On October 24, 2012, January 14, 2013, January 24, 2013, April 17, 2013, June 13, 2013 and August 29, 2013, the Company borrowed $32,500, $10,600, $32,500, $42,500, $32,500 and $27,500, respectively, from Asher Enterprises, Inc. All six notes accrue interest at the rate of 8% per annum. They are due on July 26, 2013, September 16, 2013, October 28, 2013, January 22, 2014, March 17, 2014, and June 3, 2014, respectively.
These notes are convertible by the holder after 180 days at 45%-58% of the average of the lowest five closing bid prices in the ten trading day period before the conversion. These notes have no financial covenants.
Pursuant to the Convertible Note Agreements and the Notes, the Investor, or registered Assigns, shall have the right, from time to time, and at any time during the period beginning on the date which is 180 days following the date of the Note and ending on the later of the maturity date or the date of payment of the Default Amount (as defined in the Note), to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock of the Company; provided however, to the extent that the Holder's beneficial ownership of the Common Stock of the Company would not exceed 9.99% at any such time as a result of its conversion of the Note.
On December 31, 2013 and September 30, 2013, the Company had $76,130 and $105,367, respectively, of convertible debt outstanding, with accrued interest of $4,508 and $4,289 shown net of $46,666 and $10,833 of debt discount. The variable conversion feature at less than market value gives rise to a derivative liability. The liability for each note was computed using the Black-Sholes Option Pricing method as they became convertible (initial value date) with the following inputs for the year ended September 30, 2013:
