CONVERTIBLE NOTES PAYABLE | NOTE 5 – CONVERTIBLE NOTES PAYABLE (a) On February 22, 2010, the Company issued a $250,000 promissory note to a former officer of the Company. The note bears interest at 10% per annum, is unsecured, and was due on December 31, 2010. The holder may convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 75% of the average of the closing market price of the Company’s common stock during the five trading days immediately preceding the conversion date. The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversions feature of $175,081 with an equivalent discount on the convertible debt. The debt was fully accreted as of December 31, 2011. The carrying value of the convertible debt as of June 30, 2015 is $250,000. The derivative liability related to this note is recalculated each reporting period. The derivative liability was $335,746 as of June 30, 2015. (b) On April 13, 2010, the Company entered into a $250,000 draw down promissory note agreement with Paramount Trading Company, a non-related party. Amounts drawn on this credit facility bear interest at 8% per annum, are unsecured, and were due on April 13, 2011. Effective March 31, 2014, Paramount Trading Company assigned this note, along with accrued interest to Liberty Resources Ltd., whereby the principal balance of $250,000 and accrued interest of $59,001 were reclassified into a new principal balance of $309,001. During the period ended June 30, 2015, the current debt holder, Liberty Resources, Ltd., sold portions of the note (“Liberty Note”) to various parties. As a result the conversion terms for each sale changed from the original conversion terms thereby creating new notes each of which have varying conversion terms. As of June 30, 2015, the remaining balance on the note was $138,001 and a total of $42,083 was converted by the new holders. These notes, derived from the original Liberty note are as follows: Effective April 2, 2015, LG Capital LLC acquired a $50,000 interest for $50,000 in the Liberty Note with conversion terms equal to 60% of the average of the five lowest trading days in the preceding 25 trading days including to the conversion date. The new note was considered an extinguishment of the prior note and a loss on extinguishment of $138,750 was recorded. The note holder converted $10,000 plus interest of this note to common stock during the three months ended June 30, 2015. The carrying value of the convertible debt as of June 30, 2015 is $40,000. The derivative liability related to this note is recalculated each reporting period. The derivative liability was $77,181 as of June 30, 2015. Effective May 5, 2015, JDF Capital, Inc., acquired a $56,000 interest for $56,000 in the Liberty Note with conversion terms equal to 50% of the average of the three lowest trading days in the 20 days prior to and including the conversion date. The new note was considered an extinguishment of the prior note and a loss on extinguishment of $115,328 was recorded. The carrying value of the convertible debt as of June 30, 2015 is $56,000. The derivative liability related to this note is recalculated each reporting period. The derivative liability was $207,760 as of June 30, 2015. Effective May 28, 2015, Black Forest Capital Inc., acquired a $53,500, interest for $53,500 in the Liberty Note with conversion terms equal to 40% of the lowest trading price in the 20 days prior to and including the conversion date. The new note was considered an extinguishment of the prior note and a loss on extinguishment of $165,356 was recorded. The note holder converted $7,000 plus interest of this note to common stock during the three months ended June 30, 2015. The carrying value of the convertible debt as of June 30, 2015 is $46,500. The derivative liability related to this note is recalculated each reporting period. The derivative liability was $122,353 as of June 30, 2015. Effective April 30, 2015, Tangiers Investment Group, LLC, acquired a $25,000, interest for $25,000 in the Liberty Note with conversion terms equal to 50% of the lowest trading price in the 20 days prior to and including the conversion date. The new note was considered an extinguishment of the prior note and a loss on extinguishment of $93,630 was recorded. The note holder converted $13,500 plus interest of this note to common stock during the three months ended June 30, 2015. The carrying value of the convertible debt as of June 30, 2015 is $11,500. The derivative liability related to this note is recalculated each reporting period. The derivative liability was $31,405 as of June 30, 2015. (c) Effective January 31, 2005, a former officer of the Company entered into a line of credit agreement with a financial institution allowing for borrowings of up to $800,000 with annual interest at prime to be used to fund the operations of the Company. The line of credit is secured by the principal residence of the former President of the Company. Monthly interest-only payments are required. On October 21, 2010, the Company agreed to add a conversion option to the entire balance of principal and interest outstanding at any time on the line of credit. The President of the Company may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 75% of the average of the closing market price of the Company’s common stock during the five trading days immediately preceding the conversion date. The maturity date was December 31, 2011 and the note is now due on demand. As of June 30, 2015, the outstanding balance is $788,472 (December 31, 2014 - $788,472). The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $190,274 with an equivalent discount on the convertible debt. The debt was fully accreted as of December 31, 2011. The carrying value of the convertible debt as of June 30, 2015 is $788,472. The derivative liability related to this note is recalculated each reporting period. The derivative liability was $1,058,963 as of June 30, 2015. (d) Effective March 31, 2014, CapitalNordic Ltd., assigned two defaulted notes, plus accrued finance chafes and interest that it held to Neoventive LLC, in the collective amount of $9,200, derived from two defaulted promissory notes, dated September 10, 2013 and September 24, 2013, in the amounts of $3,000 and $5,000. The notes plus interest of $450 and $750 respectively were payable after 4 months. Upon the effectiveness of the assignment, both notes had interest at 6% and maintained the same conversion features. The holder may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at $0.01 price per share. (e) Effective March 31, 2014, Laurag Associates S.A., assigned two defaulted notes, plus accrued interest that it held to Neoventive LLC, in the collective amount of $23,250 one dated August 31, 2012 in which the Company issued a 6% convertible note for proceeds of $20,000 to and the second dated March 12, 2013 in which the Company issued a 5% promissory note in the amount of $2,500. Upon the effectiveness of the assignment, both notes had interest at 6% and maintained the same conversion features. The holder may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to the market price of the stock as determined by taking the average trading price of the stock over the previous 30 days. The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $1,407 with an equivalent discount on the convertible debt. The debt was fully accreted as of June 30, 2015. The carrying value of the convertible debt as of June 30, 2015 is $23,250. The derivative liability related to this note is recalculated each reporting period. The derivative liability was $14,876 as of June 30, 2015. (f) On November 16, 2012 the Company issued a 6% convertible note for assumed accounts payable of $66,709 which matured on November 16, 2013. The holder may elect to convert, at any time, any amount outstanding into shares of common stock of the Company at a conversion price per share equal to the market price of the stock as determined by taking the average trading price of the stock over the previous 30 days. The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $1,410 with an equivalent discount on the convertible debt. On July 1, 2014, the conversion feature of the loan was modified from a variable conversion price to a fixed conversion price of $ 0.01 per share. As a result of the loan modification, the remaining derivative liability as of July 1, 2014 of $ 5,121 was recorded as a gain on modification of loan terms. A debt discount of $ 66,709 to recognize the value of the conversion feature, was recorded on July 1, 2014, which was fully amortized as of December 31, 2014. The carrying value of the convertible debt as of June 30, 2015 is $66,709. (g) Effective January 2, 2015, the Company issued an 8% convertible note to KBM Worldwide Inc., for proceeds of $33,000 which matures on September 12, 2015. Among other terms, the holder may elect to convert, at any time after one hundred eighty days (180), any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 51% of the average of the three lowest days closing market prices during the fifteen day trading period immediately preceding the conversion date. The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $45,531, with a discount on the convertible debt of $33,000 and a derivative expense of $12,531. The debt discount will be amortized over the life of the debt. The remaining discount was $11,122 of June 30, 2015. The derivative liability related to this note is recalculated each reporting period. The derivative liability was $76,918 as of June 30, 2015. (h) Effective January 16, 2015, the Company issued a 10% convertible note to Tangiers Investment Group LLC for proceeds of $44,000 under terms of a borrowing agreement whereby the Company can borrow up to $220,000 within 270 days of execution of the agreement. The Note, with a 10% original issue discount, has interest under the Note of 10% per annum, with the principal and all accrued but unpaid interest due on or about January 16, 2016. The Note is convertible at any time at Tangier’s option into shares of the Company’s common stock at a variable conversion price of 60% of the lowest traded price during the 5 days prior to the notice of conversion, subject to adjustment and other terms as described in the Note. The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $67,262, with a discount on the convertible debt of $44,000 and a derivative expense of $23,262. The debt discount will be amortized over the life of the debt. The remaining discount was $24,230 of June 30, 2015. On May 15, 2015, the Company issued a 10% convertible note to Tangiers Investment Group LLC for proceeds of $13,250 under terms of the above borrowing agreement. The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $9,752 with an equivalent discount on the convertible debt. The debt discount will be amortized over the life of the debt. The derivative liability related to this note is recalculated each reporting period. The derivative liability was $127,478 as of June 30, 2015. (i) On March 6, 2015, the Company issued an 8% convertible note to Vis Vires Group Inc., for proceeds of $33,000 which matures on or about December 7, 2015. Among other terms, the holder may elect to convert, at any time after one hundred eighty days (180), any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 51% of the average of the three lowest days closing market prices during the fifteen day trading period immediately preceding the conversion date. The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $160,997, with a discount on the convertible debt of $33,000 and a derivative expense of $127,997. The debt discount will be amortized over the life of the debt. The remaining discount was $18,578 as of June 30, 2015. The derivative liability related to this note is recalculated each reporting period. The derivative liability was $72,601 as of June 30, 2015. (j) On April 2, 2105, the Company issued an 8% convertible note to LG Capital Funding LLC, for proceeds of $60,000 which matures on October 1, 2015. Among other terms, the holder may elect to convert, at any time after one hundred eighty days (180), any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 40% of the average of the lowest trading price with a 20-day look back. The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $183,317, with a discount on the convertible debt of $60,000 and a derivative expense of $123,317. The debt discount will be amortized over the life of the debt. The remaining discount was $45,041 as of June 30, 2015. The derivative liability related to this note is recalculated each reporting period. The derivative liability was $115,369 as of June 30, 2015. (k) Effective May 12, 2015, The Company entered into a 10% Convertible Promissory Note and Warrant Agreement with JDF Capital Inc. In accordance with the terms of the Note with JDF Capital Inc., the Company can borrow up to $330,000, of which the Company borrowed $61,600 on January 16, 2015 and with an additional $268,400 available for additional borrowings at JDF’s discretion after the initial $61,600. Each advance principal and interest is due 12 months from the applicable funding date. Warrants, with a term of 5 years, received are equal to 100% of the common stock shares eligible for conversion on the date of the initial funding with an exercise price equal 110% of the initial conversion price. The terms of conversion, among other terms, is equal to 50% of the average of the 3 lowest reported sale prices on the common stock for the 20 trading days immediately prior to the closing date of the financing or 50% of the average of the 3 lowest reported sale prices for the 20 days prior to the conversion date of the Note. The Warrant is exercisable at $.0238 per share over a five-year period and carries a valuation cost of $83,191. The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $96,258, with a discount on the convertible debt of $61,600 and a derivative expense of $34,658. The debt discount will be amortized over the life of the debt. The remaining discount was $53,149 as of June 30, 2015. The derivative liability related to this note is recalculated each reporting period. The derivative liability was $155,928 as of June 30, 2015. (l) On June 2, 2015, the Company issued an 8% convertible note to Vis Vires Group Inc., for proceeds of $33,000 which matures on or about December 31, 2015. Among other terms, the holder may elect to convert, at any time after one hundred eighty days (180), any amount outstanding into shares of common stock of the Company at a conversion price per share equal to 51% of the average of the three lowest days closing market prices during the fifteen day trading period immediately preceding the conversion date. The Company was required to classify the conversion feature contained within the convertible debt as a derivative liability. As such, the Company recorded a derivative liability related to the convertible debt equal to the estimated fair value of the conversion feature of $34,297, with a discount on the convertible debt of $33,000 and a derivative expense of $1,297. The debt discount will be amortized over the life of the debt. The remaining discount was $25,544 as of June 30, 2015. The derivative liability related to this note is recalculated each reporting period. The derivative liability was $80,367 as of June 30, 2015. |