Note 4 - Convertible Debentures

12 Months Ended

Dec. 31, 2015

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.

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. Related to these note issuances, the Company recorded $477,368 in debt discounts for beneficial conversion features and $1,127,938 in debt discounts for derivatives. These debt discounts are being amortized over the term of the notes to interest expense. 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 short-term 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%
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%

Description	Date	Conversion Price	Original Principal Amount	Unpaid Principal Balance	Term	Interest Rate

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)

Net				$ 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)

Net				$ 5,638

During the year ended December 31, 2015, the Company issued various convertible debentures in the total amount of $1,864,501, as follows: $1,675,947 cash; $24,800 original issue discount; $10,000 transfer from short-term notes payable; $128,460 transfer from stockholder advances; and $25,293 for accrued interest payable. Related to these note issuances, the Company recorded $407,613 in debt discounts for beneficial conversion features and $1,227,525 in debt discounts for derivatives. These debt discounts are being amortized over the term of the notes to interest expense. In addition, in 2015, $286,395 cash payments were made to reduce the principal balance of convertible debentures and a total principal balance of $311,768 was extinguished through the conversion of principal to common shares of the Company. The debentures issued in 2015 are unsecured and bear simple interest ranging from 8% to 15% 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 $0.001 to $0.0145 per share in addition to variable discounted pricing based conversion prices defined in the underlying agreements.

The following is a schedule of short-term convertible debentures outstanding as of December 31, 2015:

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 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 22	9/4/13	Variable	50,000	50,000	12 months	8%
Debenture 31	10/3/13	Variable	3,750	3,750	12 months	8%
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	22,800	6 months	15%
Debenture 37	11/29/13	Variable	25,000	25,000	6 months	15%
Debenture 39	12/2/13	Variable	25,000	15,000	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%
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	19,475	12 months	15%
Debenture 62	4/16/14	Variable	30,000	8,503	24 months	12%
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	50,000	12 months	15%
Debenture 68	7/11/14	$0.01	25,000	7,500	12 months	14%
Debenture 70	7/24/14	$0.06	48,360	48,360	12 months	14%
Debenture 73	8/29/14	Variable	67,595	19,966	6 months	5%
Debenture 74	9/3/14	Variable	37,520	37,520	24 months	12%
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 85	9/17/14	Variable	5,000	5,000	6 months	5%
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 90	10/27/14	$0.01	50,000	50,000	12 months	14%
Debenture 92	10/31/14	$0.0025	63,097	63,097	12 months	16%
Debenture 96	3/27/15	Variable	128,460	111,670	12 months	8%
Debenture 97	1/18/15	Variable	7,500	7,500	12 months	14%
Debenture 98	2/12/15	$0.0145	12,500	12,500	12 months	14%
Debenture 99	3/31/15	$0.01	112,972	112,972	12 months	14%
Debenture 100	2/2/15	Variable	79,115	79,115	12 months	12%
Debenture 101	2/2/15	Variable	45,000	45,000	12 months	12%
Debenture 102	2/24/15	$0.0025	10,000	9,000	12 months	14%
Debenture 104	3/12/15	Variable	25,000	25,000	12 months	14%
Debenture 105	3/21/15	$0.0025	30,000	30,000	12 months	14%
Debenture 106	1/5/15	Variable	15,000	15,000	6 months	15%
Debenture 107	1/5/15	Variable	15,000	5,300	6 months	15%
Debenture 109	2/11/15	Variable	25,000	25,000	12 months	8%
Debenture 110	2/26/15	Variable	16,000	16,000	12 months	8%
Debenture 111	3/4/15	Variable	27,500	27,500	12 months	8%
Debenture 112	3/1/15	$0.0015	10,000	10,000	12 months	14%
Debenture 114	4/2/15	Variable	26,947	24,447	12 months	8%
Debenture 115	4/2/15	$0.001	23,660	23,660	12 months	14%
Debenture 116	3/31/15	Variable	14,000	14,000	6 months	15%
Debenture 117	4/14/15	Variable	20,000	20,000	6 months	15%
Debenture 118	4/27/15	Variable	25,000	25,000	12 months	14%
Debenture 119	3/31/15	Variable	14,000	14,000	6 months	15%
Debenture 120	5/27/15	$0.0025	7,500	7,500	12 months	14%
Debenture 121	7/2/15	$0.0025	175,000	175,000	12 months	14%
Debenture 122	7/3/15	Variable	238,894	221,894	12 months	8%
Debenture 124	9/4/15	Variable	106,789	58,289	12 months	8%
Debenture 126	9/8/15	$0.0025	112,663	112,663	12 months	14%
Debenture 128	9/15/15	$0.0025	10,000	10,000	12 months	14%
Debenture 129	9/8/15	$0.0050	2,000	2,000	12 months	14%
Debenture 130	10/12/15	$0.0050	15,000	15,000	12 months	14%
Debenture 131	10/12/15	$0.0050	20,000	20,000	12 months	14%
Debenture 132	10/15/15	$0.0025	10,750	10,750	12 months	14%
Debenture 134	10/20/15	$0.0050	10,000	10,000	12 months	14%
Debenture 135	12/5/15	$0.0050	10,000	10,000	12 months	14%
Debenture 137	12/18/15	$0.0050	20,000	20,000	12 months	14%

Total at December 31, 2015			$ 3,053,312	2,765,246
Less discount				(377,265)

Net				$ 2,387,981

The following is a schedule of long-term convertible debentures outstanding as of December 31, 2015:

Description	Date	Conversion Price	Original Principal Amount	Unpaid Principal Balance	Term	Interest Rate

Debenture 123	8/24/15	Variable	$ 34,650	$ 34,650	24 months	8%
Debenture 125	9/4/15	Variable	105,000	105,000	24 months	8%
Debenture 127	9/25/15	Variable	50,000	50,000	24 months	8%
Debenture 133	10/20/15	Variable	100,000	100,000	24 months	8%
Debenture 136	12/4/15	Variable	160,000	160,000	24 months	8%

Total at December 31, 2015			$ 449,650	449,650
Less discount				(387,289)

Net				$ 62,361

As of December 31, 2015, $1,978,133 of the convertible debentures were delinquent. We believe we have good relationships with the debenture holders, and we continue to have discussions with them regarding the extension of maturity dates or settlement of amounts due. Several of the convertible debentures have default interest rates that apply when the debentures are delinquent, and we have accrued default interest where applicable. In addition, we have been unable to complete certain conversions of convertible debentures during the year ended December 31, 2015, pending the increase in the number of authorized shares of our common stock, and have accrued applicable penalties as of December 31, 2015.

Accrued interest payable for the convertible debentures, including accrued default interest and penalties, where applicable, totaled $1,141,478 and $195,458 as of December 31, 2015 and 2014, respectively.