CONVERTIBLE NOTE PAYABLE | 5. CONVERTIBLE NOTES PAYABLE Convertible notes payable at November 30, 2015, and November 30, 2014, are comprised of the following: November 30, 2015 2014 Notes payable to Adar Bays, LLC $ 115,000 $ — Notes payable to Union Capital, LLC 115,000 — Notes payable to Typenex Co-Investment, LLC 87,500 — Note payable to Gary Gelbfish 100,000 — Notes payable to JMJ Financial 60,500 — Notes payable to Black Mountain Equities, Inc. 55,000 — Notes payable to LG Capital Funding, LLC 50,000 63,250 Note payable to GCEF Opportunity Fund, LLC 27,500 — Note payable to Lord Abstract, LLC 8,800 — Total notes payable 619,300 63,250 Less: debt discount (202,325 ) (9,040 ) Total convertible notes payable, net of discount $ 416,975 $ 54,210 During the years ended November 30, 2015 and 2014 , the Company entered into convertible promissory notes with various entities in which it received aggregate proceeds of $508,000 and $47,500, respectively. As consideration for these loans, the Company issued promissory notes in the aggregate principal amount of $632,550, which included loan fees of $47,500 and original issue discounts of $29,550. The convertible promissory notes accrue interest at rates ranging between 8% and 12% per annum. At November 30, 2015, the Company was in default on the LG Capital Funding, LLC, Gary Gelbfish and Typenex Co-Investment, LLC convertible promissory notes and subject to default interest rates of 24%, 10% and 22%, respectively, on these convertible promissory notes. Further, the Company recorded a default penalty of $18,902 on the Typenex Co-Investments, LLC convertible promissory note. On April 4, 2017, the Company and Typenex agreed to a settlement, see Note 12. As of the date of this report, the Company was in default on all of the convertible notes payable. The table below summarizes the Company’s convertible promissory notes as of November 30, 2014. Inception Original Stock Principal Inception Due Interest Loan Issue Issued in Amount of Date Date Rate Cash Fees Discount Lieu of Cash Note LG Capital Funding, LLC 11/3/2014 11/3/2015 8 % $ 47,500 $ 7,500 $ 8,250 $ - $ 63,250 The table below summarizes the Company’s convertible promissory notes as of November 30, 2015. Inception Original Stock Principal Inception Due Interest Loan Issue Issued in Amount of Date Date Rate Cash Fees Discount Lieu of Cash Note Adar Bays, LLC 5/12/2015 5/12/2016 8 % $ 100,000 $ 15,000 $ - $ - $ 115,000 Union Capital, LLC 5/11/2015 5/11/2016 8 % 100,000 15,000 - - 115,000 Typenex Co-Investment, LLC 6/2/2015 7/2/2016 10 % 70,000 10,000 7,500 - 87,500 Gary Gelbfish 4/1/2015 9/23/2015 10 % 100,000 - - - 100,000 JMJ Financial 4/29/2015 4/29/2017 12 % 55,000 - 5,500 - 60,500 Black Mountain Equities, Inc. 6/4/2015 6/4/2016 10 % 50,000 - 5,000 - 55,000 LG Capital Funding, LLC 11/3/2014 11/3/2015 8 % 47,500 7,500 8,250 (13,250 ) 50,000 GCEF Opportunity Fund, LLC 6/30/2015 6/30/2016 10 % 25,000 - 2,500 - 27,500 Lord Abstract, LLC 6/30/2015 6/30/2016 10 % 8,000 - 800 - 8,800 Total $ 555,500 $ 47,500 $ 29,550 $ (13,250 ) $ 619,300 As reflected below, at November 30, 2015, the Company’s convertible notes payable were convertible into 3,890,876 shares of the Company’s common stock at the conversion terms below. Shares Issuable Upon Conversion Conversion terms at November 30, 2015 Adar Bays, LLC 60% of the lowest trading price of the Company's common stock for the 20 days preceding conversion 638,889 Union Capital, LLC 60% of the lowest trading price of the Company's common stock for the 20 days preceding conversion 638,889 Typenex Co-Investment, LLC 35% of lowest closing bid price of the Company's common stock for the 20 days preceding conversion 1,013,352 Gary Gelbfish 50% of the average of the closing price of the Company's common stock for the twenty days preceding conversion 455,063 JMJ Financial 60% of the lowest trading price of the Company's common stock in the 25 days prior to conversion 403,333 Black Mountain Equities, Inc. 70% of the average of the three lowest closing prices of the Company's common stock during the twenty days preceding conversion 261,905 LG Capital Funding, LLC 60% of the lowest trading price of the Company's common stock for the 20 days preceding conversion 277,778 GCEF Opportunity Fund, LLC 60% of the lowest closing price of the Company's common stock for the 20 days preceding conversion 152,778 Lord Abstract, LLC 60% of the lowest closing price of the Company's common stock for the 20 days preceding conversion 48,889 Number of shares of common stock underlying 3,890,876 The debt conversion features embedded in the Company’s convertible promissory notes are accounted for under ASC Topic 815 – Derivatives and Hedging The tables below summarize the Company’s derivative liabilities and the related non-cash charges at November 30, 2015. Estimated FV of Debt Conversion Debt Feature at Loss on Debt Amortization Discount at Inception Other Fees Issuance Discount Expense November 30, 2015 Adar Bays, LLC $ 203,234 $ - $ (103,234 ) $ 100,000 $ (59,589 ) $ 40,411 Union Capital, LLC 193,664 - (93,664 ) 100,000 (59,904 ) 40,096 Typenex Co-Investment, LLC 48,301 7,500 - 55,801 (27,671 ) 28,130 Gary Gelbfish 116,224 41,349 (57,573 ) 100,000 (100,000 ) - JMJ Financial 173,334 2,500 (118,334 ) 57,500 (12,924 ) 44,576 Black Mountain Equities, Inc. 68,362 5,000 (18,362 ) 55,000 (26,972 ) 28,028 LG Capital Funding, LLC 109,773 - (62,273 ) 47,500 (47,500 ) - GCEF Opportunity Fund, LLC 29,889 2,500 (4,889 ) 27,500 (11,527 ) 15,973 Lord Abstract, LLC 9,565 800 (1,565 ) 8,800 (3,689 ) 5,111 952,346 59,649 (459,894 ) 552,101 (349,776 ) 202,325 Notes payable: Studio Capital, LLC - - - 26,968 (7,674 ) 19,294 Loss on payment - - (12,139 ) - - - Total $ 952,346 $ 59,649 $ (472,033 ) $ 579,069 $ (357,450 ) $ 221,619 Estimated FV of Debt Conversion Feature at Change in FV of Inception November 30, 2015 Debt Conversion Feature Adar Bays, LLC $ 203,234 $ 207,659 $ 4,425 Union Capital, LLC 193,664 207,536 13,872 Typenex Co-Investment, LLC 48,301 380,858 332,557 Gary Gelbfish 116,224 118,391 2,167 JMJ Financial 173,334 155,017 (18,317 ) Black Mountain Equities, Inc. 68,362 81,951 13,589 LG Capital Funding, LLC 109,773 94,905 (14,868 ) GCEF Opportunity Fund, LLC 29,889 50,532 20,643 Lord Abstract, LLC 9,565 16,163 6,598 $ 952,346 $ 1,313,012 $ 360,666 As reflected in the table below, during the years ended November 30, 2015 and 2014, the Company incurred interest expense, excluding amortization of debt discount, of $43,313 and $374, respectively, on the convertible promissory notes. At November 30, 2015 and 2014, accrued interest on the convertible promissory notes totaled $42,426 and $374, respectively, and is recorded in accounts payable and accrued expenses on the consolidated balance sheets. Interest Expense for the Year ended Accrued Interest at November 30, November 30, 2015 November 30, 2014 2015 2014 Adar Bays, LLC $ 5,091 $ - $ 5,091 $ - Union Capital, LLC 5,117 - 5,117 - Typenex Co-Investment, LLC 6,225 - 6,225 - Gary Gelbfish 6,795 - 6,795 - JMJ Financial 7,260 - 7,260 - Black Mountain Equities, Inc. 5,500 - 5,500 - LG Capital Funding, LLC 5,778 374 4,891 374 GCEF Opportunity Fund, LLC 1,172 - 1,172 - Lord Abstract, LLC 375 - 375 - Total $ 43,313 $ 374 $ 42,426 $ 374 |