NOTE 7. CONVERTIBLE NOTES PAYABLE

During May 2016, the Company issued unsecured convertible promissory notes to various individuals for aggregate proceeds of $525,000, bearing an interest rate of 10% per annum, due 12 months from the date of issuance and convertible at a price of $0.0125 per share. The Company assessed the embedded conversion feature and determined that the intrinsic value of the beneficial conversion feature at inception exceeded the face value of this note and accordingly recorded at beneficial conversion feature of $395,200. Such beneficial conversion feature was accounted for as a debt discount, which is amortized to interest expense over the life of the note. During the three months ended September 30, 2016, the Company recorded amortization of debt discount and interest expense of $99,612 and $13,233, respectively, on these convertible notes. Total unamortized debt discount and interest accrued on the loans as of September 30, 2016 was $249,469 and $19,445, respectively. Total unamortized debt discount and interest accrued on the loans as of June 30, 2016 was $349,081 and $6,212, respectively.