Quarterly report pursuant to Section 13 or 15(d)

Convertible Note Payable (Tables)

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Convertible Note Payable (Tables)
9 Months Ended
Sep. 30, 2015
Schedule of Short Term Convertible Notes

Convertible notes payable consisted of the following as of:

 

    September 30, 2015     December 31, 2014  
Short term convertible notes                
2013 and 2014 convertible notes payable   $ 350,000     $ 550,000  
Debt discount     -       (166,668 )
2015 convertible notes payable     937,864       -  
Typenex note payable     -     $ 342,000  
Vista note payable     -       132,000  
Redwood note payable     892,500       2,184,000  
    $ 2,180,364     $ 3,041,332  
Derivative and warrant liability                
Typenex   $ -     $ 893,347  
Vista     -       195,506  
2015 convertible notes payable     569,550       -  
Redwood     270,094       850,439  
    $ 839,644     $ 1,939,292  

Schedule of Investors Notes Receivable

    September 30, 2015     December 31, 2014  
Investor Notes                
Typenex   $ -     $ 255,260  
Redwood     1,535,000       1,920,000  
Total Investor Notes Receivable   $ 1,535,000     $ 2,175,260  

Schedule of Interest Expense for Short Term Convertible Notes

Interest expense for the short term debt for the nine months ended September 30, 2015 and 2014 is summarized as follows:

 

    Nine months ended September 30, 2015     Nine Months ended September 30, 2014  
Interest expense on short term convertible notes                
2013 and 2014 convertible notes payable   $ 36,074     $ 42,551  
Debt discount     166,669       353,389  
2015 convertible notes payable     41,672       -  
Typenex note payable     10,774       1,666  
Vista note payable     21,166       14,927  
Redwood note payable     135,650       -  
    $ 412,005     $ 412,533  

Schedule of Debt

At inception, the carrying value of the above ten notes was as follows:

 

Face amount of note   $ 958,000  
Derivative and warrant liability     -  
    $ 958,000  

 

At September 30, 2015, the carrying value of the above ten notes was as follows:

 

Face amount of note   $ 937,864  
Derivative and warrant liability     569,550  
    $ 1,507,414  

Schedule of Investor Warrants

The Purchase Price allocated to each Investor Warrant at inception was:

 

Investor Warrant #1:   $ 275,000  
Investor Warrant #2:     137,500  
Investor Warrant #3:     137,500  
    $ 550,000  

Schedule of Fair Value Hierarchy of Outstanding Derivative Liability

The fair values and corresponding classifications under the appropriate levels of the fair value hierarchy of the outstanding derivative liability recorded as recurring liabilities in the Consolidated Balance Sheets consisted of the following:

 

    Level     September 30, 2015     December 31, 2014  
                         
Included in current liabilities: Derivative Liability     3     $ 839,644     $ 1,939,292  

 

    Valuation   Unobservable
    Technique   Input
         
Included in current liabilities:        
Derivative Liability        
    Monte Carlo Pricing Model   Prevailing interest rates Company’s stock volatility Expected term

Prepayment Option [Member]  
Schedule of Debt

At September 30, 2015, the carrying value of the note was as follows:

 

Face amount of note   $ 892,500  
Derivative and warrant liability     270,094  
    $ 1,162,594  

 

At December 31, 2014, the carrying value of the note was as follows:

 

Face amount of note   $ 2,184,000  
Derivative and warrant liability     850,439  
    $ 3,034,439  

Investors Warrants $ 39,000 [Member]  
Schedule of Debt

Accordingly, the initial carrying amount of the note is approximately $39,000, derived as follows:

 

Face amount of note   $ 550,000  
Original issuance discount     (50,000 )
Allocation to Investor Warrants     (182,000 )
Allocated to embedded derivatives     (279,000 )
    $ 39,000  

 

At September 30, 2015, the carrying value of the note was as follows:

 

Face amount of note   $ -  
Derivative and warrant liability     -  
    $ -  

 

At December 31, 2014, the carrying value of the note was as follows:

 

Face amount of note   $ 342,000  
Derivative and warrant liability     893,347  
    $ 1,235,347  

Investors Warrants $ 100,000 [Member]  
Schedule of Debt

Accordingly, the carrying amount of the note at inception is approximately $100,000, derived as follows:

 

Face amount of note   $ 100,000  
Allocated to embedded derivatives     -  
    $ 100,000  

 

At September 30, 2015, the carrying value of the note was as follows:

 

Face amount of note   $ -  
Derivative and warrant liability     -  
    $ -  

 

At December 31, 2014, the carrying value of the note was as follows:

 

Face amount of note   $ 132,000  
Derivative and warrant liability     195,506  
    $ 327,506  

Typenex Co-Investment, LLC [Member]  
Schedule of Conversion Eligible Tranches

The note is separated into three Conversion Eligible Tranches (discussed under Lender Conversion below) of the following amounts:

 

Initial Tranche   $ 275,000  
First Subsequent Tranche     137,500  
Second Subsequent Tranche     137,500  
    $ 550,000  

Vista Capital Investments LLC [Member]  
Schedule of Conversion Eligible Tranches

The note is separated into three Conversion Eligible Tranches (discussed under Lender Conversion below) of the following amounts:

 

Initial Consideration   $ 100,000  
Subsequent Consideration     100,000  
    $ 200,000