balance due after the conversion was $48,000. On January 26, 2015, KBM converted $15,000 of principal related to the March 19, 2014, convertible note, into shares of the Company's common stock at $0.0058 per share. The remaining principal balance due after the conversion was $33,000. On , KBM converted $11,455 of principal related to the March 19, 2014, convertible note, into shares of the Company's common stock at $0.0041 per share. The remaining principal balance due after the conversion was $21,545. On , KBM converted $9,055 of principal related to the March 19, 2014, convertible note, into shares of the Company's common stock at $0.0038 per share. The remaining principal balance due after the conversion was $12,490. On , KBM converted $12,490 of principal and $2,120 related to the March 19, 2014, convertible note, into shares of the Company's common stock at $0.0056 per share. The remaining principal balance due after the conversion was $0. On March 17, 2015, the Company entered into a convertible promissory note with for an 8% convertible promissory note with an aggregate principal amount of $33,000 which together with any unpaid accrued interest is due on December 19, 2015. This convertible note together with any unpaid accrued interest is convertible into shares of common stock at the holder's option 180 days from inception at a variable conversion price calculated as 58% of the Market Price, which means the average of the lowest three Trading Prices (defined as the closing bid prices) during the three trading day period ending on the last complete trading day prior to the conversion date with a floor of $.00005 as stated in the conversion feature. On April 1, 2015 the Company received cash in the amount of $20,000, with the remaining $13,000 being used for legal fees. The Company analyzed the note on the issuance date on March 17, 2015. The Company determined that the variable conversion price and the floor exceeding the authorized number of shares results in the need for bifurcation into a separate derivative liability valued at fair market value. On October 31, 2015, the Company estimated the fair market value of the derivative liability associated with the bifurcated conversion feature to be $35,444 and a discount on the note of $33,000. On May 12, 2015, KBM Worldwide converted $12,890 of principal related to the April 30, 2014, convertible note, into 8,056,250 shares of the Company's common stock at $ 0.0016 per share. The remaining principal balance due after the conversion was $50,110. On June 6, 2015, KBM Worldwide issued a Notice of Default, which resulted in the principle due being increased to 150% of the principal balance due to the Company’s filing its quarterly SEC report after the filing deadline, and the loan balance increased by $25,055 to $75,165. On June 2, 2015, the Company entered into a convertible promissory note with Firehole River Capital, LLC for a 12% convertible promissory note with an aggregate principal amount of $27,500 which together with any unpaid accrued interest is due on March 2, 2015. This convertible note together with any unpaid accrued interest is convertible into shares of common stock at the holder's option 180 days from inception at a variable conversion price calculated as 58% of the Market Price, which means the lowest Trading Price (defined as the closing bid prices) during the 10 trading day period ending on the last complete trading day prior to the conversion date. On July 8, 2015 the Company received cash in the amount of $17,400, with the remaining $10,100 being used for legal fees. The Company analyzed the note on the issuance date on June 2, 2015. The Company determined that the variable conversion price exceeded the authorized number of shares results in the need for bifurcation into a separate derivative liability valued at fair market value. On July 31, 2015 the Company estimated the fair market value of the derivative liability associated with the bifurcated conversion feature to be $31,695 and a discount on the note of $27,500. On June 17, 2015, JMJ Financial converted $6,435 of principal related to the December 10, 2014, convertible note, into 4,500,000 shares of the Company's common stock at $ 0.001430 per share. The remaining principal balance due after the conversion was $58,565. On June 19, 2015, Typenex Co-Investment, LLC converted $17,059 of principal related to the December 2, 2014, convertible note, into 11,921,055 shares of the Company's common stock at $ 0.001431 per share. The remaining principal balance due after the conversion was $41,941. On July 15, 2015, KBM Worldwide converted $8,200 of principal related to the April 30, 2014, convertible note, into 8,453,608 shares of the Company's common stock at $ 0.000970 per share. The remaining principal balance due after the conversion was $66,965. On July 17, 2015, JMJ Financial converted $5,862 of principal related to the December 10, 2014, convertible note, into 9,690,000 shares of the Company's common stock at $ 0.000605 per share. The remaining principal balance due after the conversion was $52,703. On July 20, 2015, LG Capital Funding, LLC converted $3,667 of principal related to the December 2, 2014, convertible note, into 3,793,686 shares of the Company's common stock at $ 0.000967 per share. The remaining principal balance due after the conversion was $70,000. On July 27, 2015, KBM Worldwide converted $1,605 of principal related to the April 30, 2014, convertible note, into 8,447,368 shares of the Company's common stock at $ 0.000190 per share. The remaining principal balance due after the conversion was $65,360. On July 28, 2015, JMJ Financial converted $1,780 of principal related to the December 10, 2014, convertible note, into 10,790,000 shares of the Company's common stock at $ 0.000165 per share. The remaining principal balance due after the conversion was $50,922. On July 29, 2015, Typenex Co-Investment, LLC converted $3,515 of principal related to the December 2, 2014, convertible note, into 16,900,000 shares of the Company's common stock at $ 0.000208 per share. The remaining principal balance due after the conversion was $38,426. On July 30, 2015, KBM Worldwide converted $1,265 of principal related to the April 30, 2014, convertible note, into 8,433,333 shares of the Company's common stock at $ 0.000150 per share. The remaining principal balance due after the conversion was $64,095. On August 6, 2015, KBM Worldwide converted $840 of principal related to the April 30, 2014, convertible note, into 8,400,000 shares of the Company's common stock at $ 0.000100 per share. The remaining principal balance due after the conversion was $63,255. On August 6, 2015, JMJ Financial converted $693 of principal related to the December 10, 2014, convertible note, into 12,595,000 shares of the Company's common stock at $ 0.000055 per share. The remaining principal balance due after the conversion was $50,229. On August 12, 2015, KBM Worldwide converted $815 of principal related to the April 30, 2014, convertible note, into 13,583,333 shares of the Company's common stock at $ 0.000060 per share. The remaining principal balance due after the conversion was $62,440. On August 18, 2015, Typenex Co-Investment, LLC converted $1,310 of principal related to the December 2, 2014, convertible note, into 27,300,000 shares of the Company's common stock at $ 0.000048 per share. The remaining principal balance due after the conversion was $37,115. On August 21, 2015, JMJ Financial converted $862 of principal related to the December 10, 2014, convertible note, into 15,680,000 shares of the Company's common stock at $ 0.000055 per share. The remaining principal balance due after the conversion was $49,367. On August 27, 2015, JMJ Financial converted $905 of principal related to the December 10, 2014, convertible note, into 16,460,000 shares of the Company's common stock at $ 0.000055 per share. The remaining principal balance due after the conversion was $48,462. On August 27, 2015, Evolution Capital Partners, LLC converted $3,400 of principal related to the August 18, 2013, convertible note, into 8,500,000 shares of the Company's common stock at $ 0.000400 per share. The remaining principal balance due after the conversion was $121,600. On September 8, 2015, Typenex Co-Investment, LLC converted $1,699 of principal related to the December 2, 2014, convertible note, into 35,400,000 shares of the Company's common stock at $ 0.000048 per share. The remaining principal balance due after the conversion was $35,416. On September 29, 2015, at the time of Mr. Doron’s resignation, Mr. Doron received a convertible note from the Company in the aggregate principal amount of $299,382 in satisfaction of his accrued salary and stock payables. This convertible note together with any unpaid accrued interest is convertible into shares of common stock at the holder's option at 100% of the closing bid price of such common stock on the trading day immediately preceding the conversion. The Company determined that the variable conversion price exceeded the authorized number of shares results in the need for bifurcation into a separate derivative liability valued at fair market value. On October 31, 2015, the Company estimated the fair market value of the derivative liability associated with the bifurcated conversion feature to be $4,291 and a discount on the note of $4,291. On October 5, 2015, KBM Worldwide converted $1,630 of principal related to the April 30, 2014, convertible note, into 13,583,333 shares of the Company's common stock at $ 0.000120 per share. The remaining principal balance due after the conversion was $60,810. On October 6, 2015, KBM Worldwide converted $700 of principal related to the April 30, 2014, convertible note, into 5,833,333 shares of the Company's common stock at $ 0.000120 per share. The remaining principal balance due after the conversion was $60,110. On October 6, 2015, KBM Worldwide converted $1,630 of principal related to the April 30, 2014, convertible note, into 13,583,333 shares of the Company's common stock at $ 0.000120 per share. The remaining principal balance due after the conversion was $58,480. On October 7, 2015, KBM Worldwide converted $2,725 of principal related to the April 30, 2014, convertible note, into 19,464,286 shares of the Company's common stock at $ 0.000140 per share. The remaining principal balance due after the conversion was $55,755. On October 9, 2015, KBM Worldwide converted $2,725 of principal related to the April 30, 2014, convertible note, into 19,464,286 shares of the Company's common stock at $ 0.000140 per share. The remaining principal balance due after the conversion was $53,030. On October 12, 2015, KBM Worldwide converted $2,920 of principal related to the April 30, 2014, convertible note, into 19,466,667 shares of the Company's common stock at $ 0.000150 per share. The remaining principal balance due after the conversion was $50,110. On October 15, 2015, KBM Worldwide converted $5,525 of principal related to the April 30, 2014, convertible note, into 24,021,739 shares of the Company's common stock at $ 0.000230 per share. The remaining principal balance due after the conversion was $44,585. On October 15, 2015, LG Capital Funding, LLC converted $3,053 of principal related to the December 2, 2014, convertible note, into 13,157,887 shares of the Company's common stock at $ 0.000232 per share. The remaining principal balance due after the conversion was $67,141. On October 20, 2015, KBM Worldwide converted $5,540 of principal related to the April 30, 2014, convertible note, into 14,205,128 shares of the Company's common stock at $ 0.000390 per share. The remaining principal balance due after the conversion was $39,045. As of October 31, 2015 and July 31, 2015, the Company estimated the fair market value of the derivative liability to be $427,456 and $93,204, with a change in fair value of $419,666 respectively. See note 12. |