DEBT PURCHASE AGREEMENT

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Note 11. DEBT PURCHASE AGREEMENT

The Company entered into that certain Debt Purchase Agreement (the “Debt Purchase Agreement”), dated December 31, 2015, by and among the Company, TCA and Rockwell Capital Partners (“Rockwell”), pursuant to which TCA assigned to Rockwell $300,000 of debt (the “Assigned Debt”) evidenced by that certain Second Replacement Revolving Note, dated as of April 1, 2015, in the principal amount of $2,828,037.03 made by the Company to TCA. Under the Debt Purchase Agreement, the Assigned Debt will be assigned from TCA to Rockwell in six tranches of $50,000 each, with the first tranche having been assigned with the execution of the Debt Purchase Agreement, and tranches two though six, taking place 30 days after the assigned of the prior $50,000 tranche assignment.

On January 25, 2016, pursuant to the terms and conditions of the Debt Purchase Agreement, the Company made that certain Fourth Replacement Revolving Note A, dated January 21, 2016, in the principal sum of $50,000 (the “Third Replacement Revolving Note A”) that certain Fourth Replacement Revolving Note A, dated January 21, 2016, in the principal sum of $1,867,589.48 (collectively, the “Two Fourth Replacement Revolving Notes”). Two Fourth Replacement Revolving Notes replace the Two Third Replacement Revolving Notes.

The Two Fourth Replacement Revolving Notes pay interest at a rate of 11% per annum. At any time while either of the Two Fourth Replacement Revolving Notes are outstanding, upon the occurrence of an Event of Default (as defined in the Two Fourth Replacement Revolving Notes), TCA or any other holder of either of the Two Fourth Replacement Revolving Notes, may convert all or any portion of the outstanding principal accrued and unpaid interest and any other sums due and payable or under any of the other Transaction Documents (such total amount, the “Conversion Amount”) into shares of Common Stock of the Company (the “Conversion Shares”) at a price equal to: (i) the Conversion Amount (the numerator); divided by(ii) eighty-five percent (85%) of the lowest volume weighted average price of the Company’s Common Stock during the five (5) trading days immediately prior to the conversion date, as indicated in the conversion notice (the denominator) (the “Conversion Price”).

On January 4, 2016, the Company received $50,000 in the first purchase tranche from assignee of the debt. These proceeds were used to repay a portion of the revolving loan balance.

On January 4, 2016, the assignee of the debt purchase agreement converted $5,400 of the principle due to 2,000,000 shares of the Company’s common stock at a conversion price of $.0027 per share.

On January 6, 2016, the assignee of the debt purchase agreement converted $10,080 of the principle due to 4,000,000 shares of the Company’s common stock at a conversion price of $.00252 per share.

On January 8, 2016, the assignee of the debt purchase agreement converted $10,800 of the principle due to 6,000,000 shares of the Company’s common stock at a conversion price of $.0018 per share.

On January 12, 2016, the assignee of the debt purchase agreement converted $10,560 of the principle due to 8,000,000 shares of the Company’s common stock at a conversion price of $.00132 per share.

On January 15, 2016, the assignee of the debt purchase agreement converted $9,600 of the principle due to 8,000,000 shares of the Company’s common stock at a conversion price of $.0012 per share.

On January 21, 2016, the assignee of the debt purchase agreement converted $3,560 of the principle due to 3,955,000 shares of the Company’s common stock at a conversion price of $.0009 per share.

On January 27, 2016, the Company received proceeds of $50,000 in a second purchase tranche from assignee of the debt. These proceeds were used to repay a portion of the revolving loan balance.

On January 27, 2016, the assignee of the debt purchase agreement converted $7,800 of the principle due to 10,000,000 shares of the Company’s common stock at a conversion price of $.00078 per share.

On February 3, 2016, the assignee of the debt purchase agreement converted $6,600 of the principle due to 10,000,000 shares of the Company’s common stock at a conversion price of $.00066 per share.

On February 5, 2016, the assignee of the debt purchase agreement converted $6,600 of the principle due to 10,000,000 shares of the Company’s common stock at a conversion price of $.00066 per share.

On February 9, 2016, the assignee of the debt purchase agreement converted $6,600 of the principle due to 10,000,000 shares of the Company’s common stock at a conversion price of $.00066 per share.

On February 11, 2016, the assignee of the debt purchase agreement converted $6,600 of the principle due to 10,000,000 shares of the Company’s common stock at a conversion price of $.00066 per share.

On February 16, 2016, the assignee of the debt purchase agreement converted $5,400 of the principle due to 10,000,000 shares of the Company’s common stock at a conversion price of $.00054 per share.

On February 19, 2016, the assignee of the debt purchase agreement converted $7,020 of the principle due to 13,000,000 shares of the Company’s common stock at a conversion price of $.00054 per share.

On February 24, 2016, the assignee of the debt purchase agreement converted $5,780 of the principle due to 10,704,000 shares of the Company’s common stock at a conversion price of $.00054 per share.

On March 8, 2016, the Company received proceeds of $40,000 in a third purchase tranche from assignee of the debt. These proceeds were used to repay a portion of the revolving loan balance.

On March 9, 2016, the assignee of the debt purchase agreement converted $5,040 of the principle due to 14,000,000 shares of the Company’s common stock at a conversion price of $.00036 per share.

On March 11, 2016, the assignee of the debt purchase agreement converted $5,400 of the principle due to 15,000,000 shares of the Company’s common stock at a conversion price of $.00036 per share.

On March 16, 2016, the assignee of the debt purchase agreement converted $3,600 of the principle due to 15,000,000 shares of the Company’s common stock at a conversion price of $.00024 per share.

On March 22, 2016, the assignee of the debt purchase agreement converted $3,600 of the principle due to 15,000,000 shares of the Company’s common stock at a conversion price of $.00024 per share.

On March 24, 2016, the assignee of the debt purchase agreement converted $2,700 of the principle due to 15,000,000 shares of the Company’s common stock at a conversion price of $.00018 per share.

On March 29, 2016, the assignee of the debt purchase agreement converted $3,240 of the principle due to 18,000,000 shares of the Company’s common stock at a conversion price of $.00018 per share.

On March 30, 2016, the assignee of the debt purchase agreement converted $3,240 of the principle due to 18,000,000 shares of the Company’s common stock at a conversion price of $.00018 per share.

On April 1, 2016, the assignee of the debt purchase agreement converted $3,240 of the principle due to 18,000,000 shares of the Company’s common stock at a conversion price of $.00018 per share.

On April 5, 2016, the assignee of the debt purchase agreement converted $2,400 of the principle due to 20,000,000 shares of the Company’s common stock at a conversion price of $.00012 per share.

On April 6, 2016, the assignee of the debt purchase agreement converted $2,400 of the principle due to 20,000,000 shares of the Company’s common stock at a conversion price of $.00012 per share.

On April 8, 2016, the assignee of the debt purchase agreement converted $2,520 of the principle due to 21,000,000 shares of the Company’s common stock at a conversion price of $.00012 per share.

On April 11, 2016, the assignee of the debt purchase agreement converted $2,620 of the principle due to 21,833,000 shares of the Company’s common stock at a conversion price of $.00012 per share.

On May 2, 2016, the Company received proceeds of $20,000 in a fourth purchase tranche from assignee of the debt. These proceeds were used to repay a portion of the revolving loan balance.

On May 4, 2016, the assignee of the debt purchase agreement converted $2,640 of the principle due to 22,000,000 shares of the Company’s common stock at a conversion price of $.00012 per share.

On May 9, 2016, the assignee of the debt purchase agreement converted $2,640 of the principle due to 22,000,000 shares of the Company’s common stock at a conversion price of $.00012 per share.

On May 10, 2016, the assignee of the debt purchase agreement converted $3,240 of the principle due to 27,000,000 shares of the Company’s common stock at a conversion price of $.00012 per share.

On May 12, 2016, the assignee of the debt purchase agreement converted $3,240 of the principle due to 27,000,000 shares of the Company’s common stock at a conversion price of $.00012 per share.

On May 17, 2016, the assignee of the debt purchase agreement converted $3,240 of the principle due to 27,000,000 shares of the Company’s common stock at a conversion price of $.00012 per share.

On May 18, 2016, the assignee of the debt purchase agreement converted $1,800 of the principle due to 30,000,000 shares of the Company’s common stock at a conversion price of $.00006 per share.

On May 20, 2016, the assignee of the debt purchase agreement converted $1,800 of the principle due to 30,000,000 shares of the Company’s common stock at a conversion price of $.00006 per share.

On May 24, 2016, the assignee of the debt purchase agreement converted $1,760 of the principle due to 29,330,000 shares of the Company’s common stock at a conversion price of $.00006 per share.

Debt purchase agreement at June 30, 2017 and March 31, 2017 consist of the following:

	June 30,			March 31,
	2017			2017
Debt purchase agreement dated January 21, 2016; non-interest bearing; due April 28, 2017; convertible into shares of common stock at 60% of the lowest trading price 10 days prior to conversion		(360	)		(360	)
Unamortized debt discount		-			-
Debt purchase agreement, net discount	$	(360	)	$	(360	)

A rollfoward of the debt purchase agreement from March 31, 2015 to June 30, 2017 is below:

Debt purchase agreement, net discount March 31, 2015	$	-
Issued for cash		140,000
Conversion to common stock		(126,820	)
Debt discount related to new convertible notes		(140,000	)
Amortization of debt discounts		127,936
Debt purchase agreement, net discount March 31, 2016		1,116
Issued for cash		20,000
Conversion to common stock		(33,540	)
Debt discount related to new convertible notes		(20,000	)
Amortization of debt discounts		32,064
Debt purchase agreement, net discount March 31, 2017 and June 30, 2017	$	(360	)

As of June 30, 2017, the net balance of the debt purchase agreement is $(360). See Note 12 on conversion feature of convertible debt recorded as a derivative liability.