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 shares of common stock as follows: Date of Conversion Principal Amount Converted Conversion Rate Shares Received June 2013 $ 70 $ 0.0001 700 August 2013 $ 40 $ 0.0001 400 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 shares of common stock. In September 2013, the new note holder converted $100 of note principal into 1,000 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 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 December 2013 $ 50 $ 0.0001 500 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 April 2014 $ 40 $ 0.0001 400 Subsequent to these conversions there remains $125 in note principal outstanding at December 31, 2018. Note Payable-SF In July 2013, the holder of the second note converted $240 of note principal into 400 shares of the Company’s common stock at $0.0006 per share. At December 31, 2018 and December 31 2017, 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 347,936 shares at December 31, 2018 and 84,859 shares at December 31, 2017. 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 shares of common stock as follows: Date of Conversion Principal Amount Converted Conversion Rate Shares Received December 2012 $ 150 $ 0.001 150 January 2013 $ 660 $ 0.001 660 March 2013 $ 200 $ 0.001 200 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 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 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 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 347,936 shares at December 31, 2018 and 84,858,757 shares at December 31, 2017. 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, 2018 and December 31, 2017, the remaining principal balance on this portion of the note is $715 and $715 respectively. 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 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 shares of common stock. During April 2017, the current noteholder converted $410 of remaining principal into 6,000 shares of common stock. There remains $890 in principal balance at December 31, 2018 with the current noteholder and $890 in principal balance with the original noteholder at December 31, 2017. 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, 2018 and December 31, 2017. 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 23,490 shares of common stock thereby leaving a principal balance of $25,452 on the note at December 31, 2017. During the first quarter of 2018, the noteholder converted $23,000 of the principle balance into 122,727 shares of common stock thereby leaving a principal balance of $2,452 on the note at June 30, 2018. During the quarter ended September 30, 2018, the noteholder converted the remaining balance of the note into 148,316 shares on common leaving no balance due on the note as of December 31, 2018. There is $12,896 in accrued interest and penalty assessments on this note as of December 31, 2018 which is included in accrued expenses payable on the balance sheet. 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, 2018 and December 31, 2017. 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. Accordingly, 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. 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 35,058 and 39,714 shares of the Company’s common stock, respectively. The principal balance remaining on this convertible note is $94,400 as of December 31,2017. During the quarter ended March 31, 2018 the holder of the original note converted, through four separate conversion transactions, a total of $38,870 of the note’s principal balance into total of 193,384 shares of the Company’s common stock. During the quarter ended June 30, 2018 the holder of the original note converted $10,030 of the note’s principal balance into total of 62,015 shares of the Company’s common stock. During the quarter ended September 30, 2018 the holder of the original note converted $2,200 of the note’s principal balance into total of 69,439 shares of the Company’s common stock. During the quarter ended December 31, 2018 the holder of the original note converted $10,640 of the note’s principal balance and $1,312 of accrued interest into total of 148,545 shares of the Company’s common stock. The principal balance remaining on this convertible note is $32,660 as of December 31, 2018. 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 embedded derivative on the note was valued and bifurcated effective October 1, 2018. During the quarter ended December 31, 2018, $4,500 in principal on this note was satisfied by the noteholder converting such amount into 150,000 shares of the Company’s common stock. The remaining principal balance outstanding on the note is $45,500 as of December 31, 2018. 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 17,273 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 it’s embedded derivative and discount. On September 25, 2017, $16,250 in principal on this note was satisfied by the conversion into 25,000 shares of the Company’s common stock leaving a balance on the note of $133,750 at December 31, 2017. During the year ended December 31, 2018 the Company made cash paydowns to the noteholder in the total amount of $32,550. In addition, $30,195 in principal balance on the note was converted into 495,000 shares of the Company’s common stock. The ending principal balance on this note at December 31, 2018 is $51,005 to the original noteholder. During the year-ended December 31, 2018 the unrelated third-party noteholder converted $3,350 in principal balance into 120,000 shares of the Company’s common stock thereby leaving a principal balance to this unrelated noteholder in the amount of $16,650. Convertible Notes Payable - LG (8%) (Notes 5 & 6) On January 25, 2018 the Company issued a convertible note payable (promissory note) to an investor in the principal amount of $78,750. The note matures on January 25, 2019 and bears interest at 8%. The note holder has has the right at any time on or after the day that is six months from January 25, 2018 to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock. The entire principal balance of $78,750 is outstanding as of December 31, 2018. On June 4, 2018 the Company issued a convertible note payable (promissory note) to an investor in the principal amount of $52,500. The note matures on June 4, 2019 and bears interest at 8%. The note holder has has the right at any time on or after the day that is six months from June 4, 2018 to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock. The entire principal balance of $52,500 is outstanding as of December 31, 2018. Convertible Notes Payable - PULG (8%) (Notes 1 & 2) On October 1, 2018 the Company issued a convertible note payable (convertible promissory note PULG (8%) Note 1) to an investor in the principal amount of $58,000. The note matures on April 1, 2020 and bears interest at 8%. The note holder has has the right at any time on or after the day that is six months from October 1, 2018 to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock. The entire principal balance of $58,000 is outstanding as of December 31, 2018. On November 19, 2018 the Company issued a convertible note payable (convertible promissory note PULG (8%) Note 2) to an investor in the principal amount of $65,000. The note matures on May 19, 2020 and bears interest at 8%. The note holder has has the right at any time on or after the day that is six months from November 19, 2018 to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock. The entire principal balance of $65,000 is outstanding as of December 31, 2018. 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, 2018 as follows: 12/31/2018 Remaining Original Deferred Total Principal Issue Derivative Financing Convertible Derivative Debt Amount Discount Discount Costs Notes 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%) 45,500 (45,486 ) 14 51,639 Convertible Note Payable - HG (10%) 16,650 16,650 Convertible Note Payable - CB (5%) - - 1,431 Convertible Notes Payable- SO (8%) - - - Convertible Note Payable - LGC (8%) 1 32,660 32,660 15,356 Convertible Note Payable - LGC (8%) 2 125,000 - 125,000 22,713 Convertible Note Payable - LGC (8%) 3 125,000 - - 125,000 22,743 Convertible Note Payable - LGC (8%) 4 125,000 - - 125,000 22,768 Convertible Note Payable - MLM (10%) (Related party) 51,005 - 51,005 28,741 Convertible Note Payable - LGC (8%) 5 78,750 (28,646 ) (462 ) 49,642 8,354 Convertible Note Payable - LGC (8%) 6 52,500 (26,803 ) (808 ) 24,889 16,972 Convertible Notes Payable- PULG (8%) 1 65,000 (63,610 ) (2,244 ) (854 ) 35,933 Convertible Notes Payable- PULG (8%) 2 58,000 (47,690 ) (2,655 ) 7,655 36,818 $ 791,855 $ - $ (212,235 ) $ (6,169 ) $ 573,451 $ 263,468 As of December 31, 2018, the convertible notes payable can be converted into approximately 727,373 shares of common stock. |