Effective May 1, 2012, the Company entered into a

Effective May 1, 2012, the Company entered into a Consulting Agreement with I Equity Corp. under which I Equity Corp. agreed to undertake the research and business development necessary to implement the new business of the Company already under development. The Consulting Agreement provides for a monthly fee of $50,000 and a total of $450,000 in fees had been accrued as of December 31, 2012. The accrued amount was converted into a promissory note in the same amount on December 31, 2012 convertible into common stock at the election of the holder. Through the quarter ended March 31, 2014, a total $57,375 in principal of the note was transferred to unrelated third parties, leaving a balance due on the original note held by I Equity at $392,625. On January 1, 2014, an additional $600,000 in accrued consulting amounts payable to I Equity Corp. was converted into a promissory note in that amount, which remains outstanding. I Equity Corp. is now the controlling shareholder of the Company.
The portions of the original I Equity note transferred to three unrelated parties, were re-issued as convertible notes in the amounts of $15,000, $30,000 and $12,375. During the quarter ended March 31, 2014, $9,000 of the $30,000 note was converted into common stock, leaving a balance due of $21,000 on that note; and $6,000 of the $12,375 note was also converted into common stock, leaving a balance due of $6,375 on that note.
As of March 31, 2014, a total of $1,070,466 in short term convertible notes remained outstanding, on which a total of $83,437 had accrued as interest. In addition, two notes in the amount of $30,000 each, dated October 1, 2013 and January 1, 2014, payable for consulting services previously rendered, remained outstanding as long-term liabilities, on which a total of $2,236 in interest had accrued as of March 31, 2014.