| Notes Payable | Note 7 – Notes Payable Promissory Notes
5BARz International, Inc. Note Balance Balance Balance Balance
Terms September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016
Issue Date
December 17, 2012 (a) $ 116,620 $ 114,314 $ 112,079 $ 109,911
January 8, 2013 (b) 78,316 88,531 75,034 86,331
October 6, 2014 (c) 257,604 256,956 256,317 255,687
May 21, 2015 (d) — — — 47,191
June 17, 2015 (e) 79,889 76,976 74,094 83,733
June 18, 2015 (f) — 32,678 25,000 25,000
June 18, 2015 (g) 72,677 69,852 67,165 64,609
June 26, 2015 (h) 100,000 166,667 177,424 177,424
July 30, 2015 (i) 61,742 96,871 96,871 158,476
August 27, 2015 (j) — 8,454 84,033 84,033
October 28, 2015 (k) — — — 25,651
October 30, 2015 (l) — — — 54,713
Mar – Dec, 2017 (m) 621,124 130,690 49,961 —
5BARz International Inc. $ 1,387,972 $ 1,041,990 $ 1,017,980 $ 1,172,759 CelLynx Group, Inc. – Notes Payable
Issue Date Balance Balance Balance Balance
Note Terms September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016
May 24, 2012 (n) $ 66,952 $ 63,434 $ 60,135 $ 57,041
September 12, 2012 (o) 48,082 45,555 43,186 40,964
Cellynx total $ 115,034 $ 108,989 $ 103,322 $ 98,005
Sub-total $ 1,503,006 $ 1,050,979 $ 1,121,302 $ 1,270,764
Debt Discount
Notes payable, net $ 1,503,006 $ 1,050,979 $ 1,121,302 $ 1,270,764
a) In December 2012, a shareholder purchased 1,600,000
common shares for $80,000. On January 17, 2013, the security was amended to a convertible debenture with an 8% per annum yield
and may be converted into common stock, at the option of the holder, 90 days after the inception of the agreement, at a price which
is a 20% discount to market, but not less than $0.05 per share. During the period from issuance of the convertible debenture
to September 30, 2017, interest of $36,620 June 30, 2017, interest of $34,314, March 31, 2017, interest of $32,079 and December
31, 2016, interest of $29,911 was accrued on the convertible debenture, resulting in a total principal and interest due at September
30, 2017 of $116,620, June 30, 2017 of $114,314, March 31, 2017 of $112,079 and December 31, 2016 of $109,911. The condensed
consolidated financial statements include a derivative liability at September 30, 2017 of Nil, June 30, 2017 of $65, March 31,
2017 of $4,248 and December 31, 2016 of $6,219 in connection with this note.
b) On January 8, 2013, the Company entered into
a convertible debenture agreement with a consultant in settlement of $147,428 payable to that consultant for services rendered.
The convertible debenture yields interest at 8% per annum and may be converted into common stock, at the option of the holder,
90 days after the inception of the agreement, at a price which is a 20% discount to market, but not less than $0.05 per share.
During the nine months ended September 30, 2017, interest of $4,985, during the six months ended June 30, 2017, interest of $3,199
and during the three months ended March 31, 2017, interest of $1,703 (December 31, 2016 - $6,355) was accrued on the convertible
debenture. During the nine months ended September 30, 2017, $49,000, during the three months ended September 30, 2017, $24,000
and during the three months ended March 31, 2017, $25,000 (December 31, 2016 - $50,000) was settled by way of conversion into common
stock. During the nine months ended September 30, 2017, the agreement was amended to add additional unpaid consulting fees
of $36,000 to the principal of note (December 31, 2016 - $48,000). The total principal and interest due under the note at September
30, 2017 is $78,316, June 30, 2017 is $88,531 and March 31, 2017 - $75,034 (December 31, 2016 - $86,331). On September 20, 2017,
the conversion floor price of $0.05 was amended to the lowest price at which the Company is issuing securities to third parties.
The Company reflected a derivative liability at September 30, 2017 of $4,345, June 30, 2017 of $ 51 and March 31, 2017 of $2,844
(December 31, 2016 - $4,885) (2015 - $20,494) in connection with this note. On May 1, 2018 the balance of the note at that time
of $110,448 was converted into units at a price of $0.03 per unit. Each unit is comprised of one common share and a warrant to
acquire a second share at $0.20, with a warrant term of two (2) years.
c) On October 6, 2014, the Company entered into
a Note and Warrant purchase agreement with three parties who have agreed to provide to the Company additional resources to run
operations. The parties have agreed to loan up to $1,500,000 pursuant to the terms of a convertible promissory note and warrant
agreement. On the closing date, October 6, 2014 the Company received $250,000 cash. The purchasers have agreed that at any time
on or before the earlier of (i) the Purchasers’ election, or (ii) the execution of an engagement letter by and between the
Company and an Investment Banking Firm acceptable to the purchaser relating to the provision of financial advisory services by
the Investment Banking Firm to the Company, that the Company will sell Notes representing the balance of the authorized principal
amount not sold at the Closing to the Purchasers. The convertible note accrues interest at a rate of 1% per annum and provides
for the conversion of the principal and accrued interest on the note into common stock at any time, at the election of the holder
at a price of $0.15 per share. Further, the number of warrants to be issued will be equal to the proceeds loaned pursuant to the
note and warrant purchase agreement divided by $0.15. The warrant has a term of five (5) years and provides a strike price of $0.20
per share. The fair value of warrants at the date of issue was $282,767 using the Black-Scholes pricing model. The convertible
promissory note and accrued interest at September 30, 2017 was $257,604, June 30, 2017 - $256,956, March 31, 2017 - $256,317 (December
31, 2016 - $255,687). During the nine months ended September 30, 2017, additional interest of $1,917 (December 31, 2016 - $2,548),
was accrued to bring the total principal and interest balance to $257,604 at September 30, 2017, (December 31, 2016 - $255,687).
The note matured at December 31, 2016. The note may be extended for two additional one-year terms at the sole discretion of the
lender.
d) On May 21, 2015, the Company entered into a convertible
note arrangement with an investment Company, in the principal amount of $200,000 of which $100,000 was advanced to the Company
at the inception of the note. The Company agreed to pay an “original issue discount” in an amount up to 10% of the
loan amount, or $10,000. The interest rate on the note is 12%. The prepayment penalty of the note is as follows: 5% from day 1
to 90 days, 15% from day 91 to 150 days, 18% from day 151 to 179 days and 25% there- after on buyout of loan. The note is convertible
into common stock of the issuer at a discount to market of 40%, with the market defined as the lowest trade price for a period
of 25 days prior to the conversion, with a conversion floor price at no lower than $0.00001. On November 22, 2015, the Company
became delinquent on its filing requirements with the Securities and Exchange Commission, triggering a default of the note. Upon
the Event of Default, the outstanding balance was increased to 118%, in addition to that a default penalty payment of $1,000 per
business day was added to the outstanding balance. The principal and interest due under the note at December 31, 2015 was $174,064.
On March 10, 2016, a complaint was filed in relation to the unpaid balance of this note payable. On June 28, 2016, the parties
entered into a settlement agreement in the amount of $153,000 payable in equal payments of $35,000 made in cash or shares issued
at market every 21 days from the date of settlement. On July 14, 2016, 333,333 common shares were issued at a price of $0.105 per
share in lieu of $35,000 cash. On August 4, 2016, an additional 448,717 common shares were issued at a price of $0.078 instead
of a $35,000 cash payment. On November 1, 2016, the Company issued 416,446 shares at a price of $0.084 per share for the settlement
of convertible notes payable with a total value of $35,000. On December 5, 2016, the Company issued 594,228 shares at a price of
$0.059 per share for the settlement of a further $35,000. The balance due to the holder at December 31, 2016 was $47,191. On January
6, 2017, the Company issued a further 673,077 shares at a price of $0.052 per share for a payment of $35,000. On February 6, 2017,
the Company issued a final 234,447 shares at a price of $0.052 for a final settlement amount of $12,191. At September 30, 2017,
June 30, 2017 and March 31, 2017 the balance due under this note was nil. The lawsuit has been dismissed with prejudice as to defendant.
e) On June 17, 2015, the Company entered into a
convertible note arrangement with an investment company, in the principal amount of $52,500 of which $50,000 was advanced to the
Company at the inception of the note. The Company recorded 5% interest of $2,500 at inception of the note. The interest rate on
the note is 8%. The prepayment penalty of the note is as follows: 15% from day 1 to 60 days, 21% from day 61 to 90 days, 27% from
day 91 to 120 days, 33% from day 121 to 150 days and 39% from day 151 to 180 days. This note may not be prepaid after the 180 th
f) On June 18, 2015, the Company entered into a
convertible note arrangement with an investment company, in the principal amount of $105,000 of which $100,000 was advanced to
the Company at the inception of the note. The Company agreed to pay an original issue discount of 5% of the loan amount, or $5,000.
The interest rate on the note is 10%. The prepayment penalty of the note is as follows: 15% from day 1 to 60 days, 21% from day
61 to 90 days, 27% from day 91 to 120 days, 33% from day 121 to 150 days and 39% from day 151 to 180 days. This note may not be
prepaid after the 180 th
g) On June 18, 2015, the Company entered into a
convertible note arrangement with an investment company, in the principal amount of $52,500 of which $50,000 was advanced to the
Company at the inception of the note. The Company recorded an interest of $2,500 at inception of the note. The interest rate on
the note is 8%. The prepayment penalty of the note is as follows: 15% from day 1 to 60 days, 21% from day 61 to 90 days, 27% from
day 91 to 120 days, 33% from day 121 to 150 days and 39% from day 151 to 180 days. This note may not be prepaid after the 180 th
h) On June 26, 2015, the Company entered into a
convertible note arrangement with an investment company, in the principal amount of $110,000 of which $104,500 was advanced to
the Company at the inception of the note. The Company agreed to pay an “original issue discount” in an amount of $5,500.
The interest rate on the note is 12%. Upon an Event of Default, the interest rate shall increase to 18%. The prepayment penalty
of the note is as follows: 35% from day 1 to 90 days, 45% from day 91 to 120 days, and 50% there- after on buyout of loan. The
note is convertible into common stock of the issuer at a discount to market of 42%, with the market defined as the lowest trade
price for a period of 20 days prior to the conversion, with a conversion floor price at no lower than $0.0001. On November 22,
2015, the Company became delinquent on its filing requirements with the Securities and Exchange Commission, triggering an Event
of Default of the note. Upon the Event of Default, the interest rate was increased to 18% per annum. On July 6, 2016, a complaint
was filed in the District Court of Dallas County Texas, alleging breach of contract, promissory estoppel as to note, and tortious
interference with Contract (see litigation note 14 to the December 31, 2017 consolidated financial statements included in this
document). On May 31, 2017, the Company and plaintiff entered into a mediation and settled the law suit by agreement to pay
$200,000 in shares at market over six equal monthly payments. The Company paid by way of shares four payments from June to October
2017 in the aggregate amount of $133,332. The remaining principal and interest due under the note at September 30, 2017 were $100,000
(June 30, 2017 - $166,667, March 31, 2017 – $177,424). On February 9, 2018 a final judgment was issued by the Dallas County
District court for damages of $92,174 plus attorney fees of $15,275. The increase of $25,506, plus legal fees pursuant to court
order was reflected in 2018 as interest and legal fees. On September 7, 2018, the Company paid $30,000 in cash pursuant to a payment
schedule negotiated with the lender for the balance due.
i) On July 30, 2015, the Company entered into a
convertible note arrangement with an investment company, in the principal amount of $110,000 of which $100,000 was advanced to
the Company at the inception of the note. The interest rate on the note is 10%. Upon an Event of Default, the interest rate shall
increase to 24%. The prepayment penalty of the note is as follows, 35% from day 1 to 90 days, and 50% there- after on buyout of
loan. The note is convertible into common stock of the issuer at a discount to market of 42%, with the market defined as the lowest
trade price for a period of 25 days prior to the conversion, with a conversion floor price at no lower than $0.00001. On November
22, 2015, the Company became delinquent on its filing requirements with the Securities and Exchange Commission, triggering an event
of default of the note. Upon the event of default, the outstanding balance was increased to 150%. The note is payable upon demand.
On August 31, 2016, the Company and lender completed a settlement agreement, to repay $188,500 paid, in six monthly payments, in
cash or shares over a six-month period in full settlement of the note. On November 1, 2016, the Company paid $30,023 by delivery
of 389,910 common shares at a price of 0.077 per share. At December 31, 2016 the balance due under the note agreement was $158,477
(2015 - $12,167). During 2017 the Company made an additional three payments by delivery of an aggregate of 1,969,747 shares with
a market value of $96,735. The outstanding balance at September 30, 2017 is $61,742 (June 30, 2017 - $96,871, March 31, 2017 -
$96,871). On June 7, 2018, a complaint was filed in the United States Court, Southern District of New York against 5BARz International,
Inc. by the lender, EMA Financial LLC (see litigation note 14 to the December 31, 2017 consolidated financial statements included
in this document). The complaint requests specific performance under the agreements, claims breach of contract, injunctive relief,
costs and attorney fees. The Company expects to recommence its payment schedule when the Company’s filings with the SEC are
current, and shares will again be accepted by the lender in settlement of the settlement amount.
j) On August 27, 2015, the Company entered into
a convertible note arrangement with an investment company, in the principal amount of $110,000 of which $100,000 was advanced to
the Company at the inception of the note. The Company agreed to pay an “original issue discount” in an amount up to
10% of the loan amount, or $10,000. The interest rate on the note is 10%. The prepayment penalty of the note is as follows: 35%
from day 1 to 90 days, 45% from day 91 to 180 days. This note may not be prepaid after the 180 th
k) On October 28th, 2015, the Company entered into
a convertible note arrangement with an investment company in the principal amount of $100,000. Interest is accrued on the note
at a rate of 12% per annum, and the note matured on July 28, 2016. The note is convertible at any time by the borrower at a conversion
price, which is the lesser of closing sale price on the close date of the note or 60% of market, defined as the lowest trade price
for a period 25 days prior to the notice of conversion. The Company may prepay the note principal and interest at rates from 145%
of principal and interest within 180 days from the issue date. After 180 days the note may not be prepaid. On November 22, 2015,
the Company became delinquent on its filing requirements with the Securities and Exchange Commission, triggering an event of default
of the note. Upon the event of default, the outstanding balance was increased to 150%. On May 2, 2016, the Company entered into
a settlement agreement, to pay $153,912 by way of six-monthly payments, each in the amount of $25,652, with the first payment due
on May 15, 2016. Two of the six payments were completed on May 31, 2016 and June 20, 2016. On August 15, 2016, the Company
issued 388,667 common stock at a price of $0.066 per share in payment of $25,652 under the settlement agreement. On November 3,
2016, the Company paid an additional $25,262 by the issuance of 360,886 common shares at a price of $0.07 per share. On December
7, 2016, $26,042 was paid by the issuance of 520,840 shares at $0.05 per share. At December 31, 2016, the balance due under the
note agreement was $25,652. The final payment was made on January 6, 2017 by way of issuance of 513,040 shares at a price of $0.05
per share for aggregate proceeds of $25,652.
l) On October 30, 2015, the Company entered into
a convertible note arrangement with an investment company, in the principal amount of $105,000 of which $100,000 was advanced to
the Company at the inception of the note. Interest is accrued on the note at a rate of 8% per annum, and the note matures on October
30, 2016. The note is convertible at any time by the borrower at a conversion price which is the lesser of closing sale price on
the close date of the note or 60% of market, defined as the lowest trade price for a period 10 days prior to the notice of conversion.
The Company may prepay the note principal and interest as follows, 125% from day 1 to 90 days, 140% from day 91 to 180 days, 150%
after 180 days. On November 22, 2015, the Company became delinquent on its filing requirements with the Securities and Exchange
Commission, triggering an event of default of the note. Upon the Event of Default, the outstanding balance was increased to 150%
and the interest rate was increased to 18% per annum. The note is payable upon demand. On May 31, 2016, the Company entered into
a settlement agreement to make a series of six payments, each in the amount of $27,354, for an aggregate amount of $164,128, in
full settlement of the amounts due under this note agreement. On May 31, 2016, the Company issued 547,100 common stock at a price
of $0.05 per share valued at $27,355. On June 30, 2016, the Company issued another 547,100 common shares at a price of $0.05 valued
at $27,355. On November 8, 2016 the Company issued a further 405,259 shares at a price of $0.0675 per share for proceeds of $27,355.
On December 7, 2016, the Company issued 547,100 shares at a price of $0.05 per share for a payment of $27,355. At December 31,
2016, the balance outstanding on the note was $54,713. On January 6, 2017, the Company issued an additional 547,080 shares at $0.05
per share for a payment of $27,354. On February 28, 2017, the Company issued 526,038 shares at $0.052 for a final payment of $27,359.
On September 30, 2017, June 30, 2017 and March 31, 2017, the balance due was nil (December 31, 2016 - $54,713).
m) During the period March 24, 2017 to September
30, 2017, the Company entered into 36 Unsecured Convertible Promissory Note agreements in Canada, for aggregate proceeds of $614,271
USD ($776,650 CAD.). The notes provide for interest at a rate of 10% per annum payable on a semi-annual basis. The maturity of
the notes shall occur on the earlier of the date that is 12 months from the effective date of the note, or the completion of an
initial public offering in Canada, at which point the Notes and any accrued interest shall automatically convert into common shares.
The conversion price shall be the Initial Public Offering price, less a 50% discount. At September 30, 2017, the principal and
interest outstanding on the notes was $621,124, June 30, 2017 - $130,691, March 31, 2017 - $49,961.
n) On May 24, 2012, a subsidiary Company, CelLynx
Group, Inc., completed a transaction pursuant to a Promissory Note agreement, through which the Company borrowed $37,500. The Note
bears interest at a rate of 8%, and was due on November 24, 2012, (the “Due Date”). The Company could settle
that note within the first 90 days following the issue date by paying to the Lender 140% of the principal amount of the note
plus accrued interest. The Company may settle the note during the period which is 91 days from the issue date of the note to 180
days from the issue date of the note by payment of 150% of the principal amount of the note plus accrued interest. In the event
that the note is not repaid 180 days from the date of issue, the note and accrued interest are convertible into common stock at
a variable conversion price equal to 51% of the average of the three lowest closing bid prices for CelLynx Group, Inc’s common
stock for a period of 10 days prior to the date of notice of conversion. The Company redeemed $21,600 payable on that note, by
the issuance of CelLynx Group, Inc. common shares. As of September 30, 2017, the note is past due. The note principal and
accrued interest outstanding at September 30, 2017 was $66,951, June 30, 2017 - $63,434, March 31, 2017 - $60,135 (December 31,
2016 - $57,041).
o) On September 12, 2012, CelLynx Group, Inc. completed
a transaction pursuant to a Promissory Note agreement, through which the Company borrowed $12,500. The Note bears interest at a
rate of 8%, and is due on March 12, 2013, (the “Due Date”). The Company may settle that note within the
first 90 days following the issue date by paying to the Lender 140% of the principal amount of the note plus accrued interest.
The Company may settle the note during the period which is 91 days from the issue date of the note to 180 days from the issue date
of the note by payment of 150% of the principal amount of the note plus accrued interest. In the event that the note is not repaid
180 days from the date of issue, the note and accrued interest are convertible into common stock at a variable conversion price
equal to 51% of the average of the three lowest closing bid prices for CelLynx Group, Inc’s common stock for a period of
10 days prior to the date of notice of conversion. As of September 30, 2017, the note is past due. The note principal and interest
outstanding at September 30, 2017 was $48,081, June 30, 2017 - $45,555, March 31, 2017 - $43,186 (December 31, 2016 - $40,964). At September 30, 2017, March 31, 2017,
June 30, 2017 and December 31, 2016, all the above debt, was either settled or is in default and is immediately due and payable,
with the exception of the debt referred to in sub-sections (a)(b)(c) & (s) above. | Note 8 – Notes Payable Promissory Notes
5BARz Unpaid Balance Balance Balance
International, Inc. Note Principal Note Terms Unpaid Interest December 31, 2017 December 31, 2016 December 31, 2015
Issue Date
December, 2012 $ 80,000 (a) $ 38,971 $ 118,971 $ 109,911 $ 99,445
January 8, 2013 86,331 (b) 5,565 91,896 86,331 81,977
October 6, 2014 250,000 (c) 8,254 258,254 255,687 253,123
March 6, 2015 — (d) — — — 548,283
May 4, 2015 — (e) — — — 138,000
May 21, 2015 — (f) — — 47,191 174,064
June 15, 2015 — (g) — — 175,000
June 17, 2015 52,500 (h) 30,302 82,802 83,733 82,217
June 18, 2015 — (i) — — 25,000 163,956
June 18, 2015 52,500 (j) 23,116 75,616 64,609 82,193
June 26, 2015 66,667 (k) — 66,667 177,424 176,652
July 17, 2015 — (l) — — — 105,282
July 30, 2015 61,742 (m) — 61,742 158,476 172,167
August 27, 2015 — (n) — — — 92,195
August 27, 2015 — (o) 321,980 321,980 84,033 170,764
October 9, 2015 — (p) — — — 87,514
October 28, 2015 — (q) — — 25,651 152,915
October 30, 2015 — (r) — — 54,713 160,081
Mar – Dec, 2017 1,005,826 (s) 25,620 1,031,446 — —
Sub-total $ 1,655,566 $ 453,808 $ 2,109,374 $ 1,172,759 $ 2,915,828
Cellynx Group, Inc. – Notes Payable
Unpaid Balance Balance Balance
Issue Date Note Principal Note Terms Unpaid Interest December 31, 2017 December 31, 2016 December 31, 2015
May 24, 2012 $ 15,900 (t) $ 54,764 $ 70,664 $ 57,041 $ 46,018
September 12, 2012 12,500 (u) 38,248 50,748 40,964 33,048
CelLynx total $ 28,400 $ 93,012 $ 121,412 $ 98,005 $ 79,066
Sub-total $ 1,683,966 $ 546,820 $ 2,230,786 $ 1,270,764 $ 2,994,894
Debt Discount (111,630 )
Notes payable, net $ 1,683,966 $ 546,820 $ 2,230,786 $ 1,270,764 $ 2,883,264
a) In December 2012, a shareholder purchased 1,600,000
common shares for $80,000. On January 17, 2013, the security was amended to a convertible debenture with an 8% per annum yield
and may be converted into common stock, at the option of the holder, 90 days after the inception of the agreement, at a price which
is a 20% discount to market, but not less than $0.05 per share. During the period from issuance of the convertible debenture
to December 31, 2017, December 31, 2016 and December 31, 2015, interest of $38,971, $29,911 and $19,445 were accrued on the convertible
debenture, respectively, resulting in a total principal and interest due at December 31, 2017 of $118,971 and December 31, 2016
of $109,911 and December 31, 2015 of $99,445. The consolidated financial statements include a derivative liability at December
31, 2017 of $94, December 31, 2016 of $6,219 and December 31, 2015 of $24,861 in connection with this note.
b) On January 8, 2013, the Company entered into
a convertible debenture agreement with a consultant in settlement of $147,428 payable to that consultant for services rendered.
The convertible debenture yields interest at 8% per annum and may be converted into common stock, at the option of the holder,
90 days after the inception of the agreement, at a price which is a 20% discount to market, but not less than $0.05 per share.
As of December 31, 2017, December 31, 2016 and December 31, 2015, interest of $6,564, $6,355 and $5,431 were accrued on the convertible
debenture, respectively. During the years ended December 31, 2017, December 31,2016 and December 31, 2015, $49,000, $50,000 and
$48,000, respectively, were settled by way of conversion into common stock. During 2017, the agreement was amended to add
additional unpaid consulting fees of $48,000 to the principal of note (2016 - $48,000) (2015 - $28,000). The total principal and
interest due under the note at December 31, 2017 is $91,896 (2016 - $86,331) (2015 - $81,977). On September 20, 2017, the conversion
floor price of $0.05 was amended to the lowest price at which the Company is issuing securities to third parties. The Company reflected
a derivative liability at December 31, 2017 of $36,771 (2016 - $4,885) (2015 - $20,494) in connection with this note. On May 1,
2018 the balance of the note at that time of $110,448 was converted into units at a price of $0.03 per unit. Each unit is comprised
of one common share and a warrant to acquire a second share at $0.20, with a warrant term of two (2) years.
c) On October 6, 2014 the Company entered into a
Note and Warrant purchase agreement with three parties who have agreed to provide to the Company additional resources to run operations.
The parties have agreed to loan up to $1,500,000 pursuant to the terms of a convertible promissory note and warrant agreement.
On the closing date, October 6, 2014 the Company received $250,000 cash. The purchasers have agreed that at any time on or before
the earlier of (i) the Purchasers’ election, or (ii) the execution of an engagement letter by and between the Company and
an Investment Banking Firm acceptable to the purchaser relating to the provision of financial advisory services by the Investment
Banking Firm to the Company, that the Company will sell Notes representing the balance of the authorized principal amount not sold
at the Closing to the Purchasers. The convertible note accrues interest at a rate of 1% per annum and provides for the conversion
of the principal and accrued interest on the note into common stock at any time, at the election of the holder at a price of $0.15
per share. Further, the number of warrants to be issued will be equal to the proceeds loaned pursuant to the note and warrant purchase
agreement divided by $0.15. The warrant has a term of five (5) years and provides a strike price of $0.20 per share. The fair value
of warrants at the date of issue was $282,767 using the Black-Scholes pricing model. The convertible promissory note and accrued
interest at December 31, 2017 was $258,253, (2016 - $255,687) (2015 - $253,123). During the year ended December 31, 2017, additional
interest of $2,516 (2016 - $2,548), (2015 - $2,516) was accrued to bring the total principal and interest balance to $258,254 at
December 31, 2017, (2016 - $255,687) (2015 - $253,123). The note matured at December 31, 2016. The note was extended for two additional
one-year terms to December 31, 2018. The note is currently payable on demand.
d) On March 6, 2015 the Company entered into an
agreement with two parties who loaned $400,000 pursuant to the terms of a convertible promissory note. On the closing date, March
6, 2015 the Company received $400,000 cash. The notes matured on September 6, 2015. The loan maturity was extended for an additional
6 months by payment on the original maturity date of unpaid interest, plus a 10% extension fee. The convertible notes accrued interest
at a rate of 15% semi-annually and provided for the conversion of the principal and accrued interest on the note into common stock
at any time, at the election of the holder at a price of $0.05 per share. Further, warrants to acquire up to 12,441,667 shares
which had been issued in conjunction with previous financings from that lender at strike prices ranging from $0.20 to $0.30 per
share are to be re-priced to a strike price of $0.05 per share with the maturity dates changed to March 6, 2016. The Company has
the right to repay the loan by payment of the principal and accrued interest at the date of repayment. On September 6, 2015 the
maturity of the loan was extended for 6 months, with the unpaid interest of $60,000 and $40,000 extension fee being added to the
note payable. At December 31, 2015 unpaid principal and interest on the notes aggregate $548,283. On March 6, 2016 the holders
of the convertible notes provided notice of conversion to settle the unpaid principal and interest under the notes in the aggregate
amount of $575,000 by conversion into common stock at a price of $0.05 per share by issuance of 11,500,000 shares. At December
31, 2016 and 2017, the notes were paid in full.
e) On May 4, 2015, the Company entered into a convertible
note arrangement with an investment Company, in the principal amount of $250,000 of which $100,000 was advanced to the Company
at the inception of the note. The Company agreed to pay an “original issue discount” in an amount up to 10% of the
loan amount, or $10,000. The interest rate on the note is 12%, with 6% being charged on the Issuance Date to the Original Principal
Amount in the amount of $6,600 and the remaining 6% being charged to the Original Principal Amount on the 61th calendar day after
the issuance date provided the note has not been paid in full. The loan may be repaid at any time during the first 120 days of
the note term. The note is convertible into common stock of the issuer at the lesser of $0.09 or a discount to market of 50%, with
the market defined as the lowest trade price for a period of 25 days prior to the conversion, with a conversion floor price at
no lower than $0.001. On November 3, 2015 an amending agreement was entered into providing for the prepayment of the note at any
time up to 9 months from the loan origination date at a rate of 145% of the then unpaid principal and interest due under the note.
On November 6, 2015 the Company issued 200,000 shares pursuant to a notice of conversion of a convertible note at a price of $0.041
per share, for the conversion of $8,200. On November 22, 2015 the Company became delinquent on its filing requirements with the
Securities and Exchange Commission, triggering a default of the note. Upon the Event of Default, the outstanding balance was increased
to 120%. The note is payable on demand. The principal and interest due under the note at December 31, 2015 was $138,000. On
January 20, 2016, the Company entered into a settlement agreement to settle the unpaid $138,000 by the issuance of 20,000 shares
on January 20, 2016, and the commitment to make a series of payments over 8 months, ending September 15, 2016 in the aggregate
amount of $120,000. The Company made the payments under the settlement agreement on February 8, 2016 of $7,500, and on March 15,
2016 of $15,000 as required by the agreement. On May 2, 2016 the Company issued 1,375,500 shares at a price of $0.08 per share
for $15,000, and a further issue of 1,375,500 common shares at a price of $0.06 per share for the remaining $82,500 due under the
note settlement agreement. At December 31, 2016 this note was paid in full (December 31, 2015 - $138,000).
f) On May 21, 2015, the Company entered into a convertible
note arrangement with an investment Company, in the principal amount of $200,000 of which $100,000 was advanced to the Company
at the inception of the note. The Company agreed to pay an “original issue discount” in an amount up to 10% of the
loan amount, or $10,000. The interest rate on the note is 12%. The prepayment penalty of the note is as follows: 5% from day 1
to 90 days, 15% from day 91 to 150 days, 18% from day 151 to 179 days and 25% there- after on buyout of loan. The note is convertible
into common stock of the issuer at a discount to market of 40%, with the market defined as the lowest trade price for a period
of 25 days prior to the conversion, with a conversion floor price at no lower than $0.00001. On November 22, 2015 the Company became
delinquent on its filing requirements with the Securities and Exchange Commission, triggering a default of the note. Upon the Event
of Default, the outstanding balance was increased to 118%, in addition to that, a default penalty payment of $1,000 per business
day was added to the outstanding balance. The principal and interest due under the note at December 31, 2015 was $174,064. On
March 10, 2016, a complaint was filed in relation to the unpaid balance of this note payable. On June 28, 2016, the parties entered
into a settlement agreement in the amount of $153,000 payable in equal payments of $35,000 made in cash or shares issued at market
every 21 days from the date of settlement. On July 14, 2016, 333,333 common shares were issued at a price of $0.105 per share in
lieu of $35,000 cash. On August 4, 2016, an additional 448,717 common shares were issued at a price of $0.078 instead of a $35,000
cash payment. On November 1, 2016, the Company issued 416,446 shares at a price of $0.084 per share for the settlement of convertible
notes payable with a total value of $35,000. On December 5, 2016, the Company issued 594,228 shares at a price of $0.059 per share
for the settlement of a further $35,000. The balance due to the holder at December 31, 2016 was $47,191. On January 6, 2017, the
Company issued a further 673,077 shares at a price of $0.052 per share for a payment of $35,000. On February 6, 2017, the Company
issued a final 234,447 shares at a price of $0.052 for a final settlement amount of $12,191. At December 31, 2017, the balance
due under this note was nil. The lawsuit has been dismissed with prejudice as to defendant.
g) On June 15, 2015, the Company entered into a
convertible note arrangement with an investment company, in the principal amount of $125,000 of which $102,500 was advanced to
the Company at the inception of the note. The Company recorded an interest of $22,500 at inception of the note and issued 250,000
shares at $0.10. The note is convertible into common stock of the issuer at 0.05 if converted within 180 days after the Issuance
Date, or at a discount to market of 35%, with the market defined as the lowest trade price for a period of 20 days prior to the
conversion, with a conversion floor price at no lower than $0.0001, if converted after 180 days. On November 22, 2015, the Company
became delinquent on its filing requirements with the Securities and Exchange Commission, triggering a default of the note. Upon
the Event of Default, the outstanding balance was increased to 140%. The principal and interest due under the note at December
31, 2015 was $175,000. On March 17, 2016, the Company entered into a settlement agreement with the holder providing for a series
of eight monthly payments in the aggregate amount of $175,000, to settle the amount due under the note. On May 3, 2016, the Company
entered into an amended settlement agreement for full settlement of the note for $175,000. The Company issued 1,500,000 common
shares at a price of $0.05 per share in settlement of $75,000 due under the note and agreed to a series of 6 monthly payments each
in the amount of $11,666, commencing May 15, 2016. On May 20, 2016, pursuant to a revised agreement, the settlement was amended
such that the Company issued 1,000,000 common shares at a price of $0.05 per share, for aggregate proceeds of $50,000 to complete
the payments due under the note. At December 31, 2016, the note was paid in full.
h) On June 17, 2015, the Company entered into a
convertible note arrangement with an investment company, in the principal amount of $52,500 of which $50,000 was advanced to the
Company at the inception of the note. The Company recorded 5% interest of $2,500 at inception of the note. The interest rate on
the note is 8%. The prepayment penalty of the note is as follows, 15% from day 1 to 60 days, 21% from day 61 to 90 days, 27% from
day 91 to 120 days, 33% from day 121 to 150 days and 39% from day 151 to 180 days. This note may not be prepaid after the 180 th
i) On June 18, 2015, the Company entered into a
convertible note arrangement with an investment company, in the principal amount of $105,000 of which $100,000 was advanced to
the Company at the inception of the note. The Company agreed to pay an original issue discount of 5% of the loan amount, or $5,000.
The interest rate on the note is 10%. The prepayment penalty of the note is as follows: 15% from day 1 to 60 days, 21% from day
61 to 90 days, 27% from day 91 to 120 days, 33% from day 121 to 150 days and 39% from day 151 to 180 days. This note may not be
prepaid after the 180 th
j) On June 18, 2015, the Company entered into a
convertible note arrangement with an investment company, in the principal amount of $52,500 of which $50,000 was advanced to the
Company at the inception of the note. The Company recorded an interest of $2,500 at inception of the note. The interest rate on
the note is 8%. The prepayment penalty of the note is as follows: 15% from day 1 to 60 days, 21% from day 61 to 90 days, 27% from
day 91 to 120 days, 33% from day 121 to 150 days and 39% from day 151 to 180 days. This note may not be prepaid after the 180 th
k) On June 26, 2015, the Company entered into a
convertible note arrangement with an investment company, in the principal amount of $110,000 of which $104,500 was advanced to
the Company at the inception of the note. The Company agreed to pay an “original issue discount” in an amount of $5,500.
The interest rate on the note is 12%. Upon an Event of Default, the interest rate shall increase to 18%. The prepayment penalty
of the note is as follows: 35% from day 1 to 90 days, 45% from day 91 to 120 days, and 50% there- after on buyout of loan. The
note is convertible into common stock of the issuer at a discount to market of 42%, with the market defined as the lowest trade
price for a period of 20 days prior to the conversion, with a conversion floor price at no lower than $0.0001. On November 22,
2015, the Company became delinquent on its filing requirements with the Securities and Exchange Commission, triggering an Event
of Default of the note. Upon the Event of Default, the interest rate was increased to 18% per annum. On July 6, 2016, a complaint
was filed in the District Court of Dallas County Texas, alleging breach of contract, promissory estoppel as to note, and tortious
interference with Contract (see litigation note 14). On May 31, 2017, the Company and plaintiff entered into a mediation and
settled the law suit by agreement to pay $200,000 in shares at market over six equal monthly payments. The Company paid by way
of shares four payments from June to October 2017 in the aggregate amount of $133,332. The remaining principal and interest due
under the note at December 31, 2017 were $66,667, (2016 – 177,424), (2015 - $176,652). On February 9, 2018, a final judgment
was issued by the Dallas County District court for damages of $92,173.86 plus attorney fees of $15,275. The increase of $25,506,
plus legal fees pursuant to court order was reflected in 2018 as interest and legal fees. On September 7, 2018, the Company paid
$30,000 in cash pursuant to a payment schedule negotiated with the lender for the balance due.
l) On July 17, 2015, the Company entered into a
convertible note arrangement with an investment company, in the principal amount of $66,250 of which $60,000 was advanced to the
Company at the inception of the note. The interest rate on the note is 10%. Upon an Event of Default, the interest rate shall increase
to 24%. The prepayment penalty of the note is as follows: 25% from day 1 to 30 days, 30% from day 31 to 60 days, 35% from day 61
to 90 days, 40% from day 91 to 120 days, 45% from day 121 to 150 days, 50% from day 151 to 180 days. There is no right to prepayment
after 180 days. The note is convertible into common stock of the issuer at a discount to market of 45%, with the market defined
as the lowest trade price for a period of 25 days prior to the conversion, with a conversion floor price at no lower than $0.0001.
On November 22, 2015, the Company became delinquent on its filing requirements with the Securities and Exchange Commission, triggering
an event of default of the note. Upon the Event of Default, the outstanding balance was increased to 150% and the interest rate
was increased to 24% per annum. The note is payable on demand. On January 19, 2016, the Company settled the convertible debt
in the principal and interest amount of $69,626 by the issuance of 1,578,463 shares, at a price of $0.04411 per share. The settlement
amount does not require the payment of default penalties contemplated in the note agreement. The principal and interest due under
the note at December 31, 2017 and 2016 were nil (2015 - $105,282).
m) On July 30, 2015, the Company entered into a
convertible note arrangement with an investment company, in the principal amount of $110,000 of which $100,000 was advanced to
the Company at the inception of the note. The interest rate on the note is 10%. Upon an Event of Default, the interest rate shall
increase to 24%. The prepayment penalty of the note is as follows, 35% from day 1 to 90 days, and 50% there- after on buyout of
loan. The note is convertible into common stock of the issuer at a discount to market of 42%, with the market defined as the lowest
trade price for a period of 25 days prior to the conversion, with a conversion floor price at no lower than $0.00001. On November
22, 2015, the Company became delinquent on its filing requirements with the Securities and Exchange Commission, triggering an event
of default of the note. Upon the event of default, the outstanding balance was increased to 150%. The note is payable upon demand.
On August 31, 2016, the Company and lender completed a settlement agreement, to repay $188,500, payable in six monthly payments,
in cash or shares over a six-month period in full settlement of the note. On November 1, 2016, the Company paid $30,023 by delivery
of 389,910 common shares. At December 31, 2016, the balance due under the note agreement was $158,477 (2015 - $172,167). During
2017 the Company made three additional payments by delivery of an aggregate of 1,969,747 shares with a market value of $96,659.
The outstanding balance at December 31, 2017 is $61,818. On June 7, 2018, a complaint was filed in the United States Court, Southern
District of New York against 5BARz International, Inc. by the lender, EMA Financial LLC (see litigation note 14). The complaint
requests specific performance under the agreements, claims breach of contract, injunctive relief, costs and attorney fees. The
Company expects to recommence its payment schedule when the Company’s filings with the SEC are current, and shares will again
be accepted by the lender in settlement of the settlement amount.
n) On August 27, 2015, the Company entered into
a convertible note arrangement with an investment company, in the principal amount of $59,000 of which $55,000 was advanced to
the Company at the inception of the note. The interest rate on the note is 12%. Upon an Event of Default, the interest rate shall
increase to 24%. The prepayment penalty of the note is 40%. The note is convertible into common stock of the issuer at a discount
to market of 42%, with the market defined as the lowest trade price for a period of 20 days prior to the conversion, with a conversion
floor price at no lower than $0.000058. On November 22, 2015, the Company became delinquent on its filing requirements with the
Securities and Exchange Commission, triggering an event of default of the note. Upon the event of default, the outstanding balance
was increased to 150%. The note is payable upon demand. On February 26, 2016, the Company settled the convertible debt for an aggregate
amount of $83,900. The settlement agreement provides for the issuance of 312,650 common shares at a price of $0.05 per share for
aggregate proceeds of $15,632 issued on February 26, 2016 and the balance to be repaid by a series of monthly payments in the aggregate
amount of $68,268 over a five-month period commencing on April 15, 2016. The Company issued 391,740 common shares at a price of
$0.06 per share on May 15, 2016 for a value of $23,504. On July 15, 2016, the Company issued $22,655 in 323,648 common shares at
a price of $0.07 per share. On November 4, 2016, the Company issued 315,836 shares at a price of $0.07 for a value of $22,109.
The outstanding settlement balance at December 31, 2016 was nil (2015 - $92,195).
o) On August 27, 2015, the Company entered into
a convertible note arrangement with an investment company, in the principal amount of $110,000 of which $100,000 was advanced to
the Company at the inception of the note. The Company agreed to pay an “original issue discount” in an amount up to
10% of the loan amount, or $10,000. The interest rate on the note is 10%. The prepayment penalty of the note is as follows, 35%
from day 1 to 90 days, 45% from day 91 to 180 days. This note may not be prepaid after the 180 th
p) During the period October 7, 2015 to October
10, 2015, the Company entered into four convertible note arrangements with certain investors in the principal amount of $85,000.
Interest is accrued on the notes at a rate of 8% per annum, and the notes mature one year from the date of issue. The notes are
convertible after 183 days by the borrower at a conversion price of the lesser of $0.05 per share or 70% of market, defined as
the lowest trade price for a period 20 days prior to the notice of conversion, if VWAP . In no case may the debt be converted at less than $0.01 per share. The Company
may prepay the note principal and interest at a rate of 125% of principal and interest within 90 days of the issue date and at
a rate of 135% after 90 days from the issue date. On November 22, 2015, the Company became delinquent on its filing requirements
with the Securities and Exchange Commission, triggering an event of default of the note. Upon the event of default, the interest
rate was increased to 20% per annum. The notes are payable upon demand. On September 6, 2016, one convertible note principle and
interest of $37,567 was settled for 751,333 common shares at a price of $0.05 per share. Further on September 27, 2016, a second
convertible note principle and interest of $17,390 was settled by the issuance of 347,808 common shares at a price of $0.05 per
share. On November 3, 2016, a third note agreement was settled by the issuance of 116,447 shares at $0.05 for proceeds of $5,822.
On December 12, 2016, the fourth note agreement was settled by the issuance of 656,548 shares at $0.05 per share for aggregate
proceeds of $32,827. The balance due under the four convertible note agreements at December 31, 2016 was nil, (2015 - $87,514).
q) On October 28th, 2015, the Company entered into
a convertible note arrangement with an investment company, in the principal amount of $100,000. Interest is accrued on the note
at a rate of 12% per annum, and the note matured on July 28, 2016. The note is convertible at any time by the borrower at a conversion
price which is the lesser of closing sale price on the close date of the note or 60% of market, defined as the lowest trade price
for a period 25 days prior to the notice of conversion. The Company may prepay the note principal and interest at rates from 145%
of principal and interest within 180 days from the issue date. After 180 days the note may not be prepaid. On November 22, 2015,
the Company became delinquent on its filing requirements with the Securities and Exchange Commission, triggering an event of default
of the note. Upon the event of default, the outstanding balance was increased to 150%. The note is payable upon demand. On May
2, 2016, the Company entered into a settlement agreement, to pay $153,912 by way of six monthly payments, each in the amount of
$25,652, with the first payment due on May 15, 2016. Two of the six payments were completed on May 31, 2016 and June 20, 2016.
On August 15, 2016, the Company issued 388,667 common stock at a price of $0.066 per share in payment of $25,652 under the settlement
agreement. On November 3, 2016, the Company paid an additional $25,262 by the issuance of 360,886 common shares at a price of $0.07
per share. On December 7, 2016, $26,042 was paid by the issuance of 520,840 shares at $0.05 per share. At December 31, 2016, the
balance due under the note agreement was $25,652 (2015 – 153,912). The final payment was made on January 6, 2017 by way of
issuance of 513,040 shares at a price of $0.05 per share for aggregate proceeds of $25,652.
r) On October 30, 2015, the Company entered into
a convertible note arrangement with an investment company, in the principal amount of $105,000 of which $100,000 was advanced to
the Company at the inception of the note. Interest is accrued on the note at a rate of 8% per annum, and the note matures on October
30, 2016. The note is convertible at any time by the borrower at a conversion price which is the lesser of closing sale price on
the close date of the note or 60% of market, defined as the lowest trade price for a period 10 days prior to the notice of conversion.
The Company may prepay the note principal and interest as follows, 125% from day 1 to 90 days, 140% from day 91 to 180 days, 150%
after 180 days. On November 22, 2015, the Company became delinquent on its filing requirements with the Securities and Exchange
Commission, triggering an event of default of the note. Upon the Event of Default, the outstanding balance was increased to 150%
and the interest rate was increased to 18% per annum. The note is payable upon demand. On May 31, 2016, the Company entered into
a settlement agreement to make a series of six payments, each in the amount of $27,354, for an aggregate amount of $164,128, in
full settlement of the amounts due under this note agreement. On May 31, 2016, the Company issued 547,100 common stock at a price
of $0.05 per share valued at $27,355. On June 30, 2016, the Company issued another 547,100 common shares at a price of $0.05 valued
at $27,355. On November 8, 2016, the Company issued a further 405,259 shares at a price of $0.0675 per share for proceeds of $27,355.
On December 7, 2016, the Company issued 547,100 shares at a price of $0.05 per share for a payment of $27,355. At December 31,
2016, the balance outstanding on the note was $54,708 (2015 - $160,081). On January 6, 2017, the Company issued an additional 547,080
shares at $0.05 per share for a payment of $27,354. On February 28, 2017, the Company issued 526,038 shares at $0.052 for a final
payment of $27,354. On December 31, 2017 the balance due was nil, (2016 - $54,708), (2015 - $160,081).
s) During the period March 24, 2017 to December
21, 2017, the Company entered into 43 Unsecured Convertible Promissory Note agreements in Canada, for aggregate proceeds of $1,005,826
USD ($1,276,650 CAD.). The notes provide for interest at a rate of 10% per annum payable on a semi-annual basis. The maturity of
the notes shall occur on the earlier of the date that is 12 months from the effective date of the note, or the completion of an
initial public offering in Canada, at which point the Notes and any accrued interest shall automatically convert into common shares.
The conversion price shall be the Initial Public Offering price, less a 50% discount. At December 31, 2017, the principal and interest
outstanding on the notes was $1,031,446, (2016 – Nil).
t) On
May 24, 2012, a subsidiary Company, CelLynx Group, Inc., completed a transaction pursuant to a Promissory Note agreement,
through which the Company borrowed $37,500. The Note bears interest at a rate of 8%, and was due on November 24, 2012, (the
“Due Date”). The Company could settle that note within the first 90 days following the issue date by
paying to the Lender 140% of the principal amount of the note plus accrued interest. The Company may settle the note
during the period which is 91 days from the issue date of the note to 180 days from the issue date of the note by payment of
150% of the principal amount of the note plus accrued interest. In the event that the note is not repaid 180 days from the
date of issue, the note and accrued interest are convertible into common stock at a variable conversion price equal to 51% of
the average of the three lowest closing bid prices for CelLynx Group, Inc.’s common stock for a period of 10 days prior
to the date of notice of conversion. The Company redeemed $21,600 payable on that note, by the issuance of CelLynx Group,
Inc. common shares. As of December 31, 2017, the note is past due. The note principal and accrued interest outstanding
at December 31, 2017 were $70,664 (2016 - $57,041), (2015 - $46,018).
u) On September 12, 2012, CelLynx
Group, Inc. completed a transaction pursuant to a Promissory Note agreement, through which the Company borrowed $12,500. The
Note bears interest at a rate of 8%, and is due on March 12, 2013, (the “Due Date”). The Company may
settle that note within the first 90 days following the issue date by paying to the Lender 140% of the principal amount
of the note plus accrued interest. The Company may settle the note during the period which is 91 days from the issue date of
the note to 180 days from the issue date of the note by payment of 150% of the principal amount of the note plus accrued
interest. In the event that the note is not repaid 180 days from the date of issue, the note and accrued interest are
convertible into common stock at a variable conversion price equal to 51% of the average of the three lowest closing bid
prices for CelLynx Group, Inc’s common stock |
