Convertible Note Payables | Note 7 – CONVERTIBLE NOTE PAYABLES The Company had several convertible note payables with unrelated third parties with interest rates ranging between 10% and 12%. These notes had a conversion feature such that the Company could not ensure it would have adequate authorized shares to meet all possible conversion demands, hence, the conversion option has been treated as a derivative liability in the accompanying interim financial statements. As of June 30, 2018 and December 31, 2017, the Company had the following convertible notes outstanding: Balance as of Balance as of Issuance Date 06/30/18 12/31/17 Due Date February 12, 2016 $ 25,000 $ 25,000 December 31, 2018 October 26, 2016 10,042 * 49,200 January 26, 2018 November 1, 2016 - 40,000 July 29, 2017 January 6, 2017 347,832 * 85,750 February 6, 2018 April 21, 2017 - 23,000 January 30, 2018 May 31, 2017 - 28,000 March 15, 2018 July 25, 2017 - 28,000 April 30, 2018 September 15, 2017 12,899 25,000 September 15, 2018 November 13, 2017 19,181 19,181 August 30, 2018 November 14, 2017 27,000 27,000 November 14, 2018 January 24, 2018 35,000 - October 30, 2018 February 22, 2018 43,000 - November 30, 2018 April 11, 2018 15,000 - January 30, 2019 April 27, 2018 21,500 - February 15, 2019 Total convertible notes payable 556,454 350,131 Less: Debt discount and deferred financing fee (92,149 ) (116,803 ) Convertible note payables, net $ 464,305 $ 233,328 *Note is currently in default The note issued on January 6, 2017 is in default and under the terms of the convertible promissory note, the Company is liable to pay 150% of the then outstanding principal and interest plus additional penalties for certain covenants that are breached. Included in the note balance of $347,832 as of June 30, 2018, are penalties totaling $276,299 relating to the default of this note. During the six month period ended June 30, 2018, the Company recorded conversion of $184,476 of notes payable into 93,176,814 shares of common stock. The Company recorded a loss on conversion of debt of $163,246 and $179,980 during the three and six months periods ended June 30, 2018. The Company had no such conversions during the three and six months periods ended June 30, 2017. The derivative liability for all the remaining convertible notes was recalculated on June 30, 2018 to be $835,378 and the loss on change in derivative liability of $31,583, for the six months period ended June 30, 2018, was recorded on the accompanying financial statements. The variables used for the Binomial model are as listed below: December 31, 2017 June 30, 2018 ● Volatility: 253% - 286% Volatility: 326% ● Risk free rate of return: 1.28%- 1.76% Risk free rate of return: 1.93%- 2.22% ● Expected term: 1-11 months Expected term: 2-10 months The Company amortized a debt discount of $69,649 and $54,633, respectively, during the three month periods ended June 30, 2018 and 2017 and $140,744 and $105,161, respectively, during the six month periods ended June 30, 2018 and 2017. The Company amortized the finance fee of $2,908 and $7,842, respectively, during the three month periods ended June 30, 2018 and 2017 and $9,950 and $13,702, respectively, during the six month periods ended June 30, 2018 and 2017. Interest expense accrued on non-related convertible notes was $21,057 and $44,885 for the three month periods ended June 30, 2018 and 2017, respectively, and $33,492, and $55,954 for the six month periods ended June 30, 2018 and 2017, respectively. During the six month period ended June 30, 2018, the note holders converted $478,527 of debt into 129,816,814 shares of common stock. |