I think most of the new shares have not even hit the market yet. More dilution to come. It takes a while to sell 35 million shares.
On May 27, 2015, the Company issued 34,041,059 shares of common stock to two related parties in satisfaction of $47,060 of related party advances and $333,315 of accrued salaries. The shares were determined to have a fair value of $309,774 based on the stock price on issuance date. The $70,601 excess of debt amount satisfied over the fair value of the stock issued is recorded as additional paid in capital.
More dilution to come and the next batch will be at lower conversion price.
On September 12, 2012 the Company issued $500,000 of convertible debentures maturing on September 11, 2015. The 2012 Debentures accrue interest at 5% per annum with a default rate of 12% per annum. The 2012 Debentures are convertible into common stock of the Company at 50% of the average closing price of the 20 day trading price ending prior to the date of conversion into the Company common stock. As of June 30, 2015 and December 31, 2014, the outstanding principal balance under this convertible debt was $421,260 and $421,260, respectively. The embedded conversion option in these convertible debentures was accounted for as a derivative liability (see Note 3). As of June 30, 2015 and December 31, 2014, the unamortized discount on these convertible notes associated with the derivative liability was $33,712 and $101,697, respectively. During the six months ended June 30, 2015, amortization of the discount totaled $67,985.
As of June 30, 2015 and December 31, 2014, the Company had accrued salaries owed to related parties of $132,685 and $375,000, respectively.
As of June 30, 2015, the Company had 25,000,000 warrants outstanding entitling the holder to purchase up to 25,000,000 shares of the Company common stock at 50% of the average closing price of the 20 day period ending one day prior to exercising the warrants. The warrant holder may exercise these warrants on or before December 31, 2015.
