Convertible Note Payable

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Convertible Note Payable

NOTE 6 - CONVERTIBLE NOTE PAYABLE

Convertible notes payable consist of the following as of September 30, 2016 and December 31, 2015:

Total convertible notes payable		501,369			501,369
Less discounts		(289,233	)		(177,596	)
Convertible notes net of discount	$	398,273		$	323,773

On February 17, 2016, we entered into a convertible promissory note pursuant to which we borrowed $100,000. Interest under the convertible promissory note is 12% per annum, and the principal and all accrued but unpaid interest is due on November 17, 2016. The note is convertible at any date after the issuance date at noteholders option into shares of our common stock at a variable conversion price of 50% of the lowest day market price of our common stock during the previous 20 days to the date of the notice of conversion or the date the note was executed. 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 $650,708 and an initial loss of $550,708 based on the Black Scholes Merton pricing model.

Amortization of debt discount during the nine-month period ended September 30, 2016 and 2015 was $82,482 and $0, respectively, and the unamortized discount at September 30, 2016 and December 31, 2015 was $17,518 and $0, respectively. Interest expense recorded on the convertible notes for the nine-month period ended September 30, 2016 and 2015 was $7,463 and $0, respectively.

On April 1, 2016, we entered into a convertible promissory note pursuant to which we borrowed $100,000. Interest under the convertible promissory note is 12% per annum, and the principal and all accrued but unpaid interest is due on December 22, 2016 The note is convertible at any date after the issuance date at noteholders option into shares of our common stock at a variable conversion price of 50% of the average three (3) two (2) lowest day market price of our common stock during the previous 20 days immediately preceding the conversion 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 $221,148 and an initial loss of $121,148 based on the Black Scholes Merton pricing model.

Amortization of debt discount during the nine-month period ended September 30, 2016 and 2015 was $75,547 and $0, respectively, and the unamortized discount at September 30, 2016 and December 31, 2015 was $34,453 and $0, respectively. Interest expense recorded on the convertible notes for the nine-month period ended September 30, 2016 and 2015 was $6,016 and $0, respectively.

On June 24, 2016, we entered into a convertible promissory note pursuant to which we borrowed $64,000 including a debt discount of $3,200. Interest under the convertible promissory note is 12% per annum, and the principal and all accrued but unpaid interest is due on December 22, 2016. The note is convertible at any date after the issuance date at noteholders option into shares of our common stock at a variable conversion price of 50% of the average three (3) two (2) lowest day market price of our common stock during the previous 20 days immediately preceding the conversion date. The Company recorded a debt discount in the amount of $64,000 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 $112,104 and an initial loss of $48,104 based on the Black Scholes Merton pricing model.

Amortization of debt discount during the nine-month period ended September 30, 2016 and 2015 was $34,652 and $0, respectively, and the unamortized discount at September 30, 2016 and December 31, 2015 was $29,348 and $0, respectively. Interest expense recorded on the convertible notes for the nine-month period ended September 30, 2016 and 2015 was $2,083 and $0, respectively.

On July 18, 2016, we entered a convertible promissory note pursuant to which we borrowed $237,750 including a debt discount of $20,000. Interest under the convertible promissory note is 10% per annum, and the principal and all accrued but unpaid interest is due on April 18, 2017. The note is convertible at any date after the issuance date at noteholders option into shares of our common stock at a variable conversion price of 55% of the lowest day market price of our common stock during the previous 25 days immediately preceding the conversion date. The Company recorded a debt discount in the amount of $237,750 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 $1,080,870 and an initial loss of $843,120 based on the Black Scholes Merton pricing model.

Amortization of debt discount during the nine-month period ended September 30, 2016 and 2015 was $69,611 and $0, respectively, and the unamortized discount at September 30, 2016 and December 31, 2015 was $188,139 and $0, respectively. Interest expense recorded on the convertible notes for the nine-month period ended September 30, 2016 and 2015 was $4,885 and $0, respectively.

The Company accounts for the fair value of the conversion features of its convertible debt in accordance with ASC Topic No. 815-15 “Derivatives and Hedging; Embedded Derivatives” (“Topic No. 815-15”). Topic No. 815-15 requires the Company to bifurcate and separately account for the conversion features as an embedded derivative contained in the Company’s convertible debt. The Company is required to carry the embedded derivative on its balance sheet at fair value and account for’ any unrealized change in fair value as a component of results of operations. The Company values the embedded derivatives using the Black-Scholes pricing model.

The Black-Scholes model utilized the following inputs to value the derivative liability at the date of issuance of the convertible note and at September 30, 2016:

Fair value assumptions – derivative notes:	September 30, 2016
Risk free interest rate		0.20-0.59	%
Expected term (years)		0.01-1.11
Expected volatility		261.63	%
Expected dividends		0	%

Settlement agreements

On July 7, 2016, the Company entered into an agreement to settle a certain note and accrued interest in the amount of $36,222 issued on November 10, 2015 for 2,000,000 shares  of common stock valued at $146,000. Upon the settlement of the notes the Company recorded a $109,778 loss related to the difference between the note balances and the fair value of the share.

On August 22, 2016, the Company entered into an agreement to settle certain convertible notes payable issued on September, 10, 2013, September 27, 2013, November 7, 2013, and November 17, 2013 with balances of $90,762, including interest for $33,000. Upon the settlement of the notes the Company recorded a $57,762 gain related to the difference between the note balances and the settlement price.

On September 8, 2016, the Company entered into an agreement to partially settle a certain note in the amount of $5,000 issued on April 17, 2014 for 10,00,000 shares of common stock valued at $195,000. Upon the settlement of the notes the Company recorded a $190,000 loss related to the difference between the note balances and the fair value of the share.