NOTES PAYABLE | NOTES PAYABLE On February 24, 2017 , the Company entered into an agreement with a vendor to convert the balance of their account into three notes payable in the aggregate amount of $765,784 . The notes bear interest of 6% per annum and matured on February 24, 2018 ; all outstanding principal and accrued interest is due and payable upon maturity. On June 5, 2018, the Company entered into another agreement with the same vendor to convert the balance of their account into a fourth note payable with a principal amount of $308,041 , this note also bears interest at a rate of 6% per annum, and matured on July 31, 2018 . As of June 30, 2019 , the Company had not made any payments on these notes; the total outstanding principal and accrued interest were $1,073,825 and $129,274 , respectively, and the note is due upon demand. On June 30, 2017 , the Company entered into an agreement with a vendor to convert the balance of their account into a note payable in the amount of $250,000 . The note bears interest of 5% per annum and matured on February 28, 2018 . As of June 30, 2019 , the Company had not made any payments on this note, the accrued interest was $25,000 , and the note is due upon demand. On September 30, 2017 , the Company entered into a settlement agreement with a customer to convert the credit balance of their account into a note payable in the amount of $215,234 . The note bears interest of 5% per annum and matured on September 30, 2018 . The Company has not made the monthly payments of $18,426 that were to commence on October 30, 2017 ; as of June 30, 2019 , the company had paid principal of $25,029 and interest of $897 , and the note is due upon demand. The remaining principal and interest balances, as of June 30, 2019 , were $190,205 and $16,782 , respectively. SECURED PROMISSORY NOTE The following table provides a summary of the activity of the Company's secured notes: Global Ichiban St. George Total Secured Notes Principal Balance at December 31, 2017 $ 4,557,227 $ — $ 4,557,227 New notes 1,935,000 1,315,000 3,250,000 Note conversions (1,426,000 ) — (1,426,000 ) Interest converted to principal 140,518 — 140,518 Note assignments (250,000 ) — (250,000 ) Secured Notes Principal Balance at December 31, 2018 4,956,745 1,315,000 6,271,745 Less: remaining discount (2,012,698 ) (811,667 ) (2,824,365 ) Secured Notes, net of discount, at December 31, 2018 2,944,047 503,333 3,447,380 New notes — 845,000 845,000 Note conversions (115,000 ) — (115,000 ) Interest converted to principal 171,152 — 171,152 Secured Notes Principal Balance at June 30, 2019 5,012,897 2,160,000 7,172,897 Less: remaining discount (1,299,922 ) (741,666 ) (2,041,588 ) Secured Notes, net of discount, at June 30, 2019 $ 3,712,975 $ 1,418,334 $ 5,131,309 Global Ichiban Secured Promissory Notes On November 30, 2017 , the Company, entered into a note purchase and exchange agreement with Global Ichiban Ltd. ("Global"), for the private placement of up to $2,000,000 of the Company’s secured convertible promissory notes in exchange for $2,000,000 of gross proceeds in several tranches through June 2018, The closing of each tranche is conditioned upon the Company having an average daily trading volume for its Common Stock of at least $50,000 for the 20 trading day period preceding such future tranche closing dates. Pursuant to the terms of the note purchase and exchange agreement, the Company and Global also agreed to exchange certain outstanding securities held by the Global for additional notes. As of November 30, 2017 , Global surrendered for cancellation (i) its outstanding promissory note dated September 13, 2017 ( $3,359,539 principal and accrued interest), (ii) its outstanding promissory note dated October 31, 2017 ( $252,466 principal and accrued interest), and (iii) its 400 shares of outstanding Series J Preferred Stock ( $445,222 of capital and accrued dividends). In exchange, the Company issued to Global $4,057,227 aggregate principal amount of additional Notes. All principal and accrued interest on the notes are redeemable at any time, in whole or in part, at the option of Global. The redemption amount may be paid in cash or converted into shares of common stock at a variable conversion price equal to the lowest of (i) 85% of the average VWAP for the shares over the prior 5 trading days, (ii) the closing bid price for the shares on the prior trading day, or (iii) $2.00 per share, at the option of the Company. The notes may not be converted, and shares of common stock may not be issued pursuant to the notes, if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 9.99% of the outstanding shares of common stock. Of the notes issued on November 30, 2017 , $3,359,539 aggregate principal amount will mature on December 15, 2020 . Principal and interest was originally to be payable in 36 equal monthly installments of $111,585 beginning January 15, 2018 . As of June 30, 2019 , principal of $1,541,000 was converted into 13,081,603 shares of common stock, and $311,670 of interest was converted to principal. This note is due upon demand. The following table summarizes the conversion activity of this note: Conversion Period Principal Converted Common Shares Issued Q1 2018 $ 1,250,000 2,450,981 Q2 2018 $ 176,000 1,035,295 Q1 2019 $ 115,000 9,595,327 $ 1,541,000 13,081,603 On July 6, 2018 , the Company issued an additional, promissory note to Global, pursuant to the note purchase and exchange agreement dated November 30, 2017 . In accordance with the agreement, the Company issued a note with a principal balance of $135,000 in exchange for gross proceeds of $120,000 . This note matures on July 6, 2019 . Principal and interest on this note are payable at maturity. The original issue discount of $15,000 will be allocated to interest expense, ratably, over the life of the note. This note is not redeemable in stock. On October 2, 2018 , the Company issued an additional promissory note to Global, pursuant to the note purchase and exchange agreement dated November 30, 2017 . In accordance with the agreement, the Company issued a note with a principal balance of $150,000 in exchange for gross proceeds of $125,000 . This note matures on October 2, 2019 . Principal and interest on this note are payable at maturity. The original issue discount of $25,000 will be allocated to interest expense, ratably, over the life of the note. This note is redeemable in stock, at the discretion of the Company, under the same conversion terms described above. On October 18, 2018 , Global sold one of its notes to another investor. As a result of this sale, $250,000 in principal and $26,466 of accrued interest were assigned to the new investor and is no longer considered secured debt. Please refer to Note 11 for further discussion of this assignment. This note is redeemable in stock, at the discretion of the Company, under the same conversion terms described above. On October 22, 2018 , the Company issued an additional promissory note to Global, pursuant to the note purchase and exchange agreement dated November 30, 2017 . In accordance with the agreement, the Company issued a note with a principal balance of $150,000 in exchange for gross proceeds of $125,000 . This note matures on October 22, 2019 . Principal and interest on this note are payable at maturity. The original issue discount of $25,000 will be allocated to interest expense, ratably, over the life of the note. All the notes issued in accordance with the note purchase and exchange agreement dated November 30, 2017 are secured by a security interest on substantially all of the Company’s assets, bear interest at a rate of 12% per annum and contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the notes, and (ii) bankruptcy or insolvency of the Company. There are no registration rights applicable to the notes. As of June 30, 2019 , the aggregate principal and interest balance of the Notes were $5,012,897 and $582,229 , respectively. Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the notes were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the notes approximates management’s estimate of the fair value of the embedded derivative liability based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions identified below. The following table summarizes the derivative liability transactions for these notes: Derivative Liability Balance as of December 31, 2018 $ 3,533,861 Change in fair value of derivative liability (869,138 ) Derivative Liability Balance as of June 30, 2019 $ 2,664,723 Due to the varying terms and varying issue dates, the tranches of this instrument were broken into five separate instruments for valuation purposes. 1) The first valuation was done on the November 30, 2017 note with term of three years. The derivative value of this note was $1,764,068 as of December 31, 2018 . 2) The second valuation was done on the group of notes dated November 30, 2017 , that had a term of one year. The derivative value of this group of notes was $418,965 as of December 31, 2018 . 3) The third valuation was done on the note dated December 28, 2017 , which had a term of one year. The derivative value of this note was $150,126 on December 31, 2018 . 4) The fourth valuation was done for the notes dated in the first quarter of 2018, which had a term of one year . The derivative value of this note was $900,757 on December 31, 2018 . 5) The fifth valuation was done for the notes dated in the fourth quarter of 2018, which had a term of one year . The derivative value of this note was $299,945 on December 31, 2018 . The derivative liability associated with the notes is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At June 30, 2019 , the Company conducted a fair value assessment of the embedded derivative associated with the three valuation groups discussed above. 1) For the November 30, 2017 3yr note: Management conducted a fair value assessment with the following assumptions: annual volatility of 59% , present value discount rate of 12% , and a dividend yield of 0% as of June 30, 2019 . As a result of the fair value assessment, the Company recorded a net loss of $252,102 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $2,016,170 as of June 30, 2019 . 2) For the November 30, 2017 1yr notes: Management conducted a fair value assessment with the following assumptions: annual volatility of 49% present value discount rate of 12% and a dividend yield of 0% as of June 30, 2019 . As a result of the fair value assessment, the Company recorded a net gain of $264,025 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $154,940 as of June 30, 2019 . 3) For the December 28, 2017 1yr note: Management conducted a fair value assessment with the following assumptions: annual volatility of 49% , present value discount rate of 12% , and a dividend yield of 0% as of June 30, 2019 . As a result of the fair value assessment, the Company recorded a net gain of $94,607 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $55,519 as of June 30, 2019 . 4) For the first quarter 2018 1yr notes: Management conducted a fair value assessment with the following assumptions: annual volatility of 49% , present value discount rate of 12% , and a dividend yield of 0% as of June 30, 2019 . As a result of the fair value assessment, the Company recorded a net gain of $567,642 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $333,115 as of June 30, 2019 . 5) For the fourth quarter 2018 1yr notes: Management conducted a fair value assessment with the following assumptions: annual volatility of 42% , present value discount rate of 12% , and a dividend yield of 0% as of June 30, 2019 . As a result of the fair value assessment, the Company recorded a net gain of $194,966 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $104,979 as of June 30, 2019 . The total cumulative net gain for the six months ended June 30, 2019 was $869,138 to reflect a total derivative liability of $2,664,723 as of June 30, 2019 . St. George Secured Convertible Notes On May 8, 2018 , the Company, entered into a note purchase agreement with St. George Investments LLC ("St. George"), for the private placement of a $575,000 secured convertible promissory note. The Company received $500,000 in aggregate proceeds for the note in two tranches and recorded and original issue discount of $50,000 and debt financing costs of $25,000 . The original issue discount and the financing costs will be recognized as interest expense, ratably, over the life of the note. The note bears interest at a rate of 10% per annum and matures on May 9, 2019 . All unredeemed principal and accrued interest is payable upon maturity. The note contains standard and customary events of default including but not limited to: (i) failure to make payments when due under the note, and (ii) bankruptcy or insolvency of the Company. In the event of default the interest rate increases to 22% per annum. The note is secured by a junior security interest on the Company's headquarters building, located in Thornton, Colorado. There are no registration rights applicable to this agreement. Beginning in early November 2018, St. George shall have the option to require the Company to redeem all or a portion of the amounts outstanding under the note. The Company may pay the requested redemption amounts in cash or in the form of shares of common stock (subject to certain specified equity conditions). Payments in the form of Common Stock shall be calculated using a variable conversion price equal to (i) 60% of the average of the two lowest closing bid prices for the shares over (ii) the prior ten day trading period immediately preceding the redemption. On November 5, 2018 , the Company entered into a second securities purchase agreement with St. George, for the private placement of a $1,220,000 secured convertible promissory note ("Company Note"). On November 7, 2018 , the Company received $200,000 of gross proceeds from the offering of the Company Note. In addition, the Company received additional consideration for the Company Note in the form of eight separate promissory notes of St. George (the “Investor Notes”) having an aggregate principal amount of $800,000 . The Company may receive additional cash proceeds of up to an aggregate of $800,000 through cash payments made from time to time by St George of principal and interest under the eight Investor Notes. The aggregate principal amount of the Company Note is divided into nine tranches, which tranches correspond to (i) the cash funding received on November 5, 2018 and (ii) the principal amounts of the eight Investor Notes. As of June 30, 2019 , the Company had received an additional $400,000 in proceeds and had recorded $1,220,000 in principal related to the Company and Investor Notes. The Company recorded original issue discounts of $200,000 and debt financing costs of $20,000 , which will be recognized as interest expense, ratably, over the life of the note. As of June 30, 2019 , the closing dates, closing amounts, and proceeds on completed Note tranches are as follows: Closing Date Closing Amount Proceeds 11/7/2018 $ 260,000 $ 200,000 11/19/2018 $ 120,000 $ 100,000 11/30/2018 $ 120,000 $ 100,000 12/7/2018 $ 120,000 $ 100,000 12/17/2018 $ 120,000 $ 100,000 1/3/2019 $ 120,000 $ 100,000 1/17/2019 $ 120,000 $ 100,000 1/30/2019 $ 120,000 $ 100,000 2/8/2019 $ 120,000 $ 100,000 The Notes bear interest at a rate of 10% per annum and matures on November 5, 2019 . All unredeemed principal and accrued interest is payable upon maturity. The Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the note, and (ii) bankruptcy or insolvency of the Company. In the event of default the interest rate increases to 22% per annum. The Notes are secured by a security interest on the Company's headquarters building, located in Thornton, Colorado. There are no registration rights applicable to this agreement. Beginning in early May 2019, St. George shall have the option to redeem all or a portion of the amounts outstanding under the Company Note. At St. George's option, redemption amounts are payable by the Company in cash or in the form of shares of the common stock. Conversions into common stock shall be calculated using a variable conversion price equal to 60% of the average of the two lowest closing bid price for the shares over the prior ten day trading period immediately preceding the conversion. On March 13, 2019 , the Company entered into a third securities purchase agreement with St. George, for the private placement of a $365,000 secured convertible promissory note ("Third Note"). The Company recorded original issue discounts of $60,000 and debt financing costs of $5,000 , which will be recognized as interest expense, ratably, over the life of the note. As of June 30, 2019 , the closing dates, closing amounts, and proceeds on completed Note tranches are as follows: Closing Date Closing Amount Proceeds 3/15/2019 $ 125,000 $ 100,000 3/22/2019 $ 120,000 $ 100,000 4/4/2019 $ 120,000 $ 100,000 The Note bears interest at a rate of 10% per annum and matures on March 13, 2020 . All unredeemed principal and accrued interest is payable upon maturity. The Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the note, and (ii) bankruptcy or insolvency of the Company. In the event of default the interest rate increases to 22% per annum. The Notes are secured by a security interest on the Company's headquarters building, located in Thornton, Colorado. There are no registration rights applicable to this agreement. Beginning in early September 2019, St. George shall have the option to redeem all or a portion of the amounts outstanding under the Company Note. At St. George's option, redemption amounts are payable by the Company in cash or in the form of shares of the common stock. Conversions into common stock shall be calculated using a variable conversion price equal to 60% of the average of the two lowest closing bid price for the shares over the prior 10 day trading period immediately preceding the conversion. Shares of common stock may not be issued pursuant to these notes if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 9.99% of the outstanding shares of common stock. As of June 30, 2019 , the aggregate principal and interest balance of the Notes were $2,040,000 and $142,351 , respectively. Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging , the conversion option in the notes were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the notes approximates management’s estimate of the fair value of the embedded derivative liability based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions identified below. The following table summarizes the derivative liability transactions for these notes: Derivative Liability Balance as of December 31, 2018 $ 3,292,692 Additional derivative liability on new notes 1,752,197 Change in fair value of derivative liability (2,106,461 ) Derivative Liability Balance as of June 30, 2019 $ 2,938,428 Due to the varying terms and varying issue dates, the tranches of this instrument were broken into three separate instruments for valuation purposes. 1) The first valuation was done on the May 8, 2018 note with term of one year . The derivative value of this note was $1,568,730 as of December 31, 2018 . 2) The second valuation was done on the November 5, 2018 notes with term of one year . The derivative value of this note was $1,723,962 as of December 31, 2018 . For the tranches of this note that were received in Q1 2019, the Company conducted an initial valuation. Although the notes were entered into at various dates, we used a weighted average date of January 22, 2019 for a combined valuation purpose. Management's analysis, using the following assumptions: annual volatility of 79% , present value discount rate of 12% , and a dividend yield of 0% , resulted in a fair value of the embedded derivative associated with these Notes of $0 as of January 22, 2019. The fair value of the derivative was greater than the face value at issuance and the difference of $69,686 was charged to interest expense at issuance. The remaining debt discount of $400,000 will be charged to interest expense ratably over the life of the note. 3) The third valuation was done on the March 13, 2019 notes with a term of one year . For the Q1 2019 tranches received, the Company conducted an initial valuation. Although the notes were entered into at various dates, we used a weighted average issuance date of March 18, 2019 for a combined valuation purpose. Management's analysis, using the following assumptions: annual volatility of 80% , present value discount rate of 12% , and a dividend yield of 0% , resulted in a fair value of the embedded derivative associated with these Notes of $997,511 as of March 18, 2019. The fair value of the derivative was greater than the face value at issuance and the difference of $797,511 was charged to interest expense at issuance. The remaining debt discount of $200,000 will be charged to interest expense ratably over the life of the note. For the Q2 2019 tranche received on the March 2019 note, the Company conducted an initial valuation. Management's analysis, using the following assumptions: issue date of April 4, 2019, annual volatility of 76% , present value discount rate of 12% , and a dividend yield of 0% , resulted in a fair value of the embedded derivative associated with these Notes of $285,000 as of April 4, 2019. The fair value of the derivative was greater than the face value at issuance and the difference of $185,000 was charged to interest expense at issuance. The remaining debt discount of $100,000 will be charged to interest expense ratably over the life of the note. The derivative liability associated with the notes is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At June 30, 2019 , the Company conducted a fair value assessment of the embedded derivative associated with the two valuation groups discussed above. 1) For the May 2018 note: Management conducted a fair value assessment with the following assumptions: annual volatility of 49% , present value discount rate of 12% , and a dividend yield of 0% as of June 30, 2019 . As a result of the fair value assessment, the Company recorded a gain of $1,013,017 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $555,713 as of June 30, 2019 . 2) For the November 5, 2018 notes: Management conducted a fair value assessment with the following assumptions: annual volatility of 63% , present value discount rate of 12% , and a dividend yield of 0% as of June 30, 2019 . As a result of the fair value assessment, the Company recorded a gain of $605,933 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $1,587,715 as of June 30, 2019 . 3) For the March 13, 2019 notes: Management conducted a fair value assessment with the following assumptions: annual volatility of 72% , present value discount rate of 12% , and a dividend yield of 0% as of June 30, 2019 . As a result of the fair value assessment, the Company recorded a gain of $487,511 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $795,000 as of June 30, 2019 . The total cumulative net gain for the six months ended June 30, 2019 was $2,106,461 to reflect a total derivative liability of $2,938,428 as of June 30, 2019 . PROMISSORY NOTES The following table provides a summary of the activity of the Company's non-convertible, unsecured, promissory notes: Investor 1 Investor 2 Total Promissory Notes Principal Balance at December 31, 2017 $ 494,437 $ 200,000 $ 694,437 New notes — 850,000 850,000 Notes exchanged — (200,000 ) (200,000 ) Promissory Notes Principal Balance at December 31, 2018 494,437 850,000 1,344,437 Less: remaining discount — (104,583 ) (104,583 ) Promissory Notes, net of discount, at December 31, 2018 $ 494,437 $ 745,417 $ 1,239,854 New notes — 160,000 160,000 Notes exchanged — (550,000 ) (550,000 ) Promissory Notes Principal Balance at June 30, 2019 494,437 460,000 954,437 Less: remaining discount — (20,000 ) (20,000 ) Promissory Notes, net of discount, at June 30, 2019 $ 494,437 $ 440,000 $ 934,437 Offering of Unsecured, Non-Convertible Notes to Investor 1 During October 2016, the Company received $420,000 from a private investor "Investor 1". These funds, along with $250,000 of additional funding, were rolled into a promissory note, executed on January 17, 2017 , in the amount of $700,000 issued with a discount of $30,000 which was charged to interest expense ratably over the term of the note. The note bears interest at 12% per annum and matures on July 17, 2017 . Principal and interest on this note were payable at maturity. This note is not convertible into equity shares of the Company and is unsecured. On June 30, 2017, the Company and Investor 1 agreed to a 12 month payment plan on the balance of this promissory note. Interest will continue to accrue on this note at 12% per annum and payments of approximately $62,000 will be made monthly beginning in July 2017. The Company has not made all the payments according to this payment plan, and the note is payable upon demand. As of June 30, 2019 , $205,563 of principal and $45,414 of interest had been paid on this note. The outstanding principal and accrued interest balances on the note as of June 30, 2019 were $494,437 and $115,881 , respectively. Offering of Unsecured, Non-Convertible Notes to Investor 2 On June 6, 2018 , the Company initiated a second non-convertible, unsecured promissory note with Investor 2 for an aggregate principal amount of $315,000 . The promissory note was issued with an original issue discount of $55,000 , which will be recorded as interest expense ratably over the term of the note, resulting in proceeds to the company of $260,000 , that was received in several tranches between February 2018 and April 2018. This note bears interest at 12% per annum and matures on June 6, 2019 . All principal and interest is payable upon maturity. As of June 30, 2019 , the remaining principal and interest on on this note were $0 and $2,028 , respectively. On July 24, 2018 , the Company initiated a third non-convertible, unsecured promissory note with Investor 2 for an aggregate principal amount of $115,000 . The promissory note was issued with an original issue discount of $27,500 , which will be recorded as interest expense ratably over the term of the note, resulting in proceeds to the company of $87,500 , which was received in several tranches between May 2018 and June 2018. This note bears interest at 12% per annum and matures on January 24, 2019 . Please see exchange note below. On September 10, 2018 , the Company initiated a fourth non-convertible, unsecured promissory note with Investor 2 for an aggregate principal amount of $120,000 . The promissory note was issued with an original issue discount of $20,000 , which will be recorded as interest expense ratably over the term of the note, resulting in proceeds to the company of $100,000 , which was received in several tranches between June 2018 and September 2018. This note bears interest at 12% per annum and matures on March 10, 2019 . Please see exchange note below. On December 31, 2018 , the Company initiated a fifth non-convertible, unsecured promissory note with Investor 2 for an aggregate principal amount of $300,000 . The promissory note was issued with an original issue discount of $75,000 , which will be recorded as interest expense ratably over the term of the note, resulting in proceeds to the company of $225,000 , which was received in several tranches between September 2018 and December 2018. This note bears interest at 12% per annum and matures on June 30, 2019 . All principal and interest is payable upon maturity. As of June 30, 2019 , the remaining principal and interest on on this note were $300,000 and $23,054 , respectively. On March 11, 2019 , the Company initiated a sixth non-convertible, unsecured promissory note with Investor 2 for an aggregate principal amount of $60,000 . The promissory note was issued with an original issue discount of $10,000 , which will be recorded as interest expense ratably over the term of the note, resulting in proceeds to the company of $50,000 , which was received in several tranches between January 2019 and March 2019. This note bears interest at 12% per annum and matures on September 11, 2019 . All principal and interest is payable upon maturity. As of June 30, 2019 , the remaining principal and interest on on this note were $60,000 and $2,667 , respectively. Exchange of Promissory Notes for Convertible Notes On March 11, 2019, the Company entered into two new securities exchange agreements with Investor 2. Pursuant to the terms of the exchange agreements, Investor 2 agreed to surrender and exchange two promissory notes in exchange for two convertible notes. The first promissory note had a principal balance of $115,000 and an accrued interest balance of $10,607 ; and the second promissory note has a principal balance of $120,000 and an accrued interest balance of $7,829 . See Note 11 for further discussion on the new convertible notes. On May 2, 2019, the Company entered into another securities exchange agreements with Investor 2. Pursuant to the terms of the exchange agreements, Investor 2 agreed to surrender and exchange one promissory note in exchange for one convertible note. The promissory note had a principal balance of $315,000 and an accrued interest balance of $37,872 . See Note 11 for further discussion on the new convertible notes. As of June 30, 2019 , the aggregate outstanding principal and interest for Investor 2 was $460,000 and $29,792 , respectively. CONVERTIBLE NOTES The following table provides a summary of the activity of the Company's unsecured, convertible, promissory notes: Principal Balance 12/31/2017 New Note |