| Convertible Note Payable |
NOTE 7 -
CONVERTIBLE NOTE PAYABLE
On
April 18, 2014, the Company issued a convertible promissory note in which the Company will be taking tranche payments on pre-defined
dates, the total of these payments cannot exceed $650,000. There is an original discount component of 10% per tranche and an additional
expense fee of $5,000. Therefore, the funds available to the Company will be $650,000 and the liability (net of interest) will
be $750,000 when all disbursements have been received by the Company. Each tranche is accounted for separately with each principal
and OID balance becoming due 18 months after receipt. Each tranche bears interest at 8% per annum. The loan is secured by shares
of the Company’s common stock. Each portion of the loan becomes convertible 180 days after date of the note. The loan and
any accrued interest can then be converted into shares of the Company’s common stock at a rate of 50% multiplied by the market
price, which is the lowest quoted price for the common stock during the 20 trading day period ending on the latest complete trading
day prior to the conversion date.
During the
year ended June 30, 2015, the Company received six additional tranche disbursements of $50,000 on July 15, 2014, $100,000 on September
30, 2014, $50,000 on November 3, 2014, $50,000 on December 1, 2014, $50,000 on December 29, 2014, and $50,000 on February 2, 2015.
On
July 20, 2015, the Company entered into a settlement agreement with the holder of the convertible note. Under the agreement the
note holder agreed not to seek to enforce its rights or remedies under the Note in relation to the notice of conversion issued
to convert a balance of the note amounting to $57,933; to not to exercise its rights of conversion pursuant to the Note, and if
an event of default occurs, the Holder agrees not to sell any shares of common stock of the Company having an aggregate conversion
value of $30,000 or more per week until such time as it has sold all of the Company’s common stock that it owns.
Under the
agreement the Company agreed to a penalty in relation to the issuance of a note in the amount of $95,000; to release the holder
from its obligation to advance additional funds to the Company; and to pay or refinance the amount due under the note plus accrued
interest in four installment payments due on July 20, 2015, August 10, 2015, September 14, 2015 and October 12, 2015. In accordance
with the agreement, the Company made the payments due on July 20, 2015 and August 10, 2015.
In respect of
prepayment penalties payable to the Holder pursuant to the Note, the Company agreed to issue to the Holder additional convertible
promissory notes with each having the same form, terms, and conditions as the original note. The value of the notes, which are
due by each installment payment date, are equal to 30% of the payment delivered. During the three months ended September 30, 2015,
the Company issued two notes related to the prepayment penalties of the installments due on July 20, 2015 and August 10, 2015
of $35,399 and $35,610, respectively.
After
the payment was made on August 10, 2015, the Company and the note holder agreed to forgo the final two payments, cancel the settlements
agreement, and therefore allow the noteholder to convert the notes as agreed to in the original note agreement. During the three
months ended September 30, 2015, the Company converted $5,000 of the penalty note issued on July 20, 2015 into 5,000,000 shares
of common stock.
The following details the disbursements
as of December 31, 2015:
| Tranche
Date |
|
Principal
with OID |
|
|
Accrued
Interest |
|
|
Converted
to
Stock |
|
|
Balance
-
September 30, 2015 |
|
| April 21, 2014 |
|
$ |
110,776 |
|
|
$ |
6,167 |
|
|
$ |
116,943 |
|
|
|
- |
|
| May 6, 2014 |
|
|
55,384 |
|
|
|
4,443 |
|
|
$ |
59,827 |
|
|
|
- |
|
| June 11, 2014 |
|
|
55,384 |
|
|
|
5,147 |
|
|
|
None |
|
|
|
- |
|
| July 16, 2014 |
|
|
55,384 |
|
|
|
4,236 |
|
|
|
None |
|
|
|
- |
|
| September 30, 2014 |
|
|
110,768 |
|
|
|
6,628 |
|
|
|
None |
|
|
|
- |
|
| November 3, 2014 |
|
|
55,384 |
|
|
|
4,006 |
|
|
|
None |
|
|
|
55,384 |
|
| December 1, 2014 |
|
|
55,384 |
|
|
|
3,417 |
|
|
|
None |
|
|
|
55,384 |
|
| December 29, 2014 |
|
|
55,384 |
|
|
|
3,110 |
|
|
|
None |
|
|
|
55,384 |
|
| February 2, 2015 |
|
|
55,384 |
|
|
|
2,901 |
|
|
|
None |
|
|
|
55,384 |
|
| July 14, 2015 |
|
|
35,610 |
|
|
|
609 |
|
|
|
None |
|
|
|
35,610 |
|
| July 20, 2015 |
|
|
95,000 |
|
|
|
1,420 |
|
|
|
16,500 |
|
|
|
78,500 |
|
| August 20, 2015 |
|
|
35,399 |
|
|
|
318 |
|
|
|
None |
|
|
|
35,399 |
|
| Unamortized Original Issue Discount |
|
|
(6,618 |
) |
|
|
- |
|
|
|
|
|
|
|
(6,618 |
) |
| |
|
$ |
768,623 |
|
|
$ |
42,402 |
|
|
|
|
|
|
|
364,427 |
|
During the six months ended December 31, 2015 and 2014,
$14,918 and $5,078 of the debt discount related to the outstanding tranches was amortized, respectively.
The Notes are shown net of an unamortized original issue
discount of $6,618 as of December 31, 2015.
The Company analyzed the conversion options embedded in
the Convertible Promissory Notes for derivative accounting consideration under ASC 815, Derivatives and Hedging, and determined
that seven tranches received on November 3, 2014, December 1, 2014, December 29, 2014, February 2, 2015, July 14, 2015, July 20,
2015, and August 20, 2015 were convertible during the quarter ended September 30, 2015.
In accordance with the terms of the Note, the holder fully
converted the tranche issued on April 21, 2014 during the year ended June 30, 2015 for 3,711,969 shares of common stock for principal
and accrued interest of $116,943. The Company recorded a debt discount in the amount of $110,776 in connection with the initial
valuation of the derivative liability of the note to be amortized utilizing the effective interest method of accretion over the
term of the note. Further, the Company recognized a derivative liability of $192,038 and an initial loss of $81,262 based on the
Black Scholes Merton pricing model.
On October 21, 2014, the Note issued on May 6, 2014 became
convertible at the option of the holder. On this date the Company recorded a debt discount in the amount of $55,384 in connection
with the initial valuation of the derivative liability of the note to be amortized utilizing the effective interest method of
accretion over the term of the note. Further, the Company recognized a derivative liability of $95,215 and an initial loss of
$39,831 based on the Black Scholes Merton pricing model.
In accordance with the terms of the Note, the holder fully
converted the tranche during the year ended June 30, 2015 for 4,943,581 shares of common stock for principal and interest of $59,827.
On December 8, 2014, the Note issued on June 11, 2014
became convertible at the option of the holder. On this date the Company recorded a debt discount in the amount of $55,384 in
connection with the initial valuation of the derivative liability of the note to be amortized utilizing the effective interest
method of accretion over the term of the note. Further, the Company recognized a derivative liability of $90,678 and initial loss
on derivative liability of $35,294 based on the Black Scholes Merton pricing model.
During the quarter ended September 30, 2015, the note
was assigned to another lender. As of December 31, 2015, $55,384 of the debt discount has been amortized. The fair value of the
derivative liability at December 31, 2015 December 31, 2015 and June 30, 2015 was $0 and $91,995, respectively resulting in a
gain on the change in fair value of the derivative of $91,995 during the six months ended December 31, 2015.
On January 12, 2015, the Note issued on July 16, 2014
became convertible at the option of the holder. On this date the Company recorded a debt discount in the amount of $55,384 in
connection with the initial valuation of the derivative liability of the note to be amortized utilizing the effective interest
method of accretion over the term of the note. Further, the Company recognized a derivative liability of $91,094 and initial loss
on derivative liability of $35,710 based on the Black Scholes Merton pricing model.
During the six months ended December 31, 2015, the note
was assigned to another lender. As of December 31, 2015, $55,384 of the debt discount has been amortized. The fair value of the
derivative liability at December 31, 2015 and June 30, 2015 was $0 and $96,644 resulting in a gain on the change in fair value
of the derivative of $96,644.
On March 29, 2015, the Note issued on September 30, 2014
became convertible at the option of the holder. On this date the Company recorded a debt discount in the amount of $110,768 in
connection with the initial valuation of the derivative liability of the note to be amortized utilizing the effective interest
method of accretion over the term of the note. Further, the Company recognized a derivative liability of $182,755 and initial
loss on derivative liability of $71,987 based on the Black Scholes Merton pricing model.
In accordance with the terms of the Note, the holder converted
$16,221of the note balance during the six month ended December 31, 2015 into 33,754,806 shares of common stock. The value of the
share on the date of conversion was $34,753.
As of December 31, 2015, $62,419 of the debt discount
has been amortized. The fair value of the derivative liability at December 31, 2015 and June 30, 2015 is $306,746 and $213,077
resulting in a gain on the change in fair value of the derivative of $158,744. The Note is shown net of a derivative debt discount
of $20,280 at December 31, 2015.
On May 2, 2015, the Note issued on November 3, 2014 became
convertible at the option of the holder. On this date the Company recorded a debt discount in the amount of $55,384 in connection
with the initial valuation of the derivative liability of the note to be amortized utilizing the effective interest method of
accretion over the term of the note. Further, the Company recognized a derivative liability of $94,120 and initial loss on derivative
liability of $38,736 based on the Black Scholes Merton pricing model.
As of December 31, 2015, $30,776 of the debt discount
has been amortized. The fair value of the derivative liability at December 31, 2015 and June 30, 2015 was $190,768 and $109,960,
respectively resulting in a loss on the change in fair value of the derivative of $80,808. The Note is shown net of a derivative
debt discount of $15,704 at December 31, 2015.
On May 30, 2015, the Note issued on December 1, 2014 became
convertible at the option of the holder. On this date the Company recorded a debt discount in the amount of $55,384 in connection
with the initial valuation of the derivative liability of the note to be amortized utilizing the effective interest method of
accretion over the term of the note. Further, the Company recognized a derivative liability of $95,257 and initial loss on derivative
liability of $39,873 based on the Black Scholes Merton pricing model.
As of December 31, 2015, $29,631 of the debt discount
has been amortized. The fair value of the derivative liability at December 31, 2015 and June 30, 2015 was $198,292 and $115,438
resulting in a loss on the change in fair value of the derivative of $82,854 during the six months ended December 31, 2015. The
Note is shown net of a derivative debt discount of $21,087 at December 31, 2015.
On June 29, 2015, the Note issued on December 29, 2014
became convertible at the option of the holder. On this date the Company recorded a debt discount in the amount of $55,384 in
connection with the initial valuation of the derivative liability of the note to be amortized utilizing the effective interest
method of accretion over the term of the note. Further, the Company recognized a derivative liability of $102,520 and initial
loss on derivative liability of $47,136 based on the Black Scholes Merton pricing model.
As of December 31, 2015, $27,914 of the debt discount
has been amortized. The fair value of the derivative liability at December 31, 2015 and June 30, 2015 was $203,347 and $116,072,
respectively resulting in a loss on the change in fair value of the derivative of $87,275 during the six months ended December
31, 2015. The Note is shown net of a derivative debt discount of $27,018 at December 31, 2015.
On August 1, 2015, the Note issued on February 2, 2015
became convertible at the option of the holder. On this date the Company recorded a debt discount in the amount of $55,384 in
connection with the initial valuation of the derivative liability of the note to be amortized utilizing the effective interest
method of accretion over the term of the note. Further, the Company recognized a derivative liability of $93,642 and initial loss
on derivative liability of $38,258 based on the Black Scholes Merton pricing model.
As of December 31, 2015, $22,938 of the debt discount
has been amortized. The fair value of the derivative liability at December 31, 2015 and June 30, 2015 was $202,585 and $0, respectively
resulting in a loss on the change in fair value of the derivative of $147,201 during the six months ended December 31, 2015. The
Note is shown net of a derivative debt discount of $32,446 at December 31, 2015.
On July 20, 2015, the Note issued on July 20, 2015 became
convertible at the option of the holder. On this date the Company recorded a debt discount in the amount of $95,000 in connection
with the initial valuation of the derivative liability of the note to be amortized utilizing the effective interest method of
accretion over the term of the note. Further, the Company recognized a derivative liability of $119,837 and initial loss on derivative
liability of $24,837 based on the Black Scholes Merton pricing model.
In accordance with the terms of the Note, the holder partially
converted the note during the six months ended December 31, 2015 for 24,000,000 shares of common stock for principal of $16,500.
The fair value of at the date of conversion of $33,003 was written off to additional paid in capital.
As of December 31, 2015, $88,838 of the debt discount has been amortized. The
fair value of the derivative liability at December 31, 2015 and June 30, 2015 was $45,284 and $0, respectively resulting in a
gain on the change in fair value of the derivative of $74,553 during the six months ended December 31, 2015. The Note is shown
net of a derivative debt discount of $6,162 at December 31, 2015.
On October 1, 2014, the Company
issued a short-term convertible promissory note in the amount of $70,000 for $50,000 cash, an original issue discount of $12,500,
and prepaid interest of $7,500. The note was due on March 30, 2015 and bears interest at 15% per annum, which was prepaid by the
Company and is being amortized over the life of the loan. The loan is secured by shares of the Company’s common stock. The
loan becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted into shares
of the Company’s common stock at a rate of 50% multiplied by the market price, which
is the lowest quoted price for the common stock during the 25 trading day period ending on the latest complete trading day prior
to the conversion date. During the year ended June 30, 2015, $12,500 of the debt discount was been amortized. The note matured
on March 30, 2015.
The Company elected to prepay the entire term’s
interest of $7,500. This payment was capitalized as a prepaid asset and has been amortized over the term of the note. The interest
expense related to this loan was $0 for the quarter ending December 31, 2015 and 2014.
On March 30, 2015, the Note became convertible at the option of the holder.
On this date the Company recorded a debt discount in the amount of $70,000 in connection with the initial valuation of the derivative
liability of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further,
the Company recognized a derivative liability of $70,014 and initial loss of $14 based on the Black Scholes Merton pricing model.
As of June 30, 2015, $70,000 of the debt discount has
been amortized. The fair value of the derivative liability at June 30, 2015 is $20,632.
As of December 31, 2015 and June 30, 2015, the holder
of the note exercised his right to convert $14,000 and $56,000 of the note balance into 2,222,222 and 3,188,125 shares of common
stock, respectively. The fair value of the derivative liability related to the converted debt as of December 31, 2015 and June
30, 2015 was $13,784 and $79,464, respectively.
On November 17, 2014, the Company
issued a short-term convertible promissory note in the amount of $70,000, which consisted of cash proceeds of $50,000, a debt
discount of $12,500 and prepaid interest of $7,500. The note is due on November 14, 2015 and bears interest at 15% per annum,
which was prepaid by the Company and is being amortized over the life of the loan. The loan is secured by shares of the Company’s
common stock. The loan becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted
into shares of the Company’s common stock at a rate of 50% multiplied by the market
price, which is the lowest quoted price for the common stock during the 25 trading day period ending on the latest complete trading
day prior to the conversion date. As of September 30, 2015, $10,946 of the debt discount has been amortized. The Note is shown
net of an unamortized debt discount of $1,554 at September 30, 2015.
The Company elected to prepay the entire term’s
interest of $7,500. This payment was capitalized as a prepaid asset and has been amortized over the term of the note. The interest
expense related to this loan was $1,885 and $0 for the quarter ending December 31, 2015 and 2014. As of December 31, 2015 and
June 30, 2015 the remaining prepaid interest balance was $353 and $2,838, respectively.
On May 16, 2015, the Note became convertible at the option
of the holder. On this date the Company recorded a debt discount in the amount of $70,000 in connection with the initial valuation
of the derivative liability of the note to be amortized utilizing the effective interest method of accretion over the term of
the note. Further, the Company recognized a derivative liability of $93,179 and initial loss of $23,179 based on the Black Scholes
Merton pricing model.
As of December 31, 2015, the holder of the note exercised
his right to convert $14,950 of the note balance into 26,045,455 shares of common stock, respectively. The fair value of the derivative
liability related to the converted debt as of December 31, 2015 was $21,145.
As of December 31, 2015 and June 30, 2015, the holder
of the note exercised his right to convert $20,000 and $35,000 of the note balance into 8,695,652 and 4,404,515 shares of common
stock. The fair value of the derivative liability related to the converted debt at December 31, 2015 and June 30, 2015 was $57,121
and $54,324, respectively.
As of December 31, 2015, $52,692 of the debt discount
has been amortized. The fair value of the derivative liability at December 31, 2015 and June 30, 2015 was $76,217 and $56,108,
respectively resulting in a loss on the change in fair value of the derivative of $20,109. The Note is shown net of a derivative
discount of $0 at December 31, 2015.
On December 23, 2014, the Company
issued a short-term convertible promissory note in the amount of $70,000, which consisted of cash proceeds of $50,000, a debt
discount of $12,500 and prepaid interest of $7,500. The note is due on December 18, 2015 and bears interest at 15% per annum,
which was prepaid by the Company and is being amortized over the life of the loan. The loan is secured by shares of the Company’s
common stock. The loan becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted
into shares of the Company’s common stock at a rate of 50% multiplied by the market
price, which is the lowest quoted price for the common stock during the 25 trading day period ending on the latest complete trading
day prior to the conversion date. During the year ended June 30, 2015, $6,562 of the debt discount has been amortized. The Note
is shown net of an unamortized debt discount of $2,743 at September 30, 2015.
The Company elected to prepay the entire term’s
interest of $7,500. This payment was capitalized as a prepaid asset and has been amortized over the term of the note. The interest
expense related to this loan was $1,896 and $0 for the year ending September 30, 2015 and 2014. As of September 30, 2015, the
remaining prepaid interest balance was $782
On June 21, 2015, the Note became convertible at the option of the holder.
On this date the Company recorded a debt discount in the amount of $70,000 in connection with the initial valuation of the derivative
liability of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further,
the Company recognized a derivative liability of $104,711 and initial loss of $34,711 based on the Black Scholes Merton pricing
model.
As of December 31, 2015, $70,000 of the debt discount
has been amortized. The fair value of the derivative liability at December 31, 2015 and June 30, 2015 was $190,068 and $116,694
resulting in a loss on the change in fair value of the derivative of $73,374. The Note is shown net of a derivative discount of
$0 at December 31, 2015.
On January 13, 2015, the Company issued a short-term convertible promissory
note in the amount of $74,000. The note is due on October 15, 2015 and bears interest at 8% per annum. The loan is secured by
shares of the Company’s common stock. The loan becomes convertible 180 days after date of the note. The loan and any accrued
interest can then be converted into shares of the Company’s common stock at a rate of 58% multiplied by the market price,
which is the average of the lowest three quoted prices for the common stock during the 10 trading day period ending on the latest
complete trading day prior to the conversion date.
On July 12, 2015, the Note became convertible at the option of the holder.
On this date the Company recorded a debt discount in the amount of $74,000 in connection with the initial valuation of the derivative
liability of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further,
the Company recognized a derivative liability of $59,654 based on the Black Scholes Merton pricing model.
As of September 30, 2015, the holder of the note exercised
his right to convert $76,960 of the note balance and accrued interest into 15,175,261 shares of common stock. The fair value of
the derivative liability related to the converted debt at the date of conversion was $124,660.
On January 26, 2015, the Company
issued a convertible promissory note in which the Company will be taking tranche payments based on amounts determined by the note
holder for total payments of not more than $250,000. There is an original discount component of $25,000. Therefore, the funds
available to the Company will be $225,000 and the liability (net of interest) will be $250,000 when all disbursements have been
received by the Company. Each tranche is accounted for separately with each principal and OID balance becoming due 24 months after
receipt. Each tranche bears interest at 12% per annum. The loan is secured by shares of the Company’s common stock. Each
portion of the loan becomes convertible immediately upon issuance. The loan and any accrued interest can then be converted into
shares of the Company’s common stock at a rate of the lesser of $0.045 per share or 60% multiplied by the market price per
share, which is the lowest quoted price for the common stock during the 25 trading day period ending on the latest complete trading
day prior to the conversion date. During the period ended June 30, 2015, the Company has
received two tranche disbursements of $75,000 on January 26, 2015 and 25,000 on April 28, 2015.
As of December 31, 2015, $38,679 of the debt discount
has been amortized. The Notes are shown net of an unamortized debt discount of $51,431 at December 31, 2015.
On January 26, 2015, the first tranche became convertible
at the option of the holder. On this date the Company recorded a debt discount in the amount of $82,500 in connection with the
initial valuation of the derivative liability of the note to be amortized utilizing the effective interest method of accretion
over the term of the note. Further, the Company recognized a derivative liability of $135,740 and initial loss on derivative liabilities
of $53,240 based on the Black Scholes Merton pricing model.
As of December 31, 2015, the holder of the note exercised
his right to convert $57,975 of the note balance into 59,183,000 shares of common stock. The fair value of the derivative liability
related to the converted debt at December 31, 2015 was $151,708.
As of December 31, 2015, $30,177 of the debt discount
has been amortized. The fair value of the derivative liability at December 31, 2015 and June 30, 2015 was $93,235 and $152,892
resulting in a loss on the change in fair value of the derivative of $76,083. The Note is shown net of a derivative discount of
$34,806 at December 31, 2015.
On April 28, 2015, the second tranche became convertible
at the option of the holder. On this date the Company recorded a debt discount in the amount of $27,500 in connection with the
initial valuation of the derivative liability of the note to be amortized utilizing the effective interest method of accretion
over the term of the note. Further, the Company recognized a derivative liability of $44,209 and initial loss on derivative liabilities
of $16,709 based on the Black Scholes Merton pricing model.
As of December 31, 2015, $8,502 of the debt discount has
been amortized. The fair value of the derivative liability at December 31, 2015 and June 30, 2015 was $106,534 and $54,756, respectively
resulting in a loss on the change in fair value of the derivative of $41,778. The Note is shown net of a debt discount of $16,625
at December 31, 2015.
On April 15, 2015, the Company
issued a short-term convertible promissory note in the amount of $70,000 for $50,000 cash, an original issue discount of $9,500,
and prepaid interest of $10,500. The note is due on April 15, 2016 and bears interest at 15% per annum, which was prepaid by the
Company and is being amortized over the life of the loan. The loan is secured by shares of the Company’s common stock. The
loan becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted into shares
of the Company’s common stock at a rate of 50% multiplied by the market price, which
is the lowest quoted price for the common stock during the 25 trading day period ending on the latest complete trading day prior
to the conversion date. As of the quarter ended September 30, 2015, $4,361 of the debt discount has been amortized and the note
is shown net $5,139 in unamortized debt discount.
On October 12, 2015, the Note became convertible at the option of the holder.
On this date the Company recorded a debt discount in the amount of $60,500 in connection with the initial valuation of the derivative
liability of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further,
the Company recognized a derivative liability of $248,055 and an initial loss on derivative liabilities of $187,555 based on the
Black Scholes Merton pricing model.
As of December 31, 2015, $26,022 of the debt discount
has been amortized. The fair value of the derivative liability at December 31, 2015 and June 30, 2015 was $286,113 and $0, respectively
resulting in a loss on the change in fair value of the derivative of $98,558. The Note is shown net of a debt discount of $34,478
at December 31, 2015.
On May 20, 2015, the Company
issued a convertible promissory note in the amount of $43,000 for $43,000 cash. The note is due on February 22, 2016 and bears
interest at 8% per annum. The loan becomes convertible 180 days after date of the note. The loan can then be converted into shares
of the Company’s common stock at a rate of 58% multiplied by the market price, which
is the average of the lowest three (3) quoted price for the common stock during the 10 trading day period ending on the latest
complete trading day prior to the conversion date. As of September 30, 2015, the note has not become convertible.
On November 16, 2015, the Note became convertible at the option of the holder.
On this date the Company recorded a debt discount in the amount of $43,000 in connection with the initial valuation of the derivative
liability of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further,
the Company recognized a derivative liability of $52,875 and an initial loss on derivative liabilities of $9,875 based on the
Black Scholes Merton pricing model.
As of December 31, 2015, the holder of the note exercised
his right to convert $5,625 of the note balance into 17,045,455 shares of common stock. The fair value of the derivative liability
related to the converted debt as of December 31, 2015 was $8,910.
As of December 31, 2015, $19,745 of the debt discount
has been amortized. The fair value of the derivative liability at December 31, 2015 and June 30, 2015 was $144,435 and $0, respectively
resulting in a loss on the change in fair value of the derivative of $91,560. The Note is shown net of a debt discount of 23,255
at December 31, 2015.
On June 7, 2015, the Company
issued a short-term convertible promissory note in the amount of $70,000 for $50,000 cash, an original issue discount of $9,500,
and prepaid interest of $10,500. The note is due on June 8, 2016 and bears interest at 15% per annum, which was prepaid by the
Company and is being amortized over the life of the loan. The loan is secured by shares of the Company’s common stock. The
loan becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted into shares
of the Company’s common stock at a rate of 50% multiplied by the market price, which
is the lowest quoted price for the common stock during the 25 trading day period ending on the latest complete trading day prior
to the conversion date. As of December 31, 2015, $5,358 of the debt discount has been amortized and the note is shown net $4,142
in unamortized debt discount.
On December 4, 2015, the Note became convertible at the option of the holder.
On this date the Company recorded a debt discount in the amount of $60,500 in connection with the initial valuation of the derivative
liability of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further,
the Company recognized a derivative liability of $121,252 and an initial loss on derivative liabilities of $60,752 based on the
Black Scholes Merton pricing model.
As of December 31, 2015, $8,735 of the debt discount has
been amortized. The fair value of the derivative liability at December 31, 2015 and June 30, 2015 was $305,445 and $0, respectively
resulting in a loss on the change in fair value of the derivative of $184,193. The Note is shown net of a debt discount of 51,765
at December 31, 2015.
On June 19, 2015, the Company
issued a short-term convertible promissory note in the amount of $37,500 for $25,000 cash, an original issue discount of $6,875,
and prepaid interest of $5,625. The note is due on June 19, 2016 and bears interest at 15% per annum, which was prepaid by the
Company and is being amortized over the life of the loan. The loan is secured by shares of the Company’s common stock. The
loan becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted into shares
of the Company’s common stock at a rate of 50% multiplied by the market price, which
is the lowest quoted price for the common stock during the 25 trading day period ending on the latest complete trading day prior
to the conversion date. As of December 31, 2015, $3,663 of the debt discount has been amortized and the note is shown net $3,212
in unamortized debt discount.
On December 16, 2015, the Note became convertible at the option of the holder.
On this date the Company recorded a debt discount in the amount of $30,625 in connection with the initial valuation of the derivative
liability of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further,
the Company recognized a derivative liability of $122,955 and an initial loss on derivative liabilities of $92,330 based on the
Black Scholes Merton pricing model.
As of December 31, 2015, $2,470 of the debt discount has
been amortized. The fair value of the derivative liability at December 31, 2015 and June 30, 2015 was $166,587 and $0, respectively
resulting in a loss on the change in fair value of the derivative of $43,632. The Note is shown net of a debt discount of 28,155
at December 31, 2015.
On June 28, 2015, the Company
issued a convertible promissory note in the amount of $150,000 for $100,000 cash, an original issue discount of $50,000. The note
is due on December 28, 2016 and bears interest at 15% per annum. The loan becomes convertible 180 days after date of the note.
The loan can then be converted into shares of the Company’s common stock at a rate
of 50% multiplied by the market price, which is the lowest quoted price for the common stock during the 25 trading day period
ending on the latest complete trading day to the conversion date. As of December 31, 2015, $16,940 of the debt discount has been
amortized and the note is shown net $33,060 in unamortized debt discount.
On December 25, 2015, the Note became convertible at the option of the holder.
On this date the Company recorded a debt discount in the amount of $100,000 in connection with the initial valuation of the derivative
liability of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further,
the Company recognized a derivative liability of $624,135 and an initial loss on derivative liabilities of $524,135 based on the
Black Scholes Merton pricing model.
As of December 31, 2015, $1,626 of the debt discount has
been amortized. The fair value of the derivative liability at December 31, 2015 and June 30, 2015 was $685,878 and $0, respectively
resulting in a loss on the change in fair value of the derivative of $61,743. The Note is shown net of a debt discount of $98,374
at December 31, 2015.
On June 29, 2015, the Company issued a convertible
promissory note in which the Company will be taking tranche payments based on amounts determined by the note holder for total
payments of not more than $100,000. There is an original discount component of $10,000. Therefore, the funds available to the
Company will be $90,000 and the liability (net of interest) will be $100,000 when all disbursements have been received by the
Company. Each tranche is accounted for separately with each principal and OID balance becoming due 24 months after receipt. Each
tranche bears interest at 15% per annum. Each portion of the loan becomes convertible immediately upon issuance. The loan and
any accrued interest can then be converted into shares of the Company’s common stock at a rate of the lesser of $0.02 per
share or 50% multiplied by the market price per share, which is the lowest quoted price for the common stock during the 25 trading
days immediately preceding the conversion date. During the period ended June 30, 2015, the
Company has received one tranche disbursements of $30,000 on June 29, 2015.
As of December 31, 2015, $760 of the debt discount has
been amortized. The Note is shown net of an unamortized debt discount of $2,240 at December 31, 2015.
On June 29, 2015, the first trance became convertible
at the option of the holder. On this date the Company recorded a debt discount in the amount of $33,000 in connection with the
initial valuation of the derivative liability of the note to be amortized utilizing the effective interest method of accretion
over the term of the note. Further, the Company recognized a derivative liability of $67,818 and initial loss on derivative liabilities
of $34,818 based on the Black Scholes Merton pricing model.
As of December 31, 2015, $8,340 of the debt discount has
been amortized. The fair value of the derivative liability at December 31, 2015 and June 30, 2015 is $154,753 and $79,497, respectively
resulting in a loss on the change in fair value of the derivative of $75,256 The Note is shown net of a derivative debt discount
of $24,615 at December 31, 2015.
On July 7, 2015, the Company
issued a convertible promissory note in the amount of $40,000 for $38,000 cash. The note is due on June 30, 2016 and bears interest
at 8% per annum. The loan is secured by shares of the Company’s common stock. The loan becomes convertible as of the date
of the note. The loan and any accrued interest can then be converted into shares of the Company’s common
stock at a rate of 60% multiplied by the market price, which is the lowest quoted price for the common stock during the 25 trading
day period ending on the latest complete trading day prior to the conversion date. During the six months ended December 31, 2015,
$986 of the debt discount has been amortized. The Note is shown net of an unamortized debt discount of $1,014 at December 31,
2015.
On July 7, 2015, the note became convertible at the option
of the holder. On this date the Company recorded a debt discount in the amount of $40,000 in connection with the initial valuation
of the derivative liability of the note to be amortized utilizing the effective interest method of accretion over the term of
the note. Further, the Company recognized a derivative liability of $60,307 and initial loss on derivative liabilities of $20,307
based on the Black Scholes Merton pricing model.
As of December 31, 2015, $19,721 of the debt discount
has been amortized. The fair value of the derivative liability at December 31, 2015, was $121,109 resulting in a loss on the change
in fair value of the derivative of $60,802. The Note is shown net of a derivative discount of $20,279 at December 31, 2015.
On July 24, 2015, the Company
issued a convertible promissory note in the amount of $56,250 for $50,000 cash. The note is due on April 24, 2016 and bears interest
at 10% per annum, which was prepaid by the Company and is being amortized over the life of the loan. The loan is secured by shares
of the Company’s common stock. The loan becomes convertible as of the date of the note. The loan and any accrued interest
can then be converted into shares of the Company’s common stock at a rate of 50% multiplied
by the market price, which is the lowest quoted price for the common stock during the 20 trading day period ending on the latest
complete trading day prior to the conversion date. The Note is shown net of an unamortized debt discount of $4,705at September
30, 2015.
On July 24, 2015, the note became convertible at the option
of the holder. On this date the Company recorded a debt discount in the amount of $56,250 in connection with the initial valuation
of the derivative liability of the note to be amortized utilizing the effective interest method of accretion over the term of
the note. Further, the Company recognized a derivative liability of $101,339 and initial loss on derivative liabilities of $45,089
based on the Black Scholes Merton pricing model.
As of December 31, 2015, $32,727 of the debt discount
has been amortized. The fair value of the derivative liability at December 31, 2015, was $235,493 resulting in a loss on the change
in fair value of the derivative of $134,154. The Note is shown net of a derivative discount of $23,523 at December 31, 2015.
On August 3, 2015, the Company
issued a convertible promissory note in the amount of $75,000 for $50,000 cash, an original issue discount of $13,750 and prepaid
interest of $11,250. The note is due on January 29, 2016 and bears interest at 15% per annum, which was prepaid by the Company
and is being amortized over the life of the loan. The loan is secured by shares of the Company’s common stock. The loan
becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted into shares of the
Company’s common stock at a rate of 50% multiplied by the market price, which is the
lowest quoted price for the common stock during the 25 trading day period ending on the latest complete trading day prior to the
conversion date. During the six months ended December 31, 2015, $13,750 of the debt discount has been amortized. The Note is shown
net of an unamortized debt discount of $0 at December 31, 2015. As of December 31, 2015, the note has not become convertible.
On August 5, 2015, the Company
issued a convertible promissory note in the amount of $37,500 for $25,000 cash, an original issue discount of $6,875 and prepaid
interest of $5,625. The note is due on January 29, 2017 and bears interest at 15% per annum, which was prepaid by the Company
and is being amortized over the life of the loan. The loan is secured by shares of the Company’s common stock. The loan
becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted into shares of the
Company’s common stock at a rate of 50% multiplied by the market price, which is the
lowest quoted price for the common stock during the 25 trading day period ending on the latest complete trading day prior to the
conversion date. During the six months ended December 31, 2015, $1,874 of the debt discount has been amortized. The Note is shown
net of an unamortized debt discount of $5,001 at December 31, 2015. As of December 31, 2015, the note has not become convertible.
On August 12, 2015, the Company
issued a convertible promissory note in the amount of $50,000 for $44,000 cash, an original issue discount of $6,000. The note
is due on February 12, 2016 and bears interest at 12% per annum, which was prepaid by the Company and is being amortized over
the life of the loan. The loan is secured by shares of the Company’s common stock. The loan becomes convertible as of the
date of the note. The loan and any accrued interest can then be converted into shares of the Company’s common
stock at a rate of 50% multiplied by the market price, which is the lesser of lowest quoted price for the common stock during
the previous 20 trading day period ending on the conversion date and the lowest trading price on the 30th trading day
after the funding of the note. During the six months ended December 31, 2015, $4,598 of the debt discount has been amortized.
The Note is shown net of an unamortized debt discount of $1,402 at December 31, 2015.
On August 12, 2015, the note became convertible at the
option of the holder. On this date the Company recorded a debt discount in the amount of $50,000 in connection with the initial
valuation of the derivative liability of the note to be amortized utilizing the effective interest method of accretion over the
term of the note. Further, the Company recognized a derivative liability of $358,250 and initial loss on derivative liabilities
of $308,250 based on the Black Scholes Merton pricing model.
As of December 31, 2015, $38,315 of the debt discount
has been amortized. The fair value of the derivative liability at December 31, 2015 was $153,697 resulting in a gain on the change
in fair value of the derivative of $204,553. The Note is shown net of a derivative discount of $11,685 at December 31, 2015.
On August 12, 2015, the Company
issued a convertible promissory note in the amount of $115,000 for $115,000 cash. The note is due on August 12, 2016 and bears
interest at 12% per annum, which was prepaid by the Company and is being amortized over the life of the loan. The loan is secured
by shares of the Company’s common stock. The loan becomes convertible as of the date of the note. The loan and any accrued
interest can then be converted into shares of the Company’s common stock at a rate
of 50% multiplied by the market price, which is the lesser of lowest quoted price for the common stock during the previous 20
trading day period ending on the conversion date and the lowest trading price on the 30th trading day after the funding
of the note.
On August 12, 2015, the note became convertible at the
option of the holder. On this date the Company recorded a debt discount in the amount of $115,000 in connection with the initial
valuation of the derivative liability of the note to be amortized utilizing the effective interest method of accretion over the
term of the note. Further, the Company recognized a derivative liability of $215,932 and initial loss on derivative liabilities
of $100,932 based on the Black Scholes Merton pricing model.
As of December 31, 2015, the holder of the note exercised
his right to convert $23,334 of the note balance into 41,816,074 shares of common stock, respectively. The fair value of the derivative
liability related to the converted debt as of December 31, 2015 was $69,667.
As of December 31, 2015, $44,425 of the debt discount
has been amortized. The fair value of the derivative liability at December 31, 2015 was $54,786 resulting in a gain on the change
in fair value of the derivative of $161,146. The Note is shown net of a derivative discount of $70,575 at December 31, 2015.
On September 8, 2015, the Company
issued a short-term convertible promissory note in the amount of $70,000 for $50,000 cash, an original issue discount of $9,500,
and prepaid interest of $10,500. The note is due on September 9, 2016 and bears interest at 15% per annum, which was prepaid by
the Company and is being amortized over the life of the loan. The loan is secured by shares of the Company’s common stock.
The loan becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted into shares
of the Company’s common stock at a rate of 50% multiplied by the market price, which
is the lowest quoted price for the common stock during the 25 trading day period ending on the latest complete trading day prior
to the conversion date. During the year ended December 31, 2015, $2,951 of the debt discount has been amortized and the note is
shown net $6,549 in unamortized debt discount. As of December 31, 2015, the note has not become convertible.
On October 29, 2015, the Company
issued a convertible promissory note in the amount of $37,500 for $25,000 cash, an original issue discount of $7,500 and prepaid
interest of $2,500. The note is due on October 28, 2016 and bears interest at 15% per annum, which was prepaid by the Company
and is being amortized over the life of the loan. The loan is secured by shares of the Company’s common stock. The loan
becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted into shares of the
Company’s common stock at a rate of 50% multiplied by the market price, which is the
lowest quoted price for the common stock during the 25 trading day period ending on the latest complete trading day prior to the
conversion date. During the three months ended December 31, 2015, $1,295 of the debt discount has been amortized. The Note is
shown net of an unamortized debt discount of $6,205 at December 31, 2015. As of December 31, 2015, the note has not become convertible.
On November 25, 2015, the Company
issued two short-term convertible promissory note in the amount of $300,000 for $200,000 cash, an original issue discount of $75,000,
and prepaid interest of $25,000. The notes are due on May 22, 2016 and bears interest at 15% per annum, which was prepaid by the
Company and is being amortized over the life of the loan. The loan is secured by shares of the Company’s common stock. The
loan becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted into shares
of the Company’s common stock at a rate of 50% multiplied by the market price, which
is the lowest quoted price for the common stock during the 25 trading day period ending on the latest complete trading day prior
to the conversion date. During the six months ended December 31, 2015, $15,084 of the debt discount has been amortized and the
note is shown net $59,916 in unamortized debt discount. As of December 31, 2015, the note has not become convertible.
Derivative liability for these notes were valued under
the Black-Scholes model, with the following assumptions:
| Fair value assumptions –
derivative notes: |
|
December 31, 2015 |
| Risk free interest rate |
|
|
0.00-0.56 |
% |
| Expected term (years) |
|
|
0.45-1.575 |
|
| Expected volatility |
|
|
241-444 |
% |
| Expected dividends |
|
|
0 |
% |
| Fair value assumptions –
derivative notes: |
|
June 30, 2015 |
| Risk free interest rate |
|
|
0.09-0.64 |
% |
| Expected term (years) |
|
|
0.45-1.01 |
|
| Expected volatility |
|
|
198-288 |
|
| Expected dividends |
|
|
0 |
% |
As of December
31, 2015, the company had the below commitments related to its outstanding convertible notes payable.
| Commitments: |
|
Amount |
|
| Within one year |
|
$ |
1,694,127 |
|
| After one year and within 5 years |
|
|
0 |
|
| Total |
|
$ |
1,694,127 |
|
|