CONVERTIBLE NOTES PAYABLE

9 Months Ended

Jun. 30, 2015

Convertible Note Payable Abstract

CONVERTIBLE NOTES PAYABLE

NOTE 5 – CONVERTIBLE NOTES PAYABLE

On May 8, 2014 the Company entered into a $53,000 Convertible Promissory Note with an unrelated third party finance company to fund operating expenses in the form of $53,000 in cash. The Note shall accrued interest at 8% per annum with a 22% default rate and matured on February 12, 2015. The holder has the right to convert into common stock 180 days after issuance at a variable rate of 58% of the market price as defined in the debenture document. Upon default, the Note will be convertible at par or $0.001 per share. Accordingly, there has been beneficial conversion feature discount of $38,379 calculated on this note. As of June 30, 2015, the entire debt discount has been recorded as interest expense leaving a remainder of $-0-. As of June 30, 2015 there was a total of $5,746 in accrued interest assessed on this note of which $2,700 was expensed during the nine months ended June 30, 2015. During the nine months ended June 30, 2015, the note holder exercised their conversion rights and converted $36,347 of the note payable into 28,949,309 shares of common stock (see Note 8). As part of this transaction the proportional remaining debt discount of $2,069 related to this conversion was expensed.

On May 29, 2015 a third party paid Company expenses forming a convertible note payable of $22,000. The note has an original issue discount (OID) of $3,000 (12%) resulting in a face value of $25,000. The note is unsecured due 1 year from the date of issuance. The note is convertible with an anti-dilutive feature into common stock at a discount of 50% of the closing market price of the average 3 lowest days of the preceding 20 trading days. Accordingly, a debt discount of $22,000 has been charged against the note of which $1,929 was expensed during the three months ended June, 30, 2015. Likewise, $263 of the OID was expensed during the same three months. This $22,000 is a partial draw on a $600,000 financing agreement entered into with a third party. All draws pursuant to the financing agreement contain a 12% OID and are convertible at 50% as previously described. The convertibility of the note results in a derivative liability (see Note 6).