4. Convertible Debenture	9 Months Ended
Sep. 30, 2015
Notes to Financial Statements
4. Convertible Debenture	4. Convertible Debenture On March 23, 2015, the Company issued $100,000 convertible debentures. The maturity date is September 23, 2015. The convertible debentures bear interest at a rate of eight-percent (8%) per annum. Until the ninetieth day after the issuance date the Company may pay the principal at a cash redemption premium of 130%, in addition to outstanding interest, without the Holder’s consent; from the 90^th day after the issuance date to the maturity date, the Company may pay the principal at a cash redemption premium of 135%, in addition to outstanding interest, without the Holder’s consent. After maturity date the Company may not repay the Note, in whole or in part, under any circumstance without obtaining the Holder’s consent. If the Company requests to repay the Note after the maturity date and obtain the Holder’s consent to do so, the Company must pay the Note’s outstanding principal at a cash redemption premium of 150%, in addition to outstanding interest. At the Holder’s option, principle and unpaid accrued interest shall be convertible into common stock at a rate of a 40% discount to the lowest price during the previous twenty trading days to the date of conversion. On the September 24, 2015, the Holder elected to convert a $10,000 into 83,292 shares of the Company’s Common Stock at $0.12006 per share. The remaining balance of $90,000 was overdue and outstanding as of September 30, 2015. On the October 14, 2015, the Holder elected to convert a $20,000 into 237,925 shares of the Company’s Common Stock at $0.08406 per share. On the November 3, 2015, the Holder elected to convert a $20,000 into 416,666 shares of the Company’s Common Stock at $0.048 per share. On April 1, 2015, the Company issued a $125,000 convertible redeemable note. The maturity date is March 31, 2016. The convertible debentures bear interest at a rate of eight-percent (8%) per annum. The Convertible price is equal to 58% of lowest trading price of the common stock as reported on the national Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the common stock may be traded in the future, for the twenty prior trading days including the day upon which a Notice of Conversion is received by the company. The Company received money on April 1, 2015. On the October 7, 2015, the Holder elected to convert a $7,500 plus accrued interest $311 into 96,121 shares of the Company’s Common Stock at $0.081258 per share. On June 5, 2015, the Company entered into and closed a securities purchase agreement (the “St. George SPA”) with St. George Investments LLC (“St. George”), pursuant to which the Company issued, sold to St. George a convertible promissory note in the principal amount of $110,000 (the “St. George Note”) for a purchase price of $100,000, and granted to St. George a number of warrants (St. George Warrants”) that are equal to $55,000, divided by the Conversion Price, with an exercise price of $1.00 that have an expiration date which is the last calendar day of the month in which the first anniversary of the Issue Date occurs. The St. George Note is convertible into the Company’s common stock at a conversion price equal to 62% of the lowest closing bid price of the common stock for the twenty trading days prior to conversion. Repayment of the St. George Note is due one year from the date of issuance. The St. George Note accrues interest at the rate of 8% per year, due at maturity. The Company may prepay the St. George Note, upon five days written notice and subject to the optional prepayment amount of 125% multiplied by the then outstanding balance on the St. George Note. On July 22, 2015, the Company entered a securities purchase agreement. The buyer wished to purchase from the Company securities consisting of the Company’s Convertible Debenture due three years from the respective date of issuance, which will be convertible into shares of the Company’s common stock in the aggregate principal amount of up to $335,000, for an aggregate purchase price of up to $301,500. Conversion price is 60% of the lowest closing bid price of Common stock for the 20 trading days immediately preceding the date of conversion of the Debentures. Three Debentures will be issued. “Signing Debenture” is the first of the three Debentures, in the principal amount of $85,000, to be issued by the Company on Signing Closing date. On July 22, 2015 the Company issued “Signing Debenture” for $85,000. The Company received the money on July 24, 2015. “Second Debenture” is the second of three Debentures, in the principal amount $125,000, which is issued by the Company at any time 61 to 100 days following the signing closing date. “Third Debenture” is the third of the three Debentures, in the principal amount of $125,000, to be issued by the Company at any time 61 to 100 days following the Second Debenture issued date. The Compound derivative comprises certain derivative features embedded in the host convertible debenture contracts including the conversion feature and warrants both of which contain anti-dilution protections. These instruments were combined into one compound derivative and bifurcated from the host instrument at fair value. The Company applied the Black-Scholes Merton valuation technique to fair value these derivatives because this technique embodies all of the assumptions necessary to fair value these compound derivative instruments. Since the derivative financial instruments are required to be recorded, both initially, and subsequently, at fair value, there were insufficient proceeds to allocate any amount to the convertible debentures and, accordingly, it has no carrying value on the date of inception. Additionally, proceeds were insufficient to record the fair values of the derivative financial instruments, resulting in initial interest expense of $295,581. It should be noted that the derivative instruments will be adjusted to fair value at each reporting date. The initial fair value of the derivative was $780,125. There was a gain on the fair value derivative of $348,614 and reclassified $12,497 as additional paid in capital on conversion, resulting in the end balance of $467,865.

4. Convertible Debenture

9 Months Ended

Sep. 30, 2015

4. Convertible Debenture

On March 23, 2015, the Company issued $100,000 convertible debentures. The maturity date is September 23, 2015. The convertible debentures bear interest at a rate of eight-percent (8%) per annum. Until the ninetieth day after the issuance date the Company may pay the principal at a cash redemption premium of 130%, in addition to outstanding interest, without the Holder’s consent; from the 90^th day after the issuance date to the maturity date, the Company may pay the principal at a cash redemption premium of 135%, in addition to outstanding interest, without the Holder’s consent. After maturity date the Company may not repay the Note, in whole or in part, under any circumstance without obtaining the Holder’s consent. If the Company requests to repay the Note after the maturity date and obtain the Holder’s consent to do so, the Company must pay the Note’s outstanding principal at a cash redemption premium of 150%, in addition to outstanding interest. At the Holder’s option, principle and unpaid accrued interest shall be convertible into common stock at a rate of a 40% discount to the lowest price during the previous twenty trading days to the date of conversion. On the September 24, 2015, the Holder elected to convert a $10,000 into 83,292 shares of the Company’s Common Stock at $0.12006 per share. The remaining balance of $90,000 was overdue and outstanding as of September 30, 2015. On the October 14, 2015, the Holder elected to convert a $20,000 into 237,925 shares of the Company’s Common Stock at $0.08406 per share. On the November 3, 2015, the Holder elected to convert a $20,000 into 416,666 shares of the Company’s Common Stock at $0.048 per share.

On April 1, 2015, the Company issued a $125,000 convertible redeemable note. The maturity date is March 31, 2016. The convertible debentures bear interest at a rate of eight-percent (8%) per annum. The Convertible price is equal to 58% of lowest trading price of the common stock as reported on the national Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the common stock may be traded in the future, for the twenty prior trading days including the day upon which a Notice of Conversion is received by the company. The Company received money on April 1, 2015. On the October 7, 2015, the Holder elected to convert a $7,500 plus accrued interest $311 into 96,121 shares of the Company’s Common Stock at $0.081258 per share.

On June 5, 2015, the Company entered into and closed a securities purchase agreement (the “St. George SPA”) with St. George Investments LLC (“St. George”), pursuant to which the Company issued, sold to St. George a convertible promissory note in the principal amount of $110,000 (the “St. George Note”) for a purchase price of $100,000, and granted to St. George a number of warrants (St. George Warrants”) that are equal to $55,000, divided by the Conversion Price, with an exercise price of $1.00 that have an expiration date which is the last calendar day of the month in which the first anniversary of the Issue Date occurs. The St. George Note is convertible into the Company’s common stock at a conversion price equal to 62% of the lowest closing bid price of the common stock for the twenty trading days prior to conversion. Repayment of the St. George Note is due one year from the date of issuance. The St. George Note accrues interest at the rate of 8% per year, due at maturity. The Company may prepay the St. George Note, upon five days written notice and subject to the optional prepayment amount of 125% multiplied by the then outstanding balance on the St. George Note.

On July 22, 2015, the Company entered a securities purchase agreement. The buyer wished to purchase from the Company securities consisting of the Company’s Convertible Debenture due three years from the respective date of issuance, which will be convertible into shares of the Company’s common stock in the aggregate principal amount of up to $335,000, for an aggregate purchase price of up to $301,500. Conversion price is 60% of the lowest closing bid price of Common stock for the 20 trading days immediately preceding the date of conversion of the Debentures. Three Debentures will be issued. “Signing Debenture” is the first of the three Debentures, in the principal amount of $85,000, to be issued by the Company on Signing Closing date. On July 22, 2015 the Company issued “Signing Debenture” for $85,000. The Company received the money on July 24, 2015. “Second Debenture” is the second of three Debentures, in the principal amount $125,000, which is issued by the Company at any time 61 to 100 days following the signing closing date. “Third Debenture” is the third of the three Debentures, in the principal amount of $125,000, to be issued by the Company at any time 61 to 100 days following the Second Debenture issued date.

The Compound derivative comprises certain derivative features embedded in the host convertible debenture contracts including the conversion feature and warrants both of which contain anti-dilution protections. These instruments were combined into one compound derivative and bifurcated from the host instrument at fair value. The Company applied the Black-Scholes Merton valuation technique to fair value these derivatives because this technique embodies all of the assumptions necessary to fair value these compound derivative instruments. Since the derivative financial instruments are required to be recorded, both initially, and subsequently, at fair value, there were insufficient proceeds to allocate any amount to the convertible debentures and, accordingly, it has no carrying value on the date of inception. Additionally, proceeds were insufficient to record the fair values of the derivative financial instruments, resulting in initial interest expense of $295,581. It should be noted that the derivative instruments will be adjusted to fair value at each reporting date. The initial fair value of the derivative was $780,125. There was a gain on the fair value derivative of $348,614 and reclassified $12,497 as additional paid in capital on conversion, resulting in the end balance of $467,865.