Convertible Notes

12 Months Ended

Jun. 30, 2018

Convertible Notes

Convertible Notes

8.Convertible Notes

As of June 30, 2018 and 2017, the balance owing on convertible notes, net of debt discount, with terms as described below was $2,399,941 and $1,502,023, respectively.

Convertible notes issued prior the year ended June 30, 2017 were as follows:

Convertible note 1: On August 24, 2012, the Company entered into a convertible promissory note with an accredited investor for $25,000. The note has a term of six (6) months with an interest rate of 10% and is convertible to common shares at a 25% discount of the average of 30 days prior to the conversion date. As of June 30, 2018, the note is in default.

Convertible note 2: On September 18, 2012, the Company entered into a convertible promissory note with an accredited investor for $25,000. The note has a term of six (6) months with an interest rate of 10% and is convertible to common shares at a 25% discount of the average of 30 days prior to the conversion date. As of June 30, 2018, the note is in default.

Convertible note 3: On December 21, 2012, the Company entered into a convertible promissory note with an accredited investor for $100,000. The note has a term of six (6) months with an interest rate of 10% and is convertible to common shares at a 25% discount of the average of 30 days prior to the conversion date. As of June 30, 2018, the note is in default.

Convertible note 4: On December 19, 2016, the Company entered into a convertible promissory note with an accredited investor for $20,000. The note has a term of six (6) months with an interest rate of 8% and is convertible to common shares at a 40% discount. As of June 30, 2018, the note is in default.

Convertible note 5: On January 17, 2017, the Company entered into a convertible promissory note with an accredited investor for $25,000. The note has a term of six (6) months with an interest rate of 8% and is convertible to common shares at a 40% discount to the then current market price of our shares. As of June 30, 2018, the note is in default.

Convertible note 6: On January 17, 2017, the Company entered into a convertible promissory note with an accredited investor for $20,000. The note has a term of six (6) months with an interest rate of 8% and is convertible to common shares at a 40% discount to the then current market price of our shares. The note has been fully converted as of June 30, 2018.

Convertible note 9: On January 20, 2017, the Company entered into a convertible promissory note with an accredited investor for $80,000. The note has a term of seven (6) months with an interest rate of 8% and is convertible to common shares at a 40% discount to the then current market price of our shares. As of June 30, 2018, the note is in default.

Convertible note 7: On January 24, 2017, the Company entered into a convertible promissory note with an accredited investor for $43,000. The note has a term of twelve (12) months with an interest of 8% and is convertible to common shares at a 45% discount to the then current market price of our shares. This convertible promissory note has been fully converted in the year ended June 30, 2018.

Convertible note 8: On February 8, 2017, the Company entered into a convertible promissory note with an accredited investor for $50,000. The note has a term of six (6) months with an interest rate of 8% and is convertible to common shares at a 40% discount to the then current market price of our shares. As of June 30, 2018, the note is in default.

Convertible note 10: On February 24, 2017, the Company entered into a convertible promissory note with an accredited investor for $66,023. The note has a term of six (6) months with an interest rate of 8% and is convertible to common shares at a 40% discount to the then current market price of our shares. As of June 30, 2018, the note is in default.

Convertible note 11: On February 9, 2017, the Company entered into a convertible promissory note with an accredited investor for $50,000. The note has a term of six (6) months with an interest rate of 8% and is convertible to common shares at a 40% discount to the then current market price of our shares. As of June 30, 2018, the note is in default.

Convertible note 12: On February 28, 2017, the Company entered into a convertible promissory note with an accredited investor for $75,000. The note has a term of six (6) months with an interest rate of 8% and is convertible to common shares at a 40% discount. As of June 30, 2018, the note is in default.

Convertible note 13: On March 1, 2017, the Company entered into a convertible promissory note with an accredited investor for $100,000. The note has a term of nine (9) months with an interest rate of 10% and is convertible to common shares at a 45% discount to the then current market price of our shares. As of June 30, 2018, there were $92,500 has been converted into the Company’s common stock and the remaining principal balance was $7,500. As of June 30, 2018, the note is in default.

Convertible note 14: On March 23, 2017, the Company entered into a convertible promissory note with an accredited investor for $70,000. The note has a term of six (6) months with an interest rate of 8% and is convertible to common shares at a 40% discount to the then current market price of our shares. As of June 30, 2018, the note is in default.

Convertible note 15: On February 15, 2017, the Company entered into a convertible promissory note with an accredited investor for $63,000. The note has a term of nine (9) months with an interest rate of 8% and is convertible to common shares at 40% discount to the then current market price of our shares. This convertible promissory note has been fully converted in the year ended June 30, 2018.

Convertible note 16: On February 16, 2017, the Company entered into a convertible promissory note with an accredited investor for $30,000. The note has a term of six (6) months with an interest rate of 8% and is convertible to common shares at a 40% discount to the then current market price of our shares. As of June 30, 2018, the note is in default.

Convertible note 17: On March 31, 2017, the Company entered into a convertible promissory note with an accredited investor for $200,000. The note has a term of six (6) months with an interest rate of 8% and is convertible to common shares at a 40% discount to the then current market price of our shares. As of June 30, 2018, the note is in default.

Convertible note 18 & 19: On May 17, 2017, the Company entered a convertible promissory note with an investor for a total amount of $1,375,000 (after $10,000 legal and due diligence fee) with an OID of $125,000, the note will be fulfilled through a series of funding. The note is due 12 months after each funding date and bear an interest rate of 10%. The conversion price for the note is 55% of the lowest closing bid for the 20 consecutive trading days prior to the conversion date. In connection with the note, the investor will also receive warrants and is calculated based on 15% of the maturity amount. The warrants have a life of four years with exercise price of $0.15 per share and have cashless exercise option. The Company received $505,000 from this note during the year ended June 30, 2018. The fair value of the warrants were $40,400 at grant date. As of June 30, 2018, the Company had outstanding convertible note payable to this investor for $671,004 (with two major default charge in total of $166,004), the fair value of the warrant liability was $40,400. As of June 30, 2018, the note is in default and bears a default interest rate of 22% per annum.

Convertible notes issued during the year ended June 30, 2018 were as follows: 

On July 17, 2017, the Company entered into a convertible promissory note with an accredited investor for $164,900. The note has a term of one year with an interest rate of 8% and is convertible to common shares at a fixed conversion price of $0.025.

On August 3, 2017, the Company entered into a convertible promissory note with an accredited investor for $150,000. The note has a term of six (6) months with an interest rate of 10% and is convertible to common shares at a 45% discount to average of 3 lowest trading price during last 20 trading days. As of June 30, 2018, the note is in default.

On August 22, 2017, the Company entered into a convertible promissory note with an accredited investor for $35,000. The note has a term of six (6) months with an interest rate of 8% and is convertible to common shares at a 40% discount of average two lowest price of last 20 trading days prices.

On September 15, 2017, the Company entered into a convertible promissory note with an accredited investor for $150,000. The note has a term of six (6) months with an interest rate of 10% and is convertible to common shares at a 45% discount to average of 3 lowest trading price during last 20 trading days. As of June 30, 2018, the note is in default.

On September 26, 2017, the Company entered into a convertible promissory note with an accredited investor for $15,000. The note has a term of six (6) months with an interest rate of 8% and is convertible to common shares at a 40% discount of average two lowest price of last 20 trading days prices.

On December 7, 2017, the Company entered into a convertible promissory note with an accredited investor for $50,000. The note has a term of one year with an interest rate of 8% and is convertible to common shares at a fixed conversion price of $0.05.

As of the year ended June 30, 2018, the Company’s convertible notes consisted of following:

Principal		Default Penalty		Conversion in Principal		Number of Shares		Balance as of 6/30/2018		Due Date	Interest Rate			Conversion Price
$	25,000							$	25,000	2/24/2013		14	%	75% of the average of 30 days prior to the conversion date
$	25,000							$	25,000	3/18/2013		14	%	75% of the average of 30 days prior to the conversion date
$	100,000							$	100,000	6/21/2013		14	%	75% of the average of 30 days prior to the conversion date
$	20,000							$	20,000	7/17/2017		8	%	40% discount of average of last 20 trading days
$	25,000							$	25,000	7/17/2017		8	%	40% discount of average two lowest price of last 20 trading days
$	20,000			$	20,000		737,748		—	7/17/2017		8	%	Greater of $0.05 or 40% discount to average of 3 lowest trading price during 20 trading days
$	43,000			$	43,000		2,462,180		—	1/24/2018		8	%	45% discount of average two lowest price of last 20 trading days
$	50,000							$	50,000	8/8/2017		8	%	40% discount of average two lowest price of last 20 trading days
$	80,000							$	80,000	7/20/2017		8	%	40% discount of average two lowest price of last 20 trading days
$	66,023							$	66,023	8/24/2017		8	%	40% discount of average two lowest price of last 20 trading days
$	50,000							$	50,000	8/9/2017		8	%	40% discount of average two lowest price of last 20 trading days
$	75,000							$	75,000	7/31/2017		8	%	40% discount of average two lowest price of last 20 trading days
$	100,000			$	92,500		5,246,524	$	7,500	12/1/2017		10	%	50% discount of average three lowest price of last 20 trading days
		$	56,067					$	56,067	12/1/2017		10	%	50% discount of average three lowest price of last 20 trading days
		$	7,273					$	31,097	12/1/2017		10	%	50% discount of average three lowest price of last 20 trading days
		$	7,270					$	29,654	12/1/2017		10	%	50% discount of average three lowest price of last 20 trading days
$	70,000							$	70,000	9/23/2017		8	%	40% discount of average two lowest price of last 20 trading days
$	63,000			$	63,000		3,081,746		—	11/20/2017		8	%	42% discount of average three lowest price of last 10 trading days
$	30,000							$	30,000	8/16/2017		8	%	Greater of $0.05 or 40% discount to average of 3 lowest trading price during 20 trading days
$	200,000							$	200,000	9/30/2017		8	%	40% discount of average two lowest price of last 20 trading days
$	340,000	$	78,482					$	418,482	5/12/2018		22	%	45% discount of lowest price of last 20 trading days
$	165,000	$	87,522					$	252,522	5/12/2018		22	%	45% discount of lowest price of last 20 trading days
		$	80,000					$	80,000	5/12/2018		22	%	45% discount of lowest price of last 20 trading days
		$	170,000					$	170,000	5/12/2018		22	%	45% discount of lowest price of last 20 trading days
$	150,000							$	150,000	5/3/2018		10	%	45% discount of average three lowest price of last 20 trading days
$	150,000							$	150,000	6/15/2018		10	%	45% discount of average three lowest price of last 20 trading days
$	164,900							$	164,900	7/17/2018		8	%	$0.025
$	35,000							$	35,000	8/22/2018		8	%	40% discount of average two lowest price of last 20 trading days
$	15,000							$	15,000	9/26/2018		8	%	40% discount of average two lowest price of last 20 trading days
$	50,000							$	50,000	12/7/2018		8	%	$0.025
	Total:			$	218,500			$	2,426,245

As of the year ended June 30, 2018, the Company’s debt discount consisted of following:

Date of	Due Date	Related Debt OID		Debt Discount at 6/30/2017		Amortization during 6/30/2018		Debt Discount at 6/30/2018
8/3/2017	5/3/2018	$	150,000	$	—	$	150,000
9/15/2017	6/15/2018		150,000		—		150,000
8/22/2017	8/22/2108		35,000		—		29,918		5,082
9/26/2017	9/26/2018		15,000		—		11,384		3,616
5/12/2017	5/12/2018		30,000		13,232		13,232
6/12/2017	6/12/2018		15,000		28,263		28,263
9/28/2017	5/12/2018		78,482		—		78,482
11/14/2017	5/12/2018		87,522		—		87,522
8/8/2017	12/1/2017		56,067		—		56,067
10/13/2017	12/1/2017		15,298		—		15,298
11/14/2017	12/1/2017		42,280		—		42,280
11/17/2017	5/12/2018		80,000		—		80,000
11/25/2017	5/12/2018		170,000		—		170,000
7/17/2017	7/17/2018		164,900		—		160,445		4,455
12/7/2017	12/7/2018		50,000		—		36,849		13,151
Total debt discount		$	1,139,549	$	41,495	$	912,446	$	26,303