A convertible note for $78,500 issued on February 2, 2016, bears interest at 8.0% per annum until paid or converted and matures November 2, 2016. Any or all of the outstanding balance of the note may be converted at the option of the holder at any time into common stock of the company at a variable conversion price of 65% of market price. Upon the issuance of the convertible note, the Company bifurcated the embedded conversion feature and recorded an initial derivative liability of $41,974 (the estimated fair market value at the date of grant based on the Binomial option pricing model) all of which was allocated as debt discount.

During 2015 the Company agreed to provide unsecured promissory notes with an unrelated party for $37,500. The note is non-interest bearing and is due on June 16, 2016. The note has not been paid and is in default at June 30, 2016. The note has a future conversion right that allows the holder to convert the principal balance into the Company's common stock at the lender's sole discretion at 50% of the then market price per share. In accordance with ASC 470, the Company has analyzed the beneficial nature of the conversion terms and determined that a beneficial conversion feature (BCF) exists because the effective conversion price was less than the quoted market price at the time of the issuance. The Company calculated the value of the BCF using the intrinsic method as stipulated in ASC 470. The BCF of $37,500 had been recorded as a discount to the notes payable and to Additional Paid-in Capital.

For the six months June 30, 2016, the Company has amortized $57,119 ($0 in 2015) of the discount arising from the embedded derivative and beneficial conversion feature of the two outstanding notes. The aggregate carrying value of the convertible notes is as follows:

		June 30, 2016		December 31, 2015
Face amount of the notes	$	(78,500)	$	37,500
Unamortized discount		(26,531)		(34,426)
Net balance	$	51,969	$	3,074