Note 8. Convertible Notes Payable

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

Note 8. Convertible Notes Payable

Convertible notes payable consisted of the following at December 31, 2015 and December 31, 2014:

	December 31, 2015			December 31, 2014
Convertible note dated April 1, 2010, bearing interest at 10% per annum, matured on March 31, 2013 and convertible into shares of common stock at $0.01 per share. This note is in default.	$	14,138		$	12,808
Convertible note dated May 15, 2010, bearing interest at 10% per annum, matured on March 31, 2013 and convertible into shares of common stock at $0.01 per share. This note is in default.		7,249			6,567
Convertible note dated October 31, 2012, bearing interest at 10% per annum, matures on April 30, 2014 and convertible into shares of common stock at $0.02 per share. This note is in default.		64			62
Convertible note dated April 1, 2013, bearing interest at 10% per annum, matures on March 31, 2015 and convertible into shares of common stock at $0.01 per share. This note is in default.		1,147			5,999
Convertible note dated June 30, 2013, bearing interest at 10% per annum, matures on June 30, 2015 and convertible into shares of common stock at $0.01 per share.		69,068			136,969
Convertible note dated September 30, 2013, bearing interest at 10% per annum, matures on September 30, 2015 and convertible into shares of common stock at $0.01 per share.		312,310			312,310
Convertible note dated June 30, 2014, bearing interest at 10% per annum, matures on June 30, 2016 and convertible into shares of common stock at $0.01 per share.		162,946			162,947
Convertible note dated December 31, 2014, bearing interest at 10% per annum, matures on December 31, 2016 and convertible into shares of common stock at $2.00 per share.		202,160			202,160
Convertible note dated March 31, 2015, bearing interest at 10% per annum, maturing on March 31, 2017, and convertible into shares of common stock at $1.10 per share.		87,970			—
Convertible note dated June 30, 2015, bearing interest at 10% per annum, maturing on June 30, 2017, and convertible into shares of common stock at $0.15 per share.		81,813			—
Convertible note dated September 30, 2015, bearing interest at 10% per annum, maturing on September 30, 2018, and convertible into shares of common stock at $0.06 per share.		326,402			—
Convertible note dated December 31, 2015, bearing interest at 10% per annum, maturing on December 31, 2018, and convertible into shares of common stock at $0.01 per share.		103,595			—
Total convertible notes payable	$	1,368,861		$	839,822
Less: current portion of convertible notes payable		(769,081	)		(474,716	)
Less: discount on noncurrent convertible notes payable		(578,194	)		(355,753	)
Convertible notes payable, net of discount	$	21,586		$	9,353
Current portion of convertible notes payable		769,081			474,716
Less: discount on current portion of convertible notes payable		(286,267	)		(280,892	)
Current portion of convertible notes payable, net of discount	$	482,814		$	193,824

Accrued interest payable associated with convertible notes payable was $152,482 and $76,839 as of December 31, 2015 and 2014, respectively. During the years ended December 31, 2015 and 2014, we recognized statutory interest expense of $100,282 and $56,005, respectively.

The convertible note payable dated April 1, 2013 had an original beneficial conversion discount of $96,463 and a remaining beneficial conversion discount of $0 as of December 31, 2015 and 2014. During the years ended December 31, 2015 and 2014, we recognized interest expense related to the amortization of the beneficial conversion discount of $0 and $14,530, respectively.

The convertible note payable dated June 30, 2013 had an original beneficial conversion discount of $167,185 and a remaining beneficial conversion discount of $0 and $29,904 as of December 31, 2015 and 2014, respectively. During the years ended December 31, 2015 and 2014, we recognized interest expense related to the amortization of the beneficial conversion discount of $29,904 and $95,141, respectively.

The convertible note payable dated September 30, 2013 had an original beneficial conversion discount of $312,310 and a remaining beneficial conversion discount of $0 and $250,980 as of December 31, 2015 and 2014, respectively. During the years ended December 31, 2015 and 2014, we recognized interest expense related to the amortization of the beneficial conversion discount of $250,980 and $95,141, respectively.

The convertible note payable dated June 30, 2014 had an original beneficial conversion discount of $162,946 and a remaining beneficial conversion discount of $108,369 and $153,601 as of December 31, 2015 and 2014, respectively. During the years ended December 31, 2015 and 2014, we recognized interest expense related to the amortization of the beneficial conversion discount of $45,232 and $9,345, respectively.

The convertible note payable dated December 31, 2014 had an original beneficial conversion discount of $202,160 and a remaining beneficial conversion discount of $202,160 and $177,898 as of December 31, 2015 and 2014, respectively. During the years ended December 31, 2015 and 2014, we recognized interest expense related to the amortization of the beneficial conversion discount of $24,262 and $0, respectively.

The convertible note payable dated March 31, 2015 had an original beneficial conversion discount of $87,970 and a remaining beneficial conversion discount of $81,085 as of December 31, 2015. During the year ended December 31, 2015, we recognized interest expense related to the amortization of the beneficial conversion discount of $6,885.

The convertible note payable dated June 30, 2015 had an original beneficial conversion discount of $81,813 and a remaining beneficial conversion discount of $76,980 as of December 31, 2015. During the year ended December 31, 2015, we recognized interest expense related to the amortization of the beneficial conversion discount of $4,833.

The convertible note payable dated September 30, 2015 had an original beneficial conversion discount of $326,402 and a remaining beneficial conversion discount of $316,533 as of December 31, 2015. During the year ended December 31, 2015, we recognized interest expense related to the amortization of the beneficial conversion discount of $9,869.

The convertible note payable dated December 31, 2015 had an original beneficial conversion discount of $103,595 and a remaining beneficial conversion discount of $103,595 as of December 31, 2015. During the year ended December 31, 2015, we recognized interest expense related to the amortization of the beneficial conversion discount of $0.

All principal along with accrued interest is payable on the maturity date. The notes are convertible into common stock at the option of the holder. The holder of the notes cannot convert the notes into shares of common stock if that conversion would result in the holder owning more than 4.9% of the outstanding stock of the Company.

Advances Refinanced into Convertible Promissory Notes

During the year ended December 31, 2015, the Company has signed Convertible Promissory Notes that refinance non-interest bearing advances into convertible notes payable. The Convertible Promissory Notes bear interest at 10% per annum and are payable along with accrued interest. The Convertible Promissory Note and unpaid accrued interest are convertible into common stock at the option of the holder.

Date Issued	Maturity Date	Interest Rate			Conversion Rate		Amount of Note		Beneficial Conversion Feature
March 31, 2015	March 31, 2017		10	%	$	1.10	$	87,970	$	87,970
June 30, 2015	June 30, 2017		10	%		0.15		81,813		81,813
September 30, 2015	September 30, 2018		10	%		0.06		326,402		326,402
December 31, 2015	December 31, 2018		10	%		0.01		103,595		103,595
							$	599,780	$	599,780

During the year ended December 31, 2014, the Company signed convertible promissory notes, which refinanced non-interest bearing advances in the amount of $365,107 into convertible notes payable. These notes are payable along with interest at maturity and bear interest at 10% per annum. The holder of the notes may not convert the convertible promissory note into common stock if that conversion would result in the holder owing more than 4.99% of the number of shares of common stock outstanding on the conversion date. The convertible promissory notes are convertible into common stock at the option of the holder.

Date Issued	Maturity Date	Interest Rate			Conversion Rate Per Share		Amount of Note
June 30, 2014	June 30, 2016		10	%	$	0.005	$	162,947
December 31, 2014	December 31, 2016		10	%		2.00		202,160
							$	365,107

Conversions to Common Stock

Year Ended December 31, 2015

During year ended December 31, 2015, the holders of the Convertible Note Payable dated April 1, 2013 elected to convert principal and accrued interest in the amounts show below into share of common stock at a rate of $0.01 per share. On the conversion date, the unamortized discount related to the principal amount converted was immediately amortized to interest expense. No gain or loss was recognized on the conversions as they occurred within the terms of the agreement that provided for conversion.

Date	Amount Converted		Number of Shares Issued		Discount Amortized
January 12, 2015	$	300		30,000	$	—
January 14, 2015		300		30,000		—
January 27, 2015		320		32,000		—
February 6, 2015		350		35,000		—
February 16, 2015		350		35,000		—
February 16, 2015		350		35,000		—
February 16, 2015		350		35,000		—
February 26, 2015		400		40,000		—
February 26, 2015		400		40,000		—
March 11, 2015		1,900		190,000		—
Total	$	5,020		502,000	$	—

During year ended December 31, 2015, the holders of the Convertible Note Payable dated June 30, 2013 elected to convert principal and accrued interest in the amounts show below into share of common stock at a rate of $0.01 per share. On the conversion date, the unamortized discount related to the principal amount converted was immediately amortized to interest expense. No gain or loss was recognized on the conversions as they occurred within the terms of the agreement that provided for conversion.

Date	Amount Converted		Number of Shares Issued		Discount Amortized
March 12, 2015	$	1,900		190,000	$	—
April 1, 2015		2,000		200,000		—
April 13, 2015		2,000		200,000		—
April 28, 2015		2,300		230,000		—
May 5, 2015		2,300		230,000		—
May 22, 2015		2,500		250,000		—
June 2, 2015		2,500		250,000		—
June 16, 2015		2,800		280,000		—
June 23, 2015		2,900		290,000		—
June 25, 2015		1,800		180,000		—
June 26, 2015		1,400		140,000		—
June 29, 2015		1,000		100,000		—
June 30, 2015		2,800		280,000		—
July 8, 2015		2,270		227,000		—
July 15, 2015		2,250		225,000		—
July 16, 2015		1,750		175,000		—
July 17, 2015		3,750		375,000		—
July 17, 2015		3,750		375,000		—
July 21, 2015		2,350		235,000		—
July 21, 2015		1,000		100,000		—
July 31, 2015		3,100		310,000		—
August 5, 2015		1,370		137,000		—
August 13, 2015		3,280		328,000		—
August 27, 2015		3,330		333,000		—
September 11, 2015		4,850		485,000		—
September 11, 2015		3,300		330,000		—
September 11, 2015		1,500		150,000		—
September 11, 2015		1,500		150,000		—
September 24, 2015		2,650		265,000		—
September 29, 2015		1,400		140,000		—
October 2, 2015		3,150		315,000		—
October 8, 2015		4,100		410,000		—
November 17, 2015		7,410		741,000		—
Total	$	86,260		8,626,000	$	—

On December 22, 2015, the holder of the Convertible Note Payable dated June 30, 2013 elected to convert principal and accrued interest of $4,100 into 410,000 shares of common stock at a rate of $0.01 per share. No gain or loss was recognized on the conversions as they occurred within the terms of the agreement that provided for conversion. The shares were issued on January 7, 2016. As a result, the amount of $4,100 is included in common stock payable on the balance sheet as of December 31, 2015.

Year Ended December 31, 2014

The holders of the $251,468 convertible note payable signed on October 31, 2012 elected to convert principal and interest at a rate of $0.02 per share as follows:

Date	Principal & Interest Converted		Common Stock Issued upon Conversion
October 10, 2014	$	340		17,000
October 21, 2014		340		17,000
November 4, 2014		420		21,000
November 6, 2014		440		22,000
Total	$	1,540		77,000

There was no discount balance on this note on the dates of the conversions.  There was no gain or loss on the conversion, as it was effected in accordance with the terms of the convertible note payable.

The holders of the $96,463 convertible note payable signed on April 1, 2013 elected to convert principal and interest at a rate of $0.01 per share as follows:

Date	Principal & Interest Converted		Common Stock Issued upon Conversion
January 14, 2014		20,000		6,667
December 9, 2014		250		25,000
December 18, 2014		250		25,000
Total	$	20,500		56,667

The unamortized discount related to this principal was $10,450. We amortized this amount to interest expense. We recognized the $20,500 of converted principal and interest as in increase in stockholders’ equity.  There was no gain or loss on the conversion, as it was effected in accordance with the terms of the convertible note payable.

The holders of the $167,185 convertible note payable signed on June 30, 2013 elected to convert principal and interest at a rate of $0.01 per share as follows:

Date	Principal & Interest Converted		Common Stock Issued upon Conversion
January 27, 2014	$	20,000		6,667
January 30, 2014		20,000		6,667
September 26, 2014		170		17,000
September 26, 2014		170		17,000
November 26, 2014		460		46,000
December 11, 2014		260		26,000
December 12, 2014		250		25,000
Total	$	41,310		144,334

The unamortized discount related to this principal was $21,399. We amortized this amount to interest expense. We recognized the $41,310 of converted principal and interest as in increase in stockholders’ equity.  There was no gain or loss on the conversion, as it was effected in accordance with the terms of the convertible note payable.