| NOTE 9 - Convertible Notes Payable | The
Company accounted for the following Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of
the obligation is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts
have been amortized to interest expense over the respective terms of the related notes. See Note 10. On
December 19, 2014, the Company issued a convertible back-end note, with a face value of $156,000 and stated interest of 8% to
a third-party investor due December 19, 2015. The note is convertible at any time into a variable number of the Company’s
common stock, based on a conversion ratio of 68% of the lowest closing bid prices for 20 days prior to conversion. The note was
funded on June 18, 2015, when the Company received proceeds of $143,333, net of $12,663 of OID and costs. As of September 30,
2018, and December 31, 2017, the outstanding principal amount of the note was $135,371. On
May 1, 2017, the Company issued to a third-party investor, three convertible notes, two of which were for $50,000 each and one
for $17,500, and three back-end convertible notes, two of which were for $50,000 each and one for $25,000. All of the notes have
a stated interest of 8% and each note is convertible at any time following the funding of such note, into a variable number of
the Company’s common stock, based on a conversion ratio of 55% of the lowest traded price for 20 days prior to conversion
subject to a ceiling of $0.0005. The three convertible notes were funded on May 1, 2017, when the Company received proceeds of
$111,625, after disbursements for the lender’s transaction costs, fees and expenses of $5,875, which were recorded as discounts
against the debt to be amortized into interest expense through maturity. The embedded conversion feature included in the three
notes resulted in an initial debt discount of $117,500, an initial derivative expense of $319,692 and an initial derivative liability
of $437,192. For the nine months ended September 30, 2018, amortization of the debt discounts of $39,752 was charged to interest
expense. As of September 30, 2018, the outstanding principal balance of the three convertible notes was $117,500. On August 8,
2017, the investor funded the $25,000 back-end note when the Company received $23,750 after disbursements for the lender’s
transaction costs, fees and expenses of $1,250, which were recorded as discounts against the debt to be amortized into interest
expense through maturity. The embedded conversion feature included in the $25,000 back-end resulted in an initial debt discount
of $25,000, an initial derivative expense of $258,904 and an initial derivative liability of $283,904. For the nine months ended
September 30, 2018, amortization of the debt discounts of $8,449 was charged to interest expense. As of September 30, 2018, the
outstanding principal balance of the funded back-end convertible note was $25,000. On
May 2, 2017, the Company issued a convertible note for legal services previously provided with a face value of $23,000 and stated
interest of 10% to a third-party investor. The note is convertible into a variable number of the Company’s common stock,
based on a conversion ratio of 70% of the average of the three lowest closing bid prices for 10 days prior to conversion. The
embedded conversion feature included in the note resulted in an initial debt discount of $15,715 and an initial derivative liability
of $15,715. The investor sold the note to a third party on May 3, 2017, and the Company issued a replacement note to the buyer,
as described below. On
May 3, 2017, the Company issued three replacement notes to a third-party investor. The replacement notes were in the amounts of
$22,000, $29,700 and $25,300, respectively, and replaced notes issued in the amounts of $20,000, $27,000 and $23,000, respectively,
all due May 3, 2018. The three replacement notes have a stated interest of 8% and each note is convertible at any time into a
variable number of the Company’s common stock, based on a conversion ratio of 55% of the lowest traded price for 20 days
prior to conversion. Beginning on the six- month anniversary of the notes the conversion price shall have ceiling of $0.0005.
The embedded conversion feature included in the three replacement notes resulted in an initial debt discount of $77,000, an initial
derivative expense of $158,790 and an initial derivative liability of $235,790. For the nine months ended September 30, 2018,
amortization of the debt discount of $25,239 was charged to interest expense. As of September 30, 2018, and December 31, 2017,
the principal balance of the three replacement notes in the aggregate was $77,000. On
June 8, 2017, the Company issued to a third-party investor a convertible promissory note for $140,750 and a back-end convertible
note for $140,750. The notes mature on June 8, 2018, have a stated interest of 8% and each note is convertible at any time following
the funding of such note into a variable number of the Company’s common stock, based on a conversion ratio of 55% of the
lowest traded price for 20 days prior to conversion. Beginning on the six-month anniversary of the note the conversion price shall
have ceiling of $0.0005. The note was funded on June 15, 2017, when the Company received proceeds of $135,000, after disbursements
for the lender’s transaction costs, fees and expenses of $5,750, which were recorded as discounts against the debt to be
amortized into interest expense through maturity. The embedded conversion feature included in the note resulted in an initial
debt discount of $140,750, an initial derivative expense of $454,574 and an initial derivative liability of $595,324. For the
nine months ended September 30, 2018, amortization of the debt discounts of $62,782 was charged to interest expense. As of September
30, 2018, and December 31, 2017, the principal balance of the note is $140,750. On August 8, 2017, the investor funded the $140,750
back-end note when the Company received $135,000 after disbursements for the lender’s transaction costs, fees and expenses
of $5,750, which were recorded as discounts against the debt to be amortized into interest expense through maturity. The embedded
conversion feature included in the back-end resulted in an initial debt discount of $140,750, an initial derivative expense of
$1,454,021 and an initial derivative liability of $1,594,771. For the nine months ended September 30, 2018, amortization of the
debt discounts of $62,782 was charged to interest expense. As of September 30, 2018, and December 31, 2017, the outstanding principal
balance of the back-end convertible note was $140,750. On
June 8, 2017, the Company issued to a third-party investor a convertible promissory note for $140,750 and a back-end convertible
note for $140,750. The notes mature on June 8, 2018, have a stated interest of 8% and each note is convertible at any time following
the funding of such note, convertible into a variable number of the Company’s common stock, based on a conversion ratio
of 55% of the lowest traded price for 20 days prior to conversion. Beginning on the six-month anniversary of the note the conversion
price shall have ceiling of $0.0005. The note was funded on June 15, 2017, when the Company received proceeds of $135,000, after
disbursements for the lender’s transaction costs, fees and expenses of $5,750, which were recorded as discounts against
the debt to be amortized into interest expense through maturity. The embedded conversion feature included in the note resulted
in an initial debt discount of $140,750, an initial derivative expense of $454,574 and an initial derivative liability of $595,324.
For the nine months ended September 30, 2018, amortization of the debt discount of $62,782 was charged to interest expense. During
the nine months ended September 30, 2018, the investor converted $60,200 of principal and $2,916 of accrued interest into 60,398,076
shares of common stock. On January 26, 2018, the investor sold the remaining principal portion of the note of $80,550 and accrued
interest of $3,920, and the Company issued a replacement note of $84,469 to the buyer (see below). As of September 30, 2018, and
December 31, 2017, the principal balance of the initial note is $-0- and $140,750, respectively. On August 8, 2017, the investor
funded the $140,750 back-end note when the Company received $135,000 after disbursements for the lender’s transaction costs,
fees and expenses of $5,750, which were recorded as discounts against the debt to be amortized into interest expense through maturity.
The embedded conversion feature included in the back-end resulted in an initial debt discount of $140,750, an initial derivative
expense of $1,454,021 and an initial derivative liability of $1,594,771. During the nine months ended September 30, 2018, the
investor converted $140,750 of principal and $5,152 of accrued interest into 139,618,981 shares of common stock. For the nine
months ended September 30, 2018, amortization of the debt discount of $62,782 was charged to interest expense. As of September
30, 2018, and December 31, 2017, the outstanding principal balance of the back-end convertible note was $-0- and $140,750, respectively. On
June 9, 2017, the Company issued a convertible promissory note, with a face value of $165,025 and stated interest of 10% to a
third-party investor. The note is convertible at any time after ninety days following the funding of the note into a variable
number of the Company’s common stock, based on a conversion ratio of 60% of the average of the three lowest closing bid
prices for 20 days prior to conversion. The note was funded on May 12, 2017, when the Company received proceeds of $135,000, after
OID of $21,525, and disbursements for the lender’s transaction costs, fees and expenses of $8,500, which were recorded as
discounts against the debt to be amortized into interest expense through maturity. The embedded conversion feature included in
the note resulted in an initial debt discount of $143,500, an initial derivative expense of $134,496 and an initial derivative
liability of $277,996. For the nine months ended September 30, 2018, amortization of the debt discounts of $54,048 was charged
to interest expense. The note also requires 240 daily payments of $680 per day via ACH, however, there were no payments made for
the nine months ended September 30, 2018. During the nine months ended September 30, 2018, the investor converted a total of $52,565
of the face value of the note and $7,663 of accrued interest into 54,752,409 shares of common stock. As of September 30, 2018,
and December 31, 2017, the outstanding principal balance of the note was $-0- and $52,565, respectively. On
June 23, 2017, the Company issued a convertible promissory note, with a face value of $262,775 and stated interest of 10% to a
third-party investor. The note is convertible at any time after ninety days following the funding of the note into a variable
number of the Company’s common stock, based on a conversion ratio of 60% of the average of the three lowest closing bid
prices for 20 days prior to conversion. The note was funded on June 23, 2017, when the Company received proceeds of $220,000,
after OID of $34,275, and disbursements for the lender’s transaction costs, fees and expenses of $8,500, which were recorded
as discounts against the debt to be amortized into interest expense through maturity. The embedded conversion feature included
in the note resulted in an initial debt discount of $228,500, an initial derivative expense of $187,733 and an initial derivative
liability of $416,233. The note also required 180 daily payments of $1,460 per day via ACH. During the nine months ended September
30, 2018, the investor converted a total of $227,735 of the face value of the note and $13,914 of accrued interest into 212,848,780
shares of common stock. For the nine months ended September 30, 2018, amortization of the debt discounts of $127,348 was charged
to interest expense. As of September 30, 2018, and December 31, 2017, the outstanding principal balance of the note was $-0- and
$227,735, respectively. On
August 1, 2017, the Company issued a convertible promissory note, with a face value of $181,700, maturing on February 1, 2018,
(the “Maturity Date”) and stated interest of 10% to a third-party investor. The note is convertible at any time following
the funding of the note into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the
average of the three lowest trading prices quoted for the 20 days prior to conversion. The note was funded on August 3, 2017,
when the Company received proceeds of $150,000, after OID of $23,700, and disbursements for the lender’s transaction costs,
fees and expenses of $8,000, which were recorded as discounts against the debt to be amortized into interest expense through maturity.
The embedded conversion feature included in the note resulted in an initial debt discount of $158,000, an initial derivative expense
of $104,654 and an initial derivative liability of $262.654. During the nine months ended March 31, 2018, the investor converted
a total of $51,349 of the face value of the note and $2,420 of accrued interest into 49,786,212 shares of common stock. For the
nine months ended September 30, 2018, amortization of the debt discounts of $50,598 was charged to interest expense. As of September
30, 2018, and December 31, 2017, the note balance is $-0- and $51,349, respectively. On
August 7, 2017, the Company issued a convertible promissory note, with a face value of $223,422, maturing on August 7, 2018, and
stated interest of 10% to a third-party investor. The note is convertible at any time following the funding of the note into a
variable number of the Company’s common stock, based on a conversion ratio of 60% of the average of the three lowest trading
prices for the 20 days prior to conversion. The note was funded on August 9, 2017, when the Company received proceeds of $186,280,
after OID of $29,142, and disbursements for the lender’s transaction costs, fees and expenses of $8,000, which were recorded
as discounts against the debt to be amortized into interest expense through maturity. The note also requires 240 daily payments
of $931 per day via ACH, no payments were made on the note. The embedded conversion feature included in the note resulted in an
initial debt discount of $194,280, an initial derivative expense of $112,250 and an initial derivative liability of $306,530.
During the nine months ended September 30, 2018, the investor converted a total of $197,022 of the face value of the note and
$461 of accrued interest into 266,781,430 shares of common stock. For the nine months ended September 30, 2018, amortization of
the debt discounts of $138,853 was charged to interest expense. On March 27, 2018, the investor sold $26,400 of the note to a
third party (see below). As of September 30, 2018, and December 31, 2017, the note balance is $-0- and $223,422, respectively. On
October 12, 2017 (the “Issue Date”), the Company issued a convertible promissory note, with a face value of $40,111
maturing October 12, 2018, and stated interest of 12% to a third-party investor. The note is convertible at any time following
ninety (90) days after the Issue Date of the note into a variable number of the Company’s common stock, based on a conversion
ratio of 60% of the average of the three lowest trading prices for the 20 days prior to conversion. The embedded conversion feature
included in the note resulted in an initial debt discount of $40,111, an initial derivative expense of $35,941 and an initial
derivative liability of $76,052. On April 2, 2018, the Company paid $45,000, including $4,889 of interest and prepayment costs.
For the nine months ended September 30, 2018, amortization of the debt discounts of $31,297 was charged to interest expense. As
of September 30, 2018, and December 31, 2017, the note balance of this note is $-0- and $40,111, respectively. On
November 1, 2017, the Company issued a convertible promissory note, with a face value of $239,200 maturing November 1, 2018, and
stated interest of 12% to a third-party investor. The note is convertible at any time following the funding of the note into a
variable number of the Company’s common stock, based on a conversion ratio of 60% of the average of the three lowest trading
prices for the 20 days prior to conversion. The note was funded on November 1, 2017, when the Company received proceeds of $200,000,
after OID of $31,200, and disbursements for the lender’s transaction costs, fees and expenses of $8,000, which were recorded
as discounts against the debt to be amortized into interest expense through maturity. The embedded conversion feature included
in the note resulted in an initial debt discount of $208,000, an initial derivative expense of $233,718 and an initial derivative
liability of $441,718. For the nine months ended September 30, 2018, amortization of the debt discounts of $206,001 was charged
to interest expense. The note also requires 240 daily payments of $997 per day via ACH, no payments have been made on the note.
During the nine months ended September 30, 2018, the investor converted a total of $239,200 of the face value of the note and
17,337 of interest into 377,101,781 shares of common stock. As of September 30, 2018, and December 31, 2017, the note balance
is $-0- and $239,200, respectively. On
November 9, 2017, the Company issued a convertible promissory note, with a face value of $120,750, maturing on May 1, 2018, (the
“Maturity Date”) and stated interest of 10% to a third-party investor. The note is convertible at any time following
the funding of the note into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the
average of the three lowest trading prices quoted for the 20 days prior to conversion. The note was funded on November 10, 2017,
when the Company received proceeds of $100,000, after OID of $15,750, and disbursements for the lender’s transaction costs,
fees and expenses of $5,000, which were recorded as discounts against the debt to be amortized into interest expense through maturity.
The embedded conversion feature included in the note resulted in an initial debt discount of $105,000, an initial derivative expense
of $41,897 and an initial derivative liability of $146,897. For the nine months ended September 30, 2018, amortization of the
debt discounts of $107,585 was charged to interest expense. The note also requires daily payments of $503 until the note is paid
in full, no payments have been made and the Company is in default of the note. As of September 30, 2018, and December 31, 2017,
the note balance is $120,750. On
December 26, 2017, the Company issued a convertible promissory note, with a face value of $120,750 and stated interest of 12%
to a third-party investor. The note is convertible at any time following the funding of the note into a variable number of the
Company’s common stock, based on a conversion ratio of 60% of the average of the three lowest trading prices for the 20
days prior to conversion. The note was funded on December 27, 2017, when the Company received proceeds of $100,000, after OID
of $15,750, and disbursements for the lender’s transaction costs, fees and expenses of $5,000, which were recorded as discounts
against the debt to be amortized into interest expense through maturity. The embedded conversion feature included in the note
resulted in an initial debt discount of $105,000, an initial derivative expense of $93,767 and an initial derivative liability
of $198,767. For the nine months ended September 30, 2018, amortization of the debt discounts of $88,103 was charged to interest
expense. The note also requires 240 daily payments of $503 per day via ACH, no payments have been made and the Company is in default
of the note. During the nine months ended September 30, 2018, the investor converted a total of $22,000 of the face value of the
note into 55,000,000 shares of common stock. As of September 30, 2018, and December 31, 2017, the note balance is $98,750 and
$120,750, respectively, with a carrying value as of September 30, 2018 of $62,850, net of unamortized discounts of $35,900. On
January 26, 2018, the Company issued a replacement convertible promissory note in the face amount of $84,469, to a third-party
that replaced a portion of the convertible promissory note issued on June 8, 2017, with a face value of $80,550, and accrued interest
of $3,913. The embedded conversion feature included in the replacement note resulted in an initial debt discount of $84,469, an
initial derivative expense of $58,121 and an initial derivative liability of $142,586. During the nine months ended September
30, 2018, the investor converted a total of $84,469 of the face value of the note and $4,466 of interest into 141,167,968 shares
of common stock. For the nine months ended September 30, 2018, amortization of the debt discounts of $84,469 was charged to interest
expense. As of September 30, 2018, the outstanding principal amount of the replacement note issued was $0. On
January 26, 2018 (the “Issue Date”), the Company issued a convertible promissory note, with a face value of $20,000,
maturing on January 26, 2019, and stated interest of 12% to a third-party investor. The note is convertible at any time following
the funding of the note into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the
average of the three lowest trading prices for the 20 days prior to conversion. The note was funded on January 26, 2018, when
the Company received proceeds of $20,000. The note also requires daily ACH payments of $83, no payments have been made and the
Company is in default of the note. The embedded conversion feature included in the note resulted in an initial debt discount of
$20,000, an initial derivative expense of $15,403 and an initial derivative liability of $35,403. During the nine months ended
September 30, 2018, the investor converted a total of $20,000 of the face value of the note and $1,414 of interest into 53,534,250
shares of common stock. For the nine months ended September 30, 2018, amortization of the debt discounts of $20,000 was charged
to interest expense. As of September 30, 2018, the note balance was $0. On
January 29, 2018, the Company issued a convertible promissory note, with a face value of $84,525, maturing on July 29, 2018, (the
“Maturity Date”) and stated interest of 10% to a third-party investor. The note is convertible at any time following
the funding of the note into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the
average of the three lowest trading prices quoted for the 20 days prior to conversion. The note was funded on February 5, 2018,
when the Company received proceeds of $70,000, after disbursements for the lender’s transaction costs, fees and expenses.
The note also requires daily ACH payments of $263, no payments have been made and the Company is in default of the note. The embedded
conversion feature included in the note resulted in an initial debt discount of $89,525, an initial derivative expense of $7,909
and an initial derivative liability of $97,434. For the nine months ended September 30, 2018, amortization of the debt discounts
of $84,525 was charged to interest expense. As of September 30, 2018, the note balance was $84,525. On
February 21, 2018, the Company issued a convertible promissory note, with a face value of $184,000, maturing on February 21, 2019,
(the “Maturity Date”) and stated interest of 10% to a third-party investor. The note is convertible at any time following
the funding of the note into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the
average of the three lowest trading prices quoted for the 20 days prior to conversion. The note was funded on February 21, 2018,
when the Company received proceeds of $150,000, after disbursements for the lender’s transaction costs, fees and expenses.
The note also requires daily ACH initial payments of $250 for the first 30 days, then an increase to a daily ACH range of $251
to $766. During the nine months ended September 30, 2018, the Company made principal payments of $34,000. The embedded conversion
feature included in the note resulted in an initial debt discount of $198,000, an initial derivative expense of $114,501 and an
initial derivative liability of $312,501. For the nine months ended September 30, 2018, amortization of the debt discounts of
$121,550 was charged to interest expense. As of September 30, 2018, the note balance is $150,000 with a carrying value as of September
30, 2018, of $73,550, net of unamortized discounts of $76,450. On
March 27, 2018, the Company issued a replacement convertible promissory note in the face amount of $26,400, to a third-party that
replaced a portion of the convertible promissory note issued on August 7, 2017. During the nine months ended September 30, 2018,
the buyer converted the face value of $26,400 of the replacement convertible note into 40,000,000 shares of common stock. As of
September 30, 2018, the outstanding principal amount of the replacement note issued was $-0-. On
April 2, 2018 (the “Issue Date”), the Company issued a convertible promissory note, with a face value of $45,000,
maturing on April 2, 2019, and stated interest of 12% to a third-party investor. The note is convertible at any time following
the funding of the note into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the
average of the three lowest trading prices for the 20 days prior to conversion. The note also requires daily ACH payments of $83,
no payments have been made and the Company is in default of the note. The embedded conversion feature included in the note resulted
in an initial debt discount of $45,000, an initial derivative expense of $32,083 and an initial derivative liability of $77,083.
For the nine months ended September 30, 2018, amortization of the debt discount of $22,625 was charged to interest expense. As
of September 30, 2018, the note balance is $45,000 with a carrying value as of September 30, 2018, of $22,625, net of unamortized
discounts of $22,375. On
April 8, 2018, the Company issued a convertible promissory note, with a face value of $34,500, maturing on October 8, 2018, (the
“Maturity Date”) and stated interest of 10% to a third-party investor. The note is convertible at any time following
the funding of the note into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the
average of the three lowest trading prices quoted for the 20 days prior to conversion. The note was funded on April 10, 2018,
when the Company received proceeds of $30,000, after disbursements for the lender’s transaction costs, fees and expenses.
The embedded conversion feature included in the note resulted in an initial debt discount of $34,500, an initial derivative expense
of $29,712 and an initial derivative liability of $64,212. For the nine months ended September 30, 2018, amortization of the debt
discounts of $33,542 was charged to interest expense. As of September 30, 2018, the note balance is $34,500 with a carrying value
as of September 30, 2018, of $33,542, net of unamortized discounts of $958. On
May 11, 2018, the Company issued a convertible promissory note, with a face value of $215,000, maturing on May 11, 2019, (the
“Maturity Date”) and stated interest of 12% to a third-party investor. The note is convertible at any time following
the funding of the note into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the
average of the three lowest trading prices quoted for the 20 days prior to conversion. The note was funded on May 11, 2018, when
the Company received proceeds of $200,000, after disbursements for the lender’s transaction costs, fees and expenses. The
embedded conversion feature included in the note resulted in an initial debt discount of $215,000, an initial derivative expense
of $40,845 and an initial derivative liability of $255,845. For the nine months ended September 30, 2018, amortization of the
debt discounts of $90,722 was charged to interest expense. As of September 30, 2018, the note balance is $215,000 with a carrying
value as of September 30, 2018, of $75,722, net of unamortized discounts of $139,278. On
May 18, 2018, the Company issued a convertible promissory note, with a face value of $52,969, maturing on November 18, 2018, (the
“Maturity Date”) and stated interest of 10% to a third-party investor. The note is convertible at any time following
the funding of the note into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the
average of the three lowest trading prices quoted for the 20 days prior to conversion. The note was funded on May 18, 2018, when
the Company received proceeds of $42,000, after disbursements for the lender’s transaction costs, fees and expenses. The
embedded conversion feature included in the note resulted in an initial debt discount of $42,000, an initial derivative expense
of $16,011 and an initial derivative liability of $58,011. For the nine months ended September 30, 2018, amortization of the debt
discounts of $38,793 was charged to interest expense. As of September 30, 2018, the note balance is $52,969 with a carrying value
as of September 30, 2018, of $38,793, net of unamortized discounts of $14,176. On
June 15, 2018, the Company issued a convertible promissory note, with a face value of $63,000, maturing on December 15, 2018,
(the “Maturity Date”) and stated interest of 10% to a third-party investor. The note is convertible at any time following
the funding of the note into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the
average of the three lowest trading prices quoted for the 20 days prior to conversion. The note also requires daily ACH payments
of $350 beginning on August 15, 2018.The note was funded on June 15, 2018, when the Company received proceeds of $50,000, after
OID of $8,000, and disbursements for the lender’s transaction costs, fees and expenses of $5,000, which were recorded as
discounts against the debt to be amortized into interest expense through maturity. The embedded conversion feature included in
the note resulted in an initial debt discount of $58,000, an initial derivative expense of $26,864 and an initial derivative liability
of $84,864. For the nine months ended September 30, 2018, amortization of the debt discounts of $42,206 was charged to interest
expense. As of September 30, 2018, the note balance is $63,000 with a carrying value as of September 30, 2018, of debit balance
of $34,206, net of unamortized discounts of $28,794. On
June 20, 2018, the Company issued a convertible promissory note, with a face value of $184,000, maturing on June 20, 2019, (the
“Maturity Date”) and stated interest of 12% to a third-party investor. The note is convertible at any time following
the funding of the note into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the
average of the three lowest trading prices quoted for the 20 days prior to conversion. The note also requires daily ACH payments
of $350. During the nine months ended September 30, 2018, principal payments of $21,000 were made. The note was funded on June
20, 2018, when the Company received proceeds of $150,000, after OID of $24,000, and disbursements for the lender’s transaction
costs, fees and expenses of $10,000, which were recorded as discounts against the debt to be amortized into interest expense through
maturity. The embedded conversion feature included in the note resulted in an initial debt discount of $160,000, an initial derivative
expense of $42,071 and an initial derivative liability of $202,071. For the nine months ended September 30, 2018, amortization
of the debt discounts of $54,967 was charged to interest expense. As of September 30, 2018, the note balance is $163,000 with
a carrying value as of September 30, 2018, of a debit balance of $134,206, net of unamortized discounts of $28,794. On
August 21, 2018, the Company issued a convertible promissory note, with a face value of $59,000, maturing on August 21, 2019,
(the “Maturity Date”) and stated interest of 12% to a third-party investor. The note is convertible at any time following
the funding of the note into a variable number of the Company’s common stock, based on a conversion ratio of 60% |
