Note 7 - Notes and Loans Payable

3 Months Ended

Mar. 31, 2017

Notes

Note 7 - Notes and Loans Payable

NOTE 7 – Notes and Loans Payable

Notes and loans payable consist of:

	March 31,  2017	December 31,  2016
Convertible note payable to lender dated February 1, 2016 (as amended                 December 21, 2016), interest at 12% per annum, due February 1,         2017, convertible into Common Stock at a Conversion Price equal to the         Lesser of (i) $0.01 per share or (ii) 50% of the lowest Bid Price of the         Common Stock for the 30 Trading Days preceding the Conversion Date               –fully converted at February 13, 2017	$                    -		$          3,571
Convertible notes payable to lender dated from March 15, 2016 (as amended June 2, 2016) to February 27, 2017, interest at rates ranging from 12% to 14.99% per annum, due from April 6, 2017 to July 28, 2017, partially converted at March 22, 2017 and the remaining notes convertible into Common Stock at a Conversion Price equal to the lesser of (i) $0.01 per share or (ii) 50% of the lowest Closing Bid Price of the Common Stock for the 30 Trading Days preceding the Conversion Date – net of         unamortized debt discount of $9,038 and $34,411, respectively	24,712		39,839
Convertible notes payable to lender dated February 1, 2016 (as amended         December 21, 2016) and December 21, 2016, interest at 12% per         annum, due February 1, 2017 and May 20, 2017, convertible into         Common Stock at a Conversion Price equal to the lesser of (i) $0.01 per         share or (ii) 50% of the lowest Closing Bid Price of the Common Stock         for the 30 Trading Days preceding the Conversion Date – net of         unamortized debt discount of $16,667 and $58,095	48,333		6,905
Note payable to brother of Marco Alfonsi, Chief Executive Officer of the Company, interest at 10% per annum, due August 22, 2016 (now past due)	5,000		5,000
Note payable to Pasquale and Rosemary Ferro, interest at 14.99% per annum, due September 16, 2017	50,000		-
Loan payable to Mckenzie Webster Limited (“MWL”), an entity controlled by the Chairman of the Board of Directors of the Company, non-interest bearing, due on demand	3,000		3,000
Total	$         131,045		$         58,315

The derivative liability of the convertible notes payable at March 31, 2017 consisted of:

	Face Value		Derivative Liability
Convertible notes payable to lender dated from March 15, 2016 (as amended June 2, 2016) to February 27, 2017, due from April 6, 2017 to July 28, 2017		$33,750		$56,675
Convertible notes payable to lender dated February 1, 2016 (as amended         December 21, 2016) and December 21, 2016, due February 1, 2017 and         May 20, 2017		65,000		108,834
Totals	$	98,750	$	165,509

The above convertible notes contain a variable conversion feature based on the future trading price of the Company common stock. Therefore, the number of shares of common stock issuable upon conversion of the notes is indeterminate. Accordingly, we have recorded the fair value of the embedded conversion features as a derivative liability at the respective issuance dates (or amendment dates) of the notes ($23,919 total for the three months ended March 31, 2017) and charged the applicable amounts to debt discounts ($9,500 total for the three months ended March 31, 2017) and the remainder to other expense ($14,419 total for the three months ended March 31, 2017). The increase (decrease) in the fair value of the derivative liability from the respective issuance dates (or amendment dates) of the notes to the measurement date ($62,949 total decrease the three months ended March 31, 2017) is charged (credited) to other expense (income). The fair value of the derivative liability of the notes is measured at the respective issuance dates and quarterly thereafter using the Black Scholes option pricing model. Assumptions used for the calculations of the derivative liability of the notes at March 31, 2017 include (1) stock price of $0.021 per share, (2) exercise price of $0.01 per share, (3) terms ranging from 6 days to 119 days, (4) expected volatility of 265% and (5) risk free interest rates ranging from 0.00% to 0.81%.