CONVERTIBLE NOTES PAYABLE, NET

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

CONVERTIBLE NOTES PAYABLE, NET

NOTE 7 – CONVERTIBLE NOTES PAYABLE, NET

Convertible notes consisted of the following as of June 30, 2016 and December 31, 2015:

In January 2017, the below convertible notes payable, which were being renegotiated, and related accrued interest were converted into Common stock of the Company (Note 13).

	2016		2015
In June 2015, the Company issued 10% convertible notes with an   aggregate principal amount of $700,000.  The notes are secured by the assets of the Company, matured in June 2016, and are convertible into common stock of the Company at a conversion rate of $0.03 per share, subject to adjustment.  In connection with the issuance of these notes, the Company also issued warrants for the purchase of 15,400,000 shares of the Company’s common stock at an exercise price of $0.05 per share for a period of five years.  The conversion rate on the notes and exercise price of the warrants are subject to adjustment for anti-dilution protection that requires these features to be bifurcated and presented as derivative liabilities at their fair values.  See Note 8. The Company also incurred debt issuance costs of $124,500, which are presented as a discount against the note and amortized into interest expense over the term of the note. During the six months ended June 30, 2016, one note holder elected to convert principal and accrued interest totaling $21,222 into 704,074 shares of common stock.	$	680,000	$	700,000
In July 2015, the Company issued 10% convertible notes with in the aggregate principal amount of $190,000.  The notes are secured by the assets of the Company, matured in July 2016, and are convertible into common stock of the Company at a conversion rate of $0.03 per share, subject to adjustment.  In connection with the issuance of these notes, the Company also issued warrants for the purchase of 4,180,000 shares of the Company’s common stock at an exercise price of $0.05 per share for a period of five years. The conversion rate on the notes and exercise price of the warrants are subject to adjustment for anti-dilution protection that requires these features to be bifurcated and presented as derivative liabilities at their fair values.  See Note 8. The Company also incurred debt issuance costs of $16,200, which are presented as a discount against the note and amortized into interest expense over the term of the note.		166,000		166,000

In February 2016, the Company re-issued a 12% convertible note in the amount of $172,095. The note is secured by the assets of the Company, originally maturing in September 2016, and is convertible into common stock of the Company at a rate of $0.10 per share.		172,095			172,095
In April 2016, the Company issued 12% convertible notes in the amount of $1,550,000. The notes are secured by the assets of the Company, mature in October 2016, and are convertible into common stock of the Company at a rate of $0.25 per share.  In connection with the issuance of these notes, the Company also issued 1,033,337 shares of common stock and warrants for the purchase of 6,200,000 shares of the Company’s common stock at an exercise price of $0.25 per share for a period of five years. The conversion rate on the notes and exercise price of the warrants are subject to adjustment for anti-dilution protection that require these features to be bifurcated and presented as derivative liabilities at their fair values. See Note 8. The portion of the remaining proceeds attributable to the notes and common stock were allocated to the instruments based on their relative fair values.  See Notes 8 and 10.  The Company also incurred debt issuance costs of $226,400, which are presented as a discount against the note and amortized into interest expense over the term of the note.		1,550,000			-
Total Principal Outstanding	$	2,568,095		$	1,038,095
Unamortized Deferred Debt Discounts		(442,097	)		(583,049	)
Unamortized Deferred Debt Issuance costs		(180,583	)		(71,700	)
Convertible Notes, Net	$	1,945,415		$	383,346

The following is a roll-forward of the Company’s convertible notes and related discounts for the six months ended June 30, 2016:

	Principal Balance			Debt Issuance Costs			Debt Discounts			Total
Balance at December 31, 2015	$	1,038,095		$	(71,700	)	$	(583,049	)	$	383,346
New issuances		1,550,000			(226,400	)		(636,373	)		687,227
Conversions		(20,000	)		-			-			(20,000	)
Amortization		-			117,517			777,325			894,842
Balance at June 30, 2016	$	2,568,095		$	(180,583	)	$	(442,097	)	$	1,945,415