5. CONVERTIBLE PROMISSORY NOTES PAYABLE | 5. CONVERTIBLE PROMISSORY NOTES PAYABLE Convertible Promissory Note - $299,212 Effective October 24, 2013, the remaining principal balance of certain notes payable totaling $291,443 and accrued interest of $7,769 were combined in a new 10% convertible promissory note in the aggregate amount of $299,212, which originally matured on October 24, 2014. The maturity date was subsequently extended to June 30, 2016. The new note was convertible into shares of our common stock at a conversion price equal to (a) the lesser of $0.06 per share or (b) 50% of the lowest trade price recorded on any trade date after the effective date, or (c) the lowest effective price per share granted to any person through the issuance of securities after the effective date. After conversions to our common stock during 2013 and 2014, and the three months ended March 31, 2016, the note had a principal balance of $198,912. This principal balance and related accrued interest payable of $71,929 were converted into shares of Series B preferred stock on March 3, 2016. Convertible Promissory Notes - Services of $244,452 On December 31, 2012, we entered into 5% convertible promissory notes with three individuals in exchange for services rendered in the aggregate amount of $244,452, including $185,852 with the Chairman of our Board of Directors and our former Chief Executive Officer ("Chairman"). The notes are convertible into shares of our common stock at a conversion price equal to the lesser of $2.00 per share or the closing price per share of common stock recorded on the trading day immediately preceding the date of conversion. We recorded a debt discount of $237,742 related to the conversion feature of the notes, which has been fully amortized to interest expense, along with a derivative liability at inception. One of the notes with a principal balance of $25,980 at December 31, 2016, matured on December 31, 2014 and is currently in default. The maturity date of a second note with a principal balance of $32,619 at December 31, 2016, has been extended to December 31, 2017. On July 27, 2016, we entered into a Settlement and Release Agreement with the Chairman for full extinguishment of the above described convertible promissory note with a principal balance of $185,852, plus accrued interest. We agreed to pay the Chairman $100 in cash and arranged for him to enter into an option agreement with our principal lender and a principal holder of our Series B preferred stock ("Lender") to acquire 225 shares of our Series B preferred stock from the Lender upon the occurrence of certain events defined in the agreement. Due to the related party nature of this transaction, the extinguishments of the note principal of $185,752, accrued interest payable of $33,199 and associated derivative liability of $106,858 were recorded to additional paid-in capital as a contribution to capital totaling $325,809. Convertible Promissory Note - $100,000 During 2013, we received total proceeds of $40,000 pursuant to a securities purchase agreement for the sale of 10% convertible promissory notes in the aggregate principal amount of $100,000. The notes are convertible into shares of our common stock at a price equal to a variable conversion price of the lesser of $0.90 per share or fifty percent (50%) of the lowest trade price recorded after the effective date. The notes were to mature one year from their effective date. The maturity dates were extended to June 30, 2016. We recorded a debt discount of $40,000 related to the beneficial conversion feature of the notes, which has been fully amortized to interest expense. During the three months ended March 31, 2016, $5,550 principal and $1,660 accrued interest payable were converted into shares of common stock and the remaining principal of $34,450 and accrued interest payable of $9,607 were converted into shares of Series B preferred stock on March 3, 2016. Convertible Promissory Note – Accounts Payable of $29,500 On March 14, 2013, we entered into a 5% convertible promissory note in the principal amount of $29,500, which is convertible into shares of our common stock at a conversion price equal to the lesser of $1.50 per share or the closing price per share of common stock recorded on the trading day immediately preceding the date of conversion. The note matured two years from its effective date, or March 14, 2015, and is currently in default. Convertible Promissory Note – $97,000 On May 29, 2013, we exchanged $97,000 in demand promissory notes for a 10% convertible promissory note in the aggregate principal amount of $97,000. The note was convertible into shares of our common stock at a price equal to a conversion price of the lesser of $0.28 per share or fifty percent (50%) of the lowest trade price recorded after the effective date. The maturity date of the note was extended to June 30, 2016. We recorded a debt discount of $97,000 related to the beneficial conversion feature of the note, which has been fully amortized to interest expense. The principal balance of $97,000 and accrued interest payable of $27,461 were converted into shares of Series B preferred stock on March 3, 2016. Convertible Promissory Note – Services of $25,000 On June 4, 2013, we entered into a 5% convertible promissory note with a former member of our Board of Directors in exchange for services rendered in the amount of $25,000. The note is convertible into shares of common stock of the Company at a conversion price equal to the lesser of $0.35 per share or the closing price per share of common stock recorded on the trading day immediately preceding the date of conversion. We have entered into an agreement to repay this note with 12 equal monthly payments of principal and interest of $2,352 beginning in June 2016. The note had a principal balance of $10,417 and accrued interest payable of $1,328 at December 31, 2016. Convertible Promissory Note – $5,000 Exchanged Note On September 6, 2013, we exchanged a $5,000 promissory note for a 10% convertible promissory note in the aggregate principal amount of $5,000. The note is convertible into shares of our common stock at a price equal to a conversion price of the lesser of $0.042 per share or fifty percent (50%) of the lowest trade price recorded after the effective date. The note was converted in full to shares of our common stock in February 2017 (Note 13). We recorded a debt discount of $2,536, which has been fully amortized to interest expense, along with a derivative liability at inception. Convertible Promissory Note – $250,000 On October 8, 2012, we entered into to a 10% convertible promissory note in the aggregate principal amount of $250,000. The note is convertible into shares of common stock of the Company at a price equal to the lesser of $0.06 or 50% of the lowest trade price subsequent to the effective date of the note and prior to the conversion. The maturity date of this note was extended to June 30, 2016. The lender previously advanced a total of $11,000 in August and September 2013 that was transferred to this promissory note. We recorded a debt discount of $11,000, which has been fully amortized to interest expense, along with a derivative liability upon transfer. On October 21, 2013, we received additional proceeds of $22,000 on this promissory note. We recorded a debt discount of $22,000, which has been fully amortized to interest expense, along with a derivative liability at inception. On November 22, 2013, we received additional proceeds of $25,000 on this promissory note agreement. We recorded a debt discount of $25,000, which has been fully amortized to interest expense, along with a derivative liability at inception. The total principal balance of $58,000 and total accrued interest payable of $13,609 were converted into shares of Series B preferred stock on March 3, 2016. April 2014 Convertible Promissory Note – $500,000 On April 18, 2014, we entered into a 10% convertible promissory note with an aggregate principal amount of $500,000 (the "April 2014 $500,000 CPN"). The advance amounts received were at the lender's discretion. The note was convertible into shares of our common stock at a price per share equal to the lesser of: $0.03; or 50% of the lowest trade price subsequent to the effective date of the note and prior to the conversion; or the lowest effective price per share granted to any person or entity to acquire common stock subsequent to the effective date of the note. The note matured, with respect to each advance, eighteen months from the effective date of each advance. On April 18, 2014, we received proceeds of $60,000 pursuant to the April 2014 $500,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. During the year ended December 31, 2015, amortization of debt discount was recorded to interest expense in the amount of $31,861 and the debt discount was fully amortized to interest expense. On May 20, 2014, we received proceeds of $45,000 pursuant to the April 2014 $500,000 SPA. We recorded a debt discount of $45,000 related to the conversion feature of the note, along with a derivative liability at inception. During the year ended December 31, 2015, amortization of debt discount was recorded to interest expense in the amount of $26,557 and the debt discount was fully amortized to interest expense. On June 30, 2014, we received proceeds of $200,000 pursuant to the April 2014 $500,000 CPN. We recorded a debt discount of $200,000 related to the conversion feature of the note, along with a derivative liability at inception. During the year ended December 31, 2015, amortization of debt discount was recorded to interest expense in the amount of $132,847 and the debt discount was fully amortized to interest expense. On July 18, 2014, we received proceeds of $25,000 pursuant to the April 2014 $500,000 CPN. We recorded a debt discount of $25,000 related to the conversion feature of the note, along with a derivative liability at inception. During the years ended December 31, 2016 and 2015, amortization of debt discount was recorded to interest expense in the amount of $820 and $16,621, respectively, and the debt discount was fully amortized to interest expense. On August 6, 2014, we received proceeds of $65,000 pursuant to the April 2014 $500,000 CPN. We recorded a debt discount of $65,000 related to the conversion feature of the note, along with a derivative liability at inception. During the years ended December 31, 2016 and 2015, amortization of debt discount was recorded to interest expense in the amount of $4,381 and $43,215, respectively, and the debt discount was fully amortized to interest expense. On August 18, 2014, we received proceeds of $25,000 pursuant to the April 2014 $500,000 CPN. We recorded a debt discount of $25,000 related to the conversion feature of the note, along with a derivative liability at inception. During the years ended December 31, 2016 and 2015, amortization of debt discount was recorded to interest expense in the amount of $2,231 and $16,621, respectively, and the debt discount was fully amortized to interest expense. On September 9, 2014, we received proceeds of $56,000 pursuant to the April 2014 $500,000 CPN. We recorded a debt discount of $56,000 related to the conversion feature of the note, along with a derivative liability at inception. During the years ended December 31, 2016 and 2015, amortization of debt discount was recorded to interest expense in the amount of $7,064 and $37,367, respectively, and the debt discount was fully amortized to interest expense. On October 8, 2014, we received proceeds of $24,000 pursuant to the April 2014 $500,000 CPN. We recorded a debt discount of $24,000 related to the conversion feature of the note, along with a derivative liability at inception. During the years ended December 31, 2016 and 2015, amortization of debt discount was recorded to interest expense in the amount of $4,336 and $15,985, respectively, and the debt discount was fully amortized to interest expense. The total principal balance of $500,000 of the April 2014 $500,000 CPN and total accrued interest payable of $82,677 were converted into shares of Series B preferred stock on March 3, 2016. October 2014 Convertible Promissory Note – $500,000 On October 1, 2014, we entered into a 10% convertible promissory note with an aggregate principal amount of $500,000 (the "October 2014 $500,000 CPN"). The advance amounts received were at the lender's discretion. The note was convertible into shares of our common stock at a price per share equal to the lesser of: $0.03; or 50% of the lowest trade price subsequent to the effective date of the note and prior to the conversion; or the lowest effective price per share granted to any person or entity to acquire common stock subsequent to the effective date of the note. The note was to mature, with respect to each advance, eighteen months from the effective date of each advance. On October 1, 2014, we received proceeds of $65,000 pursuant to the October 2014 $500,000 CPN. We recorded a debt discount of $65,000 related to the conversion feature of the note, along with a derivative liability at inception. During the years ended December 31, 2016 and 2015, amortization of debt discount was recorded to interest expense in the amount of $10,912 and $43,294, respectively, and the debt discount was fully amortized to interest expense. On November 7, 2014, we received proceeds of $30,000 pursuant to the October 2014 $500,000 CPN. We recorded a debt discount of $30,000 related to the conversion feature of the note, along with a derivative liability at inception. During the years ended December 31, 2016 and 2015, amortization of debt discount was recorded to interest expense in the amount of $7,020 and $20,018, respectively, and the debt discount was fully amortized to interest expense. On December 9, 2014, we received proceeds of $25,000 pursuant to the October 2014 $500,000 CPN. We recorded a debt discount of $25,000 related to the conversion feature of the note, along with a derivative liability at inception. During the years ended December 31, 2016 and 2015, amortization of debt discount was recorded to interest expense in the amount of $7,345 and $16,651, respectively, and the debt discount was fully amortized to interest expense. On January 14, 2015, we received proceeds of $92,000 pursuant to the October 2014 $500,000 CPN. We recorded a debt discount of $92,000 related to the conversion feature of the note, along with a derivative liability at inception. During the years ended December 31, 2016 and 2015, amortization of debt discount was recorded to interest expense in the amount of $32,965 and $59,035, respectively, and the debt discount was fully amortized to interest expense. On February 10, 2015, we received proceeds of $30,000 pursuant to the October 2014 $500,000 CPN. We recorded a debt discount of $30,000 related to the conversion feature of the note, along with a derivative liability at inception. During the years ended December 31, 2016 and 2015, amortization of debt discount was recorded to interest expense in the amount of $12,230 and $17,770, respectively, and the debt discount was fully amortized to interest expense. On March 16, 2015, we received proceeds of $30,000 pursuant to the October 2014 $500,000 CPN. We recorded a debt discount of $30,000 related to the conversion feature of the note, along with a derivative liability at inception. During the years ended December 31, 2016 and 2015, amortization of debt discount was recorded to interest expense in the amount of $14,182 and $15,818, respectively, and the debt discount was fully amortized to interest expense. On April 17, 2015, we received proceeds of $45,000 pursuant to the October 2014 $500,000 CPN. We recorded a debt discount of $45,000 related to the conversion feature of the note, along with a derivative liability at inception. During the years ended December 31, 2016 and 2015, amortization of debt discount was recorded to interest expense in the amount of $23,852 and $21,148, respectively, and the debt discount was fully amortized to interest expense. On May 5, 2015, we received proceeds of $65,000 pursuant to the October 2014 $500,000 CPN. We recorded a debt discount of $65,000 related to the conversion feature of the note, along with a derivative liability at inception. During the years ended December 31, 2016 and 2015, amortization of debt discount was recorded to interest expense in the amount of $36,636 and $28,364, respectively, and the debt discount was fully amortized to interest expense. On May 11, 2015, we received proceeds of $40,000 pursuant to the October 2014 $500,000 CPN. We recorded a debt discount of $40,000 related to the conversion feature of the note, along with a derivative liability at inception. During the years ended December 31, 2016 and 2015, amortization of debt discount was recorded to interest expense in the amount of $22,982 and $17,018, respectively, and the debt discount was fully amortized to interest expense. On June 22, 2015, we received proceeds of $35,000 pursuant to the October 2014 $500,000 CPN. We recorded a debt discount of $35,000 related to the conversion feature of the note, along with a derivative liability at inception. During the years ended December 31, 2016 and 2015, amortization of debt discount was recorded to interest expense in the amount of $22,760 and $12,240, respectively, and the debt discount was fully amortized to interest expense. On June 23, 2015, we received proceeds of $20,000 pursuant to the October 2014 $500,000 CPN. We recorded a debt discount of $20,000 related to the conversion feature of the note, along with a derivative liability at inception. During the years ended December 31, 2016 and 2015, amortization of debt discount was recorded to interest expense in the amount of $13,042 and $6,958, respectively, and the debt discount was fully amortized to interest expense. On July 9, 2015, we received proceeds of $23,000 pursuant to the October 2014 $500,000 CPN. We recorded a debt discount of $23,000 related to the conversion feature of the note, along with a derivative liability at inception. During the years ended December 31, 2016 and 2015, amortization of debt discount was recorded to interest expense in the amount of $15,682 and $7,318, respectively, and the debt discount was fully amortized to interest expense. The total principal balance of $500,000 of the October 2014 $500,000 CPN and total accrued interest payable of $50,748 were converted into shares of Series B preferred stock on March 3, 2016. July 2015 Convertible Promissory Note – $500,000 On July 13, 2015, we entered into a 10% convertible promissory note with an aggregate principal amount of $500,000 (the "July 2015 $500,000 CPN"). The advance amounts received were at the lender's discretion. The note was convertible into shares of our common stock at a price per share equal to the lesser of: $0.03; or 50% of the lowest trade price subsequent to the effective date of the note and prior to the conversion; or the lowest effective price per share granted to any person or entity to acquire common stock subsequent to the effective date of the note. The note was to mature, with respect to each advance, eighteen months from the effective date of each advance. On July 13, 2015, we received proceeds of $12,000 pursuant to the July 2015 $500,000 CPN. We recorded a debt discount of $12,000 related to the conversion feature of the note, along with a derivative liability at inception. During the years ended December 31, 2016 and 2015, amortization of debt discount was recorded to interest expense in the amount of $8,269 and $3,731, respectively, and the debt discount was fully amortized to interest expense. On August 7, 2015, we received proceeds of $65,000 pursuant to the July 2015 $500,000 CPN. We recorded a debt discount of $65,000 related to the conversion feature of the note, along with a derivative liability at inception. During the years ended December 31, 2016 and 2015, amortization of debt discount was recorded to interest expense in the amount of $47,745 and $17,255, respectively, and the debt discount was fully amortized to interest expense. On September 10, 2015, we received proceeds of $25,000 pursuant to the July 2015 $500,000 CPN. We recorded a debt discount of $25,000 related to the conversion feature of the note, along with a derivative liability at inception. During the years ended December 31, 2016 and 2015, amortization of debt discount was recorded to interest expense in the amount of $19,881 and $5,119, respectively, and the debt discount was fully amortized to interest expense. On October 13, 2015, we received proceeds of $25,000 pursuant to the July 2015 $500,000 CPN. We recorded a debt discount of $25,000 related to the conversion feature of the note, along with a derivative liability at inception. During the years ended December 31, 2016 and 2015, amortization of debt discount was recorded to interest expense in the amount of $21,389 and $3,611, respectively, and the debt discount was fully amortized to interest expense. On November 13, 2015, we received proceeds of $25,000 pursuant to the July 2015 $500,000 CPN. We recorded a debt discount of $25,000 related to the conversion feature of the note, along with a derivative liability at inception. During the years ended December 31, 2016 and 2015, amortization of debt discount was recorded to interest expense in the amount of $22,806 and $2,194, respectively, and the debt discount was fully amortized to interest expense. On December 9, 2015, we received proceeds of $25,000 pursuant to the July 2015 $500,000 CPN. We recorded a debt discount of $25,000 related to the conversion feature of the note, along with a derivative liability at inception. During the years ended December 31, 2016 and 2015, amortization of debt discount was recorded to interest expense in the amount of $23,995 and $1,005, respectively, and the debt discount was fully amortized to interest expense. On January 14, 2016, we received proceeds of $25,000 pursuant to the July 2015 $500,000 CPN. We recorded a debt discount of $25,000 related to the conversion feature of the note, along with a derivative liability at inception. During the year ended December 31, 2016, amortization of debt discount was recorded to interest expense in the amount of $25,000 and the debt discount was fully amortized to interest expense. On February 9, 2016, we received proceeds of $25,000 pursuant to the July 2015 $500,000 CPN. We recorded a debt discount of $25,000 related to the conversion feature of the note, along with a derivative liability at inception. During the year ended December 31, 2016, amortization of debt discount was recorded to interest expense in the amount of $25,000 and the debt discount was fully amortized to interest expense. The total principal balance of $227,000 of the July 2015 $500,000 CPN and total accrued interest payable of $8,498 were converted into shares of Series B preferred stock on March 3, 2016. March 2016 Convertible Promissory Note – $1,000,000 On March 4, 2016, we entered into a convertible promissory note in the aggregate principal amount of $1,000,000 (the "March 2016 $1,000,000 CPN"). The lender may advance the Company consideration in such amounts as the lender may choose in its sole discretion. The note is convertible into shares of our common stock at a price per share equal to the lesser of: $0.03; 50% of the lowest trade price of our common stock subsequent to the effective date of the note; or the lowest effective price per share granted to any person or entity (exclusive of our officers and directors) to acquire common stock subsequent to the effective date of the note. The note initially matured, with respect to each advance, one year from the effective date of each advance. Subsequently, the Lender extended the maturity date, with the note payable upon demand, but in no event later than 60 months from March 4, 2016. On March 4, 2016, we received proceeds of $25,000 pursuant to the March 4, 2016 $1,000,000 CPN. We recorded a debt discount of $25,000 related to the conversion feature of the note, along with a derivative liability at inception. During the year ended December 31, 2016, amortization of debt discount was recorded to interest expense in the amount of $20,685, resulting in a remaining discount of $4,315 at December 31, 2016. On March 14, 2016, we received proceeds of $27,000 pursuant to the March 4, 2016 $1,000,000 CPN. We recorded a debt discount of $27,000 related to the conversion feature of the note, along with a derivative liability at inception. During the year ended December 31, 2016, amortization of debt discount was recorded to interest expense in the amount of $21,600, resulting in a remaining discount of $5,400 at December 31, 2016. On March 17, 2016, we received proceeds of $33,000 pursuant to the March 4, 2016 $1,000,000 CPN. We recorded a debt discount of $33,000 related to the conversion feature of the note, along with a derivative liability at inception. During the year ended December 31, 2016, amortization of debt discount was recorded to interest expense in the amount of $21,608, resulting in a remaining discount of $11,392 at December 31, 2016. On April 11, 2016, we received proceeds of $90,000 pursuant to the March 4, 2016 $1,000,000 CPN. We recorded a debt discount of $90,000 related to the conversion feature of the note, along with a derivative liability at inception. During the year ended December 31, 2016, amortization of debt discount was recorded to interest expense in the amount of $65,096, resulting in a remaining discount of $24,904 at December 31, 2016. On May 20, 2016, we received proceeds of $60,000 pursuant to the March 4, 2016 $1,000,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. During the year ended December 31, 2016, amortization of debt discount was recorded to interest expense in the amount of $36,986, resulting in a remaining discount of $23,014 at December 31, 2016. On June 22, 2016, we received proceeds of $50,000 pursuant to the March 4, 2016 $1,000,000 CPN. We recorded a debt discount of $50,000 related to the conversion feature of the note, along with a derivative liability at inception. During the year ended December 31, 2016, amortization of debt discount was recorded to interest expense in the amount of $36,301, resulting in a remaining discount of $23,699 at December 31, 2016. On July 6, 2016, we received proceeds of $87,000 pursuant to the March 4, 2016 $1,000,000 CPN. We recorded a debt discount of $87,000 related to the conversion feature of the note, along with a derivative liability at inception. During the year ended December 31, 2016, amortization of debt discount was recorded to interest expense in the amount of $42,427, resulting in a remaining discount of $44,573 at December 31, 2016. On August 8, 2016, we received proceeds of $60,000 pursuant to the March 4, 2016 $1,000,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. During the year ended December 31, 2016, amortization of debt discount was recorded to interest expense in the amount of $23,836, resulting in a remaining discount of $36,164 at December 31, 2016. On September 13, 2016, we received proceeds of $55,000 pursuant to the March 4, 2016 $1,000,000 CPN. We recorded a debt discount of $55,000 related to the conversion feature of the note, along with a derivative liability at inception. During the year ended December 31, 2016, amortization of debt discount was recorded to interest expense in the amount of $16,425, resulting in a remaining discount of $38,575 at December 31, 2016. On October 17, 2016, we received proceeds of $55,000 pursuant to the March 4, 2016 $1,000,000 CPN. We recorded a debt discount of $55,000 related to the conversion feature of the note, along with a derivative liability at inception. During the year ended December 31, 2016, amortization of debt discount was recorded to interest expense in the amount of $11,301, resulting in a remaining discount of $43,699 at December 31, 2016. On November 8, 2016, we received proceeds of $55,000 pursuant to the March 4, 2016 $1,000,000 CPN. We recorded a debt discount of $55,000 related to the conversion feature of the note, along with a derivative liability at inception. During the year ended December 31, 2016, amortization of debt discount was recorded to interest expense in the amount of $7,986, resulting in a remaining discount of $47,014 at December 31, 2016. On December 6, 2016, we received proceeds of $60,000 pursuant to the March 4, 2016 $1,000,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. During the year ended December 31, 2016, amortization of debt discount was recorded to interest expense in the amount of $3,767, resulting in a remaining discount of $56,233 at December 31, 2016. The total loss on settlement of debt, including conversions of notes payable, was $33,561 for the year ended December 31, 2016. The total gain on settlement of debt was $5,660 for the year ended December 31, 2015. |