Note 4 - Convertible Debentures

12 Months Ended

Dec. 31, 2014

Notes

Note 4 - Convertible Debentures

Note 4 – Convertible Debentures

During the years ended December 31, 2012 and 2011, the Company issued various convertible debentures for cash in the total amount of $409,500.  All debentures issued in 2011 and 2012 are unsecured and bear simple interest of 14% per annum with a one-year maturity.  The outstanding principal and interest of the debenture is convertible into shares of common stock at a conversion price of $30.00 per share. The conversion rate was based upon the market price of the Company's common stock as determined by reference to recent cash sales.

During the year ended December 31, 2013, the Company issued various convertible debentures in the total amount of $1,224,516: $945,500 cash; $10,000 original issue discount; $5,000 services; $203,000 for other notes payable; and $61,016 for accrued interest payable.  In addition in 2013, $84,534 cash payments were made to reduce the principal balance of convertible debentures and a total principal balance of $548,411 was extinguished through the conversion of principal to common shares of the Company.  The debentures issued in 2013 are unsecured and bear simple interest ranging from 6% to 15% per annum, with maturities ranging from six months to one year.  The outstanding principal and accrued interest of the debentures are convertible into shares of the Company’s common stock at a fixed conversion price ranging from $0.15 to $30.00 per share in addition to variable discounted pricing based on conversion prices defined in the underlying agreements.

The following is a schedule of the convertible debentures outstanding as of December 31, 2013:

Description	Date	Conversion Price	Original Principal Amount	Unpaid Principal Balance	Term	Interest Rate
Debenture 1	10/10/11	$30.00	$25,000	$25,000	12 months	14%
Debenture 2	12/20/11	$30.00	6,000	1,466	12 months	14%
Debenture 3	2/17/12	$30.00	10,000	10,000	12 months	14%
Debenture 4	3/9/12	$30.00	5,000	5,000	12 months	14%
Debenture 5	3/19/12	$30.00	5,000	5,000	12 months	14%
Debenture 6	4/29/12	$30.00	5,000	5,000	12 months	14%
Debenture 7	4/25/12	$30.00	10,000	10,000	12 months	14%
Debenture 8	10/9/12	$30.00	5,000	5,000	12 months	14%
Debenture 9	10/31/12	$30.00	12,500	12,500	12 months	14%
Debenture 10	11/15/12	$30.00	5,000	5,000	12 months	14%
Debenture 11	11/20/12	$30.00	2,000	2,000	12 months	14%
Debenture 12	12/11/12	$30.00	2,500	2,500	12 months	14%
Debenture 13	12/29/12	$30.00	2,500	2,500	12 months	14%
Debenture 14	1/5/13	$30.00	2,500	2,500	12 months	14%
Debenture 15	2/5/13	$30.00	2,500	2,500	12 months	14%
Debenture 16	7/11/13	Variable	21,500	21,500	12 months	12%
Debenture 17	7/23/13	Variable	62,000	62,000	9 months	8%
Debenture 18	7/26/13	Variable	78,500	78,500	12 months	8%
Debenture 19	7/29/13	$30.00	10,000	10,000	12 months	14%
Debenture 20	8/2/13	Variable	21,500	21,500	12 months	12%
Debenture 21	8/30/13	Variable	37,500	37,500	12 months	15%
Debenture 22	9/4/13	Variable	50,000	50,000	12 months	8%
Debenture 23	9/23/13	Variable	25,000	25,000	12 months	14%
Debenture 24	9/27/13	Variable	25,402	25,402	12 months	14%
Debenture 25	9/26/13	Variable	7,500	7,500	12 months	15%
Debenture 26	9/30/13	Variable	5,250	5,250	12 months	15%
Debenture 27	9/30/13	Variable	7,500	7,500	12 months	15%
Debenture 28	9/30/13	Variable	9,750	9,750	12 months	15%
Debenture 29	10/1/13	$1.50	75,000	75,000	12 months	14%
Debenture 30	10/2/13	$1.50	50,000	50,000	12 months	14%
Debenture 31	10/3/13	Variable	3,750	3,750	12 months	8%
Debenture 32	10/23/13	Variable	50,000	50,000	12 months	6%
Debenture 33	10/25/13	Variable	52,000	52,000	9 months	8%
Debenture 34	10/25/13	Variable	30,000	30,000	9 months	8%
Debenture 35	11/6/13	$1.50	50,000	50,000	12 months	14%
Debenture 36	11/29/13	Variable	30,000	30,000	6 months	15%
Debenture 37	11/29/13	Variable	25,000	25,000	6 months	15%
Debenture 38	11/29/13	Variable	25,000	25,000	6 months	15%
Debenture 39	12/2/13	Variable	25,000	25,000	6 months	15%
Debenture 40	12/2/13	Variable	1,476	1,476	6 months	15%
Debenture 41	12/2/13	Variable	1,476	1,476	6 months	15%
Debenture 42	12/2/13	Variable	1,476	1,476	6 months	15%
Debenture 43	12/2/13	Variable	1,475	1,475	6 months	15%
Debenture 44	12/30/13	$0.15	10,000	10,000	6 months	14%
Debenture 45	8/14/13	$1.875	100,000	100,000	12 months	14%
Debenture 46	2/24/12	Variable	11,268	11,268	12 months	15%
Total at December 31, 2013			$1,004,823	$1,000,289
Less discount				(408,194)
				$592,095

During the year ended December 31, 2014, the Company issued various convertible debentures in the total amount of $1,384,954: $1,158,332 cash; $19,040 original issue discount; $95,000 services; $50,000 transfer from stockholder advances; $17,454 adjustment to principal; and $45,128 for accrued interest payable.  In addition in 2014, $107,433 cash payments were made to reduce the principal balance of convertible debentures and a total principal balance of $329,251 was extinguished through the conversion of principal to common shares of the Company.  The debentures issued in 2014 are unsecured and bear simple interest ranging from 5% to 22% per annum, with maturities ranging from six months to two years.  The outstanding principal and accrued interest of the debentures are convertible into shares of the Company’s common stock at a fixed conversion price ranging from $0.00025 to $0.06 per share in addition to variable discounted pricing based conversion prices defined in the underlying agreements.

The following is a schedule of the convertible debentures outstanding as of December 31, 2014:

Description	Date	Conversion Price	Original Principal Amount	Unpaid Principal Balance	Term	Interest Rate
Debenture 1	10/10/11	$30.00	$25,000	$25,000	12 months	14%
Debenture 3	2/17/12	$30.00	10,000	10,000	12 months	14%
Debenture 4	3/9/12	$30.00	5,000	5,000	12 months	14%
Debenture 5	3/19/12	$30.00	5,000	5,000	12 months	14%
Debenture 6	4/29/12	$30.00	5,000	5,000	12 months	14%
Debenture 7	4/25/12	$30.00	10,000	10,000	12 months	14%
Debenture 8	10/9/12	$30.00	5,000	5,000	12 months	14%
Debenture 10	11/15/12	$30.00	5,000	5,000	12 months	14%
Debenture 11	11/20/12	$30.00	2,000	2,000	12 months	14%
Debenture 12	12/11/12	$30.00	2,500	2,500	12 months	14%
Debenture 13	12/29/12	$30.00	2,500	2,500	12 months	14%
Debenture 14	1/5/13	$30.00	2,500	2,500	12 months	14%
Debenture 15	2/5/13	$30.00	2,500	2,500	12 months	14%
Debenture 17	7/23/13	Variable	62,000	62,000	9 months	8%
Debenture 19	7/29/13	$30.00	10,000	10,000	12 months	14%
Debenture 21	8/30/13	Variable	37,500	27,800	12 months	15%
Debenture 22	9/4/13	Variable	50,000	50,000	12 months	8%
Debenture 23	9/19/13	Variable	25,000	25,000	12 months	14%
Debenture 24	9/27/13	Variable	25,402	21,545	12 months	14%
Debenture 31	10/3/13	Variable	3,750	3,750	12 months	8%
Debenture 32	10/23/13	Variable	50,000	35,000	12 months	6%
Debenture 33	10/25/13	Variable	52,000	52,000	9 months	8%
Debenture 34	10/25/13	Variable	30,000	47,455	9 months	8%
Debenture 36	11/29/13	Variable	30,000	30,000	6 months	15%
Debenture 37	11/29/13	Variable	25,000	17,200	6 months	15%
Debenture 38	11/29/13	Variable	25,000	25,000	6 months	15%
Debenture 39	12/2/13	Variable	25,000	25,000	6 months	15%
Debenture 47	6/23/13	Variable	35,000	17,500	7 months	10%
Debenture 48	6/23/13	Variable	12,500	12,500	7 months	10%
Debenture 49	1/12/14	Variable	26,000	26,000	12 months	22%
Debenture 50	1/12/14	Variable	60,000	60,000	12 months	12%
Debenture 51	2/3/14	$0.06	50,000	46,600	2 months	14%
Debenture 52	2/18/14	$0.06	5,000	5,000	12 months	14%
Debenture 53	3/17/14	Variable	25,000	23,500	12 months	18%
Debenture 54	3/20/14	Variable	10,000	10,000	12 months	18%
Debenture 55	3/25/14	Variable	10,000	10,000	12 months	18%
Debenture 56	3/28/14	Variable	55,000	55,000	12 months	18%
Debenture 57	4/1/14	$0.0025	50,000	800	6 months	14%
Debenture 58	4/9/14	Variable	75,000	75,000	11 months	18%

Description	Date	Conversion Price	Original Principal Amount	Unpaid Principal Balance	Term	Interest Rate
Debenture 59	4/10/14	Variable	60,000	60,000	11 months	18%
Debenture 60	4/11/14	Variable	2,272	2,272	11 months	18%
Debenture 61	4/11/14	Variable	40,000	40,000	12 months	15%
Debenture 63	4/23/14	$0.04	10,500	10,500	12 months	14%
Debenture 64	5/8/14	$0.06	4,000	4,000	12 months	14%
Debenture 65	5/21/14	Variable	50,000	45,300	12 months	16%
Debenture 66	6/3/14	Variable	15,000	15,000	12 months	8%
Debenture 67	7/2/14	Variable	27,500	27,500	12 months	12%
Debenture 68	7/11/14	$0.01	25,000	25,000	12 months	14%
Debenture 69	7/18/14	Variable	27,500	27,500	12 months	12%
Debenture 70	7/24/14	$0.06	48,360	48,360	12 months	14%
Debenture 71	8/4/14	Variable	35,250	35,250	9 months	8%
Debenture 72	9/22/14	Variable	15,500	15,500	9 months	8%
Debenture 73	8/29/14	Variable	67,595	23,201	6 months	5%
Debenture 75	9/8/14	$0.01	25,000	25,000	12 months	14%
Debenture 76	9/9/14	$0.01	36,359	36,359	12 months	14%
Debenture 77	9/9/14	$0.0025	8,641	811	12 months	14%
Debenture 78	9/9/14	$0.0025	10,000	10,000	12 months	14%
Debenture 79	9/9/14	$0.0025	10,000	10,000	12 months	14%
Debenture 80	9/9/14	$0.0025	10,000	10,000	12 months	14%
Debenture 81	9/9/14	$0.0025	77,595	73,845	12 months	14%
Debenture 82	9/10/14	$0.01	8,000	8,000	12 months	14%
Debenture 83	9/10/14	$0.01	15,000	15,000	12 months	14%
Debenture 84	9/10/14	$0.01	25,000	25,000	12 months	14%
Debenture 85	9/17/14	Variable	5,000	5,000	6 months	5%
Debenture 86	9/22/14	Variable	32,500	32,500	9 months	8%
Debenture 87	9/24/14	Variable	140,995	140,995	6 months	5%
Debenture 88	10/1/14	$0.00025	16,378	13,878	12 months	14%
Debenture 89	10/27/14	Variable	57,422	45,622	12 months	8%
Debenture 90	10/27/14	$0.01	50,000	50,000	12 months	14%
Debenture 91	10/31/14	Variable	53,097	51,097	12 months	8%
Debenture 92	10/31/14	$0.0025	63,097	63,097	12 months	16%
Debenture 93	11/13/14	Variable	33,000	33,000	9 months	8%
Debenture 94	12/9/14	Variable	15,000	15,000	12 months	8%
Total at December 31, 2014			$2,066,713	$1,899,237
Less discount				(539,557)
				$1,359,680

The following is a schedule of long-term convertible debentures outstanding as of December 31, 2014:

Description	Date	Conversion Price	Original Principal Amount	Unpaid Principal Balance	Term	Interest Rate
Debenture 62	4/16/14	Variable	$37,520	$11,802	24 months	12%
Debenture 74	9/3/14	Variable	37,520	37,520	24 months	12%
Total at December 31, 2014			$75,040	$49,322
Less discount				(43,684)
				$5,638

As of December 31, 2014, several of the convertible debentures were delinquent.  We believe we have good relationships with the debenture holders, and continue to have discussions with them regarding the extension of maturity dates.

Accrued interest payable for the convertible debentures was $195,458 and $52,209 as of December 31, 2014 and 2013, respectively.