| Promissory notes, including related parties and debenture payable | 8. Promissory notes, including related parties and debenture
payable: Promissory notes, including
related parties at September 30, 2015 and December 31, 2014, consist of the following:
2015 2014
Promissory notes payable:
Various, including related parties of $13,867 (2015) and $157,322 (2014); interest rate ranging from 8% to 10% [A] $ 136,911 $ 171,422
Notes payable; interest rates ranging from 9% to 15%; interest payable quarterly; the notes are unsecured, matured on February 28, 2008; currently in default and past due [B] 2,090,719 2,090,719
$ 2,227,630 $ 2,198,391
[A] Pursuant to a November 4, 2011 Board of director resolution, these notes are convertible at conversion rates, determined
at the discretion of the board of directors. During the nine months ended September 30, 2015 the Company issued notes of $144,600
($5,000 to related parties) and made payments of $153,230
[B] These notes payable (the Promissory Notes) originally became due on February 28,
2007. In April 2007 the Company, through a financial advisor, restructured $1,825,000 of the Promissory Notes (the Restructured
Notes). The Restructured Notes carry a stated interest rate of 15% (a default rate of 20%) and matured on February 28, 2008.
The Company has not paid the interest due since June 2007, and no principal payments on the Promissory Notes have been made since
2008 and accordingly, they are in default. Accrued interest on these notes total $3,434,686 and is included in accrued expenses
on the consolidated balance sheets. In January 2008, the Company
and the three guarantors received a complaint filed by the financial advisor (acting as agent for the holders of the Restructured
Notes) and the holders of the Restructured Notes. The claim is seeking $1,946,250 plus per diem interest beginning January 22,
2008 at the rate of twenty percent (20%) per annum plus $37,000 due the financial advisor for unpaid fees. The court has ruled
in favor of a motion for summary judgment filed by certain of the plaintiffs and a judgment was entered on August 18, 2009 in the
total amount of $2,482,922 in principal and interest on the notes, $40,920 in related claims and $124,972 in attorneys fees
and expenses. The Company is not aware of any payments being made by any of the guarantors and accordingly, the Company includes
these liabilities on the September 30, 2015 and December 31, 2014 balance sheet items promissory notes payable and accrued expenses. Debenture
payable: 2012 Notes On November 1,
2012, the Company issued a convertible promissory note to David Schaper (Schaper) in the amount of $269,858 in exchange
for previously accrued legal fees. The note bears interest at 8% per annum and is convertible at a conversion price for each share
of common stock equal to 50% of the average of the lowest three trading prices (as defined in the note agreements) per share of
the Companys common stock for the ten trading days immediately preceding the date of conversion.. During the year ended
December 31, 2014, the Company issued 2,240,336 shares of common stock upon the conversion of $163,670 of the Note. As of September
30, 2015, the balance of the note is $3,000. 2013 Notes The following
notes issued in 2013, bear interest at 8% per annum and other than as described below are convertible at a conversion price for
each share of common stock equal to 50% of the average of the lowest three trading prices (as defined in the note agreements) per
share of the Companys common stock for the ten trading days immediately preceding the date of conversion. The notes issued
in 2013 are referred to as the 2013 Notes. On March 14, 2013
the Company issued a convertible promissory note for $46,000 to an accredited investor (the March 2013 Note). The
March 2013 Note, was due eight months from issuance and bears an interest rate of 8% per annum, and in the case of an event of
default increases to 12% per annum (the Default Rate). The conversion feature of the 2013 Note is a 50% discount
to the average of the three lowest day closing bid prices for the ten trading days prior to conversion. The March 2013 Note matured
November 14, 2013, is in default, and the Default Rate was effective at that date. During the nine months ended September 30, 2015,
the Company issued 41,325,963 shares of common stock upon conversion of $9,250 of the note. The balance of the March 2013 Note
is $17,326 as of September 30, 2015. On August 22, 2013, the Company
issued a $6,000 convertible promissory note to Schaper. During the year ended December 31, 2014, the Company issued 66,667 shares
of common stock upon conversion of $4,000 of this note. The outstanding principal balance on this note is $2,000 as of September
30, 2015. On October 18, 2013, the Company
issued four (4) convertible notes each in the amount of $25,625 to Gel (the 2013 Gel Notes). The conversion price for the 2013
Gel Notes is equal to 50% of the lowest closing bid price of the Common Stock as reported on the exchange which the Companys
shares are traded or any exchange upon which the Common Stock may be traded in the future with a floor of $0.0001 per share, for
any of the five trading days including the day upon which a Notice of Conversion is received by the Company. If the shares have
not been delivered within 3 business days, the Notice of Conversion may be rescinded. Accrued but unpaid interest shall be subject
to conversion. No fractional shares or scrip representing fractions of shares will be issued on conversion, but the number of shares
issuable shall be rounded to the nearest whole share. On November 22, 2013, the Company
issued a $35,000 (the Fong Note) and $30,000 (the Hollander Note) convertible notes to Mr. Fong and Mr. Hollander, respectively,
in satisfaction of unpaid fees. During the nine months ended September 30, 2015, the Company issued 18,030,303 shares of common
stock in satisfaction of $6,000 of the Hollander note. The outstanding principal balances of the Fong and Hollander notes as of
September 30, 2015 are $35,000 and $2,000 respectively. 2014 Notes On February 10, 2014, the Company
issued two (2) convertible promissory notes in the amounts of $95,814 and $95,813 in exchange for previously accrued legal fees.
The notes bear interest at 8% per annum and are convertible at a conversion price for each share of common stock equal to 50% of
the average of the lowest three trading prices (as defined in the note agreements) per share of the Companys common stock
for the ten trading days immediately preceding the date of conversion. This note matured February 10, 2015 and is in default. During
the year ended December 31, 2014, the company issued 416,667 shares of common stock in settlement of $12,500 of the notes. During
the nine months ended September 30, 2015, $35,000 in note principal was assigned to a third party in the form of a new convertible
promissory note, with the same terms as the prior note. During the nine months ended September 30, 2015, the Company issued 194,518,463
shares of common stock in satisfaction of $17,958 in principal and $137 of accrued and unpaid interest of the third-party portion
of the note. As of September 30, 2015, the balances of the notes, including amounts now held by third parties, totaled $161,169. On February 20, 2014, the Company
issued two (2) convertible promissory notes, each in the amount of $40,000 to LG Capital (LG). The Company received
$38,000 after debt issuance costs of $2,000 and a $40,000 secured promissory note. The debt issuance costs will be amortized over
the earlier of the twelve month term of the Note or any redemptions and $2,000 was expensed as debt issuance costs (included in
interest expense) for the year ended December 31, 2014. This note matured February 20, 2015 and is in default. During the nine
months ended September 30, 2015, the Company issued 167,326,230 shares of common stock in full satisfaction of convertible note
principal and $1,673 of accrued and unpaid interest. As of September 30, 2015, the outstanding principal balance of these notes
has been satisfied. On March 6, 2014 the Company issued
a $50,000 convertible promissory note to Gel, under the same terms and conditions as the 2012 Gel Notes. This note matured March
6, 2015 and is in default. During the nine months ended September 30, 2015, the Company issued 24,979,349 shares of common stock
in satisfaction of $19,205 in convertible note principal and $2,863 in accrued and unpaid interest. As of September 30, 2015, the
outstanding principal balance of this note is $30,795. On March 27, 2014, the Company issued
an $831,000 secured convertible promissory note (the Note) to Typenex (the Lender). The Typenex Note
carries an original issuer discount of $75,000. In addition, the Company agreed to pay $6,000 to cover the Lenders legal
and other fees. At the option of the Lender, the note converts at $0.0025 per share. The conversion by the Lender of any portion
of the Outstanding Balance shall only be exercisable in ten (10) tranches (each, a Tranche), consisting of an initial
Tranche in an amount equal to $88,500 and nine (9) additional Tranches, each in the amount of $82,500, plus any interest, costs,
fees or charges accrued thereon or added thereto under the terms of this Note. The Note carries a ten (10) percent interest rate
and matures on the seventeenth month after funding. Typenex funded $75,000 on April 1, 2014 and also delivered nine (9) secured
promissory notes to the Company, each in the amount of $75,000. Each payment received will constitute an Issue Date.
The Company also granted Typenex the right to purchase at any time on or after each Issue Date until the date which is the last
calendar day of the month in which the fifth anniversary of the Issue Date occurs (the Expiration Date), a number
of fully paid and non-assessable shares (the Warrant Shares) of the Companys common stock, par value $0.001
per share equal to $41,250 divided by the Market Price (as defined in the Note). This note matured April 1, 2015 and is in default.
During the year ended December 31, 2014, the company issued 558,333 shares of common stock upon conversion of $16,500 of the note.
During the nine months ended September 30, 2015, the company issued 4,405,110 shares of common stock upon conversion of $17,078
of note principal. In addition, during the nine months ended September 30, 2015, the company issued 40,535,699 shares upon conversion
of $18,000 in warrants outstanding. As of September 30, 2015, the outstanding principal balance of this note is $69,426. Amortization
for the nine months ended September 30, 2015, totaled $39,600 and the carrying value of the note as of September 30, 2015, is $54,672,
net of unamortized discount of $0. On April 1, 2014 ($15,000) and April
23, 2014 ($12,500), the Company issued convertible promissory notes to Carebourn Capital. During the year ended December 31, 2014,
the Company issued 851,467 shares of common stock in satisfaction of $25,544 in convertible note principal. During the nine months
ended September 30, 2015, the Company issued 1,528,123 shares in satisfaction of $1,956 in convertible note principal. As of September
30, 2015, the principal balance of these notes has been satisfied. On May 16, 2014, the Company issued
a $27,000 convertible promissory note, bearing interest at 12% per annum, to WHC Capital, LLC. The Company received $25,000 after
debt issuance costs of $2,000, which was amortized over the earlier of the one year term of the Note or any redemption. The note
matured on February 16, 2015 and is in default. During the nine months ended September 30, 2015, the company issued 42,974,921
shares of common stock upon conversion of $18,425 of note principal. As of September 30, 2015, the principal balance of this note
has been fully satisfied. On July 11, 2014, the Company issued
a $42,750 convertible promissory note to Auctus Private Equity Fund, LLC. . The note is due on demand, bears interest at 8% and
is convertible at a 45% discount of the average of the two lowest days closing prices for the twenty five (25) days preceding
conversion. The conversion price may be adjusted downward if, within three (3) business days of the transmittal of the Notice of
Conversion, the Common Stock has a closing bid which is 5% or lower than that set forth in the Notice of Conversion. The company
received $37,750 after debt issuance costs of $5,000, which was amortized over the earlier of the 9 month term of the Note or any
redemptions. Accordingly, $288 has been expensed for the nine months ended September 30, 2015, as debt issuance costs (included
in interest expense). The Company recorded an initial derivative liability of $44,460, debt discount of $42,750 and derivative
expense of $1,710. The debt discount of $42,750 was amortized into interest expense over the term of the note. The note matured
on April 11, 2015 and is in default. During the nine months ended September 30, 2015, the company issued 2,564,562 shares of common
stock upon conversion of $7,028 of note principal and $2,155 of accrued note interest. As of September 30, 2015, a principal balance
of $35,676 remains outstanding. On July 16, 2014, the Company issued
a convertible promissory note for $50,000 to an unaffiliated accredited investor. The note is due on demand, bears interest at
8% and is convertible at 50% discount of the average of the three lowest days closing prices for the ten (10) days preceding
conversion. The Company recorded an initial derivative liability of $52,000, debt discount of $50,000 and derivative expense of
$2,000. The debt discount of $50,000 was amortized into interest expense over the term of the note. The note matured on April 16,
2015 and is in default. As of September 30, 2015, the full principal balance of $50,000 remains outstanding. Amortization for the
nine months ended September 30, 2015, totaled $4,167 and the carrying value of the note as of September 30, 2015, is $50,000, net
of unamortized discount of $0. On July 22, 2014 ($52,500), August
28, 2014 ($27,500), September 19, 2014 ($27,500), and November 3, 2014 (27,500) the Company issued convertible promissory notes
to Carebourn Capital. The notes are due on demand, bear interest at 12% and are convertible at a 50% discount of the average of
the three lowest days closing prices for the ten (10) days preceding conversion. The Company received $125,000 after debt
issuance costs of $10,000, which was amortized over the earlier of the term of the Notes or any redemptions. The July note matured
on April 22, 2015 and is in default. The rest of the notes matured on May 28, 2015 and are in default. The Company recorded an
initial derivative liability of $143,100, debt discount of $125,000 and derivative expense of $18,100. The debt discount of $125,000
was amortized into interest expense over the term of the notes. During the nine months ended September 30, 2015, the company issued
321,518,056 shares of common stock upon conversion of $101,413 of note principal. As of September 30, 2015, a principal balance
of $35,543 remains outstanding. Amortization for the nine months ended September 30, 2015, totaled $38,258 and the carrying value
of the notes as of September 30, 2015, is $50,186, net of unamortized discount of $0. On October 9, 2014, the
Company issued a convertible promissory note for $26,500 to LG Capital (LG). The note bears interest at 8% and is
convertible at a 50% discount of the lowest closing price for the ten (10) days preceding conversion The Company recorded an
initial derivative liability of $28,090, debt discount of $26,500 and derivative expense of $1,590. The debt discount of
$26,500 was amortized into interest expense over the term of the note. The Company received $25,000 after debt issuance costs
of $1,500. The debt issuance costs will be amortized over the earlier of the twelve month term of the Note or any redemptions
and accordingly $1,250 has been expensed as debt issuance costs (included in interest expense) for the nine months ended
September 30, 2015. The note matures on October 9, 2015. During the nine months ended September 30, 2015, the company issued
15,200,000 shares of common stock upon conversion of $760 of note principal. As of September 30, 2015, a principal balance of
$25,740 remains outstanding. Amortization for the nine months ended September 30, 2015, totaled $14,863 and the carrying
value of the notes as of September 30, 2015, is $25,105, net of unamortized discount of $635. On December 2, 2014, the Company
issued a convertible promissory note for $25,000 to an unaffiliated accredited investor. The note bears interest at 8% and is convertible
at 50% discount of the average of the three lowest days closing prices for the ten (10) days preceding conversion. The Company
recorded an initial derivative liability of $26,000, debt discount of $25,000 and derivative expense of $1,000. The debt discount
of $25,000 is being amortized into interest expense over the term of the note. The note matured on September 2, 2015 and is in
default. As of September 30, 2015, the full principal balance of $25,000 remains outstanding. Amortization for the nine months
ended September 30, 2015, totaled $21,111 and the carrying value of the notes as of September 30, 2015, is $25,000, net of unamortized
discount of $0. On December 23, 2014, the Company
issued a $7,500 convertible promissory note to Carebourn Capital. The note is due on demand, bears interest at 8% and is convertible
at a 50% discount of the average of the three lowest days closing prices for the ten (10) days preceding conversion. During
the nine months ended September 30, 2015, the Company paid $7,500 in settlement of the note principal and $190 in settlement of
accrued interest. As of September 30, 2015, this note has been fully satisfied. On December 29, 2014, the Company
issued a $25,000 convertible promissory note to Pure Energy 714, a New Jersey LLC. The proceeds from this note were received on
January 6, 2015. The note is due on demand, bears interest at 10% and is convertible at a 50% discount of the average of the three
lowest days closing prices for the ten (10) days preceding conversion and matures September 29, 2015. The Company recorded
an initial derivative liability of $26,250, debt discount of $25,000 and derivative expense of $1,250. The debt discount of $25,000
is being amortized into interest expense over the term of the note. On August 10, 2015, the entirety of the note outstanding, including
$25,000 in principal and $1,520 in accrued and unpaid interest, was assigned to Stark Capital Investments, a Florida LLC. During
the nine months ended September 30, 2015, the company issued 503,960,000 shares of common stock upon conversion of $20,159 of note
principal. As of September 30, 2015, a principal balance of $4,841 remains outstanding. 2015 Notes On February 6, 2015, the
Company issued a convertible promissory note for $26,500 to LG Capital (LG). The Company received $25,000 after
debt issuance costs of $1,500. The debt issuance costs will be amortized over the earlier of the twelve month term of the
Note or any redemptions and accordingly $441 has been expensed as debt issuance costs (included in interest expense) for the
nine months ended September 30, 2015. The Company recorded an initial derivative liability of $28,620, debt discount of
$26,500 and derivative expense of $2,120. The debt discount of $26,500 is being amortized into interest expense over the term
of the note. The note is due on demand, bears interest at 8% and is convertible at a 50% discount of the lowest closing price
for the ten (10) days preceding conversion and matures February 6, 2016. As of September 30, 2015, the outstanding principal
balance of this note is $26,500. Amortization for the nine months ended September 30, 2015, totaled $17,134 and the carrying
value of the notes as of September 30, 2015, is $17,134, net of unamortized discount of $9,366. On April 10, 2015, the Company issued
a $40,500 convertible promissory note to Carebourn Capital. The April 10 Carebourn Note carries an original issuer discount of
$3,000. The company paid $3,000 in debt issuance costs related to this note on June 16, 2015. The note is due on demand, bears
interest at 12% and is convertible at a 50% discount of the average of the three lowest days closing prices for the ten
(10) days preceding conversion. The Company recorded an initial derivative liability of $45,360, debt discount of $40,500 and derivative
expense of $4,860. The debt discount of $40,500 is being amortized into interest expense over the term of the note. The note matures
on January 10, 2016. As of September 30, 2015, the full principal balance of $40,500 remains outstanding. Amortization for the
nine months ended September 30, 2015, totaled $25,478, and the carrying value of the notes as of September 30, 2015, is $25,478,
net of unamortized discount of $15,022. On April 15, 2015, the Company
issued a convertible promissory note for $26,500 to LG Capital (LG). The note is due on demand, bears interest at
8% and is convertible at a 50% discount of the lowest closing price for the ten (10) days preceding conversion. The Company
recorded an initial derivative liability of $28,090, debt discount of $26,500 and derivative expense of $1,590. The debt
discount of $26,500 is being amortized into interest expense over the term of the note. The Company received $25,000 after
debt issuance costs of $1,500. The debt issuance costs will be amortized over the earlier of the twelve month term of the
Note or any redemptions and accordingly $1,383 has been expensed as debt issuance costs (included in interest expense) for
the nine months ended September 30, 2015. The note matures on October 9, 2015. As of September 30, 2015, the outstanding
principal balance of this note is $26,500. Amortization for the nine months ended September 30, 2015, totaled $25,847 and the
carrying value of the notes as of September 30, 2015, is $25,847, net of unamortized discount of $653. On May 6, 2015, the Company
issued a $40,000 convertible promissory note to Pure Energy 714, a New Jersey LLC. The note is due on demand, bears interest
at 12% and is convertible at a 50% discount of the average of the three lowest days closing prices for the ten (10)
days preceding conversion and matures November 6, 2015. The Company received $37,500 after debt issuance costs of $2,500. The
debt issuance costs will be amortized over the earlier of the five month term of the Note or any redemptions and accordingly
$764 has been expensed as debt issuance costs (included in interest expense) for the nine months ended September 30, 2015.
The Company recorded an initial derivative liability of $42,400, debt discount of $40,000 and derivative expense of $2,450.
The debt discount of $40,000 is being amortized into interest expense over the term of the note. Amortization for the nine
months ended September 30, 2015, totaled $39,895 and the carrying value of the notes as of September 30, 2015, is $39,895,
net of unamortized discount of $105. During the nine months ended September 30, 2015, the company issued 138,552,217 shares
of common stock upon conversion of $39,477 of note principal. As of September 30, 2015, the outstanding principal balance of
this note is $523 On May 15, 2015, the Company
issued a $128,000 convertible promissory note to Carebourn Capital. The note is due on demand, bears interest at 12% and is
convertible at a 50% discount of the average of the three lowest days closing prices for the twenty (20) days preceding
conversion and matures February 15, 2016. The Company received $125,000 after debt issuance costs of $3,000. The debt
issuance costs will be amortized over the earlier of the nine month term of the Note or any redemptions and accordingly
$2,267 has been expensed as debt issuance costs (included in interest expense) for the nine months ended September 30, 2015.
The Company recorded an initial derivative liability of $143,360, debt discount of $128,000 and derivative expense of
$15,360. The debt discount of $128,000 is being amortized into interest expense over the term of the note. Amortization for
the nine months ended September 30, 2015, totaled $21,333 and the carrying value of the notes as of September 30, 2015, is
$64,000, net of unamortized discount of $64,000. As of September 30, 2015, the outstanding principal balance of this note is
$64,000. On May 27, 2015, the Company
issued a $28,000 convertible promissory note to Carebourn Capital. The note is due on demand, bears interest at 12% and is
convertible at a 50% discount of the average of the three lowest days closing prices for the twenty (20) days preceding
conversion and matures February 27, 2016. The Company received $25,000 after debt issuance costs of $3,000. The debt issuance
costs will be amortized over the earlier of the nine month term of the Note or any redemptions and accordingly $2,067 has
been expensed as debt issuance costs (included in interest expense) for the nine months ended September 30, 2015. The Company
recorded an initial derivative liability of $31,360, debt discount of $28,000 and derivative expense of $3,360. The debt
discount of $28,000 is being amortized into interest expense over the term of the note. Amortization for the nine months
ended September 30, 2015, totaled $12,783 and the carrying value of the notes as of September 30, 2015, is $12,783, net of
unamortized discount of $15,217. As of September 30, 2015, the outstanding principal balance of this note is $28,000. On May 29, 2015, the Company issued
a $125,000 convertible promissory note to Pure Energy 714, a New Jersey LLC. The note is due on demand, bears interest at 12% and
is convertible at a 60% discount of the average of the three lowest days closing prices for the fifty (50) days preceding
conversion and matures November 29, 2015. The Company recorded an initial derivative liability of $132,500, debt discount of $125,000
and derivative expense of $7,500. The debt discount of $125,000 is being amortized into interest expense over the term of the note.
Amortization for the nine months ended September 30, 2015, totaled $84,239 and the carrying value of the notes as of September
30, 2015, is $84,239, net of unamortized discount of $40,761. As of September 30, 2015, the outstanding principal balance of this
note is $125,000. On June 9, 2015, the Company issued
a $28,000 convertible promissory note to Pure Energy 714, a New Jersey LLC.. The note is due on demand, bears interest at 12% and
is convertible at a 50% discount of the average of the three lowest days closing prices for the twenty (20) days preceding
conversion and matures February 27, 2016. The Company received $25,000 after debt issuance costs of $3,000. The debt issuance costs
will be amortized over the earlier of the seven month term of the Note or any redemptions and accordingly $1,850 has been expensed
as debt issuance costs (included in interest expense) for the nine months ended September 30, 2015. The Company recorded an initial
derivative liability of $29,680, debt discount of $28,000 and derivative expense of $1,680. The debt discount of $28,000 is being
amortized into interest expense over the term of the note. Amortization for the nine months ended September 30, 2015, totaled $12,030
and the carrying value of the notes as of September 30, 2015, is $12,030, net of unamortized discount of $15,970. As of September
30, 2015, the outstanding principal balance of this note is $28,000. On June 19, 2015, the Company
issued a convertible promissory note for $36,750 to LG Capital (LG). The note is due on demand, bears interest at
8% and is convertible at a 50% discount of the lowest closing price for the ten (10) days preceding conversion and matures on
June 19, 2016. The Company recorded an initial derivative liability of $39,690, debt discount of $36,750 and derivative
expense of $1,590. The debt discount of $26,500 is being amortized into interest expense over the term of the note. The
Company received $25,000 after debt issuance costs of $1,500. The debt issuance costs will be amortized over the earlier of
the twelve month term of the Note or any redemptions and accordingly $544 has been expensed as debt issuance costs (included
in interest expense) for the nine months ended September 30, 2015. Amortization for the nine months ended September 30, 2015,
totaled $10,342, and the carrying value of the notes as of September 30, 2015, is $10,342, net of unamortized discount of
$26,408. As of September 30, 2015, the outstanding principal balance of this note is $36,750. On June 24, 2015, the Company issued
a convertible promissory note for $25,000 to Service Trading Company, LLC (SVC). The note is due on demand, bears
interest at 8% and is convertible at a 50% discount of the lowest closing price for the ten (10) days preceding conversion and
matures on June 24, 2016. The Company received $23,500 after debt issuance costs of $1,500. The debt issuance costs will be amortized
over the earlier of the twelve month term of the Note or any redemptions and accordingly $800 has been expensed as debt issuance
costs (included in interest expense) for the nine months ended September 30, 2015. The Company recorded an initial derivative liability
of $27,000, debt discount of $25,000 and derivative expense of $2,000. The debt discount of $25,000 is being amortized into interest
expense over the term of the note. Amortization for the nine months ended September 30, 2015, totaled $6,694 and the carrying value
of the notes as of September 30, 2015, is $6,694, net of unamortized discount of $10,069. As of September 30, 2015, the outstanding
principal balance of this note is $25,000. On June 26, 2015, the Company issued
a $15,500 convertible promissory note to Carebourn Capital. The note is due on demand, bears interest at 12% and is convertible
at a 50% discount of the average of the three lowest days closing prices for the twenty (20) days preceding conversion and
matures March 26, 2016. The Company received $12,500 after debt issuance costs of $3,000. The debt issuance costs will be amortized
over the earlier of the nine month term of the Note or any redemptions and accordingly $1,567 has been expensed as debt issuance
costs (included in interest expense) for the nine months ended September 30, 2015. The Company recorded an initial derivative liability
of $17,360, debt discount of $15,500 and derivative expense of $1,860. The debt discount of $15,500 is being amortized into interest
expense over the term of the note. Amortization for the nine months ended September 30, 2015, totaled $5,431 and the carrying value
of the notes as of September 30, 2015, is $5,431, net of unamortized discount of $11,442. As of September 30, 2015, the outstanding
principal balance of this note is $15,500. On July 20, 2015, the Company issued
a $15,500 convertible promissory note to Carebourn Capital. The note is due on demand, bears interest at 12% and is convertible
at a 50% discount of the average of the three lowest days closing prices for the twenty (20) days preceding conversion and
matures April 20, 2016. The Company received $12,500 after debt issuance costs of $3,000. The debt issuance costs will be amortized
over the earlier of the nine month term of the Note or any redemptions and accordingly $1,067 has been expensed as debt issuance
costs (included in interest expense) for the nine months ended September 30, 2015. The Company recorded an initial derivative liability
of $17,360, debt discount of $15,500 and derivative expense of $1,860. The debt discount of $15,500 is being amortized into interest
expense over the term of the note. Amortization for the nine months ended September 30, 2015, totaled $4,058 and the carrying value
of the notes as of September 30, 2015, is $4,058, net of unamortized discount of $11,442. As of September 30, 2015, the outstanding
principal balance of this note is $15,500. The Company has
determined that the conversion features of the 2012, 2013, 2014 and 2015 Notes represent embedded derivatives since the Notes are
convertible into a variable number of shares upon conversion. Accordingly, the Notes are not considered to be conventional debt
under EITF 00-19 and the embedded conversion features must be bifurcated from the debt hosts and accounted for as derivative liabilities.
Accordingly, the fair value of these derivative instruments have been recorded as liabilities on the consolidated balance sheet
with the corresponding amounts recorded as a discounts to the Notes. Such discounts will be ac |
