CONVERTIBLE NOTES PAYABLE | Note 5. CONVERTIBLE NOTES PAYABLE In March 2011, the Company issued $800 aggregate principal amount of 6% convertible notes due in January 2012. Interest on the notes accrue at the rate of 6% per annum and are payable when the notes mature. The notes matured prior to conversion but have not been repaid. Interest continues to accrue at the rate of 6% per annum. The holder of one of the notes converted $110 of note principal into 1,100,000 shares of common stock as follows: Date of Conversion Principal Amount Converted Conversion Rate Shares Received June 2013 $ 70 $ 0.0001 700,000 August 2013 $ 40 $ 0.0001 400,000 In August 2013, in a private transaction, the same note holder transferred $330 of the remaining note principal plus $55 in accrued interest to a third party. In August 2013, in a private transaction, the new note holder transferred $5 of the remaining note principal to a third party who then converted the note into 50,000 shares of common stock. In September 2013, the new note holder converted $100 of note principal into 1,000,000 shares of common stock. In September 2013, in a private transaction, the new note holder transferred $35 of the remaining note principal to a third party who then converted the note into 350,000 shares of common stock. In November and December 2013, the new note holder converted an additional $90 of note principal into 900,000 shares of common stock as follows: Date of Conversion Principal Amount Converted Conversion Rate Shares Received November 2013 $ 40 $ 0.0001 400,000 December 2013 $ 50 $ 0.0001 500,000 In March and April 2014, the new note holder converted an additional $90 of note principal into 900,000 shares of common stock as follows: Date of Conversion Principal Amount Converted Conversion Rate Shares Received March 2014 $ 50 $ 0.0001 500,000 April 2014 $ 40 $ 0.0001 400,000 Subsequent to these conversions there remains $125 in note principal. In July 2013, the holder of the second note converted $240 of note principal into 400,000 shares of the Company's common stock at $0.0006 per share. At December 31, 2015 and 2014, the note had a remaining principal balance of $60 and $60, respectively. At any time on or after the maturity date, the holders of the notes, have the option of converting any of the unpaid principal and interest into the Company's common stock. The notes plus any accrued but unpaid interest are convertible at the rate of $0.0001 per share at the time of conversion up to a maximum of 9.99% of the then issued and outstanding common stock, or 3,506,665 shares at December 31, 2015. In May 2012, the Company issued a $25,000 6% per annum note that matured in November 2012. In December 2012 the note was amended to be a convertible note. Interest on the note accrues interest at 6% per annum and is payable when the note matures. The holder of the $25,000 note had the option of converting it at any time prior to maturity. The note plus any accrued but unpaid interest were convertible at the rate of $0.001 per share at the time of conversion up to a maximum of 9.99% of the then issued and outstanding common stock. The holder of the note converted $1,010 of note principal into 1,010,000 shares of common stock as follows: The holder of the note converted $1,010 of note principal into 1,010,000 shares of common stock as follows: Date of Conversion Principal Amount Converted Conversion Rate Shares Received December 2012 $ 150 $ 0.001 $ 150,000 January 2013 $ 660 $ 0.001 $ 660,000 March 2013 $ 200 $ 0.001 $ 200,000 In July 2013, the Company retired $14,000 of note principal in payment for consulting services provided to the note holder. In July 2013, the note holder converted $300 of note principal into 300,000 shares of the Company's common stock. In July 2013, in a private transaction, the note holder transferred the remaining note principal balance of $9,690 to a third party. In August 2013, in a private transaction, the new note holder transferred $4,475 of principal to a stockholder of the company. In October 2013, the note holder converted $400 of note principal into 400,000 shares of the Company's common stock at $0.001 per share. In October 2014, the note holder converted $1,100 of note principal into 1,100,000 of the Company's common stock. At December 31, 2015, the remaining principal on this portion of the note is $3,715. The note holder has the option of converting the balance at any time with the approval of the Board of Directors. The note plus any accrued but unpaid interest are convertible at the rate of $0.001 per share at the time of conversion up to a maximum of 9.99% of the then issued and outstanding common stock, or 4,154,729 shares at March 31, 2016. In August 2013, the note holder/stockholder converted $700 of note principal into 700,000 shares of the Company's common stock at $0.001 per share. In October 2013, in a private transaction, this note holder transferred $1,000 of note principal to a third party of which $700 was converted into 700,000 shares in June 2014. The remaining principal balance on this portion of the note at March 31, 2016 is $2,075. The note holder has the option of converting the balance at any time with the approval of the Board of Directors. The note plus any accrued but unpaid interest are convertible at the rate of $0.001 per share at the time of conversion up to a maximum of 9.99% of the then issued and outstanding common stock, or 4,154,729 shares at March 31, 2016. In April 2015, the Company issued a $3,000 8% per annum note that matures in October 2015. The holder of the note has the right to convert the principal into shares of the Company's common stock at any time 180 days after the closing date at $0.0001 per share. Interest on the note accrues interest at 8% per annum and is payable when the note matures. In July 2015, the Company issued a convertible note payable in the principal amount of $59,000. The note matures in March 2016 and bears interest at 8%. Beginning 180 days following the closing date the note holder shall have the right to convert any or all of the outranking principal balance into shares of the Company's common stock at the discounted rate of 55% of the average of the three lowest market trading prices during the 10 days immediately preceding the conversion date. In August 2015, the Company issued a convertible note payable in the principal amount of $38,000. The note matures in March 2016 and bears interest at 8%. Beginning 180 days following the closing date the note holder shall have the right to convert any or all of the outranking principal balance into shares of the Company's common stock at the discounted rate of 55% of the average of the three lowest market trading prices during the 10 days immediately preceding the conversion date. On October 8, 2015, the Company issued a convertible note payable in the principal amount of $31,000 with an Original Issue Discount of $1,500. The note matures on October 8, 2016 and bears interest at 8%. The note holder has the right at any time to convert any part or all of the outstanding unpaid principal balance into shares of the Company's common stock at the discounted rate of 58% of the lowest market trading price during the 20 days prior to and including the conversion date. In June 2015, the Company issued a convertible note payable in the principal amount of $100,000. The note matures in December 2015 and bears interest at 5%. Beginning 180 days following the closing date the note holder shall have the right to convert any or all of the outranking principal balance into shares of the Company's common stock at the discounted rate of 50% of the average of the three lowest market trading prices during the 3 days immediately preceding the conversion date. On October 15, 2015 the Company issued a convertible note payable in the principal amount of $35,000 with an Original Issue Discount of $5,000. The note matures on October 15, 2016 and bears interest at 5%. The note holder has the right at any time on or after the day that is six months from October 15, 2015 to convert any part or all of the outstanding unpaid principal balance into shares of the Company's common stock at the discounted rate of 55% of the lowest market trading prices during the 20 days prior to the conversion date. On January 7 2016, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an accredited investor (the “Investor”) for the sale of convertible redeemable notes in aggregate principal amount of $251,803. On January 7, 2016, the Company and the Investor conducted the first closing under the Purchase Agreement, pursuant to which the Company issued to the Investor (i) a convertible redeemable note in principal amount of $105,000 containing an original issue discount of $20,000 (the “$105K Note”); and (ii) a convertible redeemable note in principal amount of $50,000 (the “$50K Note” and together with the $105K Note, the “Notes”). Under the Purchase Agreement, on March 15, 2016 and June 15, 2016, the Company and the Investor expect to conduct additional closing for the sale and purchase of additional notes having the same terms as the Notes in principal amounts equal to $50,000 and $46, 803, respectively. In consideration for the issuance of the $105K Note, on January 13, 2016, the Company received net proceeds (after deducting the original issue discount and legal fees) in the amount of $75,697. In consideration for the issuance of the $50K Note, the Investor issued to the Company a $50,000 fully-collateralized secured promissory note (the “Investor Note”), pursuant to which the Investor agreed to pay the Company $50,000 on or before April 30, 2016. The Notes, which are due on January 7, 2017, bear interest at the rate of 8% per annum. Subject to a beneficial ownership limitation equal to 9.99%, principal and interest on the Notes is convertible into shares of the Company’s common stock (“Common Stock”) at a conversion price equal to 55% of the lowest trading price of Common Stock during the 20 trading day period prior to conversion. The Company’s convertible notes payable and the related derivative liabilities, derivative discount, deferred financing costs and original-issue discount are presented in the financial statements at March 31, 2016 as follows: Debt Face Amount Original Issue Discount Derivative Discount Deferred Financing Costs Total Convertible Notes Payable Derivative Liability Note Payable - BS $ 125 $ 125 Note Payable - SF 60 60 Note Payable - MC #1 2,075 2,075 Note Payable - NW 3,715 3,715 Note Payable - MC #2 3,000 3,000 Debenture Payable (5%) - B 100,000 100,000 32,293 Convertible Note Payable - LGC (8%) 105,000 (15,397 ) (78,310 ) (7,162 ) 4,130 123,003 Convertible Note Payable - LGC (8%) 50,000 (44,708 ) (1,925 ) 3,367 89,897 Convertible Note Payable - LGC (8%) 50,000 (46,712 ) (2,336 ) 952 88,709 Convertible Note Payable - LGC (8%) 46,803 (43,146 ) (2,186 ) 1,471 83,216 Convertible Note Payable - CB (5%) 35,000 (2,699 ) (540 ) 31,762 Convertible Note Payable - LGC (8%) 31,000 (781 ) (22,861 ) (2,473 ) 4,886 56,366 Convertible Notes Payable- VVtoLG (8%) 49,491 1,358 50,849 59,209 Convertible Notes Payable- VV (8%) #2 38,000 (680 ) 37,320 $ 514,269 $ (18,877 ) $ (234,379 ) $ (17,301 ) $ 243,713 $ 532,693 As of March 31, 2016, the convertible notes payable can be converted into approximately 136,333,000 shares of common stock. |