CONVERTIBLE NOTES PAYABLE | Note 5. CONVERTIBLE NOTES PAYABLE Note Payable-BS 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 outstanding at June 30, 2016. Note Payable-SF 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 June 30, 2016 and December 31 2015, 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 5,776,486 shares at June 30, 2016 and 3,506,665 shares at December 31, 2015. Note Payable-RK 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: 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. Note Payable-NW 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 June 30, 2016 and 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 5,776,486 shares at June 30, 2016 and 3,506,665 shares at December 31, 2015. Note Payable-MC #1 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 June 30, 2016 and December 31, 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 5,776,486 shares at June 30, 2016 and 3,506,665 shares at December 31, 2015.. Note Payable-MC #2 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. Convertible Note Payable-VV to LG (8%)#1 In July 2015, the Company issued a convertible note payable in the principal amount of $59,000. The note matured 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. During the six months ended June 30, 2016, the note holder converted $17,709 in note principal into common stock leaving a principal balance remaining on the note in the amount of $41,291 at June 30, 2016 Convertible Note Payable-VV (8%) #2 In August 2015, the Company issued a convertible note payable in the principal amount of $38,000. The note matured 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. Convertible Note Payable-LGC(8%) 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 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. Debenture Payable - (5%) B (Original $100K) 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. Convertible Note Payable-SO-B (8%) (Original $60k) On May 2, 2016, the Company issued to an Investor a replacement redeemable convertible note in the principal amount of $60,000 ("the Replacement Note"). The Note, which matures on May 2, 2017, pays interest at the rate of 8% per annum. This Replacement Note partially replaces a note originally issued on June 12, 2015 in the principal amount of $100,000 The holder of the note is entitled, at its option beginning on the 6 month anniversary, to convert all or any of the principal face amount of the Note then outstanding into shares of the Company's common stock at the price equal to 55% of the lowest trading price for the twenty prior trading days including the date of conversion. Any unamortized original issue discount and deferred financing costs from the original note was expensed upon replacement. The derivative discount and liability on the original note was appropriately accounted for upon replacement and a new derivative discount and liability for the replacement note appropriately recorded. During the months of May and June 2016, the holder of the aforementioned $60,000 Replacement Note converted $12,471 in principal to common stock leaving a principal balance payable of $47,529 on the note as of June 30, 2016. Convertible Note Payable-CB (5%) (Original $35k) 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 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. During the months of May and June 2016, the holder of the above $35,000 Note converted $16,088 in principal to common stock leaving a principal balance payable of $18,913 on the note as of June 30, 2016. Convertible NoteS Payable-LGC (8%) 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. Convertible NoteS Payable-LGC (8%) BEN 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. In accordance with the terms of the Purchase Agreement, the investor and the Company closed on the two outstanding notes ($50,000 and $46,803) in May and June 2016. The Company thereby received cash funding and offset the Note Receivables at June 30, 2016. Convertible NoteS Payable-SO (8%) On May 2, 2016, the Company issued to an Investor a convertible redeemable note in the principal amount of $57,750 ("the Note"). The Note, which matures on May 2, 2017, pays interest at the rate of 8% per annum. The note contains a 10% original issue discount. The holder of the note is entitled, at its option beginning on the 6 month anniversary, to convert all or any of the principal face amount of the Note then outstanding into shares of the Company's common stock at the price equal to 55% of the lowest trading price for the twenty prior trading days including the date of 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 June 30, 2016 as follows: Remaining Principal Original Issue Derivative Deferred Financing Total Convertible Notes Derivative Debt Amount Discount Discount Costs Payable 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 (Original $100K) 40,000 (30 ) 39,970 Convertible Note Payable - LGC (8%) 105,000 (10,818 ) (63,451 ) (10,748 ) 19,984 68,693 Convertible Note Payable - LGC (8%) BEN 50,000 (39,072 ) 10,928 54,386 Convertible Note Payable - LGC (8%) BEN 46,803 (38,475 ) 8,328 50,718 Convertible Note Payable - LGC (8%) 50,000 (43,201 ) 6,799 53,840 Convertible Note Payable - CB (5%) (Original $35k) 18,913 (14,482 ) 4,431 21,225 Convertible Note Payable - LGC (8%) 31,000 (15,664 ) 15,336 31,186 Convertible Notes Payable- VV to LG (8%) #1 41,291 (27,356 ) 13,935 41,032 Convertible Notes Payable- VV (8%) #2 38,000 (680 ) 37,320 Convertible Notes Payable- SO-B (8%) (Original $60k) 47,529 47,529 29,564 Convertible Notes Payable- SO (8%) 57,750 (4,416 ) (4,192 ) 49,142 $ 535,261 $ (15,234 ) $ (241,701 ) $ (15,649 ) $ 262,677 $ 350,644 As of June 30, 2016, the convertible notes payable can be converted into approximately 137,199,203 shares of common stock. |