| CONVERTIBLE NOTES PAYABLE | NOTE 12– CONVERTIBLE NOTES PAYABLE
On March 2, 2018, the Company completed the
closing of a private placement financing transaction (the “Transaction”) when a third-party investor purchased a convertible
note (the “Convertible Note”). The Convertible Note carries a 10% annual interest rate and is in the principal amount
of $50,000. Principal and interest was due and payable March 2, 2019, and the Note is convertible into shares of the Company’s
common stock at any time after one hundred eighty (180) days, at a conversion price (the “Conversion Price”) equal
to seventy-five percent (75%) of the average closing price of the Company’s common stock for the ten (10) days immediately
preceding the conversion, representing a twenty-five percent (25%) discount. The embedded conversion feature included in the note
resulted in an initial debt discount of $13,399, and an initial derivative liability of $13,399. For the six months ended June
30, 2019, amortization of the debt discount of $2,233 was charged to interest expense. During the six months ended June 30, 2019,
the investor converted $50,000 of principal and $2,514 of interest into 2,236,291 shares of common stock. As of June 30, 2019,
and December 31, 2018, the note balance was $-0- and $50,000, respectively, with a carrying value of $47,767 at December 31, 2018,
net of unamortized discounts of $2,333. On March 27, 2018, the Company completed
the closing of a private placement financing transaction (the “Transaction”) when a third-party investor
purchased a convertible note (the “Convertible Note”). The Convertible Note carries a 10% annual interest rate
and is in the principal amount of $25,000. Principal and interest was due and payable March 27, 2019, and the Note is
convertible into shares of the Company’s common stock at any time after one hundred eighty (180) days, at a conversion
price (the “Conversion Price”) equal to seventy-five percent (75%) of the average closing price of the
Company’s common stock for the ten (10) days immediately preceding the conversion, representing a twenty-five percent
(25%) discount. The embedded conversion feature included in the note resulted in an initial debt discount of $6,736, and an
initial derivative liability of $6,736. For the six months ended June 30, 2019, amortization of the debt discount of $1,628
was charged to interest expense. On April 29, 2019 the Note was sold to a third party investor (see below). As of June 30
2019, and December 31, 2018, the note balance is $-0- and $25,000, respectively, with a carrying value of $23,372, net of
unamortized discount of $1,628 as of December 31, 2018. On May 11, 2018, the Company issued a convertible
promissory note (the “Note”), with a face value of $100,000, maturing on May 11, 2019, and stated interest of 10% to
a third-party investor. The note is convertible at any time after the funding of the note into a variable number of the Company's
common stock, based on a conversion ratio of 62% of the lowest trading price for the 20 days prior to conversion. The note was
funded on May 16, 2018, when the Company received proceeds of $75,825, after disbursements to vendors and for the lender’s
transaction costs, fees and expenses. The embedded conversion feature included in the note resulted in an initial debt discount
of $95,000, an initial derivative expense of $60,635 and an initial derivative liability of $155,635. For the six months ended
June 30, 2019, amortization of the debt discount of $17,020 was charged to interest expense. The Company also recorded a debt issue
discount of $5,000 and amortized $895 to interest expense for the six months ended June 30, 2019. During the six months ended June
30, 2019, the investor converted $50,000 of principal and $3,564 of interest into 5,539,273 shares of common stock. As of June
30, 2019, and December 31, 2018, the note balance is $-0- and $50,000, respectively, with a December 31, 2018, carrying value of
$32,085, net of unamortized discounts of $17,915. On May 23, 2018, the Company issued a convertible
promissory note (the “Note”), with a face value of $60,000, with a maturity date of February 22, 2019, and stated interest
of 12% to a third-party investor. The note is convertible at any time after the funding of the note into a variable number of the
Company's common stock, based on a conversion ratio of 65% of the lowest trading price for the 20 days prior to conversion. The
note was funded on May 30, 2018, when the Company received proceeds of $57,000, after the lender’s transaction costs, fees
and expenses. The embedded conversion feature included in the note resulted in an initial debt discount of $57,000, an initial
derivative expense of $48,033 and an initial derivative liability of $105,033. For the three months ended June 30, 2019, amortization
of the debt discount of $11,292 was charged to interest expense. The Company also recorded a debt issue discount of $3,000 and
amortized $594 to interest expense for the six months ended June 30, 2019. During the six months ended June 30, 2019, the investor
converted $51,275 of principal and $9,838 of interest into 7,909,037 shares of common stock. As of June 30, 2019, and December
31, 2018, the note balance was $-0- and $51,275, respectively, with a carrying value of $39,389, net of unamortized discounts of
$11,886 at December 31, 2018. On October 23, 2018, an investor funded the
$50,000 remaining of a convertible promissory note (the “Note”) issued on June 26, 2018, with an original face value
of $92,000, maturing on September 26, 2019, and stated interest of 10% to a third-party investor. The note is convertible at any
time after ninety (90) days of the funding of the note into a variable number of the Company's common stock, based on a conversion
ratio of 65% of the lowest trading price for the 20 days prior to conversion. On October 23, 2018, the Company recorded a note
balance of $50,000 when the Company received proceeds of $50,000. The embedded conversion feature included in the funding of October
23, 2018, resulted in an initial debt discount of $50,000, an initial derivative expense of $45,291 and an initial derivative liability
of $95,291. For the six months ended June 30, 2019, amortization of the debt discount of $25,230 was charged to interest expense.
During the six months ended June 30, 2019, the investor converted $50,000 of principal and $2,397 of interest into 2,495,107 shares
of common stock. As of June 30, 2019, and December 31, 2018, the note balance is $-0- and $50,000, respectively, with a carrying
value of $12,014, net of unamortized discounts of $37,986, at December 31, 2018. On November 2, 2018, the Company issued a convertible
redeemable note with a face value of $280,500 and a back-end convertible redeemable note for $280,500 (the “Notes”),
maturing on November 2, 2019, and a stated interest of 8% to a third-party investor. The notes are convertible at any time after
funding of the note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing
bid price for the 15 days prior to conversion. The first note was funded on November 2, 2018, when the Company received proceeds
of $255,000, after disbursements for the lender’s transaction costs, fees and expenses. The embedded conversion feature included
in the first note resulted in an initial debt discount of $250,000, an initial derivative expense of $148,544 and an initial derivative
liability of $398,544. For the six months ended June 30, 2019, amortization of the debt discount of $125,000 was charged to interest
expense. The Company also recorded a debt issue discount of $30,500 and amortized $15,250 to interest expense for the six months
ended June 30, 2019. During the six months ended June 30, 2019, the investor converted $87,400 of principal and $2,822 of interest
into 7,837,442 shares of common stock. As of June 30, 2019, and December 31, 2018, the first note balance is $193,100 and $280,500,
respectively, with a carrying value of $99,600 and $46,750, respectively, net of unamortized discounts of $93,500 and $233,750,
respectively. On December 26, 2018, the investor partially funded $187,000 of the back-end note, when the Company received proceeds
of $166,667, after disbursements for the lender’s transaction costs, fees and expenses. The embedded conversion feature included
in the partial funding of the back-end note resulted in an initial debt discount of $166,667, an initial derivative expense of
$100,081 and an initial derivative liability of $266,748. For the six months ended June 30, 2019, amortization of the debt discount
of $97,803 was charged to interest expense. The Company also recorded a debt issue discount of $20,333 and amortized $11,932 to
interest expense for the six months ended June 30, 2019. As of June 30, 2019, and December 31, 2018, the partial back-end note
balance is $187,000, with carrying values of $112,661 and $2,926, respectively, net of unamortized discounts of $74,339 and $184,074,
respectively. On January 29, 2019, the investor funded $93,500, of and completing the back-end note, when the Company received
proceeds of $75,000, after disbursements for the lender’s transaction costs, fees and expenses. The embedded conversion feature
included in the partial funding of the back-end note resulted in an initial debt discount of $75,000, an initial derivative expense
of $63,924 and an initial derivative liability of $138,924. For the six months ended June 30, 2019, amortization of the debt discount
of $41,178 was charged to interest expense. The Company also recorded a debt issue discount of $10,167 and amortized $5,582 to
interest expense for the six months ended June 30, 2019. As of June 30, 2019, the second partial back-end note balance is $93,500,
with carrying values of $55,093, net of unamortized discounts of $38,407. On December 4, 2018, the Company issued a convertible
redeemable note (the “Note”) with a face value of $158,333 maturing on December 4, 2019, and a stated interest of 8%
to a third-party investor. The note is convertible at any time after funding of the note into a variable number of the Company's
common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The note
was funded on December 4, 2018, when the Company received proceeds of $137,250, after disbursements for the lender’s transaction
costs, fees and expenses. The embedded conversion feature included in the note resulted in an initial debt discount of $137,500,
an initial derivative expense of $87,293 and an initial derivative liability of $224,793. For the six months ended June 30, 2019,
amortization of the debt discount of $68,750 was charged to interest expense. The Company also recorded a debt issue discount of
$20,833 and amortized $10,417 to interest expense for the six months ended June 30, 2019. As of June 30, 2019, and December 31,
2018, the note balance is $158,333, with carrying values of $92,361 and $13,194, respectively, net of unamortized discounts of
$65,972 and $145,139, respectively. On December 4, 2018, the Company issued to
a third-party investor a convertible redeemable note (the “Note”) with a face value of $230,000 and two back-end convertible
redeemable notes for $115,000 each. The notes mature on December 4, 2019, have a stated interest of 8% and each note is convertible
at any time following the funding of such note into a variable number of the Company's common stock, based on a conversion ratio
of 70% of the lowest closing bid price for the 15 days prior to conversion. The initial note was funded on December 4, 2018, when
the Company received proceeds of $210,000, after disbursements for the lender’s transaction costs, fees and expenses. The
embedded conversion feature included in the note resulted in an initial debt discount of $210,000, an initial derivative expense
of $108,922 and an initial derivative liability of $318,292. For the six months ended June 30, 2019, amortization of the debt discount
of $105,000 was charged to interest expense. The Company also recorded a debt issue discount of $20,000 and amortized $10,000 to
interest expense for the six months ended June 30, 2019. During the six months ended JUne 30, 2019, the investor converted $52,500
of principal and $1,167 of interest into 3,699,862 shares of common stock. As of June 30, 2019, and December 31, 2018, the initial
note balance is $177,500 and $230,000, respectively, with carrying values of $81,667 and $19,167, respectively, net of unamortized
discounts of $95,833 and $210,833, respectively. On February 12, 2019, the investor funded the first back-end note, when the Company
received proceeds of $94,100, after disbursements for the lender’s transaction costs, fees and expenses. The embedded conversion
feature included in the first back-end note resulted in an initial debt discount of $94,100, an initial derivative expense of $64,364
and an initial derivative liability of $158,464. For the six months ended June 30, 2019, amortization of the debt discount of $35,288
was charged to interest expense. The Company also recorded a debt issue discount of $10,000 and amortized $3,750 to interest expense
for the six months ended June 30, 2019. As of June 30, 2019, the first back-end note balance is $115,000, with a carrying value
of $49,937 net of unamortized discounts of $65,063. On March 1, 2019, the investor funded the second back-end note, when the Company
received proceeds of $98,175, after disbursements for the lender’s transaction costs, fees and expenses. The embedded conversion
feature included in the funding of the second back-end note resulted in an initial debt discount of $98,175, an initial derivative
expense of $62,254 and an initial derivative liability of $160,429. For the six months ended June 30, 2019, amortization of the
debt discount of $31,013 was charged to interest expense. The Company also recorded a debt issue discount of $10,000 and amortized
$3,159 to interest expense for the six months ended June 30, 2019. As of June 30, 2019, the second back-end note balance is $15,000,
with carrying values of $40,997, net of unamortized discounts of $74,003. On December 24, 2018, the Company issued to
a third-party investor a convertible redeemable note (the “Note”) with a face value of $195,000 and two back-end convertible
redeemable notes for $97,500 each. The notes mature on December 24, 2019, have a stated interest of 8% and each note is convertible
at any time following the funding of such note into a variable number of the Company's common stock, based on a conversion ratio
of 70% of the lowest closing bid price for the 15 days prior to conversion. The initial note was funded on December 26, 2018, when
the Company received proceeds of $177,000, after disbursements for the lender’s transaction costs, fees and expenses. The
embedded conversion feature included in the note resulted in an initial debt discount of $177,000, an initial derivative expense
of $92,464 and an initial derivative liability of $269,464. For the six months ended June 30, 2019, amortization of the debt discount
of $88,500 was charged to interest expense. The Company also recorded a debt issue discount of $18,000 and amortized $9,000 to
interest expense for the six months ended June 30, 2019. As of June 30, 2019, and December 31, 2018, the initial note balance is
$195,000, with carrying values of $100,100 and $2,600, respectively, net of unamortized discounts of $94,900 and $192,400, respectively. On January 22, 2019, the Company issued to
a third-party investor a convertible redeemable note (the “Note”) with a face value of $245,000 and two back-end convertible
redeemable notes for $122,500 each. The notes mature on January 22, 2020, have a stated interest of 8% and each note is convertible
at any time following the funding of such note into a variable number of the Company's common stock, based on a conversion ratio
of 70% of the lowest closing bid price for the 15 days prior to conversion. The initial note was funded on January 22, 2019, when
the Company received proceeds of $200,000, after disbursements for the lender’s transaction costs, fees and expenses. The
embedded conversion feature included in the note resulted in an initial debt discount of $200,000, an initial derivative expense
of $134,208 and an initial derivative liability of $334,208. For the six months ended June 30, 2019, amortization of the debt discount
of $87,500 was charged to interest expense. The Company also recorded a debt issue discount of $25,000 and amortized $10,938 to
interest expense for the six months ended June 30, 2019. As of June 30, 2019, the initial note balance is $245,000, with a carrying
value of $118,437, net of unamortized discounts of $126,563. On February 22, 2019, the Company issued to
a third-party investor a convertible redeemable note (the “Note”) with a face value of $116,667. The note matures on
February 22, 2020, has a stated interest of 8% and is convertible at any time following the funding of such note into a variable
number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior
to conversion. The note was funded on February 22, 2019, when the Company received proceeds of $90,000, after disbursements for
the lender’s transaction costs, fees and expenses. The embedded conversion feature included in the note resulted in an initial
debt discount of $90,000, an initial derivative expense of $36,138 and an initial derivative liability of $126,138. For the six
months ended June 30, 2019, amortization of the debt discount of $31,875 was charged to interest expense. The Company also recorded
a debt issue discount of $16,667, and amortized $5,903 to interest expense for the six months ended June 30, 2019. As of June 30,
2019, the note balance is $116,667, with a carrying value of $47,778, net of unamortized discounts of 68,889. On March 8, 2019, the Company issued to a third-party
investor a convertible redeemable note (the “Note”) with a face value of $133,333. The note matures on February 22,
2020, has a stated interest of 8% and is convertible at any time following the funding of such note into a variable number of the
Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion.
The note was funded on March 8, 2019, when the Company received proceeds of $106,200, after disbursements for the lender’s
transaction costs, fees and expenses. The embedded conversion feature included in the note resulted in an initial debt discount
of $106,200, an initial derivative expense of $82,538 and an initial derivative liability of $188,738. For the six months ended
June 30, 2019, amortization of the debt discount of $33,097 was charged to interest expense. The Company also recorded a debt issue
discount of $19,333, and amortized $6,025 to interest expense for the six months ended June 30, 2019. As of June 30, 2019, the
note balance is $133,333, with carrying values of $46,922, net of unamortized discounts of $86,411. On March 20, 2019, the Company issued to a
third-party investor a convertible redeemable note (the “Note”) with a face value of $89,075 and a back-end convertible
redeemable note for $89,075. The notes mature on March 20, 2020, hasa stated interest of 8% and is convertible at any time following
the funding of such note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest
closing bid price for the 15 days prior to conversion. The initial note was funded on March 20, 2019, when the Company received
proceeds of $75,000, after disbursements for the lender’s transaction costs, fees and expenses. The embedded conversion feature
included in the note resulted in an initial debt discount of $75,000, an initial derivative expense of $48,913 and an initial derivative
liability of $123,913. For the six months ended June 30, 2019, amortization of the debt discount of $20,756 was charged to interest
expense. The Company also recorded a debt issue discount of $9,210, and amortized $2,549 to interest expense for the six months
ended June 30, 2019. As of June 30, 2019, the initial note balance is $89,075, with carrying values of $28,170, net of unamortized
discounts of $60,905. Also, on March 20, 2019, the Company issued
to a third-party investor a convertible redeemable note (the “Note”) with a face value of $89,075 and a back-end convertible
redeemable note for $89,075. The notes mature on March 20, 2020, has a stated interest of 8% and is convertible at any time following
the funding of such note into a variable number of the Company's common stock, based on a conversion ratio of 70% of the lowest
closing bid price for the 15 days prior to conversion. The initial note was funded on March 20, 2019, when the Company received
proceeds of $75,000, after disbursements for the lender’s transaction costs, fees and expenses. The embedded conversion feature
included in the note resulted in an initial debt discount of $75,000, an initial derivative expense of $48,913 and an initial derivative
liability of $123,913.. For the six months ended June 30, 2019, amortization of the debt discount of $20,756 was charged to interest
expense. The Company also recorded a debt issue discount of $9,210, and amortized $2,549 to interest expense for the six months
ended June 30, 2019. As of June 30, 2019, the initial note balance is $89,075, with carrying values of $28,170, net of unamortized
discounts of $60,905. On April 12, 2019, the Company issued to a
third-party investor a convertible redeemable note (the “Note”) with a face value of $208,000. The note matures on
April 12, 2020, has a stated interest of 8% and is convertible at any time following the funding of such note into a variable number
of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion.
The note was funded on April 12, 2019, when the Company received proceeds of $175,000, after disbursements for the lender’s
transaction costs, fees and expenses. The embedded conversion feature included in the note resulted in an initial debt discount
of $175,000, an initial derivative expense of $104,450 and an initial derivative liability of $279,450. For the six months ended
June 30, 2019, amortization of the debt discount of $36,359 was charged to interest expense. The Company also recorded a debt issue
discount of $21,550, and amortized $4,477 to interest expense for the six months ended June 30, 2019. As of June 30, 2019, the
note balance is $208,000, with a carrying value of $52,286, net of unamortized discounts of $155,714. Also, on April 12, 2019, the Company issued
to a third-party investor a convertible redeemable note (the “Note”) with a face value of $208,000. The note matures
on April 12, 2020, has a stated interest of 8% and is convertible at any time following the funding of such note into a variable
number of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior
to conversion. The note was funded on April 12, 2019, when the Company received proceeds of $175,000, after disbursements for the
lender’s transaction costs, fees and expenses. The embedded conversion feature included in the note resulted in an initial
debt discount of $175,000, an initial derivative expense of $104,450 and an initial derivative liability of $279,450. For the six
months ended June 30, 2019, amortization of the debt discount of $36,359 was charged to interest expense. The Company also recorded
a debt issue discount of $21,550, and amortized $4,477 to interest expense for the six months ended June 30, 2019. As of June 30,
2019, the note balance is $208,000, with a carrying value of $52,286, net of unamortized discounts of $155,714. On May 15, 2019, the Company issued to a third-party
investor a convertible redeemable note (the “Note”) with a face value of $208,000. The note matures on May 15, 2020,
has a stated interest of 8% and is convertible at any time following the funding of such note into a variable number of the Company's
common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The note
was funded on May 15, 2019, when the Company received proceeds of $175,000, after disbursements for the lender’s transaction
costs, fees and expenses. The embedded conversion feature included in the note resulted in an initial debt discount of $175,000,
an initial derivative expense of $104,082 and an initial derivative liability of $279,082. For the six months ended June 30, 2019,
amortization of the debt discount of $21,815 was charged to interest expense. The Company also recorded a debt issue discount of
$21,550, and amortized $2,686 to interest expense for the six months ended June 30, 2019. As of June 30, 2019, the note balance
is $208,000, with a carrying value of $35,951, net of unamortized discounts of $172,049. Also, on May 15, 2019, the Company issued to
a third-party investor a convertible redeemable note (the “Note”) with a face value of $167,352. The note matures on
May 15, 2020, has a stated interest of 8% and is convertible at any time following the funding of such note into a variable number
of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion.
The note was funded on May 15, 2019, when the Company received proceeds of $140,250, after disbursements for the lender’s
transaction costs, fees and expenses. The embedded conversion feature included in the note resulted in an initial debt discount
of $140,250, an initial derivative expense of $85,329 and an initial derivative liability of $225,579. For the six months ended
June 30, 2019, amortization of the debt discount of $17,483 was charged to interest expense. The Company also recorded a debt issue
discount of $17,352, and amortized $2,686 to interest expense for the six months ended June 30, 2019. As of June 30, 2019, the
note balance is $167,352, with a carrying value of $29,455, net of unamortized discounts of $137,897. On June 13, 2019, the Company issued to a third-party
investor a convertible redeemable note (the “Note”) with a face value of $119,000. The note matures on June 13, 2020,
has a stated interest of 8% and is convertible at any time following the funding of such note into a variable number of the Company's
common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion. The note
was funded on June 13, 2019, when the Company received proceeds of $100,000, after disbursements for the lender’s transaction
costs, fees and expenses. The embedded conversion feature included in the note resulted in an initial debt discount of $100,000,
an initial derivative expense of $49,779 and an initial derivative liability of $149,779. For the six months ended June 30, 2019,
amortization of the debt discount of $4,155 was charged to interest expense. The Company also recorded a debt issue discount of
$12,500, and amortized $520 to interest expense for the six months ended June 30, 2019. As of June 30, 2019, the note balance is
$119,000, with a carrying value of $11,175, net of unamortized discounts of $107,825. Also, on June 13, 2019, the Company issued
to a third-party investor a convertible redeemable note (the “Note”) with a face value of $119,000. The note matures
on June 13, 2020, has a stated interest of 8% and convertible at any time following the funding of such note into a variable number
of the Company's common stock, based on a conversion ratio of 70% of the lowest closing bid price for the 15 days prior to conversion.
The note was funded on June 13, 2019, when the Company received proceeds of $100,000, after disbursements for the lender’s
transaction costs, fees and expenses. The embedded conversion feature included in the note resulted in an initial debt discount
of $100,000, an initial derivative expense of $49,779 and an initial derivative liability of $149,779. For the six months ended
June 30, 2019, amortization of the debt discount of $4,155 was charged to interest expense. The Company also recorded a debt issue
discount of $12,500, and amortized $520 to interest expense for the six months ended June 30, 2019. As of June 30, 2019, the note
balance is $119,000, with a carrying value of $11,175, net of unamortized discounts of $107,825. A summary of the convertible note balances
as of June 30, 2019, and December 31, 2018, is as follows:
June 30, 2019 December 31, 2018
Principal balance $ 2,936,955 $ 1,277,108
Unamortized discounts (1,978,128 ) (1,125,942 )
Ending balance, net $ 958,827 $ 151,166 The following is a summary of the Company’s
convertible notes and related discounts as of June 30, 2019:
Principal Balance Debt Discounts Total
Balance at January 1, 2019 $ 1,277,108 $ (1,125,942 ) $ 151,166
New issuances 2,026,022 (2,026,022 ) —
Conversions (366,175 ) — (366,175 )
Amortization — 1,173,836 1,173,836
Balance at June 30, 2019 $ 2,936,955 $ (1,978,128 ) $ 958,827 |
