6. Convertible Notes Payable

3 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Convertible Notes Payable

Some of the Convertible Notes issued as described below included an anti-dilution provision that allowed for the adjustment of the conversion price. The Company considered the guidance provided by the FASB in “Determining Whether an Instrument Indexed to an Entity’s Own Stock,” the result of which indicates that the instrument is not indexed to the issuer’s own stock. Accordingly, the Company determined that, as the conversion price of the Notes issued in connection therewith could fluctuate based future events, such prices were not fixed amounts. As a result, the Company determined that the conversion features of the Notes issued in connection therewith are not considered indexed to the Company’s stock and characterized the value of the conversion feature of such notes as derivative liabilities upon issuance.

Convertible notes at March 31, 2015 and December 31, 2014 are summarized as follows:

	March 31, 2015		December 31, 2014
Convertible Notes Payable – Unrelated Party	$	9,000	$	9,000
Convertible Notes Payable – Related Party		165,000		165,000
Discount on notes		–		–
Total - Current	$	174,000	$	174,000

Convertible Notes Payable – Unrelated Party

On April 17, 2014, the Company entered into an unsecured Convertible Note (“Note 3”) in the amount of $9,000. Note 3 was convertible into Common Shares of the Company at $0.005 per share at the option of the holder. Note 3 bore interest at eight percent per year, matured on June 17, 2014, and was unsecured. All principal and unpaid accrued interest was due at maturity. As of March 31, 2015, the Company is in default on Note 3. The balance of the note was $9,000 and $9,000 at March 31, 2015 and December 31, 2014, respectively.

Convertible Notes Payable – Related Party

On April 21, 2008, the Company entered into an unsecured Convertible Debenture (“Debenture 1”) with a shareholder in the amount of $150,000. Debenture 1 was convertible into Common Shares of the Company at $0.03 per share at the option of the holder no earlier than August 21, 2008. Debenture 1 bore interest at 12% per year, matured in August 2009, and was unsecured. All principal and unpaid accrued interest was due at maturity. In conjunction with the Debenture 1, the Company also issued warrants to purchase 5,000,000 shares of the Company’s Common Stock at $0.03 per share. The warrants expired on April 20, 2013. As a result of issued warrants, the Company recorded a $150,000 debt discount during 2008 which has been fully amortized. The Company is in default on Debenture 1, and the warrants have not been exercised. The balance of Debenture 1 was $150,000 and $150,000 at March 31, 2015 and December 31, 2014, respectively.

On March 11, 2009, the Company entered into an unsecured Convertible Debenture (“Debenture 2”) with a shareholder in the amount of $15,000. Debenture 2 was convertible into Common Shares of the Company at $0.03 per share at the option of the holder. Debenture 2 bore interest at 12% per year, matured on March 11, 2014, and was unsecured. All principal and unpaid accrued interest was due at maturity. The balance of Debenture 2 was $15,000 and $15,000 at March 31, 2015 and December 31, 2014, respectively.

The following is a schedule showing the future minimum loan payments in the future 5 years.

Year ending December 31,
2015	$	174,000
2016		0
2017		0
2018		0
2019		0
Total	$	174,000