NOTE G – Convertible Promissory Notes Payable

As of December 31, 2014, the Company has outstanding six (6) security purchase agreements with accredited investors for the sale of convertible promissory notes bearing interest at 8.0% - 12%, per annum. Pursuant to the convertible promissory notes the investor may convert the amount paid towards the Securities Purchase Agreements into common stock of the company at a conversion price equal to 50% - 55% of the average of the 3 lowest volume weighted average trading prices during the 10 day period ending on the latest complete trading day prior to the conversion date. Trading price means the closing bid price on the OTC Market Over-the-Counter Bulletin Board Pink Sheets.

The conversion rights embedded in the Notes are accounted for as a derivative financial instruments because of the down round feature of the conversion price. The beneficial conversion feature was valued at the date of issuance using the Black-Scholes-Merton options pricing model with the following assumptions: risk free interest rates ranging from .07% to .15%, contractual expected life of nine (9) to twelve (12) months, expected volatility of 185% to 236%, calculated using the historical closing price of the company's common stock, and dividend yield of zero, resulting in fair market value.

The Company had convertible debentures outstanding as follows:


December 31, 2014	Outstanding Balance of Convertible Debenture		Unamortized Discount		Net of Principal and Unamortized Discount

Convertible Debentures
January 10, 2014 - Debenture		$ 7,150		––		$ 7,150
February 28, 2014 – Debenture		13,910		(2,063)		11,847
April 2, 2014 – Debenture		20,000		(6,000)		14,000
June 18, 2014 – Settlement Agreement		58,420		(16,228)		42,192

Total Convertible Debentures		$ 99,480		(24,291)		$ 75,189

December 31, 2013	Outstanding Balance of Convertible Debenture		Unamortized Discount		Net of Principal and Unamortized Discount

Convertible Debentures
July 1, 2013 – Debenture		$ 41,500		$ (13,734)		$ 27,766
August 6, 2013 - Debenture		22,500		(10,000)		12,500
September 9, 2013 - Debenture		27,500		(15,278)		12,222
October 8, 2013 - Debenture		26,500		(17,667)		8,833
October 8, 2013 – Debenture		15,700		(10,167)		5,533
November 11, 2013 - Debenture		4,000		(3,911)		89
December 3, 2013 - Debenture		32,500		(28,889)		3,611

Total Convertible Debentures		$ 170,200		$ (99,646)		$ 70,554