CONVERTIBLE NOTES PAYABLE | Note 5. CONVERTIBLE NOTES PAYABLE Note Payable-BS In March 2011, the Company issued $800 aggregate principal amount of 6% convertible notes due in January 2012. Interest on the notes accrue at the rate of 6% per annum and are payable when the notes mature. The notes matured prior to conversion but have not been repaid. Interest continues to accrue at the rate of 6% per annum. The holder of one of the notes converted $110 of note principal into 1,100,000 shares of common stock as follows: Principal Amount Converted Conversion Rate Shares Received Date of Conversion June 2013 $ 70 $ 0.0001 700,000 August 2013 $ 40 $ 0.0001 400,000 In August 2013, in a private transaction, the same note holder transferred $330 of the remaining note principal plus $55 in accrued interest to a third party. In August 2013, in a private transaction, the new note holder transferred $5 of the remaining note principal to a third party who then converted the note into 50,000 shares of common stock. In September 2013, the new note holder converted $100 of note principal into 1,000,000 shares of common stock. In September 2013, in a private transaction, the new note holder transferred $35 of the remaining note principal to a third party who then converted the note into 350,000 shares of common stock. In November and December 2013, the new note holder converted an additional $90 of note principal into 900,000 shares of common stock as follows: Date of Conversion Principal Amount Converted Conversion Rate Shares Received November 2013 $ 40 $ 0.0001 400,000 December 2013 $ 50 $ 0.0001 500,000 In March and April 2014, the new note holder converted an additional $90 of note principal into 900,000 shares of common stock as follows: Date of Conversion Principal Amount Converted Conversion Rate Shares Received March 2014 $ 50 $ 0.0001 500,000 April 2014 $ 40 $ 0.0001 400,000 Subsequent to these conversions there remains $125 in note principal outstanding at December 31, 2017. Note Payable-SF In July 2013, the holder of the second note converted $240 of note principal into 400,000 shares of the Company’s common stock at $0.0006 per share. At December 31, 2017 and December 31 2016, the note had a remaining principal balance of $60 and $60, respectively. At any time on or after the maturity date, the holders of the notes, have the option of converting any of the unpaid principal and interest into the Company’s common stock. The notes plus any accrued but unpaid interest are convertible at the rate of $0.0001 per share at the time of conversion up to a maximum of 9.99% of the then issued and outstanding common stock, or 84,858,757 shares at December 31, 2017 and 22,562,213 shares at December 31, 2016. Note Payable-RK In May 2012, the Company issued a $25,000 6% per annum note that matured in November 2012. In December 2012 the note was amended to be a convertible note. Interest on the note accrues interest at 6% per annum and is payable when the note matures. The holder of the $25,000 note had the option of converting it at any time prior to maturity. The note plus any accrued but unpaid interest were convertible at the rate of $0.001 per share at the time of conversion up to a maximum of 9.99% of the then issued and outstanding common stock. The holder of the note converted $1,010 of note principal into 1,010,000 shares of common stock as follows: Principal Amount Converted Conversion Rate Shares Received Date of Conversion December 2012 $ 150 $ 0.001 $ 150,000 January 2013 $ 660 $ 0.001 $ 660,000 March 2013 $ 200 $ 0.001 $ 200,000 In July 2013, the Company retired $14,000 of note principal in payment for consulting services provided to the note holder. In July 2013, the note holder converted $300 of note principal into 300,000 shares of the Company’s common stock. In July 2013, in a private transaction, the note holder transferred the remaining note principal balance of $9,690 to a third party (See Note Payable-NW Note Payable-NW After receiving the transfer of the principal balance of $9,690 in July 2013 in the private transaction noted in Note Payable-RK In October 2013, the note holder converted $400 of note principal into 400,000 shares of the Company’s common stock at $0.001 per share. In October 2014, the note holder converted $1,100 of note principal into 1,100,000 of the Company’s common stock. The note holder has the option of converting the balance at any time with the approval of the Board of Directors. The note plus any accrued but unpaid interest are convertible at the rate of $0.001 per share at the time of conversion up to a maximum of 9.99% of the then issued and outstanding common stock, or 84,858,757 shares at December 31, 2017 and 22,562,213 shares at December 31, 2016. In August 2016, the note holder converted $3,000 of note principal into 3,000,000 shares of the Company’s common stock. At December 31, 2017 and December 31, 2016, the remaining principal balance on this portion of the note is $715 and $715 respectively. Note Payable-MC #1 In August 2013, the note holder/stockholder who received the $4,475 in principal from the aforementioned noteholder, converted $700 of note principal into 700,000 shares of the Company’s common stock at $0.001 per share. In October 2013, in a private transaction, this note holder transferred $1,000 of note principal to a third party of which $700 was converted into 700,000 shares in June 2014. In January 2017 the remaining $2,075 principal balance on this note was transferred to another investor who during the same period converted the entire remaining principal balance into 4,190,480 common shares. Note Payable-MC #2 In April 2015, the Company issued a $3,000 8% per annum note that matures in October 2015. The holder of the note has the right to convert the principal into shares of the Company’s common stock at any time 180 days after the closing date at $0.0001 per share. Interest on the note accrues interest at 8% per annum and is payable when the note matures. During January 2017, the current noteholder converted $1,100 in principal balance into 11,000,000 shares of common stock. During the same period, the current noteholder transferred $600 of the remaining principal balance to another investor who then converted the entire principal balance he received into 6,000,000 shares of common stock. During April 2017, the current noteholder converted $410 of remaining principal into 6,000,000 shares of common stock. There remains $890 in principal balance at December 31, 2017 with the current noteholder and $3,000 in principal balance with the original noteholder at December 31, 2016. Convertible Note Payable-VV to LG (8%)#1 In July 2015, the Company issued a convertible note payable in the principal amount of $59,000. The note matured in March 2016 and bears interest at 8%. Beginning 180 days following the closing date the note holder shall have the right to convert any or all of the outranking principal balance into shares of the Company’s common stock at the discounted rate of 55% of the average of the three lowest market trading prices during the 10 days immediately preceding the conversion date. Through a series of conversions during 2016, the note holder converted all of the entire note principal and accrued interest into common stock thereby leaving no principal balance remaining on the note at December 31, 2017 and December 31, 2016. Convertible Note Payable-VV (8%) #2 In August 2015, the Company issued a convertible note payable in the principal amount of $38,000. The note matured in March 2016 and bears interest at 8%. Beginning 180 days following the closing date the note holder shall have the right to convert any or all of the outranking principal balance into shares of the Company’s common stock at the discounted rate of 55% of the average of the three lowest market trading prices during the 10 days immediately preceding the conversion date. Through a series of conversions during 2016, the note holder converted all of the entire note principal and accrued interest into common stock thereby leaving no principal balance remaining on the note at December 31, 2017 and December 31, 2016. Convertible Note Payable-LGC(8%) On October 8, 2015, the Company issued a convertible note payable in the principal amount of $31,000 with an Original Issue Discount of $1,500. The note matures on October 8, 2016 and bears interest at 8%. The note holder has the right at any time to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock at the discounted rate of 58% of the lowest market trading price during the 20 days prior to and including the conversion date. Through a series of conversions during 2016, the note holder converted all of the entire note principal and accrued interest into common stock thereby leaving no principal balance remaining on the note at December 31, 2017 and December 31,2016. Debenture Payable - (5%) B (Original $100K) In June 2015, the Company issued a convertible note payable in the principal amount of $100,000. The note matures in December 2015 and bears interest at 5%. Beginning 180 days following the closing date the note holder shall have the right to convert any or all of the outranking principal balance into shares of the Company’s common stock at the discounted rate of 50% of the average of the three lowest market trading prices during the 3 days immediately preceding the conversion date. The remaining principal balance on the note at June 30, 2016 was $40,000 after a private sale of $60,000 in principal and deemed accrued interest on May 2, 2016 to another investor and the issuance of a replacement note by the Company - see below- Convertible Note Payable-SO-B (8%) (Original $60k). On September 27, 2016 the remaining $40,000 in principal balance and accrued interest on the note was sold in a private transaction to another investor and the Company issued a replacement note in the amount of $50,000. Both of the above noted transactions which took place on May 2, 2016 and September 27, 2016 respectively, resulted in a loss on the extinguishment of the original debt in the amount of $4,733 from deeming accrued interest in excess of actual accruals. This loss is reported in the statement of operations for the year ended December 31, 2016. Through a series of conversions during 2016, the note holder converted all of the entire note principal and accrued interest into common stock thereby leaving no principal balance remaining on the note at December 31, 2017 and December 31,2016. As a result of the aforementioned transactions and conversions, there is no principal balance remaining on the original $100,000 note as of December 31, 2017 and December 31,2016. Convertible Note Payable-SO-B (8%) (Original $60k) On May 2, 2016, the Company issued to an Investor a replacement redeemable convertible note in the principal amount of $60,000 (“the Replacement Note”). The Note, which matures on May 2, 2017, pays interest at the rate of 8% per annum. This Replacement Note partially replaces a note originally issued on June 12, 2015 in the principal amount of $100,000. The holder of the note is entitled, at its option beginning on the 6 month anniversary, to convert all or any of the principal face amount of the Note then outstanding into shares of the Company’s common stock at the price equal to 55% of the lowest trading price for the twenty prior trading days including the date of conversion. Any unamortized original issue discount and deferred financing costs from the original note was expensed upon replacement. The derivative discount and liability on the original note was appropriately accounted for upon replacement and a new derivative discount and liability for the replacement note appropriately recorded. Through a series of conversions during 2016, the note holder converted all of the entire note principal and accrued interest into common stock thereby leaving no principal balance remaining on the note at December 31,2016. Convertible Note Payable-CB (5%) (Original $35k) On October 15, 2015 the Company issued a convertible note payable in the principal amount of $35,000 with an Original Issue Discount of $5,000. The note matures on October 15, 2016 and bears interest at 5%. The note holder has the right at any time on or after the day that is six months from October 15, 2015 to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock at the discounted rate of 55% of the lowest market trading prices during the 20 days prior to the conversion date. During the months of May, June and July 2016, the holder of the above $35,000 Note converted all of the principal to common stock thereby leaving no principal balance payable on the note as of December 31, 2017 and December 31, 2016. Convertible Note Payable-LGC (8%) On January 7 2016, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an accredited investor (the “Investor”) for the sale of convertible redeemable notes in aggregate principal amount of $251,803. On January 7, 2016, the Company and the Investor conducted the first closing under the Purchase Agreement, pursuant to which the Company issued to the Investor (i) a convertible redeemable note in principal amount of $105,000 containing an original issue discount of $20,000 (the “$105K Note”); and (ii) a convertible redeemable note in principal amount of $50,000 (the “$50K Note” and together with the $105K Note, the “Notes”). Under the Purchase Agreement, on March 15, 2016 and June 15, 2016, the Company and the Investor conducted additional closings for the sale and purchase of additional notes having the same terms as the Notes in principal amounts equal to $50,000 and $46, 803, respectively (see Convertible Notes Payable-LGC (8%) BEN Convertible Notes Payable-LGC (8%) BEN In consideration for the issuance of the $105K Note, on January 13, 2016, the Company received net proceeds (after deducting the original issue discount and legal fees) in the amount of $75,697. In consideration for the issuance of the $50K Note, the Investor issued to the Company a $50,000 fully-collateralized secured promissory note (the “Investor Note”), pursuant to which the Investor agreed to pay the Company $50,000 on or before April 30, 2016. The Notes, which are due on January 7, 2017, bear interest at the rate of 8% per annum. Subject to a beneficial ownership limitation equal to 9.99%, principal and interest on the Notes is convertible into shares of the Company’s common stock (“Common Stock”) at a conversion price equal to 55% of the lowest trading price of Common Stock during the 20 trading-day period prior to conversion. In accordance with the terms of the Purchase Agreement, the investor and the Company closed on the two outstanding notes ($50,000 and $46,803) in May and June 2016 when the Company received the cash funding. During April 2017 the noteholder converted the entire principal balance of the $50,000 note into common stock of the Company. During June 2017 the noteholder converted $16,000 of the remaining principal of the $46,803 note into common stock of the Company. In July and September 2017 the noteholder converted the remaining $30,803 of the note’s principal balance into common stock. As a result, there is no principal balance remaining on either note as of December 31, 2017. As of December 31, 2016 the entire principal balances of $50,000 and $46,803 were outstanding. Convertible Notes Payable-SO (8%) On May 2, 2016, the Company issued to an Investor a convertible redeemable note in the principal amount of $57,750 (“the Note”). The Note, which matures on May 2, 2017, pays interest at the rate of 8% per annum. The note contains a 10% original issue discount. The holder of the note is entitled, at its option beginning on the 6 month anniversary, to convert all or any of the principal face amount of the Note then outstanding into shares of the Company’s common stock at the price equal to 55% of the lowest trading price for the twenty prior trading days including the date of conversion. During the quarter ended March 31, 2017 the noteholder converted $32,298 of the principle balance into 23,489,690 shares of common stock thereby leaving a principal balance of $25,452 on the note at December 31, 2017. The entire principal balance in the amount of $57,750 was outstanding on the note at December 31, 2016. Convertible Notes Payable-LG (9%) On October 11, 2016, the Company issued to an Investor a replacement convertible note in the principal amount of $50,000 (“the Replacement Note”). The Note, which matures on March 27, 2018, pays interest at the rate of 9% per annum. This Replacement Note partially replaces a note originally issued on June 12, 2015 in the principal amount of $100,000. During the quarter ended December 31, 2016 the noteholder converted the entire principal balance into shares of common stock thereby leaving $-0- principal balance remaining on the note as of December 31, 2017 and December 31, 2016. Convertible Notes Payable-BBCG (9%) On October 11, 2016, the Company issued to an Investor a convertible note in the principal amount of $157,895 (“the Note”). The Note, which matures on March 27, 2018, pays interest at the rate of 9% per annum. The note contains an original issue discount in the amount of $7,895. The holder of the note is entitled, at its option beginning on the 6 month anniversary, to convert all or any of the principal face amount of the Note then outstanding into shares of the Company’s common stock at the price equal to 57.5% of the lowest trading price for the twenty prior trading days including the date of conversion. During April and June of 2017, the noteholder converted the entire remaining principal balance of the note into common stock of the Company. There is no principal balance remaining on the note as of December 31, 2017. The entire $157,895 principal balance was outstanding on the note as of December 31, 2016. Convertible Notes Payable - Funding (8%) On May 1 2017, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an accredited investor (the “Investor”) for the sale of 8 convertible redeemable notes in aggregate principal amount of $1,012,500. On May 1st, 2017 and June 2, 2017, the Company and the Investor conducted the first two closings under the Purchase Agreement, pursuant to which the Company issued to the Investor (i) a convertible redeemable note in principal amount of $131,250 (the “$131K Note”) ; and (ii) a convertible redeemable note in principal amount of $125,000 (the “$125K Note”). On July 10, 2017 and August 7, 2017, the Company and the Investor conducted the second two closings under the Purchase Agreement, pursuant to which the Company issued to the Investor two convertible redeemable notes each in the principal amount of $125,000; Under the Purchase Agreement, on January 1, 2018, February 2, 2018, March 10, 2018 and April 7, 2018 the Company and the Investor expected to conduct additional closings for the sale and purchase of additional notes having the same terms as the Notes in principal amounts equal to $131,250, $125,000, $125,000 and $125,000 respectively (the “back-end notes”). However, all these “back-end notes” were cancelled in early 2018 and will not fund. According, all the “back-end” notes were removed from the books at December 31, 2017 along with the associated investor notes receivable. In addition, all previously accrued interest expense and interest income has been removed on these “back-end notes” for the period ended December 31, 2017. In consideration for the issuance of the $131K Note and the $125K Note, on May 1, 2017 and June 2, 2017 and for the two $125k Notes on July 10, 2017 and August 7, 2017, the Company received net proceeds (after deducting $25,000 in legal fees) in the amount of $481,250. In consideration for the issuance of the $131K and the three $125k Notes, the Investor issued to the Company a $131,250 fully-collateralized secured promissory note and three $125,000 fully-collateralized secured promissory notes (the “Investor Notes”), pursuant to which the Investor agreed to pay the Company $131,250 and $375,000 on or before January 1, 2018, February 2, 2018, March 10, 2018 and April 7, 2018 respectively. These Notes (often referred to as “back-end Notes”), bear interest at the rate of 8% per annum. However, all these “back-end notes” were cancelled in early 2018 and will not fund. According, all the “back-end” notes were removed from the books at December 31, 2017 along with the associated investor notes receivable. In addition, all previously accrued interest expense and interest income as been removed on these “back-end notes” for the period ended December 31, 2017. The two notes issued May 1, 2017 ($131,250) and June 2, 2017 ($125,000) became convertible on October 28, 2017 and December 4, 2017 respectively and required derivative treatment at that time. The embedded derivative was bifurcated and accounted for separately along with the derivative discount. The derivative liability is marked-to-market each quarter with the resulting gain or loss valuation being reported in the statement of operations. During the quarter ended December 31, 2017 (after the six-month waiting period) the holder of the original note in the principal amount of $131,250 converted $21,500 and $15,350 of the note’s principal balance into 35,0358,103 and 39,713,817 shares of the Company’s common stock, respectively. The principal balance remaining on this convertible note is $94,400 as of December 31,2017. Convertible Notes Payable - JR (5%) On August 2, 2017 the Company issued a convertible note payable (promissory note) to an investor in the principal amount of $50,000. The note matures on August 2, 2018 and bears interest at 5%. The note holder has has the right at any time on or after the day that is six months from August 2, 2018 to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock at a fixed price of .003 per share. The entire principal balance of $50,000 is outstanding as of December 31, 2017 Convertible Notes Payable - MLM (10%) As more fully described in Note 1 to the financial statements, on March 8th 2016 (with an effective date of October 1, 2015), the company, through it’s sole wholly-owned subsidiary (“Licensee”), entered into a Product and Know-How License Agreement (“Agreement”) with a Florida Corporation (“Licensor”) which is owned by a related party - the son of the Company’s CEO. The consideration for the licensing agreement consisted of the issuance of 25,000 Series B Preferred stock shares to the Licensor (at par) plus a $150,000 promissory note issued by the Company to the licensor. During the quarter-ended June 30, 2017, $18,986 in accrued interest was satisfied through the issuance of 17,272,727 shares of the Company’s common stock. On September 15, 2017 the Note was amended to include provisions to allow conversion of the Note into common stock of the Company. At such time the Note was valued with its embedded derivative and discount. On September 25, 2017, $16,250 in principal on this note was satisfied by the conversion into 25,000,000 shares of the Company’s common stock leaving a balance on the note of $133,750 at December 31, 2017. The Company’s convertible notes payable and the related derivative liabilities, derivative discount, deferred financing costs and original-issue discount are presented in the financial statements at December 31, 2017 as follows: Remaining Original Deferred Total Convertible 12/31/2017 Principal Issue Derivative Financing Notes Derivative Debt Amount Discount Discount Costs Payable Liability Note Payable - BS $ 125 $ 125 Note Payable - SF 60 60 Note Payable - SD 15,000 15,000 Note Payable - NW 715 715 Note Payable - MC #2 890 890 Convertible Note Payable - JR (5%) 50,000 50,000 Convertible Note Payable - CB (5%) - - 832 Convertible Notes Payable- SO (8%) 25,452 25,452 24,925 Convertible Note Payable - LGC (8%) 1 94,400 (59,267 ) (317 ) 34,816 52,989 Convertible Note Payable - LGC (8%) 2 125,000 (83,380 ) (2,072 ) 39,548 64,458 Convertible Note Payable - LGC (8%) 3 125,000 (3,271 ) 121,729 Convertible Note Payable - LGC (8%) 4 125,000 (3,750 ) 121,250 Convertible Note Payable - MLM (10%) 133,750 (129,234 ) 4,516 108,682 $ 695,392 $ - $ (271,881 ) $ (9,410 ) $ 414,101 $ 251,886 As of December 31, 2017, the convertible notes payable can be converted into approximately 1,039,477,572 shares of common stock. |