NOTE 15 – SUBSEQUENT EVENTS

CONVERTIBLE DEBT: HEP Investments, LLC

During the period January 1, 2016 through March 29, 2016, HEP Investments, LLC, a related party, advanced the Company an additional $1,000,000.  The Company recorded a debt discount in the amount of $1,000,000 for the $1,000,000 transaction.  The Company issued to the Lender for aggregate consideration of $1,000,000, two 11% convertible notes, and warrants to purchase 1,000,000 shares of common stock at an exercise price of $.10 for a term of five years.  The Convertible Notes accrue interest at the rate of 11% per annum, are non-amortizing, have a term of two years, subject to the Lender’s right to extend the term, and are convertible, at any time prior to the maturity date into shares of common stock, at a rate equal to $.10 per share.  In accordance with EITF 00-27, the Company valued the beneficial conversion feature and recorded the amount of $937,430 as a reduction to the carrying amount of the convertible debt and as an addition to paid-in capital. Additionally, the relative fair value of the warrants was calculated and recorded at $62,570 as a further reduction to the carrying amount of the convertible debt and an addition to additional paid-in capital. The Company is amortizing the debt discount over the term of the debt.  

HEP Investments has reached a $8,605,902 balance (including monies advanced since September 2011) and $8,427,200 these advances have been converted into convertible debt.