NOTE 6 - CONVERTIBLE PROMISSORY NOTES  

The Company entered into a securities purchase agreement (the “Purchase Agreement”) with a private investors and issued a convertible promissory note in the amount of  $43,000 respectively (the “Note”).The Note was  dated  May 7, 2015, bore interest at 8% per annum and matured on  February 11, 2016. The note was convertible into shares of the Company’s common stock at the greater of; (i) the variable conversion price (58% multiplied by the market price) that is equal to the average of the three (3) lowest closing bid prices of the Common Stock during the ten (10) trading day period prior to the date of conversion or (ii) the fixed conversion price of $.00005. The Note also contained a prepayment option whereby the Company may make payments to the holder based on the length of time the Note has been outstanding, upon three (3) trading days' prior written notice to the holder.

During the first 30 days, the Company may make a payment to the holder equal to 115% of the then outstanding unpaid principal and interest, from days 31 until 60 days, the Company may make a payment to the holder equal to 120% of the then outstanding unpaid principal and interest, from days 61 until 90 days, the Company may make a payment to the holder equal to 125% of the then outstanding unpaid principal and interest, from days 91 until 120 days the Company may make a payment to the holder equal to 130% of the then outstanding unpaid principal and interest, from days 121 until 150 days, the Company may make a payment to the holder equal to 135% of the then outstanding unpaid principal and interest, from days 151 until 180 days, the Company may make a payment to the holder equal to 140% of the then outstanding unpaid principal and interest, after 180 days, the Company has no right of prepay. In the event of default before the maturity dates, the payment is immediately due, in the amount of 22% of the outstanding unpaid principal, along with interest and any penalties.

Beneficial Conversion Feature

In connection with the convertible note entered into in May 2015, the Company determined that a beneficial conversion feature existed on the date the note was issued. The beneficial conversion feature related to this note was valued as the difference between the effective conversion price (computed by dividing the relative fair value allocated to the convertible note by the number of shares the note is convertible into) and the fair value of the common stock multiplied by the number of shares into which the note may be converted.

In accordance with ASC 470 “Debt with Conversion and other Options”, the intrinsic value of the beneficial conversion features were recorded as a debt discount with a corresponding amount to additional paid in capital. The debt discount is amortized to interest expense over the life of the instrument. The Company recorded a beneficial conversion feature related to the May 2015 convertible note financing of $31,000.

On November 23, 2015, a convertible note holder converted $10,000 in principal of the $43,000 May 2015 note into 847,458 shares of common stock. On November 27, 2015 the Company repaid the remaining balance of the convertible note along with accrued interest and penalties for a total amount of $47,975. The remaining discount on the convertible note payable was recognized as interest totaling $13,779.  

In December 2015, the Company entered into a Convertible Promissory Note with a private investor in the principal sum of $150,000. The note matures on December 6, 2017 and carries a 10% Original Issue Discount and incurs a one-time 12% interest charge on March 6, 2016. The principal sum due to the investor shall be based on the consideration actually paid by the investor plus a 10% original issue discount on the consideration paid as well as any other interest or fees. The Company is only required to repay the amount funded and is not required to repay any unfunded portion of the note. The Company received $22,500, less $2,500 of original issuance discount pursuant to the terms of this convertible note. The note is convertible into shares of the Company’s common stock at the greater of; (i) the variable conversion price (60% multiplied by the market price) that is equal to the average of the lowest trading  price of the Common Stock during the twenty five (25) trading days prior to the date of conversion (ii) the investor has the right, at any time after 180 days after principal consideration has been paid to convert all or part of the outstanding principal along with interest and any fees into the Company’s common stock. The Company may repay the note at any time on or before 90 days from the effective date, after which the Company may not make further payments on the Note prior to the maturity date without written approval from the investor. On the issuance date, the fair value of derivative liability was $62,359. The Company recorded a debt discount of $25,000 and encountered a day-one derivative loss of $37,359.

In February 2016, the Company and noteholder agreed to amend the conversion price. In accordance with the amended convertible promissory note, the note is convertible into shares of the Company’s common stock at the greater of; (i) the variable conversion price (60% multiplied by the market price) that is equal to the average of the lowest trading  price of the Common Stock during the twenty five (25) trading days prior to the date of conversion or (ii) the fixed conversion price of $.00005 (iii) the investor has the right, at any time after 180 days after principal consideration has been paid to convert all or part of the outstanding principal along with interest and any fees into the Company’s common stock. Upon amendment, the Company determined that this convertible note is now considered as a conventional convertible debt and recorded a gain of $6,997 in the change of fair value of derivative liability. The Company reclassified the fair value of $55,362 to equity on the amendment date. In June, August and September 2016, the noteholder converted $25,000 in principal and $6,111 in accrued interest into 4,906,565 shares of common stock. Accordingly, the Company recognized $25,000 of interest expense for the debt discount and $2,500 of interest expense for the original issue discount. As of  September 30, 2016, the note was fully converted.