Note 14. Subsequent Events

Management of the Company performed an evaluation of all subsequent events that occurred as of the date these financial statements were issued to determine if they must be reported. Management of the Company has determined that the following subsequent events are required to be disclosed:

On August 13, 2015, the Company effectuated two convertible note agreements with two different investors with a principal amount of $25,000 for each note. The notes bear interest at a rate of 12% per annum and are convertible into shares of common stock at a conversion price equal to 60% of the lowest trade price in the 20 trading days prior to the conversion. The principal and accrued interest balances are due on August 13, 2016.

On September 4, 2015, the Company effectuated a convertible note agreement with an investor for a total principal of $69,000. The note bears interest at a rate of 10% per annum and is convertible into shares of common stock at a conversion price equal to 55% of the lowest trade price in the 20 trading days prior to the conversion. The principal and accrued interest balances are due on March 4, 2016.

On September 21, 2015, the Company effectuated a convertible note agreement with an investor for a total principal of $92,000. The note bears interest at a rate of 10% per annum and is convertible into shares of common stock at a conversion price equal to 50% of the lowest 3 trade price in the 20 trading days prior to the conversion. The principal and accrued interest balances are due on June 21, 2016

On September 15, 2015, the Company executed a term sheet for a new loan and security agreement with an investor. Under this agreement, the Company could initially borrow up to $1.0 million to fund working capital. The Company is under processing for due diligence and expect to receive the fund by middle of November 2015.

On October 5, 2015, the Company entered into promissory note with an investor for a total principal of $100,000 with interest at the rate of 26% per annum. The principal and accrued interest balances are due in 48 payments of $2,625 each to be paid within 12 months.

On October 9, 2015, the Company entered into a business loan with a creditor for a total principal of $150,000 with interest at the rate of 38% per annum. The principal and accrued interest balances are due in 220 payments of $900 each to be paid within 10 months.

On October 7, 2015, the Company retired a convertible note issued on April 1, 2015, by paying the principal amount of $64,000 and the accumulated interest of $24,925 on the note.

On October 27, 2015, the Company received a Demand for Arbitration from PC Drivers Headquarters, LP, the Company’s partner (“PC Drivers”). PC Drivers requested that an arbitration panel decide whether a release event had occurred under the Joint Development & License Agreement between the Company and PC Drivers (“JDLA”). PC Drivers alleged that the Company failed to pay certain vendors and breached the JDLA, allowing PC Drivers to obtain the source code held in escrow for the development of the JDLA. After a hearing was held on November 5, 2015, the arbitrator determined that a release event occurred, allowing PC Drivers access to the source code. Other aspects of the JDLA, including the payment to the Company of revenues earned under have yet to be determined and the Company intends to exhaust all legal remedies with respect to such claims. The Company is still in the process of evaluating the legal and business impact of this event.

During the three months ended October 31, 2015, three lenders converted an aggregate of $216,580 of principal and accrued interest owed under certain convertible note agreements into 44,854,970 shares of the Company's common stock. The notes were converted at a discount to the trading price of the common stock in accordance with the conversion terms under the different notes disclosed in Note 12.

During the three months ended October 31, 2015, the Company issued a total of 146,406 shares to consultants in exchange for services provided.