| Note 5 Notes Payable | 3 Months Ended |
| Mar. 31, 2015 |
| Notes | |
| Note 5 Notes Payable | NOTE 5 NOTES PAYABLE |
|
| (a) $115,000 March 31, 2014 LG Capital/Adar Bays Convertible Notes |
|
| On March 31, 2014, the Company issued two convertible notes in the principal amounts of $57,500 each. The notes mature on March 31, 2015, are 8% per annum convertible notes and each includes a 5% original issue discount such that the total proceeds to the Company from issuance of the two notes is $115,000 and the purchase price for each note is $55,000. At the option of the holder after 180 days, all or any amount of the principal of the note then outstanding may be converted into shares of the Company’s common stock. The conversion price for each share is 70% of the average of the 3 lowest closing bid prices for twenty prior trading days. Interest shall be paid by the Company in common stock. |
|
| During the year ending December 31, 2014, the Company recorded a derivative liability of $84,506 from the variable conversion pricing of the convertible note and recorded accretion expense of $84,506 relating to the derivative liability from variable conversion pricing. At December 31, 2014, the derivative liability from variable conversion pricing was revalued and the Company recorded a gain on revaluation of $56,295 during the year ended December 31, 2014, resulting in an ending derivative liability balance of $28,211. |
|
| During the year ended December 31, 2014, the debtors elected to convert $65,321 in convertible debt principal and interest into 118,929 shares of common stock with an aggregate fair value of $91,960, representing the fair value of the derivative liabilities and the amortized cost of convertible debt settled was included as additional paid-in capital. During the year ended December 31, 2014, the Company recorded a loss of $26,639 on the excess of fair value of stock issued over the converted principal amount. As at December 31, 2014, the stock has not been issued, and the conversion value of $65,321 has been recorded to stock issuance liability. During the period ending March 31, 2015, the stock was issued and the stock issuance liability, except for $2,822 was reversed. |
|
| During the three months ended March 31, 2015, the debtors elected to convert $21,909 in convertible debt principal and interest into 350,733 shares of common stock with an aggregate fair value of $24,988, representing the fair value of the derivative liabilities and the amortized cost of convertible debt settled was included as additional paid-in capital. During the three months ended March 31, 2015, the Company reduced the value of derivative liabilities by $15,885 pursuant to conversion of this convertible debt. |
|
| At March 31, 2015, the convertible note principal and interest balances are $27,975. |
|
| The back-end notes entered into on March 31, 2014, with face values of $57,500 each was funded and the Company received the funds on October 22, 2014 and December 11, 2014. The Company issued two convertible notes in the principal amounts of $57,500 each. The note matured on March 31, 2015, are 8% per annum convertible notes and each includes a 5% original issue discount such that the total proceeds to the Company from issuance of the note is $55,000 and the purchase price for each note is $55,000. The back-end notes were also amended such that the conversion price for each share is 65% of the lowest closing bid price for twenty prior trading days. At the option of the holder after 180 days, all or any amount of the principal of the note then outstanding may be converted into shares of the Company’s common stock. Interest shall be paid by the Company in common stock. |
|
| During the three months ended March 31, 2015, the debtors elected to convert $50,786 of convertible debt principal and interest into 2,199,991 shares of common stock with an aggregate fair value of $150,613 which is the market trading price at date of conversion. During the three months ended March 31, 2015, the Company reduced the value of derivative liabilities by $35,161 pursuant to conversion of this convertible debt. |
|
| During the year ended December 31, 2014, the Company recorded a derivative liability of $80,028 from the variable conversion pricing of the convertible note and recorded accretion expense of $14,543 relating to the derivative liability from variable conversion pricing. During the three months ended March 31, 2015, the Company recorded accretion expense of $49,762 relating to the derivative liability from variable conversion pricing. At March 31, 2015, the derivative liability from variable conversion pricing was revalued and the Company recorded a loss on revaluation of $875,867 during the three months ended March 31, 2015, resulting in an ending derivative liability balance of $884,916. |
|
| At March 31, 2015, the back-end convertible note principal and interest balances are $56,929. |
|
| (b) $100,000 May 8, 2014 JSJ Investments Convertible Note |
|
| On May 8, 2014, the Company issued a 12% convertible note in exchange for cash received of $100,000. The Company must pay 12% interest per annum on the unpaid principal balance, and the principal balance was due on November 8, 2014. Upon maturity date, the note has a cash redemption premium of 130% of the principal amount. The note may be converted to stock at a conversion price equal to 45% discount to the average of the three lowest trades on the previous ten trading days to the date of conversion. |
|
| During the year ending December 31, 2014, the Company recorded a derivative liability of $129,359 from the variable conversion pricing of the convertible note and recorded accretion expense of $129,359 relating to the derivative liability from variable conversion pricing. As the amount of derivative liability was in excess of the principal amount of the note, the Company recorded a charge on the statement of operations of $29,359 for the year ending December 31, 2014. At December 31, 2014, the derivative liability from variable conversion pricing was revalued and the Company recorded a gain on revaluation of $128,978, during the year ended December 31, 2014, resulting in an ending derivative liability balance of $381. At March 31, 2015, as the note is fully converted, the derivative liability from variable conversion pricing was written off and the Company recorded a gain on revaluation of $381 during the three months ended March 31, 2015. |
|
| During the three months ended December 31, 2014, the debtor elected to convert $50,000 in convertible debt principal into 56,806 shares of common stock with an aggregate fair value of $96,571, representing the fair value of the derivative liabilities and the amortized cost of convertible debt settled was included as additional paid-in capital. During the year ended December 31, 2014, the Company recorded a loss of $46,571 on the excess of fair value of stock issued over the converted principal amount. |
|
| During the three months ended March 31, 2015, the debtor elected to convert the remaining principal and interest balance of $57,803 into 1,710,805 shares of common stock with an aggregate fair value of $123,782, representing the fair value of the derivative liabilities and the amortized cost of convertible debt settled was included as additional paid-in capital. During the three months ended March 31, 2015, the Company reduced the value of derivative liabilities by $69,641 pursuant to conversion of this convertible debt. |
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| (c) $1,105,000 June 4, 2014 Typenex Convertible Note |
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| On June 4, 2014, the Company issued a 10% secured convertible promissory note in the principal amount of $1,105,000. The Company must pay 10% interest per annum on the unpaid principal balance which is due November 4, 2015. The purchase price for the note is $1,000,000, computed as $1,105,000 original principal balance, less the original issue discount (“OID”) of $100,000, less the transaction cost of $5,000. On the closing date, the investor shall pay the purchase price to the Company by delivering the following at closing: |
|
| i) The initial cash purchase price of $170,000 and $15,000 of the OID (received) |
| ii) Secured investor note #1 in the principal amount of $85,000 and $8,500 of the OID (received) |
| iii) Secured investor note #2 in the principal amount of $85,000 and $8,500 of the OID |
| iv) Secured investor note #3 in the principal amount of $85,000 and $8,500 of the OID |
| v) Secured investor note #4 in the principal amount of $85,000 and $8,500 of the OID |
| vi) Investor note #5 in the principal amount of $85,000 and $8,500 of the OID |
| vii) Investor note #6 in the principal amount of $85,000 and $8,500 of the OID |
| viii) |
| Investor note #7 in the principal amount of $85,000 and $8,500 of the OID |
| ix) Investor note #8 in the principal amount of $85,000 and $8,500 of the OID |
| x) Investor note #9 in the principal amount of $85,000 and $8,500 of the OID |
| xi) Investor note #10 in the principal amount of $85,000 and $8,500 of the OID |
|
| The conversion price for each lender conversion shall be $16.50. Lender has the right at any time after the purchase price date to convert all or any part of the outstanding balance into shares of common stock. During the year ended December 31, 2014, the Company received the first tranche of $170,000 less transaction cost. During the three months ended March 31, 2015, the Company received the second tranche of $93,500 less OID. |
|
| As the conversion price at the date of issuance of the first tranche of the note was less than the Company’s market trading price of $20.40 on June 4, 2014, the Company recorded a beneficial conversion feature of $41,212 against additional paid-in capital and recorded accretion expense of $16,453 for the year ended December 31, 2014. |
|
| At December 31, 2014, the Company was in default of the loan and the principal amount of the loan was increased by $37,434, and interest on the loans increased to 18%. On January 7, 2015, the Company agreed to a forbearance and increased the principal balance by $12,740 to $200,000. During the three months ended March 31, 2015, the debtor assigned $200,000 of principal to RDW Capital. In February 2015, the principal balance increased by $27,764 due to an instalment and conversion true-up as agreed upon with the debtor. |
|
| From its assigned convertible note, RDW Capital fully converted $75,000 of the $200,000 principal balance into 6,221,023 shares of common stock with an aggregate fair value of $318,141, representing the fair value of the derivative liabilities and the amortized cost of convertible debt settled was included as additional paid-in capital. During the three months ended March 31, 2015, the Company recorded a loss of $243,141 on the excess of fair value of stock issued over the converted principal amount. |
|
| During the three months ended December 31, 2014, the debtor elected to convert $30,000 in convertible debt principal into 80,717 shares of common stock with an aggregate fair value of $64,573, representing the fair value of the derivative liabilities and the amortized cost of convertible debt settled was included as additional paid-in capital. During the year ended December 31, 2014, the Company recorded a loss of $34,573 on the excess of fair value of stock issued over the converted principal amount. |
|
| During the three months ended March 31, 2015, the debtor elected to convert $49,625 in convertible debt principal into 3,493,828 shares of common stock with an aggregate fair value of $118,148, representing the fair value of the derivative liabilities and the amortized cost of convertible debt settled was included as additional paid-in capital. During the three months ended March 31, 2015, the Company recorded a loss of $68,523 on the excess of fair value of stock issued over the converted principal amount. |
|
| At March 31, 2015, the convertible note principal and interest balance, including assigned amounts, is $214,333. |
|
| (d) $1,500,000 June 25, 2014 Himmil Convertible Note |
|
| On June 25, 2014, the Company entered into a Securities Purchase Agreement (the “Agreement”) with a single accredited investor (the “Investor”) in a private placement pursuant to which the Investor purchased a 5% Convertible Note with a face amount of $1,500,000 for a purchase price of $1,000,000 (the “Note”). The Note bears interest at a rate of 5% per annum and is payable one year after the date of the issuance. The Company may pay interest due either in cash or, at its option, through freely tradable stock. The Note will be convertible at the option of the Investor at any time into shares of the Company’s common stock at a conversion price equal to the less of (i) $19 and (ii) 70% (60% in the event of default) of the average of the two lowest volume-weighted-average-price of the Common Stock during the 12 consecutive trading days immediately preceding the applicable conversion date. All or part of the then remaining principal amount of the Note may be prepaid at any time at a price equal to 125% of the sum of the remaining principal amount of the Note to be prepaid plus all accrued and unpaid interest thereon. The principal amount of the Note will be reduced by $500,000 if the shares of Common Stock underlying the Note are registered for public resale pursuant to an effective registration statement by August 24, 2014. As at December 31, 2014, the carrying amount of this Convertible Note is $852,024, net of a $500,000 original issuer discount. |
|
| At September 1, 2014, due to the issuance of a separate convertible note which violates the Agreement, the interest rate on the Convertible Note increased from 5% to 18%. |
|
| In connection with the Agreement, the Investor received a warrant to purchase 29,783 shares of common stock, exercisable for a period of 5 years from the date of issuance at exercise price of $21.50, subject to adjustment. If a registration statement is not effective for the resale by the Holder of all of the Warrant Shares, the Investor may exercise the warrant on a “cashless” basis. The conversion price of the Note and the exercise price of the Warrant are subject to “full ratchet” anti-dilution adjustment for subsequent lower price issuances by the Company, as well as customary adjustments provisions for stock splits, stock dividends, recapitalizations and the like. During the year ended December 31, 2014, the Company recorded $195,927 as a derivative liability on the issuance of these warrants. At December 31, 2014, the derivative liability from the issuance of warrants was revalued, resulting in a gain on revaluation of derivative liability of $195,927. During the year ended December 31, 2014, the Company recorded accretion expense of $101,453 on the derivative liability of these warrants. |
|
| The Company recorded a derivative liability of $1,164,745 from the variable conversion pricing of the convertible note and recorded accretion expense of $603,114 relating to the derivative liability from variable conversion pricing during the year ended December 31, 2014. As the amount of derivative liability was in excess of the principal amount of the note, the Company recorded a charge on the profit and loss of $360,672 for the year ending December 31, 2014. At December 31, 2014, the derivative liability from variable conversion pricing was revalued and the Company recorded a gain on revaluation of $1,099,709. At March 31, 2015, the derivative liability from variable conversion pricing was revalued and the Company recorded a loss on revaluation of $40,779,268, resulting in a derivative liability balance of $41,040,476. |
|
| During the three months ended March 31, 2015, the debtor elected to convert $348,854 in convertible debt principal into 14,961,173 shares of common stock with an aggregate fair value of $810,544 which is the market trading price at respective dates of conversion. During the three months ended March 31, 2015, the Company reduced the value of derivative liabilities by $342,760 pursuant to conversion of this convertible debt. |
|
| At March 31, 2015, the convertible note principal and interest balance is $1,415,288. |
|
| (e) $83,500 September 1, 2014 KBM Worldwide Convertible Note |
|
| On September 1, 2014, the Company issued a convertible note in the principal amount of $83,500. The note matures on June 1, 2015 and bears 8% interest per annum. At the option of the holder after 180 days, all or any amount of the principal of the note then outstanding may be converted into shares of the Company’s common stock. The conversion price for each share is 58% of the average of the 3 lowest closing bid prices for ten prior trading days. |
|
| The Company recorded a derivative liability of $85,871 from the variable conversion pricing of the convertible note and recorded accretion expense of $39,211 relating to the derivative liability from variable conversion pricing during the year ended December 31, 2014. As the amount of derivative liability was in excess of the principal amount of the note, the Company recorded a charge on the profit and loss of $4,967 for the year ended December 31, 2014. At December 31, 2014, the derivative liability from variable conversion pricing was revalued and the Company recorded a gain on revaluation of $76,440 during the year ended December 31, 2014, resulting in an ending derivative liability balance of $9,431. |
|
| During the three months ended March 31, 2015, the Company recorded accretion expense of $27,159 relating to the derivative liability from variable conversion pricing. At March 31, 2015, the derivative liability from variable conversion pricing was revalued and the Company recorded a loss on revaluation of $2,498,543 during the three months ended March 31, 2015, resulting in an ending derivative liability balance of $2,507,974. At March 31, 2015, the convertible note principal and interest balance is $87,362. |
|
| (f) $82,688 September 12, 2014 LG Capital Convertible Note |
|
| On September 12, 2014, the Company issued a convertible note in the principal amount of $82,688. The note matures on September 12, 2015 and bears 8% interest per annum. The note contains a 5% original issue discount such that the purchase price is $78,750. At the option of the holder after 180 days, all or any amount of the principal of the note then outstanding may be converted into shares of the Company’s common stock. The conversion price for each share is 70% of the average of the 3 lowest closing bid prices for twenty prior trading days. Interest shall be payable in common stock. |
|
| The Company recorded a derivative liability of $68,933 from the variable conversion pricing of the convertible note and recorded accretion expense of $21,175 relating to the derivative liability from variable conversion pricing during the year ended December 31, 2014. At December 31, 2014, the derivative liability from variable conversion pricing was revalued and the Company recorded a gain on revaluation of $59,964 during the year ended December 31, 2014, resulting in an ending derivative liability balance of $8,969. |
|
| During the three months ended March 31, 2015, the Company recorded accretion expense of $15,988 relating to the derivative liability from variable conversion pricing. At March 31, 2015, the derivative liability from variable conversion pricing was revalued and the Company recorded a loss on revaluation of $2,389,219 during the three months ended March 31, 2015, resulting in an ending derivative liability balance of $2,398,187. At March 31, 2015, the convertible note principal and interest balance is $86,185. |
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| (g) $4,450,000 October 1, 2014 Convertible Notes |
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| On October 1, 2014, the Company issued convertible notes to various debtors in the principal amount of $4,450,000 in consideration of consulting expenses from the debtors. The note matures on April 1, 2015 and bears 10% interest per annum. At the option of the holder after 180 days, all or any amount of the principal of the note then outstanding may be converted into shares of the Company’s common stock. The conversion price for each share is 50% of the average of the lowest closing bid price for twenty prior trading days. Interest shall be payable in common stock. At March 31, 2015, the convertible note principal and interest balance is $4,670,671. |
|
| (h) $200,000 CDN October 1, 2014 Demand Promissory Note |
|
| On October 1, 2014, the Company received CDN $200,000 (US $171,323) pursuant to a demand promissory note agreement. The note bears interest at 12% per annum, calculated yearly and is due and payable in full on demand. Interest is due and payable annually on the first day of January of each year and must be paid no later than September 30, 2015. |
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| (i) $75,000 November 25, 2014 Tangiers Convertible Note |
|
| On November 25, 2014, the Company issued a convertible note in the principal amount of $220,000. The initial amount received by the Company was $75,000, with an additional $7,500 of the financing retained by the debtor through an original issuer discount. The debtor has the option to finance additional amounts up to the balance of $220,000 until May 25, 2015. The note matures on November 25, 2015 and bears 10% interest per annum. The note contains a 5% original issue discount such that the purchase price is $78,750. At the option of the holder, all or any amount of the principal of the note then outstanding may be converted into shares of the Company’s common stock. The conversion price for each share is 58% of the lowest closing bid prices for ten prior trading days. |
|
| The Company recorded a derivative liability of $78,148 from the variable conversion pricing of the convertible note and recorded accretion expense of $4,926 relating to the derivative liability from variable conversion pricing during the year ended December 31, 2014. As the amount of derivative liability was in excess of the principal amount of the note, the Company recorded a charge on the statement of operations of $14,596 for the year ending December 31, 2014. At December 31, 2014, the derivative liability from variable conversion pricing was revalued and the Company recorded a gain on revaluation of $52,651 during the year ended December 31, 2014, resulting in an ending derivative liability balance of $25,497. |
|
| During the three months ended March 31, 2015, the Company recorded accretion expense of $19,858 relating to the derivative liability from variable conversion pricing. At March 31, 2015, the derivative liability from variable conversion pricing was revalued and the Company recorded a loss on revaluation of $2,149,831 during the three months ended March 31, 2015, resulting in an ending derivative liability balance of $2,175,328. At March 31, 2015, the convertible note principal and interest balance is $84,966. |
|
| (j) $43,000 November 26, 2014 KBM Worldwide Convertible Note |
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| On November 26, 2014, the Company issued a convertible note in the principal amount of $43,000. The note matures on August 28, 2015 and bears 8% interest per annum. At the option of the holder, beginning May 13, 2015, all or any amount of the principal of the note then outstanding may be converted into shares of the Company’s common stock. The conversion price for each share is 42% of the lowest three closing bid prices for ten prior trading days. |
|
| The Company recorded a derivative liability of $61,303 from the variable conversion pricing of the convertible note and recorded accretion expense of $2,173 relating to the derivative liability from variable conversion pricing during the year ended December 31, 2014. As the amount of derivative liability was in excess of the principal amount of the note, the Company recorded a charge on the statement of operations of $26,621 for the year ending December 31, 2014. At December 31, 2014, the derivative liability from variable conversion pricing was revalued and the Company recorded a gain on revaluation of $37,487 during the year ended December 31, 2014, resulting in an ending derivative liability balance of $23,816. |
|
| During the three months ended March 31, 2015, the Company recorded accretion expense of $25,692 relating to the derivative liability from variable conversion pricing. At March 31, 2015, the derivative liability from variable conversion pricing was revalued and the Company recorded a loss on revaluation of $1,223,302 during the three months ended March 31, 2015, resulting in an ending derivative liability balance of $1,247,118. At March 31, 2015, the convertible note principal and interest balance is $44,178. |
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| (k) $1,000,000 January 1, 2015 Convertible Notes |
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| On January 1, 2015, the Company issued convertible notes to various lenders in the principal amounts of $1,000,000. The notes mature on July 1, 2015 and bears 10% interest per annum. At the option of the holders, all or any amount of the principal of the notes then outstanding may be converted into shares of the Company’s common stock. The conversion price for each share is 50% of the lowest closing bid price for twenty prior trading days. |
|
| The Company recorded a derivative liability of $3,203,760 from the variable conversion pricing of the convertible notes and recorded accretion expense of $1,575,329 relating to the derivative liability from variable conversion pricing during the three months ended March 31, 2015. As the amount of derivative liability was in excess of the principal amount of the notes, the Company recorded a charge on the statement of operations of $2,203,760 for the period ending March 31, 2015. At March 31, 2015, the derivative liability from variable conversion pricing was revalued and the Company recorded a loss on revaluation of $37,797,649 during the three months ended March 31, 2015, resulting in an ending derivative liability balance of $41,001,409. At March 31, 2015, the convertible notes principal and interest balance is $1,024,384. |
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| (l) $54,000 January 14, 2015 KBM Worldwide Convertible Note |
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| On January 14, 2015, the Company issued a convertible note in the principal amount of $54,000 to KBM Worldwide. The note matures on October 16, 2015 and bears 8% interest per annum. At the option of the holder, all or any amount of the principal of the note then outstanding may be converted into shares of the Company’s common stock. The conversion price for each share is 58% of the lowest three closing bid prices for ten prior trading days. |
|
| The Company recorded a derivative liability of $39,493 from the variable conversion pricing of the convertible note and recorded accretion expense of $10,914 relating to the derivative liability from variable conversion pricing during the three months ended March 31, 2015. At March 31, 2015, the derivative liability from variable conversion pricing was revalued and the Company recorded a loss on revaluation of $1,861,835 during the three months ended March 31, 2015, resulting in an ending derivative liability balance of $1,901,328. At March 31, 2015, the convertible note principal and interest balance is $60,221. |
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| (m) $100,000 January 16, 2015 RDW Capital Convertible Note |
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| On January 16, 2015, the Company issued a convertible note in the principal amount of $100,000 to RDW Capital. The holder will pay $45,000 upon execution (received) and $45,000 once the 14C is effective. The note matures on July 16, 2015 and bears 10% interest per annum. At the option of the holder, all or any amount of the principal of the note then outstanding may be converted into shares of the Company’s common stock. The conversion price for each share is 35% of the lowest twenty closing bid prices for ten prior trading days. |
|
| The Company recorded a derivative liability of $214,990 from the variable conversion pricing of the convertible note and recorded accretion expense of $87,897 relating to the derivative liability from variable conversion pricing during the three months ended March 31, 2015. As the amount of derivative liability was in excess of the principal amount of the note, the Company recorded a charge on the statement of operations of $124,990 for the period ending March 31, 2015. At March 31, 2015, the derivative liability from variable conversion pricing was revalued and the Company recorded a loss on revaluation of $5,685,165 during the three months ended March 31, 2015, resulting in an ending derivative liability balance of $5,900,155. At March 31, 2015, the convertible note principal and interest balance is $101,767. |
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| (n) $66,000 January 30, 2015 Black Mountain Convertible Note |
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| On January 30, 2015, the Company issued a convertible note in the principal amount of $66,000 to Black Mountain Equities, Inc. The note bears an original issue discount of $6,000. The note matures on January 30, 2016 and bears 10% interest per annum. At the option of the holder, all or any amount of the principal of the note then outstanding may be converted into shares of the Company’s common stock. The conversion price for each share is the lesser of $0.30 or 60% of the lowest three closing bid prices for twenty prior trading days. |
|
| The Company recorded a derivative liability of $126,995 from the variable conversion pricing of the convertible note and recorded accretion expense of $20,876 relating to the derivative liability from variable conversion pricing during the three months ended March 31, 2015. As the amount of derivative liability was in excess of the principal amount of the note, the Company recorded a charge on the statement of operations of $66,995 for the period ending March 31, 2015. At March 31, 2015, the derivative liability from variable conversion pricing was revalued and the Company recorded a gain on revaluation of $2,117,254 during the three months ended March 31, 2015, resulting in an ending derivative liability balance of $2,244,249. At March 31, 2015, the convertible note principal and interest balance is $67,085. |
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| (o) $22,500 February 19, 2015 RDW Convertible Note |
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| On February 19, 2015, the Company entered into a 10% convertible debenture with RDW Capital, LLC (“RDW”) in the principal amount of $25,000 (the "RDW Note"). The financing on the initial amount closed on March 23, 2015. |
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| The principal due under the RDW Note bears interest at the rate of 10% per annum. Upon an event of default, the outstanding balance shall immediately be due in cash and shall incur a late fee of $1,000 per day. The principal and interest underlying the RDW Note is convertible at any time into common stock, at RDW’s option, and will be equal to 35% of the lowest trading price of the Company’s common stock during the twenty consecutive trading days prior to the date on which RDW (or the then-holder of the RDW) elects to convert all or part of the RDW Note. In connection therewith, the Company agreed to reserve from its authorized and unissued shares at least the number of shares that may be issuable upon conversion of the note once the Company has increased its authorized shares. The Company may prepay any portion of the principal amount at 130% of such amount along with any accrued interest of the RDW Note at any time upon seven days’ written notice to RDW. |
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| The Company recorded a derivative liability of $46,669 from the variable conversion pricing of the convertible note and recorded accretion expense of $10,314 relating to the derivative liability from variable conversion pricing during the three months ended March 31, 2015. As the amount of derivative liability was in excess of the principal amount of the note, the Company recorded a charge on the statement of operations of $21,669 for the period ending March 31, 2015. At March 31, 2015, the derivative liability from variable conversion pricing was revalued and the Company recorded a loss on revaluation of $1,428,382 during the three months ended March 31, 2015, resulting in an ending derivative liability balance of $1,475,051. At March 31, 2015, the convertible note principal and interest balance is $25,274. |
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| (p) $43,000 March 12, 2015 Vis Vires Convertible Note |
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| On March 12, 2015, the Company entered into an 8% convertible promissory note with Vis Vires, Inc. (“Vis Vires”) in the principal amount of $43,000 (the "Vis Vires Note"). The financing on the initial amount closed on March 18, 2015. |
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| The principal due under the Vis Vires Note bears interest at the rate of 8% per annum. Upon an event of default, the outstanding balance shall immediately increase to 150% of the outstanding balance immediately prior to the event of default. The principal and interest underlying the Vis Vires Note is convertible at any time into common stock, at Vis Vires’s option, and will be equal to 58% of the average of the lowest three trading price of the Company’s common stock during the ten consecutive trading days prior to the date on which Vis Vires (or the then-holder of the Vis Vires) elects to convert all or part of the Vis Vires Note. In connection therewith, the Company agreed to reserve from its authorized and unissued shares at least the number of shares that may be issuable upon conversion of the note once the Company has increased its authorized shares. The Company may prepay any portion of the principal amount at between 115% and 145% of such amount along with any accrued interest of the Vis Vires Note at any time upon seven days’ written notice to Vis Vires. |
|
| The carrying value of convertible debentures are as follows: |
| Three months ending March 31, 2015 |
| |
| Balance of convertible debentures, December 31, 2014 | $5,749,937 |
| Proceeds from new convertible debt tranches | 1,306,170 |
| Original issue discount | -69,272 |
| Derivative liability of variable conversion price | -3,631,907 |
| Reserve defaults | 77,940 |
| Excess of derivative liability of conversion price over principal amount | 2,388,055 |
| Interest accrued on principal | 206,848 |
| Accretion of derivative liability of conversion price | 2,179,608 |
| Conversion of convertible debt | -603,978 |
| Balance of convertible debentures, end of year | $7,603,402 |
|
| The fair value of derivative liabilities are as follows: |
| Three months ending March 31, 2015 |
| |
| Fair value of derivative liabilities, December 31, 2014 | $389,397 |
| Fair value of derivative liability at inception of new tranches | 3,631,906 |
| Reduction of derivative liability upon conversion | -463,448 |
| Loss of revaluation of derivative liability | 100,812,140 |
| Fair value of derivative liabilities, March 31, 2015 | $104,369,996 |
