On various dates from November 27, 2013 through March 2, 2015, the Company issued convertible promissory notes totaling $951,081. At the time of issuance, the notes were evaluated and were determined to contain embedded conversion options that must be bifurcated and reported at fair value with original issue discounts. As a result, a derivative discount on convertible promissory notes was recorded, which net of discount amortization for the three months ended March 31, 2015 amounted to $111,148.


Description		March 31, 2015		December 31, 2014
20 convertible promissory notes in amounts ranging from $9,000 to $112,000, with maturity dates ranging from 2014 to August 2016, bearing interest ranging from 0% to 12% per annum, convertible into common stock at variable conversion prices ranging from 25% of the lowest price in the prior 20 trading days to 60% of the lowest price in the prior 25 trading days. The Company expects all debt will be converted to common shares.	$	951,081	$	934,081
Less: debt discount		(815,040)		(783,956)
Less: conversions		(454,958)		(398,241)
Add: amortization of debt discount		703,892		656,993
Balance of convertible debt, net		384,975		408,877
Less: current portion		(348,597)		(384,592)
Long-term convertible debt, net	$	36,378	$	24,285

The following is a summary of the change in the Company’s debt issuance costs for the three months ended March 31, 2015:


	March 31, 2015

Debt issuance costs	$	26,250
Accumulated amortization of debt issuance costs		(25,263)
Debt issuance costs - net	$	987

During the three months ended March 31, 2015, the Company recorded debt discounts totaling $31,084.

The Company amortized debt discount of $46,898 during the three months ended March 31, 2015.


	March 31, 2015

Debt discount	$	815,040
Accumulated amortization of debt discount		(703,892)
Debt discount - net	$	111,148

The Company identified the conversion features embedded within its convertible debts as financial derivatives. The Company has determined that the embedded conversion option should be accounted for at fair value.

The following schedule shows the change in fair value of the derivative liabilities during the three months ended March 31, 2015:


Derivative liabilities - December 31, 2014	$	549,187
Add fair value at the commitment date for convertible notes issued during the current quarter		43,468
Reclassification of derivative liabilities associated with convertible debt that ceased being a derivative liability to additional paid-in capital		(90,295)
Fair value mark to market adjustment for derivatives		1,081,942
Derivative liabilities - March 31, 2015		1,584,302
Less: current portion		(1,349,763)
Long-term derivative liabilities	$	234,539

The Company recorded the debt discount to the extent of the gross proceeds raised, and expensed immediately the remaining value of the derivative as it exceeded the gross proceeds of the note. The Company recorded derivative interest expenses for the three months ended March 31, 2015 of $13,884.

The fair value at the commitment and re-measurement dates for the Company’s derivative liabilities were based upon the following management assumptions during the current quarter:


Assumption	Commitment Date	Remeasurement Date
Expected dividends:	0%	0%
Expected volatility:	218.07% - 653.42%	434.44% - 672.48%
Expected term (years):	0.76 - 1 years	0.083 - 1.35 years
Risk free interest rate:	0.18% - 0.22%	0.17%-0.28%