10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________ 

FORM 10-Q

______________________________________________________

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2018

or

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from             to             

Commission File No. 001-32919

______________________________________________________ 

Ascent Solar Technologies, Inc.

(Exact name of registrant as specified in its charter)

 _______________________________________________________

Delaware	20-3672603
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
12300 Grant Street, Thornton, CO	80241
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number including area code: 720-872-5000

_________________________________________________________

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    x  Yes    o  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o  (Do not check if a smaller reporting company)	Smaller reporting company	x
		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o

As of May 10, 2018, there were 18,994,480,144 shares of our common stock issued and outstanding.

ASCENT SOLAR TECHNOLOGIES, INC.

Quarterly Report on Form 10-Q

Quarterly Period Ended March 31, 2018

Table of Contents

PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets - For the Three Months Ended March 31, 2018 and the Year Ended December 31, 2017	3
	Condensed Consolidated Statements of Operations - For the Three Months Ended March 31, 2018 and March 31, 2017	4
	Condensed Consolidated Statements of Cash Flow - For the Three Months Ended March 31, 2018 and March 31, 2017	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities	29
Item 4.	Mine Safety Disclosures	29
Item 5.	Other Information	29
Item 6.	Exhibits	29
SIGNATURES		30
EXHIBIT INDEX		29

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PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

ASCENT SOLAR TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
	March 31, 2018			December 31, 2017
ASSETS	(Unaudited)
Current Assets:
Cash and cash equivalents	$	88,111		$	89,618
Trade receivables, net of allowance for doubtful accounts of $35,251 and $48,201, respectively	13,984			6,658
Inventories, net	1,074,319			1,037,854
Prepaid expenses and other current assets	520,944			494,425
Total current assets	1,697,358			1,628,555
Property, Plant and Equipment	36,645,862			36,645,862
Less accumulated depreciation and amortization	(32,072,422		)	(32,013,686		)
	4,573,440			4,632,176
Other Assets:
Patents, net of accumulated amortization of $440,805 and $430,071, respectively	1,376,785			1,470,796
Other non-current assets	42,875			49,813
	1,419,660			1,520,609
Total Assets	$	7,690,458		$	7,781,340
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable	$	1,901,411		$	1,600,455
Related party payables	208,754			202,827
Accrued expenses	2,094,885			1,623,748
Notes payable	1,567,731			1,570,231
Current portion of long-term debt	349,092			343,395
Current portion of secured promissory note, net of discount of $2,595,172 and $1,934,304, respectively	822,978			253,590
Promissory Notes, net of discount of $15,000 and $20,626, respectively	984,437			948,811
October 2016 convertible notes	330,000			330,000
St. George convertible note, net of discount and cash payment premium of $528,975 and $673,241, respectively	1,101,858			1,032,592
BayBridge convertible note, net of discount of $423,750 and $565,000, respectively	36,250			—
Embedded derivative liabilities	8,109,081			6,406,833
Total current liabilities	17,506,477			14,312,482
Long-term debt, net of current portion	5,028,985			5,118,424
Long-term secured promissory note, net of current portion, and net of discount of $1,454,595 and $1,684,267, respectively	30,603			685,066
Accrued Warranty Liability	51,358			57,703
Commitments and Contingencies
Mezzanine Equity:
Series K preferred stock: 20,000 shares authorized; 2,810 issued and outstanding, respectively	2,810,000			2,810,000
Stockholders’ Deficit:
Series A preferred stock, $.0001 par value; 750,000 shares authorized; 60,756 shares issued and outstanding, respectively ($776,845 and $761,864 Liquidation Preference)	6			6
Common stock, $0.0001 par value, 20,000,000,000 shares authorized; 12,738,048,718 and 9,606,597,777 shares issued and outstanding, respectively	1,273,809			960,660
Additional paid in capital	387,917,742			386,332,475
Accumulated deficit	(406,928,522		)	(402,495,476		)
Total stockholders’ deficit	(17,736,965		)	(15,202,335		)
Total Liabilities, Mezzanine Equity and Stockholders’ Deficit	$	7,690,458		$	7,781,340

The accompanying notes are an integral part of these unaudited, condensed consolidated financial statements.

3

ASCENT SOLAR TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended
	March 31,
	2018			2017
Revenues	$	377,511		$	280,603
Costs and Expenses:
Cost of revenues (exclusive of depreciation shown below)	273,028			1,492,841
Research, development and manufacturing operations (exclusive of depreciation shown below)	1,173,035			1,276,865
Inventory impairment costs	—			363,758
Selling, general and administrative (exclusive of depreciation shown below)	934,591			1,764,230
Depreciation and amortization	101,712			371,653
Total Costs and Expenses	2,482,366			5,269,347
Loss from Operations	(2,104,855		)	(4,988,744		)
Other Income/(Expense)
Other Income/(Expense), net	—			728,485
Interest expense	(1,343,730		)	(1,991,352		)
Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net	(984,461		)	673,078
Total Other Income/(Expense)	(2,328,191		)	(589,789		)
Net Loss	$	(4,433,046	)	$	(5,578,533	)
Net Loss Per Share (Basic and diluted)	$	(0.0004	)	$	(0.0033	)
Weighted Average Common Shares Outstanding (Basic and diluted)	10,996,378,097			1,665,310,868

The accompanying notes are an integral part of these unaudited, condensed consolidated financial statements.

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ASCENT SOLAR TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
	three months ended
	March 31,
	2018			2017
Operating Activities:
Net loss	$	(4,433,046	)	$	(5,578,533	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	101,712			371,653
Share based compensation	14,324			79,737
Realized gain on sale of assets	—			(1,205,663		)
Amortization of financing costs to interest expense	3,333			35,164
Non-cash interest expense	222,648			575,015
Amortization of debt discount	1,011,109			1,474,135
Bad debt expense	—			4,082
Accrued litigation settlement	—			(143,266		)
Write-down of inventory	—			363,758
Write down of patents	59,153			—
Warranty reserve	(6,345		)	(7,489		)
Change in fair value of derivatives and (gain)/loss on extinguishment of liabilities, net	984,461			(673,078		)
Inducement conversion costs	—			407,974
Changes in operating assets and liabilities:
Accounts receivable	(1,326		)	533,822
Inventories	(36,465		)	899,915
Prepaid expenses and other current assets	(29,852		)	394,550
Accounts payable	244,975			(249,691		)
Related party payable	5,927			—
Accrued expenses	364,648			56,721
Net cash used in operating activities	(1,494,744		)	(2,661,194		)
Investing Activities:
Proceeds from the sale of assets	—			150,000
Patent activity costs	(6,502		)	(19,275		)
Net cash provided by/(used in) investing activities	(6,502		)	130,725
Financing Activities:
Proceeds from issuance of debt	1,530,000			2,340,000
Proceeds from issuance of stock	—			150,000
Payment of debt financing costs	—			(42,500		)
Repayment of debt	(30,261		)	—
Net cash provided by financing activities	1,499,739			2,447,500
Net change in cash and cash equivalents	(1,507		)	(82,969		)
Cash and cash equivalents at beginning of period	89,618			130,946
Cash and cash equivalents at end of period	$	88,111		$	47,977
Supplemental Cash Flow Information:
Cash paid for interest	$	106,617		$	20,415
Cash paid for income taxes	—			—
Non-Cash Transactions:
Non-cash conversions of convertible notes and preferred stock	$	1,430,000		$	1,699,731
Interest converted to principal	$	96,120		$	—
Initial derivatives	$	1,151,162		$	—
Make-whole dividend	$	—		$	257,152
Accounts payable converted to notes payable	$	—		$	1,172,026

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

ASCENT SOLAR TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. ORGANIZATION

Ascent Solar Technologies, Inc. (“Ascent”) was incorporated on October 18, 2005 from the separation of ITN Energy Systems, Inc's (“ITN”) Advanced Photovoltaic Division and all of that division’s key personnel and core technologies. ITN, a private company incorporated in 1994, is an incubator dedicated to the development of thin-film, photovoltaic (“PV”), battery, fuel cell, and nano technologies. Through its work on research and development contracts for private and governmental entities, ITN developed proprietary processing and manufacturing know-how applicable to PV products generally, and to Copper-Indium-Gallium-diSelenide (“CIGS”) PV products in particular. ITN formed Ascent to commercialize its investment in CIGS PV technologies. In January 2006, in exchange for 5,140 shares of common stock of Ascent, ITN assigned to Ascent certain CIGS PV technologies and trade secrets and granted to Ascent a perpetual, exclusive, royalty-free worldwide license to use, in connection with the manufacture, development, marketing and commercialization of CIGS PV to produce solar power, certain of ITN’s existing and future proprietary and control technologies that, although non-specific to CIGS PV, Ascent believes will be useful in its production of PV modules for its target markets. Upon receipt of the necessary government approvals and pursuant to novation in early 2007, ITN assigned government-funded research and development contracts to Ascent and also transferred the key personnel working on the contracts to Ascent.

Currently, the Company is focusing on integrating its PV products into high value markets such as aerospace, satellites, near earth orbiting vehicles, fixed-wing unmanned aerial vehicles (UAV), military, and emergency preparedness. Ascent has the capability to design and develop finished products for end users in these areas as well as collaborate with strategic partners to design and develop custom integrated solutions for products like fixed-wing UAVs. Ascent sees significant overlap of the needs of end users across some of these industries and can achieve economies of scale in sourcing, development, and production in commercializing products for these customers.

Sale of EnerPlex Brand

In February 2017, Ascent announced the sale of our EnerPlex brand and related intellectual properties and trademarks associated with EnerPlex to our battery product supplier, Sun Pleasure Co. Limited (“SPCL”), in an effort to better allocate its resources and to continue to focus on its core strength in the high-value specialty PV market. Effective February 27, 2017, Ascent no longer produces or sells Enerplex-branded consumer products. Ascent will supply solar PV products to SPCL, supporting the continuous growth of EnerPlex™ with Ascent’s proprietary and award-winning thin-film solar technologies and products.

Ascent continues to design and manufacture its own line of PV integrated consumer electronics, as well as portable power applications for commercial, military, and emergency management.

NOTE 2. BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements have been derived from the accounting records of Ascent Solar Technologies, Inc., Ascent Solar (Asia) Pte. Ltd., and Ascent Solar (Shenzhen) Co., Ltd. (collectively, "the Company") as of March 31, 2018 and December 31, 2017, and the results of operations for the three months ended March 31, 2018 and 2017. Ascent Solar (Shenzhen) Co., Ltd. is wholly owned by Ascent Solar (Asia) Pte. Ltd., which is wholly owned by Ascent Solar Technologies, Inc. All significant inter-company balances and transactions have been eliminated in the accompanying condensed consolidated financial statements.

The accompanying, unaudited, condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, these interim financial statements do not include all of the information and footnotes typically found in U.S. GAAP audited annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement have been included. The Condensed Consolidated Balance Sheet at December 31, 2017 has been derived from the audited financial statements as of that date but does not include all of the information and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. These condensed consolidated financial statements and notes should be read

6

in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Operating results for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company’s significant accounting policies were described in Note 3 to the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. There have been no significant changes to our accounting policies as of March 31, 2018.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The update will establish a comprehensive revenue recognition standard for virtually all industries in GAAP. ASU 2014-09 will change the amount and timing of revenue and cost recognition, implementation, disclosures and documentation. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of Effective Date. The amendments in ASU 2015-14 defer the effective date of ASU 2014-09 for all entities by one year. ASU 2014-09 is now effective for the Company in fiscal year 2018. The implementation of ASU 2014-09 did not have a material effect on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize all leases, including operating leases, on the balance sheet as a lease asset or lease liability, unless the lease is a short-term lease. ASU 2016-02 also requires additional disclosures regarding leasing arrangements. ASU 2016-02 is effective for interim periods and fiscal years beginning after December 15, 2018, and early application is permitted. The Company continues to evaluate the impact, that the adoption of this guidance will have on its consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718). ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 is effective for interim periods and fiscal years beginning after December 15, 2017, and early application is permitted. The implementation of ASU 2017-09 did not have a material effect on the Company's consolidated financial statements.

In July 2017, the FASB issued ASU No. 2017-11 Part I, Earnings Per Share (Topic 260), Distinguishing Liabilities fromEquity (Topic 480), Derivatives and Hedging (Topic 815). ASU 2017-11 Part I changes the classification analysis of certain equity linked financial instruments with down round features. ASU 2017-11 Part I is effective, for public business entities, for interim periods and fiscal years beginning after December 15, 2018, and early application is permitted. The Company is currently evaluating the impact, if any, that the adoption of this guidance will have on its consolidated financial statements.

NOTE 4. LIQUIDITY AND CONTINUED OPERATIONS

During the three months ended March 31, 2018 and the year ended December 31, 2017, the Company entered into multiple financing agreements to fund operations. Further discussion of these transactions can be found in Notes 7 through 15, and Note 18 of the financial statements presented as of, and for, the three months ended, March 31, 2018, and in Notes 8 through 22 and Note 30 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017.

The Company has continued PV production at its manufacturing facility. The Company does not expect that sales revenue and cash flows will be sufficient to support operations and cash requirements until it has fully implemented its product strategy. During the three months ended March 31, 2018 the Company used $1.5 million in cash for operations. The Company's primary significant long term cash obligation consists of a note payable of $5.4 million to a financial institution secured by a mortgage on its headquarters and manufacturing building in Thornton, Colorado. Total payments of approximately $0.5 million, including principal and interest, will come due in the remainder of 2018.

7

Additional projected product revenues are not anticipated to result in a positive cash flow position for the year 2018 overall and, as of March 31, 2018, the Company has negative working capital. As such, cash liquidity sufficient for the year ending December 31, 2018 will require additional financing.

The Company continues to accelerate sales and marketing efforts related to its consumer and military solar products and specialty PV application strategies through expansion of its sales and distribution channels. The Company has begun activities related to securing additional financing through strategic or financial investors, but there is no assurance the Company will be able to raise additional capital on acceptable terms or at all. If the Company's revenues do not increase rapidly, and/or additional financing is not obtained, the Company will be required to significantly curtail operations to reduce costs and/or sell assets. Such actions would likely have an adverse impact on the Company's future operations.

As a result of the Company’s recurring losses from operations, and the need for additional financing to fund its operating and capital requirements, there is uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to the Company’s ability to continue as a going concern.

Management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. These condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

NOTE 5. PROPERTY, PLANT AND EQUIPMENT

The following table summarizes property, plant and equipment as of March 31, 2018 and December 31, 2017:

	As of March 31,			As of December 31,
	2018			2017
Building	$	5,828,960		$	5,828,960
Furniture, fixtures, computer hardware and computer software	489,421			489,421
Manufacturing machinery and equipment	30,327,481			30,327,481
Property, plant and equipment	36,645,862			36,645,862
Less: Accumulated depreciation and amortization	(32,072,422		)	(32,013,686		)
Net property, plant and equipment	$	4,573,440		$	4,632,176

The Company analyzes its long-lived assets for impairment, both individually and as a group, whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. No assets were impaired for the three months ended March 31, 2018 or for the year ended December 31, 2017.

Depreciation expense for the three months ended March 31, 2018 was $58,736, compared to depreciation expense of $334,624 for the three months ended March 31, 2017. Depreciation expense is recorded under “Depreciation and amortization expense” in the Condensed Consolidated Statements of Operations.

NOTE 6. INVENTORIES

Inventories consisted of the following at March 31, 2018 and December 31, 2017:

	As of March 31,		As of December 31,
	2018		2017
Raw materials	$	695,474	$	688,904
Work in process	5,106		11,878
Finished goods	373,739		337,072
Total	$	1,074,319	$	1,037,854

The Company analyzes its inventory for impairment, both categorically and as a group, whenever events or changes in circumstances indicate that the carrying amount of the inventory may not be recoverable. During the three months ended March 31, 2018, the Company did not impair inventory, compared to an impairment of $363,758, for the three months ended March 31, 2017.

Inventory amounts are shown net of allowance of $458,097 and $562,140 for the three months ended March 31, 2018 and the year ended December 31, 2017, respectively.

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NOTE 7. NOTES PAYABLE

On February 24, 2017, the Company entered into an agreement with a vendor to convert the balance of their account into three notes payable in the aggregate amount of $765,784. The notes bear interest of 6% per annum and matured on February 24, 2018; all outstanding principal and accrued interest is due and payable upon maturity. As of March 31, 2018, the Company had not made any payments on these notes, the accrued interest was $51,052, and the note is due upon demand.

On March 23, 2017, the Company entered into an agreement with a vendor to convert the balance of their account into a note payable in the amount of $356,742. The note bears interest of 5% per annum and matured on March 31, 2018; all outstanding principal and accrued interest is due and payable upon maturity. As of March 31, 2018, the Company had not made any payments on the note, the accrued interest was $18,228, and the note is due upon demand.

On June 30, 2017, the Company entered into an agreement with a vendor to convert the balance of their account into a note payable in the amount of $250,000. The note bears interest of 5% per annum and matured on February 28, 2018; all outstanding principal and accrued interest is due and payable upon maturity. As of March 31, 2018, the Company had not made any payments on these notes, the accrued interest was $9,384, and the note is due upon demand.

On September 30, 2017, the Company entered into a settlement agreement with a customer to convert the credit balance of their account into a note payable in the amount of $215,234. The note bears interest of 5% per annum and matures on September 30, 2018. The Company has not made the monthly payments of $18,426 that were to commence on October 30, 2017; as of March 31, 2018 the company had paid principal of $20,029 and interest of $897. The remaining principal and interest balances, as of March 31, 2018, were $195,205 and $4,138 , respectively.

NOTE 8. DEBT

On February 8, 2008, the Company acquired a manufacturing and office facility in Thornton, Colorado, for approximately $5.5 million. The purchase was financed by a promissory note, deed of trust and construction loan agreement (the “Construction Loan”) with the Colorado Housing and Finance Authority (“CHFA”), which provided the Company borrowing availability of up to $7.5 million for the building and building improvements. In 2009, the Construction Loan was converted to a permanent loan pursuant to a Loan Modification Agreement between the Company and CHFA (the “Permanent Loan”). The Permanent Loan, collateralized by the building, has an interest rate of 6.6% and the principal will be amortized through its term to January 2028. Further, pursuant to certain negative covenants in the Permanent Loan, the Company may not, among other things, without CHFA’s prior written consent (which by the terms of the deed of trust is subject to a reasonableness requirement): create or incur additional indebtedness (other than obligations created or incurred in the ordinary course of business); merge or consolidate with any other entity; or make loans or advances to the Company’s officers, shareholders, directors or employees.

On November 1, 2016, the Company and the CFHA agreed to modify the original agreement described above with the addition of a forbearance period. Per the modification agreement, no payments of principal and interest shall be due under the note during the forbearance period commencing on November 1, 2016 and continuing through April 1, 2017. The amount of interest that should have been paid by the Company during the forbearance period in the total amount of $180,043 shall be added to the outstanding principal balance of the note. As a result, on May 1, 2017, the principal balance of the note was $5,704,932. Commencing on May 1, 2017, the monthly payments of principal and interest due under the note resumed at $57,801, and the Company shall continue to make such monthly payments over the remaining term of the note ending on February 1, 2028.

The outstanding principal balance of the Permanent Loan was $5,378,077 and $5,461,819 as of March 31, 2018 and December 31, 2017, respectively.

As of March 31, 2018, remaining future principal payments on long-term debt are due as follows:

2018	$	259,654
2019	366,757
2020	391,709
2021	418,358
2022	446,821
Thereafter	3,494,778
	$	5,378,077

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NOTE 9. SECURED PROMISSORY NOTE

On November 30, 2017, the Company, entered into a note purchase and exchange agreement (the “Note SPA”) with Global Ichiban Ltd (“Investor”), for the private placement of up to $2,000,000 of the Company’s Secured Convertible Promissory Notes (“Notes”) in exchange for $2,000,000 of gross proceeds in several tranches through June 2018, The closing of each tranche is conditioned upon the Company having an average daily trading volume for its Common Stock of at least $50,000 for the 20 trading day period preceding such future tranche closing dates.

Pursuant to the terms of the Note SPA, the Company and the Investor also agreed to exchange certain outstanding securities held by the Investor for additional Notes. As of November 30, 2017, the Investor surrendered for cancellation (i) its outstanding promissory note dated September 13, 2017 ($3,359,539 principal and accrued interest), (ii) its outstanding promissory note dated October 31, 2017 ($252,466 principal and accrued interest), and (iii) its 400 shares of outstanding Series J Preferred Stock ( $445,222 of capital and accrued dividends). In exchange, the Company issued to the Investor $4,057,227 aggregate principal amount of additional Notes. Please refer to Note 11 and Note 21 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for further discussion on the canceled promissory notes and the canceled Series J Preferred Stock shares.

All principal and accrued interest on the Notes are convertible at any time, in whole or in part, at the option of the Investor into shares of Common Stock at a variable conversion price equal to the lowest of (i) 85% of the average VWAP for the shares over the prior 5 trading days, (ii) the closing bid price for the shares on the prior trading day, or (iii) $0.002 per share

The Notes may not be converted and shares of Common Stock may not be issued pursuant to the Notes if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 9.99% of the outstanding shares of Common Stock.

Of the Notes issued on November 30, 2017, $3,359,539 aggregate principal amount will mature on December 15, 2020. Principal and interest was originally to be payable in 36 equal monthly installments of $111,585 beginning January 15, 2018. During the three months ended March 31, 2018, principal of $1,250,000 was converted into 2,450,980,392 shares of common stock, and $96,121 of interest was converted to principal. The remaining note is payable in 32 equal monthly installments of $80,036 beginning May 15, 2018.

Of the Notes issued on November 30, 2017, $697,688 aggregate principal amount will mature on November 30, 2018. Principal and interest will be payable upon maturity.

The $2,000,000 aggregate principal amount of Notes, issued in eight tranches, will mature on the first anniversary of the respective issuance date. Principal and interest will be payable upon maturity. As of March 31, 2018, the closing dates, closing amounts, and maturity dates on completed Note SPA tranches are as follows:

Closing Date	Closing Amount		Maturity Date
11/30/2017	$	250,000	11/30/2018
12/28/2017	$	250,000	12/28/2018
1/11/2018	$	250,000	1/11/2019
1/25/2018	$	250,000	1/25/2019
2/8/2018	$	250,000	2/8/2019
2/21/2018	$	250,000	2/21/2019
3/7/2018	$	250,000	3/7/2019
3/21/2018	$	250,000	3/21/2019

The Notes will be secured by a security interest on substantially all of the Company’s assets, bear interest at a rate of 12% per annum and contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the Notes, and (ii) bankruptcy or insolvency of the Company. There are no registration rights applicable to the Notes.

As of March 31, 2018, the aggregate principal and interest balance of the Notes were $4,903,348 and $83,406, respectively.

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Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion option in the Notes were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Notes approximates management’s estimate of the fair value of the embedded derivative liability based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions identified below.

Due to the varying terms and varying issue dates, the tranches of this instrument were broken into four separate instruments for valuation purposes.

1) The first valuation was done on the November 30, 2017 Note with term of three years. The derivative value of this note was $3,742,002 as of December 31, 2017.

1) The second valuation was done on the group of Notes dated November 30, 2017, that had a term of one year. The derivative value of this group of notes was $888,168 as of December 31, 2017.

2) The third valuation was done on the Note dated December 28, 2017, which had a term of one year. The derivative value of this note was $267,008 on December 31, 2017.

3) For the Notes dated in the first quarter of 2018, we did a fourth valuation. Although the notes were entered into at various dates, we used a weighted average issuance date of February 15, 2018 for a combined valuation purpose. Management's analysis, using the following assumptions: annual volatility of 54% present value discount rate of 12% and a dividend yield of 0%, resulted in a fair value of the embedded derivative associated with these Notes of $1,151,162 as of February 15, 2018. The value of the embedded derivative associated with these Notes was recorded as a debt discount.

The derivative liability associated with the Notes is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2018, the Company conducted a fair value assessment of the embedded derivative associated with the three valuation groups discussed above.

1) For the November 30, 2017 3yr Note: Management conducted a fair value assessment with the following assumptions: annual volatility of 64% present value discount rate of 12% and a dividend yield of 0% as of March 31, 2018. As a result of the fair value assessment, the Company recorded a gain of $612,155 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $3,129,847 as of March 31, 2018.

2) For the November 30, 2017 1yr Notes: Management conducted a fair value assessment with the following assumptions: annual volatility of 52% present value discount rate of 12% and a dividend yield of 0% as of March 31, 2018. As a result of the fair value assessment, the Company recorded a gain of $174,989 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $713,179 as of March 31, 2018.

3) For the December 28, 2017 1yr Note: Management conducted a fair value assessment with the following assumptions: annual volatility of 52% present value discount rate of 12% and a dividend yield of 0% as of March 31, 2018. As a result of the fair value assessment, the Company recorded a gain of $78,871 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $188,137 as of March 31, 2018.

4) For the first quarter 2018 1yr Notes: Management conducted a fair value assessment with the following assumptions: annual volatility of 52% present value discount rate of 12% and a dividend yield of 0% as of March 31, 2018. As a result of the fair value assessment, the Company recorded a loss of $878,973 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $2,030,135 as of March 31, 2018.

During the first quarter 2018, a net loss of $12,958 had been recorded to reflect the total derivative liability of $6,061,298 as of March 31, 2018.

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NOTE 10. PROMISSORY NOTES

Offering of Unsecured, Non-Convertible Notes

During October 2016, the Company received $420,000 from a separate private investor. These funds, along with $250,000 of additional funding, were rolled into a promissory note, executed on January 17, 2017, in the amount of $700,000 issued with a discount of $30,000 which will be charged to interest expense ratably over the term of the note. The note bears interest at 12% per annum and matures on July 17, 2017. Principal and interest on this note are payable at maturity. This note is not convertible into equity shares of the Company and is unsecured.

On June 30, 2017, the Company and the private investor agreed to a 12 month payment plan on the balance of this promissory note. Interest will continue to accrue on this note at 12% per annum and payments of approximately $62,000 will be made monthly beginning in July 2017. The Company has not made all the payments according to this payment plan, and the note is payable upon demand.

As of March 31, 2018, $205,563 of principal and $45,414 of interest had been paid on this note. The outstanding principal and accrued interest balances on the note as of March 31, 2018 were $494,437 and $41,756, respectively.

On November 16, 2017, the Company initiated a non-convertible, unsecured promissory note with a private investor for $275,000. The promissory note was issued with an original issue discount of $25,000, resulting in proceeds to the company of $250,000. The note does not have a stated interest rate and matured on December 18, 2017. As of March 31, 2018, no payments had been made on this note and the Company has accrued interest at an inferred rate of 12% resulting in an accrued interest balance of $9,493, as of March 31, 2018. This note is payable upon demand.

On January 31, 2018, the Company initiated a non-convertible, unsecured promissory note with a private investor for an aggregate principal amount of $200,000. The promissory note was issued with an original issue discount of $22,500, resulting in proceeds to the company of $177,500, which was received in December 2017. The note bears interest at 12% per annum and matures on December 29, 2018. All principal and interest is payable upon maturity. The Company received $30,000 in additional proceeds from this investor during the three months ended March 31, 2018, and the Company has received further proceeds as of the date of this report (please refer to Note 18 for further information). As of the date of this report, the amended note has not been finalized. As of March 31, 2018, the principal and interest balances on this note were $230,000 and $6,473, respectively.

NOTE 11. OCTOBER 2016 CONVERTIBLE NOTES AND EXCHANGE OF SERIES A PREFERRED STOCK

October 2016 Convertible Notes

On October 5, 2016, the Company entered into a securities purchase agreement with a private investor for the private placement of $330,000 principal amount of October 2016 Convertible Notes. At Closing, the Company sold and issued $330,000 principal amount of October 2016 Convertible Notes in exchange for $330,000 of gross proceeds.

Unless earlier converted or prepaid, the October 2016 Convertible Notes matured on December 31, 2017. The October 2016 Convertible Notes bear interest at a rate of 6% per annum, subject to increase to 24% per annum upon the occurrence and continuance of an event of default (as described below). Principal and accrued interest on the October 2016 Convertible Notes is payable upon demand.

All principal and accrued interest on the October 2016 Convertible Notes are convertible at any time, in whole or in part, at the option of Adar Bays, into shares of common stock at a variable conversion price equal to 80% of the lowest closing bid price of the Company’s common stock for the fifteen consecutive trading day period prior to the conversion date. After the six month anniversary of the issuance of any October 2016 Convertible Note, the conversion price for such note shall thereafter be equal to 50% of the lowest closing bid price of the Company’s common stock for the fifteen consecutive trading day period prior to the conversion date.

The October 2016 Convertible Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the October 2016 Convertible Notes; and (ii) bankruptcy or insolvency of the Company.

Outstanding principal and accrued interest on the October 2016 Convertible Notes were $330,000 and $29,810, respectively as of March 31, 2018.

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Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion option in the October 2016 Convertible Notes were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At closing, a derivative liability and a corresponding debt discount in the amount of $330,000 was recorded. The fair value of the derivative was greater than the face value at issuance and the difference of $341,114 was charged to interest expense at issuance. The remaining debt discount will be charged to interest expense ratably over the life of the October 2016 Convertible Notes. As of December 31, 2017, the fair value of the derivative liability was $572,643.

The derivative liability associated with the October 2016 Convertible Notes is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2018, the Company conducted a fair value assessment of the embedded derivative associated with the October 2016 Convertible Notes. As a result of the fair value assessment, the Company recorded a $62,276 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2018, to properly reflect the fair value of the embedded derivative of $634,919 as of March 31, 2018.

The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the October 2016 Convertible Notes approximates management’s estimate of the fair value of the embedded derivative liability at March 31, 2018 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 53% present value discount rate of 12% and dividend yield of 0%.

Exchange of Outstanding Series A Preferred Stock for Convertible Notes

In 2013, the Company completed a private placement to one accredited investor (the “Series A Holder”) of its Series A Convertible Preferred Stock. Prior to the exchange agreement described below the Company had 165,541 shares of Series A Preferred Stock that remained outstanding as of October 6, 2016.

On October 6, 2016, the Series A Holder entered into an exchange agreement with private investor. Pursuant to the exchange agreement, beginning December 5, 2016, the private investor has the option to exchange, from time to time, all or any portion of the October 2016 Convertible Notes for outstanding shares of Series A Preferred Stock from the Series A Holder.

As of March 31, 2017, the private investor had elected to exchange all outstanding October 2016 Convertible Notes, in accordance with the exchange agreement, and the Series A Holder held $330,000 of the October 2016 Convertible Notes.

NOTE 12. ST. GEORGE CONVERTIBLE NOTE

On September 8, 2017, the Company entered into a securities purchase agreement with St. George Investments LLC (“Investor”), for the private placement of $1,725,000 principal amount of the Company’s Original Issue Discount Convertible Promissory Notes.

On September 11, 2017, the Company sold and issued $1,725,000 principal amount of the convertible notes to the Investor in exchange for $1,500,000 of gross proceeds, and paid $20,000 in financing costs. The original issue discount of $225,000, and the financing fee, will be charged to interest expense, ratably, over the life of the note.

Unless earlier converted or prepaid, the convertible notes will mature on March 11, 2019. The notes do not bear interest in the absence of an event of default.

For the first six months after the issuance of the notes, the Company will make a monthly cash repayment on the notes of approximately $96,000. Thereafter, the Investor may request that the Company make monthly partial redemptions of the note up to $150,000 per month. If the Investor does not request the full $150,000 redemption amount in any one month, the unused portion of such monthly redemption amount can be added to future monthly redemption amounts. But in no event can the amount requested by the Investor for any one month exceed $275,000.

Redemption amounts are payable by the Company in cash. Beginning ten months after the issuance of the convertible notes, cash redemption payments by the Company will be subject to a 15% redemption premium.

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Beginning six months after the issuance of the convertible notes, the Company also has the option (subject to customary equity conditions) to pay redemption amounts in the form of shares of common stock. Payments in the form of shares would be calculated using a variable conversion price equal to the lower of (i) 85% of the average VWAP for the shares over the prior five trading days or (ii) the closing bid price for the shares on the prior trading day.

All principal and accrued interest on the Notes are convertible at any time, in whole or in part, at the option of the Investor into shares of Common Stock at a fixed conversion price of $0.004 per share.

The Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the Notes; and (ii) bankruptcy or insolvency of the Company. Upon the occurrence of an event of default, the Notes will begin to bear interest at the rate of 22% per annum. In addition, upon the occurrence of an event of default, the Investor has the option to increase the outstanding balance of the Notes by 25%.

In connection with the closing under the Note SPA, the Company issued 37,500,000 unregistered shares of common stock to the Investor as an origination fee. The closing stock price on the date of close was $0.0017 resulting in an interest expense of $63,750 being recorded as of the date of close.

The Notes may not be converted and shares of Common Stock may not be issued pursuant to the Notes if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 4.99% of the outstanding shares of Common Stock.

As of March 31, 2018, cash payments of $191,667 had been made on this note, and $75,000 had been converted into 187,500,000 shares of the Company's common stock. The remaining balance on the note was $1,458,333 as of March 31, 2018.

In lieu of making the December 2017 through March 2018 cash payments, the share reserve was increased by 5 billion shares, and the variable conversion price changed to the lower of (i) 60% of the average VWAP for the shares over the prior five trading days or (ii) the closing bid price for the shares on the prior trading day, please refer to Note 18 for more information on the change in VWAP discount.

Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion option in the Convertible Promissory Notes were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. As of December 31, 2017, the derivative liability was $394,280.

The derivative liability associated with the Convertible Promissory Notes is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2018, the Company conducted a fair value assessment of the embedded derivative associated with the St. George Convertible Notes. As a result of the fair value assessment, the Company recorded a $824,900 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2018, to properly reflect the fair value of the embedded derivative of $1,219,180 as of March 31, 2018.

The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Convertible Promissory Notes approximates management’s estimate of the fair value of the embedded derivative liability at March 31, 2018 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 56% present value discount rate of 12% and dividend yield of 0%.

NOTE 13. BAYBRIDGE CONVERTIBLE NOTE

On December 6, 2017, the Company entered into a securities exchange agreement (the “Exchange Agreement”) with BayBridge Capital Fund LP (“BayBridge”).

Pursuant to the terms of the Exchange Agreement, the Investor agreed to surrender and exchange 675 shares of outstanding Series J Preferred Stock ($755,417 of capital and accrued dividends). In exchange, the Company issued to the Investor an unsecured promissory note with an aggregate principal amount of $840,000 (the “Exchange Note”), with an original issue discount of $84,583. Please refer to Note 21 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for further discussion on the Series J Preferred Stock.

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The Exchange Note is unsecured, has no applicable registration rights, bears interest at a rate of 12% per annum, matures on December 6, 2018, and contains standard and customary events of default including but not limited to: (i) failure to make payments when due under the Exchange Note, and (ii) bankruptcy or insolvency of the Company. Principal and interest are payable upon maturity.

Payments of principal and accrued interest on the Exchange Note are payable in cash or, at the option of the Company, in shares of Common Stock at a variable conversion price equal to the lowest of (i) 85% of the average VWAP for the shares over the prior 5 trading days, (ii) the closing bid price for the shares on the prior trading day, or (iii) $0.003 per share. Payments in shares of Common Stock may not be issued pursuant to the Exchange Note if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 9.99% of the outstanding shares of Common Stock.

Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion option in the Exchange Note was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2017, the derivative liability associated with the promissory note was $542,733.

The derivative liability associated with the Exchange Note is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2018, the Company conducted a fair value assessment of the embedded derivative associated with the Exchange Note. As a result of the fair value assessment, the Company recorded a $349,048 gain as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, to properly reflect the fair value of the embedded derivative of $193,685 as of March 31, 2018.

The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Exchange Note approximates management’s estimate of the fair value of the embedded derivative liability at March 31, 2018 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 50%, present value discount rate of 12% and dividend yield of 0%.

As of March 31, 2018, principal of $380,000 and interest of $20,717 had been converted into 897,418,314 shares of common stock and no cash payments of principal or interest had been made. The principal and accrued interest balances as of March 31, 2018 were $460,000 and $653, respectively.

NOTE 14. SERIES A PREFERRED STOCK

In June 2013, the Company entered into a Securities Purchase Agreement with an investor to sell an aggregate of 750,000 shares of Series A Preferred Stock at a price of $8.00 per share, resulting in gross proceeds of $6,000,000. This purchase agreement included warrants to purchase up to 13,125 shares of common stock of the Company. The transfer of cash and securities took place incrementally, the first closing occurring on June 17, 2013 with the transfer of 125,000 shares of Series A Preferred Stock and a warrant to purchase 2,187 shares of common stock for $1,000,000. The final closings took place in August 2013, with the transfer of 625,000 shares of Series A Preferred Stock and a warrant to purchase 10,938 shares of common stock for $5,000,000.

Holders of Series A Preferred Stock are entitled to cumulative dividends at a rate of 8% per annum when and if declared by the Board of Directors in its sole discretion. The dividends may be paid in cash or in the form of common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period), at the discretion of the Board of Directors. The dividend rate on the Series A Preferred Stock is indexed to the Company's stock price and subject to adjustment. In addition, the Series A Preferred Stock contains a make-whole provision whereby, conversion or redemption of the preferred stock within 4 years of issuance will require dividends for the full four year period to be paid by the Company in cash or common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period). This make-whole provision expired in June 2017 and future conversions and redemptions will be paid out with accrued dividends per the holding period of the shares of Series A Preferred stock. Please see Note 23 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for more information.

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The Series A Preferred Stock may be converted into shares of common stock at the option of the Company if the closing price of the common stock exceeds $232, as adjusted, for 20 consecutive trading days, or by the holder at any time. The Company has the right to redeem the Series A Preferred Stock at a price of $8.00 per share, plus any accrued and unpaid dividends, plus the make-whole amount (if applicable). At March 31, 2018, the preferred shares were not eligible for conversion to common shares at the option of the Company. The holder of the preferred shares may convert to common shares at any time, at no cost, at a ratio of 1 preferred share into 1 common share (subject to standard ratable anti-dilution adjustments). Upon any conversion (whether at the option of the Company or the holder), the holder is entitled to receive any accrued but unpaid dividends.

On October 6, 2016, the Series A Holder entered into an exchange agreement with a private investor. Pursuant to the exchange agreement, beginning December 5, 2016, the investor has the option to exchange, from time to time, all or any portion of the October 2016 Convertible Notes (see Note 11) for outstanding shares of Series A Preferred Stock from the Series A Holder.

As of March 31, 2017, the investor had elected to exchange all outstanding October 2016 Convertible Notes, in accordance with the exchange agreement, resulting in the exchange of 104,785 shares of Series A Preferred Stock. As of March 31, 2017, the investor had also converted their 104,785 shares of Series A Preferred Stock, and the related make whole dividend, which resulted in the issuance of 173,946,250 shares of common stock.

Except as otherwise required by law (or with respect to approval of certain actions), the Series A Preferred Stock shall have no voting rights. Upon any liquidation, dissolution or winding up of the Company, after payment or provision for payment of debts and other liabilities of the Company, the holders of Series A Preferred Stock shall be entitled to receive, pari passu with any distribution to the holders of common stock of the Company, an amount equal to $8.00 per share of Series A Preferred Stock plus any accrued and unpaid dividends.

As of March 31, 2018, there were 60,756 shares of Series A Preferred Stock outstanding and accrued and unpaid dividends of $295,004.

NOTE 15. SERIES K PREFERRED STOCK

On February 8, 2017, the Company, entered into a securities purchase agreement (“Series K SPA”) with a private investor (“Investor”), for the private placement of up to $20,000,000 of the Company’s newly designated Series K Convertible Preferred Stock (“Series K Preferred Stock”).

Per the terms of the Series K SPA, the Company was scheduled to sell 1,000 shares of Series K Preferred Stock to Investor in exchange for $1,000,000 of gross proceeds on or before each of (i) February 24, 2017, (ii) March 27, 2017, (iii) April 27, 2017, (iv) May 27, 2017 and (v) June 27, 2017. The Company was also scheduled to sell 15,000 shares of Series K Preferred Stock to Investor in exchange for $15,000,000 of gross proceeds on or before July 27, 2017. As of March 31, 2018, the Company had sold 9,010 shares of Series K Preferred Stock in exchange for $9,010,000 in cash proceeds from the private investor. The Company does not expect to receive any more funding from this investor. The following summarizes the closings and proceeds received as of March 31, 2018:

Closing Period	Preferred Series K Shares Purchased	Closing Amount
Q1 2017	150	$	150,000
Q2 2017	4,100	4,100,000
Q3 2017	4,760	$	4,760,000
	9,010	$	9,010,000

The Series K Preferred Stock ranks senior to the Company’s common stock in respect to dividends and rights upon liquidation. The Series K Preferred Stock will not have voting rights and the holders of the Series K Preferred Stock will not be entitled to any fixed rate of dividends.

The shares of the Series K Preferred Stock will be convertible at the option of the holder into common stock at a fixed conversion price equal to $0.004. At no time may the Series K Preferred Stock be converted if the number of shares of common stock to be received by Investor pursuant to such conversion, when aggregated with all other shares of common stock then beneficially (or deemed beneficially) owned by Investor, would result in Investor beneficially owning more than 19.99% of all common stock then outstanding. The following table summarizes the conversion activity of Series K Preferred Stock:

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Conversion Period	Preferred Series K Shares Converted	Value of Series K Preferred Shares		Common Shares Issued
Q2 2017	3,200	$	3,200,000	800,000,000
Q3 2017	3,000	$	3,000,000	750,000,000
	6,200	$	6,200,000	1,550,000,000

As of March 31, 2018, the investor owned approximately 12% of the Company's outstanding common stock and there are 2,810 shares of Series K Preferred Stock Outstanding, representing a value of $2,810,000. Subsequent to March 31, 2018, the investor converted their remaining Series K Preferred Shares into common stock. Please refer to Note 18 for further information.

The Company is required to redeem for cash any outstanding shares of the Series K Preferred Stock at a price per share equal to $1,000 plus any accrued but unpaid dividends (if any) thereon on the fifth anniversary of the date of the original issue of such shares.

Upon our liquidation, dissolution or winding up, holders of Series K Preferred Stock will be entitled to be paid out of our assets, prior to the holders of our common stock, an amount equal to $1,000 per share plus any accrued but unpaid dividends (if any) thereon.

Upon issuance, in accordance with ASC 480-10, the Series K Preferred Stock was classified as a liability on the Consolidated Balance Sheets. Pursuant to a number of factors outlined in ASC Topic 815, the conversion option in the Series K Preferred Stock was deemed to not require bifurcation or separate accounting treatment.

NOTE 16. STOCKHOLDERS’ DEFICIT

Common Stock

At March 31, 2018, the Company had 20,000,000,000 shares of common stock, $0.0001 par value, authorized for issuance. Each share of common stock has the right to one vote. As of March 31, 2018, the Company had 12,738,084,718 shares of common stock outstanding. The Company has not declared or paid any dividends related to the common stock through March 31, 2018.

Preferred Stock

At March 31, 2018, the Company had 750,000 shares of preferred stock, $0.0001 par value, authorized for issuance. Preferred stock may be issued in classes or series. Designations, powers, preferences, rights, qualifications, limitations and restrictions are determined by the Company’s Board of Directors. 

The following table summarizes the designations, shares authorized, and shares outstanding for the Company's Preferred Stock:

Preferred Stock Series Designation	Shares Outstanding
Series A	60,756
Series K	2,810

Series A Preferred Stock

Refer to Note 14 descriptions of Series A Preferred Stock.

Series K Preferred Stock

Refer to Note 15 descriptions of Series K Preferred Stock.

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Warrants

As of March 31, 2018, the Company has three outstanding warrants for an aggregate of 700 million shares of common stock: i) a warrant for 250 million shares of common stock which is exercisable at a fixed strike price of $0.004 and expires on July 24, 2018; ii) a warrant for 250 million shares of common stock which is exercisable at a fixed strike price of $0.003 and expires on August 10, 2018; and iii) a warrant for 200 million shares of common stock which is exercisable at a fixed strike price of $0.0018 and expires on June 30, 2018. None of the warrants may not be exercised if, after giving effect to the exercise, the holder, together with its affiliates, would beneficially own in excess of 9.99% of the Company's outstanding shares of common stock. Please refer to Note 24 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for further information about each warrant issuance.

The following table summarizes warrant activity:

	Warrant Shares	Warrant Weighted Average Exercise Price
Outstanding at December 31, 2016	—	$	—
Granted	700,000,000	$	0.003
Exercised	—	$	—
Canceled	—	$	—
Outstanding at December 31, 2017	700,000,000	$	0.003
Granted	—	$	—
Exercised	—	$	—
Canceled	—	$	—
Outstanding at March 31, 2018	700,000,000	$	0.003
Exercisable at March 31, 2018	700,000,000	$	0.003

NOTE 17. EQUITY PLANS AND SHARE-BASED COMPENSATION

Share-Based Compensation: The Company measures share-based compensation cost at the grant date based on the fair value of the award and recognizes this cost as an expense over the grant recipients’ requisite service periods for all awards made to employees, officers, directors and consultants.

The share-based compensation expense recognized in the Condensed Consolidated Statements of Operations was as follows:

	For the three months ended March 31,
	2018		2017
Share-based compensation cost included in:
Research and development	$	454	$	16,610
Selling, general and administrative	13,870		63,127
Total share-based compensation cost	$	14,324	$	79,737

The following table presents share-based compensation expense by type:

	For the three months ended March 31,
	2018		2017
Type of Award:
Stock Options	$	14,324	$	53,408
Restricted Stock Units and Awards	—		26,329
Total share-based compensation cost	$	14,324	$	79,737

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Stock Options: The Company recognized share-based compensation expense for stock options of approximately $14,324 to officers, directors and employees for the three months ended March 31, 2018 related to stock option awards ultimately expected to vest. There were no stock options granted during the three months ended March 31, 2018 or during the three months ended March 31, 2017.

As of March 31, 2018, total compensation cost related to non-vested stock options not yet recognized was approximately $24,000 which is expected to be recognized over a weighted average period of approximately 1.2 years, 67,965 shares were vested or expected to vest in the future at a weighted average exercise price of $31.82, and 195,883 shares remained available for future grants under the Option Plan.

Restricted Stock: The Company did not recognized share-based compensation expense related to restricted stock grants for the three months ended March 31, 2018. During the three months ended March 31, 2017, the Company recognized approximately $26,000 in share-based compensation related to restricted stock grants. There were no restricted stock grants for the three months ended March 31, 2018 or the three months ended March 31, 2017.

As of March 31, 2018, there was no unrecognized share-based compensation expense from unvested restricted stock, no shares were expected to vest in the future, and 518,388 shares remained available for future grants under the Restricted Stock Plan.

NOTE 18. SUBSEQUENT EVENTS

Update on Promissory Notes

During April and May 2018, the Company received aggregate proceeds of $255,000 from a private investor. As of the date of this report the funds had not been documented into a note agreement, the Company is imputing interest at 12% per annum.

Update on St. George Convertible Note

On May 1, 2018, effective as of April 3, 2018, the parties agreed to amend the variable conversion price formula outlined in the SPA. As amended, payments in the form of shares would be calculated using a variable conversion price equal to the lower of (i) 60% of the lowest VWAP for the shares during the prior five trading days or (ii) the closing bid price for the shares on the prior trading day.

On April 3, 2018, St. George requested a redemption of $50,000 on their convertible note, in accordance with the Securities Purchase Agreement dated September 9, 2017 ("SPA"). Also in accordance with the SPA, the Company elected to fulfill this redemption through the issuance of common stock; as a result, 208,333,333 shares of common stock were issued to St. George.

On April 13, 2018, St. George requested a redemption of $50,000 on their convertible note, in accordance with the SPA. Also in accordance with the SPA, the Company elected to fulfill this redemption through the issuance of common stock; as a result, 277,777,778 shares of common stock were issued to St. George.

On April 25, 2018, St. George requested a redemption of $75,000 on their convertible note, in accordance with the SPA. Also in accordance with the SPA, the Company elected to fulfill this redemption through the issuance of common stock; as a result, 416,666,667 shares of common stock were issued to St. George.

On May 9, 2018, St. George requested a redemption of $141,600 on their convertible note, in accordance with the SPA. Also in accordance with the SPA, the Company elected to fulfill this redemption through the issuance of common stock; as a result, 1,180,000,000 shares of common stock were issued to St. George.

As of the date of this report, the remaining principal balance on the St. George Convertible Note was $1,141,733.

Update on BayBridge Convertible Note

On April 13, 2018, BayBridge requested a redemption of $90,000 principal and $2,760 interest on their convertible note, in accordance with the Securities Purchase Agreement dated December 6, 2017. Also in accordance with said securities purchase agreement, the Company elected to fulfill this redemption through the issuance of common stock; as a result, 545,647,059 shares of common stock were issued to BayBridge.

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On May 10, 2018, BayBridge requested a redemption of $318,000 principal and $3,330 interest on their convertible note, in accordance with the Securities Purchase Agreement dated December 6, 2017. Also in accordance with said securities purchase agreement, the Company elected to fulfill this redemption through the issuance of common stock; as a result, 1,890,176,471 shares of common stock were issued to BayBridge.

As of the date of this report, the principal balance on the BayBridge Convertible note was $52,000.

Update on Series K Preferred Stock

On May 8, 2018, the holder of the Series K Preferred stock converted the remaining 2,810 outstanding shares of Series K Preferred Stock into common stock, in accordance with the Securities Purchase Agreement dated February 8, 2017. The conversion resulted in the issuance of 702,500,000 shares of common stock. After giving effect to the conversion, immediately following the conversion, the investor held approximately 15% of the outstanding shares of the Company's common stock.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and the notes to those financial statements appearing elsewhere in this Form 10-Q. This discussion and analysis contains statements of a forward-looking nature relating to future events or our future financial performance. As a result of many factors, our actual results may differ materially from those anticipated in these forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Overview

We are a company formed to commercialize flexible photovoltaic modules using our proprietary technology. For the three months ended March 31, 2018, we generated $377,511 of revenue from product sales.

In 2012, we evolved our business model to include B2C, solution based, PV integrated consumer electronics to our off grid high value solar power generation strategy. In June of 2012, we launched our new line of consumer products under the EnerPlex™ brand, and introduced our first product, the Surfr™, a battery and solar case for the Apple® iPhone® 4/4S smart phone, featuring our ultra-light CIGS thin film technology integrated directly into the case. The case incorporates our ultra-light and thin PV module into a sleek, protective iPhone 4/4S case, along with a thin, life extending, lithium-polymer battery. The case adds minimal weight and size to an iPhone smartphone, yet provides supplemental charging when needed. In August of 2012, we announced the launch of the second version of the Surfr for the Samsung® Galaxy S® III, which provides 85% additional battery life.

In December 2012, we launched the EnerPlex Kickr™ and EnerPlex Jumpr™ product series. The Kickr IV is an extremely portable, compact and durable solar charging device, approximately seven inches by seven inches when folded, and weighs less than half a pound. The Kickr IV provides 6.5 watts of regulated power that can help charge phones, digital cameras, and other small USB enabled devices. The Kickr IV is ideal for outdoor activities such as camping, hiking and mountain climbing as well as daily city use. To complement the Kickr IV, we also released the Jumpr series of portable power banks in December of 2012. The Jumpr series provides a compact power storage solution for those who need to recharge their portable electronics while on the go.

During 2013, the EnerPlex brand rapidly expanded with the addition of two new product series as well as over fifteen new products. In 2013, we introduced further additions to the Jumpr line of portable power banks; releasing the Jumpr Mini and Jumpr Stack in August and the Jumpr Max in September. The latest additions to the Kickr line of portable solar chargers, the Kickr I and Kickr II, were introduced in August at the Outdoor Retailer show. Furthermore, in October 2013, we released our first series of solar integrated backpacks, the EnerPlex Packr™. The Packr is a functional backpack ideal for charging mobile electronic devices while on the go. Also in October of 2013, we introduced the Surfr battery and solar case for the Samsung Galaxy S® 4, and in December, we introduced the Surfr battery and solar case for Apple’s iPhone® 5. To complement our flagship product lines, we added an assortment of accessories, all of which can be integrated into the EnerPlex ecosystem of products; such as the LED wand which can be easily plugged into a Jumpr power bank to provide hours of light, or the Travel Adaptor, which enables consumers to charge up their Jumpr power banks from a traditional outlet anywhere in the world.

Beginning in 2013, we aggressively pursued new distribution channels for the EnerPlex brand; these activities have led to placement in a variety of high-traffic ecommerce venues such as www.amazon.com, www.walmart.com, www.brookstone.com, www.newegg.com, as well as many others including our own e-commerce platform at www.goenerplex.com. The April 2013 placement of EnerPlex products at Fry’s Electronics, a US West Coast consumer electronics retailer, represented the company’s first domestic retail presence; EnerPlex products were carried in all of Fry’s 34 superstores across 9 states.

Throughout 2014, EnerPlex released multiple additions to the Jumpr line of products: including the Jumpr Stack 3, 6 and 9; innovative batteries equipped with tethered micro-USB and Apple Lightning cables with a revolutionary Stack and Charge design, enabling batteries to be charged simultaneously when they are placed on top of one another. Also released in 2014 were the Jumpr Slate series, products which push the boundaries of how thin batteries can be; the Jumpr Slate 10k, at less than 7mm thick was the thinnest lithium polymer battery available when it was released. The Jumpr Slate 5k and 5k Lightning each come with a tethered micro-USB and Lightning cable respectively; freeing consumers from worrying about toting extra cables with them while on the move.

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At Outdoor Retailer 2014, EnerPlex debuted the Generatr Series. The Generatr 1200 and Generatr 100 are lithium-ion based, large format batteries. Lighter and smaller than competitors, the Generatr Series are targeted for consumers who require high-capacity, high-output batteries which remain ultra-portable. Also debuted at Outdoor Retailer was the Commandr 20, a high output solar charger designed specifically to integrate with and charge the Generatr series, allowing consumers to stay out longer without needing to charge their Generatr batteries from a traditional power source. In August 2014, the Kickr II+ and IV+ were also announced, these products represent another evolution in EnerPlex’s line of solar products; integrated with a 500mAh battery the Kickr II+ and IV+ are able to provide a constant flow of power even when there are intermittent disruptions in sunlight.

During 2015, we reached an agreement with EVINE Live, one of the premier home shopping networks with TV programming that reaches over 87 million US homes to begin selling EnerPlex products during their broadcasts. EnerPlex launched the Generatr S100 and select other products exclusively with EVINE, EnerPlex also launched the Generatr 1200 launched exclusively with EVINE for a limited period. Also during 2015, EnerPlex expanded its relationship with The Cellular Connection to include over 450 Verizon Wireless Premium Retail Stores; launched its products with two world recognized retailers; The Sports Authority and Cabela’s; and launched its products with GovX; the premier online shopping destination for Military, Law Enforcement and Government agencies. Internationally, EnerPlex products became available in the United Kingdom via the brand’s launch with 172 Maplin’s stores throughout the country.

In 2016, EnerPlex launched the new emergency sales vertical, partnering with Emergency Preparedness eCommerce leader, Emergency Essentials, and we announced new breakthroughs in the Company’s line of high-voltage solar products, designed specifically for high-altitude and space markets. Also during the first quarter of 2016, the Company announced the launch of select products on the GSA Advantage website; allowing Federal employees, including members of all branches of the US Military, to directly purchase Ascent and EnerPlex products including: the MilPak E, Commandr 20, Kickr 4 and WaveSol solar modules.

In January 2017, Ascent was awarded a contract to supply high-voltage SuperLight thin-film CIGS PV blankets. These 50W, fully laminated, flexible blankets were manufactured using a new process that was optimized for high performance in near-space conditions at elevated temperatures, and are custom designed for easy modular integration into series and parallel configurations to achieve the desired voltage and current required for such application.

In February 2017 Ascent announced the discontinuation of our EnerPlex consumer business by disposing of the EnerPlex brand, and related intellectual properties and trademarks, to our battery product supplier, Sun Pleasure Co. Limited (“SPCL”). This transaction was completed in an effort to better allocate our resources and to continue to focus on our core strength in the high-value specialty PV market. Following the transfer, Ascent will no longer be producing or selling Enerplex-branded consumer products. Ascent will focus on its photovoltaic business and will supply solar PV products to SPCL, supporting the continuous growth of EnerPlex™ with Ascent’s proprietary and award-winning thin-film solar technologies and products.

During the third quarter of 2017, Ascent Solar was selected by Energizer to develop and supply solar panels for their PowerKeep line of solar products, and in November 2017, Ascent introduced the next generation of our USB-based portable power systems with the XD™ series. The first product to be introduced was the XD-12 which, like previous products, is a folding, lightweight, easily stowable, PV system with USB power regulation. Unique to this generation of PV portable power is more PV power (12 Watts) and a 2.0 Amp smart USB output to enable the XD-12 to charge most smartphones, tablets, and USB-enabled devices as fast as a wall outlet. The enhanced smart USB circuit determines the maximum power the device is able to receive, and ensures the best possible charging performance directly from the sun. 

Also in 2017, for a space customer, Ascent manufactured a new micro-module, approximately 12.8mm x 50mm (0.5in x 2.0in) in size that is ideal for both laboratory-scale environmental testing, and for subsequent integration into flight experiments.

In February 2018, the Company introduced the second product in our XD™ series. Delivering up to 48 Watts of solar power, the durable and compact Ascent XD-48 Solar Charger is the ideal solution for charging many portable electronics and off-grid power systems. The XD-48’s versatility allows it to charge both military and consumer electronics directly from the sun wherever needed. Like the XD-12, the XD-48 has a compact and portable design, and its rugged, weather-resistant construction withstands shocks, drops, damage and even minor punctures to power through the harshest conditions.

We continue to design and manufacture PV integrated consumer electronics as well as portable power applications for commercial and military users. Due to the high durability enabled by the monolithic integration employed by our technology, the capability to customize modules into different form factors and the industry leading light weight and flexibility provided by our modules, we believe that the potential applications for our products are numerous.

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Commercialization and Manufacturing Strategy

Our proprietary manufacturing process deposits multiple layers of materials, including a thin film of highly efficient Copper-Indium-Gallium-diSelenide (“CIGS”) semiconductor material, on a flexible, lightweight, plastic substrate using a roll-to-roll manufacturing process and then laser patterns the layers to create interconnected PV cells, or PV modules, in a process known as monolithic integration. Our monolithic integration techniques enable us to form complete PV modules with less or no costly back end assembly of intercell connections. Traditional PV manufacturers assemble PV modules by bonding or soldering discrete PV cells together. This manufacturing step typically increases manufacturing costs and at times proves detrimental to the overall yield and reliability of the finished product. By reducing or eliminating this added step using our proprietary monolithic integration techniques, we believe we can achieve cost savings in, and increase the reliability of, our PV modules. We believe our technology and manufacturing process, which results in a lighter, flexible module package, provides us with unique market opportunities relative to both the crystalline silicon (“c-Si”) based PV manufacturers that currently lead the PV market, as well as other thin-film PV manufacturers that use substrate materials such as glass, stainless steel or other metals that can be heavier and more rigid than plastics.

Currently, we are producing OEM and consumer oriented products focusing on charging devices powered by our solar modules. Products in these markets are priced based on the overall value proposition rather than a commodity-style price per watt basis. We continue to develop new consumer products and we have adjusted our utilization of our equipment to meet our near term forecast sales. We plan to continue the development of our current PV technology to increase module efficiency, improve our manufacturing tooling and process capabilities and reduce manufacturing costs. We also plan to continue to take advantage of research and development contracts to fund a portion of this development.

Related Party Activity

On February 2, 2012, we announced the appointment of Victor Lee as President and Chief Executive Officer. Mr. Lee had served on our Board of Directors since November 2011 and is currently the managing director of Tertius Financial Group Pte Ltd (TFG), an investment firm located in Singapore.

As of March 31, 2018, TFG owns 333,333,333 shares of the Company's common stock, which represents less than 3% of the outstanding shares of common stock of the Company as of March 31, 2018. There are no registration rights relating to these shares.

Significant Trends, Uncertainties and Challenges

We believe the significant trends, uncertainties and challenges that directly or indirectly affect our financial performance and results of operations include:

• Our ability to generate customer acceptance of and demand for our products;

• Successful ramping up of commercial production on the equipment installed;

• Our products are successfully and timely certified for use in our target markets;

• Successful operating of production tools to achieve the efficiencies, throughput and yield necessary to reach our cost targets;

• The products we design are saleable at a price sufficient to generate profits;

• Our ability to raise sufficient capital to enable us to reach a level of sales sufficient to achieve profitability on terms favorable to us;

• Effective management of the planned ramp up of our domestic and international operations;

• Our ability to successfully develop and maintain strategic relationships with key partners, including OEMs, system integrators, distributors, retailers and e-commerce companies, who deal directly with end users in our target markets;

• Our ability to maintain the listing of our common stock on the OTC Market;

• Our ability to implement remediation measures to address material weaknesses in internal control;

• Our ability to achieve projected operational performance and cost metrics;

• Our ability to enter into commercially viable licensing, joint venture, or other commercial arrangements; and

• Availability of raw materials.

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Critical Accounting Policies and Estimates

Critical accounting policies used in reporting our financial results are reviewed by management on a regular basis. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Processes used to develop these estimates are evaluated on an ongoing basis. Estimates are based on historical experience and various other assumptions that are believed to be reasonable for making judgments about the carrying value of assets and liabilities. Actual results may differ as outcomes from assumptions may change.

The Company’s significant accounting policies were described in Note 3 to the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. There have been no significant changes to our accounting policies as of March 31, 2018.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The update will establish a comprehensive revenue recognition standard for virtually all industries in GAAP. ASU 2014-09 will change the amount and timing of revenue and cost recognition, implementation, disclosures and documentation. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of Effective Date. The amendments in ASU 2015-14 defer the effective date of ASU 2014-09 for all entities by one year. ASU 2014-09 is now effective for the Company in fiscal year 2018. The implementation of ASU 2014-09 did not have a material effect on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize all leases, including operating leases, on the balance sheet as a lease asset or lease liability, unless the lease is a short-term lease. ASU 2016-02 also requires additional disclosures regarding leasing arrangements. ASU 2016-02 is effective for interim periods and fiscal years beginning after December 15, 2018, and early application is permitted. The Company continues to evaluate the impact, that the adoption of this guidance will have on its consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718). ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 is effective for interim periods and fiscal years beginning after December 15, 2017, and early application is permitted. The implementation of ASU 2017-09 did not have a material effect on the Company's consolidated financial statements.

In July 2017, the FASB issued ASU No. 2017-11 Part I, Earnings Per Share (Topic 260), Distinguishing Liabilities fromEquity (Topic 480), Derivatives and Hedging (Topic 815). ASU 2017-11 Part I changes the classification analysis of certain equity linked financial instruments with down round features. ASU 2017-11 Part I is effective, for public business entities, for interim periods and fiscal years beginning after December 15, 2018, and early application is permitted. The Company is currently evaluating the impact, if any, that the adoption of this guidance will have on its consolidated financial statements.

Results of Operations

Comparison of the Three Months Ended March 31, 2018 and 2017

Revenues. Our net revenues were $378,000 for the three months ended March 31, 2018, compared to $281,000 for the three months ended March 31, 2017, an increase of $97,000. The increase is due to the increased sales of our PV products.

Cost of revenues. Our Cost of revenues for the three months ended March 31, 2018 was approximately $273,000, compared to $1,493,000 for the three months ended March 31, 2017, a decrease of $1,220,000. The decrease is primarily attributed to a decrease in materials and labor costs as a result of a decrease in production as compared to the first quarter in the prior year. Cost of revenues for the first quarter of 2018 is comprised of materials and freight of $35,000, direct labor of $6,000, and overhead of $232,000. Management believes our factory is currently significantly under-utilized, and a substantial increase in revenue would result in marginal increases to overhead.

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Research, development and manufacturing operations. Research, development and manufacturing operations costs were approximately $1,173,000 for the three months ended March 31, 2018, compared to approximately $1,277,000 for the three months ended March 31, 2017, a decrease of approximately $104,000. Research, development and manufacturing operations costs include costs incurred for product development, pre-production and production activities in our manufacturing facility. Research, development and manufacturing operations costs also include costs related to technology development and governmental contracts. The following factors contributed to the decrease in research, development, and manufacturing operations expenses during the three months ended March 31, 2018:

1. Personnel and facility related expenses decreased approximately $83,000, as compared to the first quarter of 2017. The decrease in personnel and facility related costs was primarily due to a reduction in headcount.

2. Consulting and contract services decreased approximately $11,000, as compared to the first quarter of 2017. The decrease in expense as compared to the first quarter of 2017 was primarily attributed to the reduced number of contractors during the quarter ended March 31, 2018.

3. Materials and equipment related expenses, decreased approximately $9,000, as compared to the first quarter of 2017. The decrease was due to a decrease in production of research and development products.

Inventory impairment costs. Due to the sale of the EnerPlex brand and the re-purposing of our work-in-process inventory, we are unable to estimate the recoverability of all of our work-in process inventory values, resulting in a lower-cost-to-market analysis and reserve for impairment of $363,758 during the first quarter of 2017. No adjustment was recorded to inventory impairment costs for the three months ended March 31, 2018.

Selling,general and administrative. Selling, general and administrative expenses were approximately $935,000 for the three months ended March 31, 2018, compared to $1,764,000 for the three months ended March 31, 2017, a decrease of approximately $830,000. The following factors contributed to the decrease in selling, general, and administrative expenses during the three months ended March 31, 2018:

1. Personnel and facility related costs decreased approximately $361,000 during the three months ended March 31, 2018, as compared to the three months ended March 31, 2017. The overall decrease in personnel related costs was primarily due a lower headcount for the three months ended March 31, 2018, as compared to the three months ended March 31, 2017.

2. Marketing and related expenses decreased approximately $83,000 during the three months ended March 31, 2018, as compared to the three months ended March 31, 2017. The decrease in Marketing and related expenses is due to reduced marketing, advertising, and promotional activities during the three months ended March 31, 2018, compared to the first quarter of 2017, which is the direct result of changing our main focus from the retail consumer electronics market to higher-value PV markets.

3. Consulting and contract services decreased approximately $354,000 during the three months ended March 31, 2018, as compared to the three months ended March 31, 2017. The decrease was a result of decreased use of consultants and contractors.

4. Legal expenses increased approximately $92,000 during the three months ended March 31, 2018, as compared to the three months ended March 31, 2017. The primary reasons for the increase is due increased and general legal expenses related to financing efforts as compared to the quarter ended March 31, 2017, offset by decreases in legal expenses related to our patent activity as compared to the first quarter of 2017.

5. Bad debt and settlement expenses decreased approximately $45,000 during the three months ended March 31, 2018, as compared to the three months ended March 31, 2017. During the first quarter of 2017 we recorded payments and settlements against existing reserves which were offset by additional reserves for customers whose accounts were greater than 120 days overdue.

6. Public company expenses decreased approximately $78,000 during the three months ended March 31, 2018, as compared to the three months ended March 31, 2017. The decrease is mostly due to reduced SEC filings and a decrease in public relations expense.

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Other Expense, net. Other income/expense was approximately $2,328,000 for the three months ended March 31, 2018, compared to approximately $590,000 for the three months ended March 31, 2017, an increase of approximately $1,738,000. The following factors contributed to the increase in other expense during the three months ended March 31, 2018:

1. Interest expense decreased approximately $648,000, as compared the first quarter of 2017. The decrease is primarily due to an decrease of non-cash interest expense related to convertible debt, promissory notes, and Preferred Stock.

2. Gains and losses on change in fair value of derivatives and on extinguishment of liabilities, net was a loss of approximately $984,000 during the first quarter of 2018, as compared to an approximate gain of $673,000 for the first quarter of 2017. The increased expense of approximately $1,658,000 in this non-cash item is attributable to a loss of approximately $551,000 on the change in fair value of our embedded derivative instruments during the three months ended March 31, 2018, compared to an approximate gain $3,256,000 in 2017, offset by a reduction in the loss from extinguishment of liabilities of approximately $2,149,000, related to conversions and redemptions of certain convertible notes and preferred stock, for the three months ended March 31, 2018, as compared to the the three months ended March 31, 2017

Net Loss. Our Net Loss was approximately $4,433,000 for the three months ended March 31, 2018, compared to a Net Loss of approximately $5,579,000 for the three months ended March 31, 2017, an improvement of approximately $1,145,000.

The decrease in Net Loss for the three months ended March 31, 2018 can be summarized in variances in significant account activity as follows:

	Decrease (Increase) to Net Loss For the Three Months  Ended March 31, 2018 Compared to the Three Months Ended March 31, 2017
Revenues	97,000
Cost of Revenue	1,220,000
Research, development and manufacturing operations
Materials and Equipment Related Expenses	9,000
Personnel and Facility Related Expenses	83,000
Consulting and Contract Services	11,000
Inventory Impairment Costs	364,000
Selling, general and administrative expenses
Personnel, administrative, and facility Related Expenses	361,000
Marketing Related Expenses	83,000
Legal Expenses	(92,000		)
Public Company Costs	78,000
Consulting and Contract Services	354,000
Bad debt and Settlement expense	45,000
Depreciation and Amortization Expense	270,000
Other Income / (Expense)
Other income	728,000
Interest Expense	(648,000		)
Non-Cash Change in Fair Value of Derivatives and Gain/Loss on Extinguishment of Liabilities, net	1,658,000
Decrease (Increase) to Net Loss	$	1,145,000

Liquidity and Capital Resources

As of March 31, 2018, we had approximately $88,000 in cash and cash equivalents.

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During the three months ended March 31, 2018 and the year ended December 31, 2017, the Company entered into multiple financing agreements to fund operations. Further discussion of these transactions can be found in Notes 7 through 15, and Note 18 of the financial statements presented as of, and for, the three months ended, March 31, 2018, and in Notes 8 through 22 and Note 30 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017.

We have continued PV production at our manufacturing facility. We do not expect sales revenue and cash flows will be sufficient to support operations and cash requirements until we have fully implemented our new consumer products strategy. Changes in the level of expected operating losses, the timing of planned capital expenditures or other factors may negatively impact cash flows and reduce current cash and investments faster than anticipated. During the three months ended March 31, 2018, we used approximately $1,495,000 in cash for operations. Our primary significant long term cash obligation consists of a note payable of approximately $5,378,000 to a financial institution secured by a mortgage on its headquarters and manufacturing building in Thornton, Colorado. Total payments of approximately $520,000, including principal and interest, will come due in the remainder of 2017.

Additional projected product revenues are not anticipated to result in a positive cash flow position for the year 2018 overall and, as of March 31, 2018, we have negative working capital. As such, cash liquidity sufficient for the year ending December 31, 2018 will require additional financing.

The Company continues to accelerate sales and marketing efforts related to its PV strategy by focusing on the Company's propriety technology. The Company has begun activities related to securing additional financing through strategic or financial investors, but there is no assurance the Company will be able to raise additional capital on acceptable terms or at all. If the Company's revenues do not increase rapidly, and/or additional financing is not obtained, the Company will be required to significantly curtail operations to reduce costs and/or sell assets. Such actions would likely have an adverse impact on the Company's future operations. As a result of the Company’s recurring losses from operations, and the need for additional financing to fund its operating and capital requirements, there is uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to the Company’s ability to continue as a going concern.

Statements of Cash Flows Comparison of the Three Months Ended March 31, 2018 and 2017

For the three months ended March 31, 2018, our cash used in operations was approximately $1,495,000 compared to approximately $2,661,000 for the three months ended March 31, 2017, a decrease of approximately $1,166,000. The decrease is primarily due to the reduction of headcount and production, coupled with the transition out of retail consumer electronics markets and the sale of the EnerPlex brand. For the three months ended March 31, 2018, our cash used in investing activities was approximately $7,000 as compared to our cash provided by investing activities of approximately $131,000, a decrease of approximately $137,000. This decrease is the result of investing in intellectual property ("IP") during the first quarter of 2018 and the sales of the EnerPlex brand IP during the first quarter of 2017. During the three months ended March 31, 2018, negative operating cash flows of approximately $1,495,000 were funded through $1,500,000 of funding received from promissory notes, and the use of cash customer receivables.

Contractual Obligations

The following table presents our contractual obligations as of March 31, 2018. Our long-term debt obligation is related to our building loan reflecting both principal and interest. Our purchase obligations include orders for equipment, inventory and operating expenses.

			Payments by Year
Contractual Obligation	Total		Less than 1 year		1-3 Years		3-5 Years		More than 5 Years
Long Term Debt	$	6,834,440	$	693,611	$	2,080,832	$	2,080,832	$	1,979,165
Purchase Obligations	$	423,297	423,297
	$	7,257,737	$	1,116,908	$	2,080,832	$	2,080,832	$	1,979,165

Off Balance Sheet Transactions

As of March 31, 2018 and December 31, 2017, we did not have any off balance sheet arrangements as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Exchange Risk

Historically, we have purchased manufacturing equipment internationally, which exposes us to foreign currency risk.

From time to time we enter into foreign currency fair value hedges utilizing forward contracts designed to match scheduled contractual payments to equipment suppliers. Our objective is to fix the dollar amount of our foreign currency denominated manufacturing equipment purchases at the time of order. Although our hedging activity is designed to fix the dollar amount to be expended, the asset purchased is recorded at the spot foreign currency rate in effect as of the date of the payment to the supplier. The difference between the spot rate and the forward rate has been reported as gain or loss on forward contract. We cannot accurately predict future exchange rates or the overall impact of future exchange rate fluctuations on our business, results of operations and financial condition. All forward contracts entered into by us have been settled on the contract settlement dates, the last of which was settled in December 2009.

Although our reporting currency is the U.S. Dollar, we may conduct business and incur costs in the local currencies of other countries in which we may operate, make sales and buy materials. As a result, we are subject to currency translation risk. Further, changes in exchange rates between foreign currencies and the U.S. Dollar could affect our future net sales and cost of sales and could result in exchange losses.

Interest Rate Risk

Our exposure to market risks for changes in interest rates relates primarily to our cash equivalents. As of March 31, 2018, our cash equivalents consisted only of federally insured operating and savings accounts held with financial institutions. From time to time we hold money market funds, investments in U.S. government securities and high quality corporate securities. The primary objective of our investment activities is to preserve principal and provide liquidity on demand, while at the same time maximizing the income we receive from our investments without significantly increasing risk. The direct risk to us associated with fluctuating interest rates is limited to our investment portfolio and we do not believe that a change in interest rates will have a significant impact on our financial position, results of operations or cash flows.

Credit Risk

From time to time we hold certain financial and derivative instruments that potentially subject us to credit risk. These consist primarily of cash, cash equivalents, restricted cash, investments and foreign currency option contracts. We are exposed to credit losses in the event of nonperformance by the counter parties to our financial and derivative instruments. We place cash, cash equivalents, investments and forward foreign currency option contracts with various high-quality financial institutions, and exposure is limited at any one institution. We continuously evaluate the credit standing of our counter party financial institutions.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission (SEC) rules and forms. Our management, including our Chief Executive Officer and interim Principal Financial Officer, conducted an evaluation required by Rules 13a-15 and 15d-15 under the Exchange Act of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15 and 15d-15 under the Exchange Act as of March 31, 2018. Based on this evaluation, our Chief Executive Officer and interim Principal Financial Officer concluded that as of March 31, 2018, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There were no other changes in internal control over financial reporting during the three months ended March 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

28

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in the updated risk factors in our Annual Report on Form 10-K filed on March 29, 2018, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K filed on March 29, 2018 are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not required.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

The exhibits listed on the accompanying Index to Exhibits on this Form 10-Q are filed or incorporated into this Form 10-Q by reference.

EXHIBIT INDEX

Exhibit No.	Description
10.1	Unsecured Promissory Note dated January 31, 2018 (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed February 2, 2018)
10.2	Amendment of Outstanding Convertible Notes dated May 1, 2018 (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed May 7, 2018)
31.1*	Chief Executive Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Chief Financial Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Chief Executive Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Chief Financial Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
*	Filed herewith

29

ASCENT SOLAR TECHNOLOGIES, INC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 11th day of May, 2018.

ASCENT SOLAR TECHNOLOGIES, INC.
By:	/S/ VICTOR LEE
	Lee Kong Hian (aka Victor Lee) President and Chief Executive Officer (Principal Executive Officer, Principal Financial Officer, Chief Accounting Officer, and Authorized Signatory)

30

EX-31.1

Exhibit 31.1

ASCENT SOLAR TECHNOLOGIES, INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Victor Lee, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Ascent Solar Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 11, 2018
	/s/ VICTOR LEE
	Victor Lee President and Chief Executive Officer (Principal Executive Officer, Principal Financial Officer, Chief Accounting Officer, and Authorized Signatory)

EX-31.2

Exhibit 31.2

ASCENT SOLAR TECHNOLOGIES, INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Victor Lee, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Ascent Solar Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 11, 2018
	/s/ VICTOR LEE
	Victor Lee President and Chief Executive Officer (Principal Executive Officer, Principal Financial Officer, Chief Accounting Officer, and Authorized Signatory)

EX-32.1

Exhibit 32.1

ASCENT SOLAR TECHNOLOGIES, INC.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Ascent Solar Technologies, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2018 as filed with the Securities and Exchange Commission on the date therein specified (the “Report”), I, Victor Lee, President, Chief Executive Officer and acting Principal Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1 The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2 The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 11, 2018
	/s/ VICTOR LEE
	Victor Lee President and Chief Executive Officer (Principal Executive Officer, Principal Financial Officer, Chief Accounting Officer, and Authorized Signatory)

EX-32.2

Exhibit 32.2

ASCENT SOLAR TECHNOLOGIES, INC.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Ascent Solar Technologies, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2018 as filed with the Securities and Exchange Commission on the date therein specified (the “Report”), I, Victor Lee, President, Chief Executive Officer and acting Principal Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1 The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2 The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 11, 2018
	/s/ VICTOR LEE
	Victor Lee President and Chief Executive Officer (Principal Executive Officer, Principal Financial Officer, Chief Accounting Officer, and Authorized Signatory)

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2018	May 10, 2018
Document And Entity Information [Abstract]
Entity Registrant Name	Ascent Solar Technologies, Inc.
Entity Central Index Key	0001350102
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		18,994,480,144

XML

Condensed Consolidated Balance Sheets - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Current Assets:
Cash and cash equivalents	$ 88,111	$ 89,618
Trade receivables, net of allowance for doubtful accounts of $35,251 and $48,201, respectively	13,984	6,658
Inventories, net	1,074,319	1,037,854
Prepaid expenses and other current assets	520,944	494,425
Total current assets	1,697,358	1,628,555
Property, Plant and Equipment	36,645,862	36,645,862
Less accumulated depreciation and amortization	(32,072,422)	(32,013,686)
Net property, plant and equipment	4,573,440	4,632,176
Other Assets:
Patents, net of accumulated amortization of $440,805 and $430,071, respectively	1,376,785	1,470,796
Other non-current assets	42,875	49,813
Total Other Assets	1,419,660	1,520,609
Total Assets	7,690,458	7,781,340
Current Liabilities:
Accounts payable	1,901,411	1,600,455
Related party payables	208,754	202,827
Accrued expenses	2,094,885	1,623,748
Notes payable	1,567,731	1,570,231
Current portion of long-term debt	349,092	343,395
Current portion of secured promissory note, net of discount of $2,595,172 and $1,934,304, respectively	822,978	253,590
Promissory Notes, net of discount of $15,000 and $20,626, respectively	984,437	948,811
Embedded derivative liabilities	8,109,081	6,406,833
Total current liabilities	17,506,477	14,312,482
Long-term debt, net of current portion	5,028,985	5,118,424
Long-term secured promissory note, net of current portion, and net of discount of $1,454,595 and $1,684,267, respectively	30,603	685,066
Accrued Warranty Liability	51,358	57,703
Commitments and Contingencies
Stockholders’ Deficit:
Common stock, $0.0001 par value, 20,000,000,000 shares authorized; 12,738,048,718 and 9,606,597,777 shares issued and outstanding, respectively	1,273,809	960,660
Additional paid in capital	387,917,742	386,332,475
Accumulated deficit	(406,928,522)	(402,495,476)
Total stockholders’ deficit	(17,736,965)	(15,202,335)
Total Liabilities, Mezzanine Equity and Stockholders’ Deficit	7,690,458	7,781,340
October 2016 Convertible Notes [Member]
Current Liabilities:
Convertible notes payable	330,000	330,000
Series K Preferred Stock [Member]
Mezzanine Equity:
Series K preferred stock: 20,000 shares authorized; 2,810 issued and outstanding, respectively	2,810,000	2,810,000
Series A Preferred Stock [Member]
Stockholders’ Deficit:
Series A preferred stock, $.0001 par value; 750,000 shares authorized; 60,756 shares issued and outstanding, respectively ($776,845 and $761,864 Liquidation Preference)	6	6
St. George Convertible Note [Member]
Current Liabilities:
Convertible notes payable	1,101,858	1,032,592
Baybridge Convertible Note [Member]
Current Liabilities:
Convertible notes payable	$ 36,250	$ 0

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Allowance for doubtful accounts	$ (35,251)	$ (48,201)
Patents, amortization	$ 440,805	$ 430,071
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	20,000,000,000	20,000,000,000
Common stock, shares issued (in shares)	12,738,084,718	9,606,597,777
Common stock, shares outstanding (in shares)	12,738,084,718	9,606,597,777
Series K Preferred Stock [Member]
Temporary equity, shares authorized (in shares)	20,000	20,000
Temporary equity, shares issued (in shares)	2,810	2,810
Temporary equity, shares outstanding (in shares)	2,810	2,810
Series A Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	750,000	750,000
Preferred stock, shares issued (in shares)	60,756	60,756
Preferred stock, shares outstanding (in shares)	60,756	60,756
Liquidation preference	$ 776,845	$ 761,864
Promissory Notes [Member]
Unamortized discount	15,000	20,626
St. George Convertible Note [Member]
Unamortized discount	528,975	673,241
Secured Promissory Note, Current [Member]
Unamortized discount	2,595,172	1,934,304
Secured Promissory Note, Noncurrent [Member]
Unamortized discount	1,454,595	1,684,267
Baybridge Convertible Note [Member]
Unamortized discount	$ 423,750	$ 565,000

XML

Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Income Statement [Abstract]
Revenues	$ 377,511	$ 280,603
Costs and Expenses:
Cost of revenues (exclusive of depreciation shown below)	273,028	1,492,841
Research, development and manufacturing operations (exclusive of depreciation shown below)	1,173,035	1,276,865
Inventory impairment costs	0	363,758
Selling, general and administrative (exclusive of depreciation shown below)	934,591	1,764,230
Depreciation and amortization	101,712	371,653
Total Costs and Expenses	2,482,366	5,269,347
Loss from Operations	(2,104,855)	(4,988,744)
Other Income/(Expense), net	0	728,485
Interest expense	(1,343,730)	(1,991,352)
Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net	(984,461)	673,078
Total Other Income/(Expense)	(2,328,191)	(589,789)
Net Loss	$ (4,433,046)	$ (5,578,533)
Net Loss Per Share (Basic and diluted) (in dollars per share)	$ (0.0004)
Weighted Average Common Shares Outstanding (Basic and diluted) (in shares)	10,996,378,097

XML

Condensed Consolidated Statements of Cash Flows - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Operating Activities:
Net loss	$ (4,433,046)	$ (5,578,533)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	101,712	371,653
Share based compensation	14,324	79,737
Realized gain on sale of assets	0	(1,205,663)
Amortization of financing costs to interest expense	3,333	35,164
Non-cash interest expense	222,648	575,015
Amortization of debt discount	1,011,109	1,474,135
Bad debt expense	0	4,082
Accrued litigation settlement	0	(143,266)
Write-down of inventory	0	363,758
Write down of patents	59,153	0
Warranty reserve	(6,345)	(7,489)
Change in fair value of derivatives and (gain)/loss on extinguishment of liabilities, net	984,461	(673,078)
Inducement conversion costs	0	407,974
Changes in operating assets and liabilities:
Accounts receivable	(1,326)	533,822
Inventories	(36,465)	899,915
Prepaid expenses and other current assets	(29,852)	394,550
Accounts payable	244,975	(249,691)
Related party payable	5,927	0
Accrued expenses	364,648	56,721
Net cash used in operating activities	(1,494,744)	(2,661,194)
Investing Activities:
Proceeds from the sale of assets	0	150,000
Patent activity costs	(6,502)	(19,275)
Net cash provided by/(used in) investing activities	(6,502)	130,725
Financing Activities:
Proceeds from issuance of debt	1,530,000	2,340,000
Proceeds from issuance of stock	0	150,000
Payment of debt financing costs	0	(42,500)
Repayment of debt	(30,261)	0
Net cash provided by financing activities	1,499,739	2,447,500
Net change in cash and cash equivalents	(1,507)	(82,969)
Cash and cash equivalents at beginning of period	89,618	130,946
Cash and cash equivalents at end of period	88,111	47,977
Supplemental Cash Flow Information:
Cash paid for interest	106,617	20,415
Cash paid for income taxes	0	0
Non-Cash Transactions:
Non-cash conversions of convertible notes and preferred stock	1,430,000	1,699,731
Interest converted to principal	96,120	0
Initial derivatives	1,151,162	0
Make-whole dividend	0	257,152
Accounts payable converted to notes payable	$ 0	$ 1,172,026

XML

ORGANIZATION

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION

ORGANIZATION

Ascent Solar Technologies, Inc. (“Ascent”) was incorporated on October 18, 2005 from the separation of ITN Energy Systems, Inc's (“ITN”) Advanced Photovoltaic Division and all of that division’s key personnel and core technologies. ITN, a private company incorporated in 1994, is an incubator dedicated to the development of thin-film, photovoltaic (“PV”), battery, fuel cell, and nano technologies. Through its work on research and development contracts for private and governmental entities, ITN developed proprietary processing and manufacturing know-how applicable to PV products generally, and to Copper-Indium-Gallium-diSelenide (“CIGS”) PV products in particular. ITN formed Ascent to commercialize its investment in CIGS PV technologies. In January 2006, in exchange for 5,140 shares of common stock of Ascent, ITN assigned to Ascent certain CIGS PV technologies and trade secrets and granted to Ascent a perpetual, exclusive, royalty-free worldwide license to use, in connection with the manufacture, development, marketing and commercialization of CIGS PV to produce solar power, certain of ITN’s existing and future proprietary and control technologies that, although non-specific to CIGS PV, Ascent believes will be useful in its production of PV modules for its target markets. Upon receipt of the necessary government approvals and pursuant to novation in early 2007, ITN assigned government-funded research and development contracts to Ascent and also transferred the key personnel working on the contracts to Ascent.

Currently, the Company is focusing on integrating its PV products into high value markets such as aerospace, satellites, near earth orbiting vehicles, fixed-wing unmanned aerial vehicles (UAV), military, and emergency preparedness. Ascent has the capability to design and develop finished products for end users in these areas as well as collaborate with strategic partners to design and develop custom integrated solutions for products like fixed-wing UAVs. Ascent sees significant overlap of the needs of end users across some of these industries and can achieve economies of scale in sourcing, development, and production in commercializing products for these customers.

Sale of EnerPlex Brand

In February 2017, Ascent announced the sale of our EnerPlex brand and related intellectual properties and trademarks associated with EnerPlex to our battery product supplier, Sun Pleasure Co. Limited (“SPCL”), in an effort to better allocate its resources and to continue to focus on its core strength in the high-value specialty PV market. Effective February 27, 2017, Ascent no longer produces or sells Enerplex-branded consumer products. Ascent will supply solar PV products to SPCL, supporting the continuous growth of EnerPlex™ with Ascent’s proprietary and award-winning thin-film solar technologies and products.

Ascent continues to design and manufacture its own line of PV integrated consumer electronics, as well as portable power applications for commercial, military, and emergency management.

XML

BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements have been derived from the accounting records of Ascent Solar Technologies, Inc., Ascent Solar (Asia) Pte. Ltd., and Ascent Solar (Shenzhen) Co., Ltd. (collectively, "the Company") as of March 31, 2018 and December 31, 2017, and the results of operations for the three months ended March 31, 2018 and 2017. Ascent Solar (Shenzhen) Co., Ltd. is wholly owned by Ascent Solar (Asia) Pte. Ltd., which is wholly owned by Ascent Solar Technologies, Inc. All significant inter-company balances and transactions have been eliminated in the accompanying condensed consolidated financial statements.

The accompanying, unaudited, condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, these interim financial statements do not include all of the information and footnotes typically found in U.S. GAAP audited annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement have been included. The Condensed Consolidated Balance Sheet at December 31, 2017 has been derived from the audited financial statements as of that date but does not include all of the information and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. These condensed consolidated financial statements and notes should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Operating results for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company’s significant accounting policies were described in Note 3 to the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. There have been no significant changes to our accounting policies as of March 31, 2018.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The update will establish a comprehensive revenue recognition standard for virtually all industries in GAAP. ASU 2014-09 will change the amount and timing of revenue and cost recognition, implementation, disclosures and documentation. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of Effective Date. The amendments in ASU 2015-14 defer the effective date of ASU 2014-09 for all entities by one year. ASU 2014-09 is now effective for the Company in fiscal year 2018. The implementation of ASU 2014-09 did not have a material effect on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize all leases, including operating leases, on the balance sheet as a lease asset or lease liability, unless the lease is a short-term lease. ASU 2016-02 also requires additional disclosures regarding leasing arrangements. ASU 2016-02 is effective for interim periods and fiscal years beginning after December 15, 2018, and early application is permitted. The Company continues to evaluate the impact, that the adoption of this guidance will have on its consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718). ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 is effective for interim periods and fiscal years beginning after December 15, 2017, and early application is permitted. The implementation of ASU 2017-09 did not have a material effect on the Company's consolidated financial statements.

In July 2017, the FASB issued ASU No. 2017-11 Part I, Earnings Per Share (Topic 260), Distinguishing Liabilities fromEquity (Topic 480), Derivatives and Hedging (Topic 815). ASU 2017-11 Part I changes the classification analysis of certain equity linked financial instruments with down round features. ASU 2017-11 Part I is effective, for public business entities, for interim periods and fiscal years beginning after December 15, 2018, and early application is permitted. The Company is currently evaluating the impact, if any, that the adoption of this guidance will have on its consolidated financial statements.

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LIQUIDITY AND CONTINUED OPERATIONS

3 Months Ended

Mar. 31, 2018

LIQUIDITY AND CONTINUED OPERATIONS [Abstract]

LIQUIDITY AND CONTINUED OPERATIONS

LIQUIDITY AND CONTINUED OPERATIONS

During the three months ended March 31, 2018 and the year ended December 31, 2017, the Company entered into multiple financing agreements to fund operations. Further discussion of these transactions can be found in Notes 7 through 15, and Note 18 of the financial statements presented as of, and for, the three months ended, March 31, 2018, and in Notes 8 through 22 and Note 30 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017.

The Company has continued PV production at its manufacturing facility. The Company does not expect that sales revenue and cash flows will be sufficient to support operations and cash requirements until it has fully implemented its product strategy. During the three months ended March 31, 2018 the Company used $1.5 million in cash for operations. The Company's primary significant long term cash obligation consists of a note payable of $5.4 million to a financial institution secured by a mortgage on its headquarters and manufacturing building in Thornton, Colorado. Total payments of approximately $0.5 million, including principal and interest, will come due in the remainder of 2018.

Additional projected product revenues are not anticipated to result in a positive cash flow position for the year 2018 overall and, as of March 31, 2018, the Company has negative working capital. As such, cash liquidity sufficient for the year ending December 31, 2018 will require additional financing.

The Company continues to accelerate sales and marketing efforts related to its consumer and military solar products and specialty PV application strategies through expansion of its sales and distribution channels. The Company has begun activities related to securing additional financing through strategic or financial investors, but there is no assurance the Company will be able to raise additional capital on acceptable terms or at all. If the Company's revenues do not increase rapidly, and/or additional financing is not obtained, the Company will be required to significantly curtail operations to reduce costs and/or sell assets. Such actions would likely have an adverse impact on the Company's future operations.

As a result of the Company’s recurring losses from operations, and the need for additional financing to fund its operating and capital requirements, there is uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to the Company’s ability to continue as a going concern.

Management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. These condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

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PROPERTY, PLANT AND EQUIPMENT

3 Months Ended

Mar. 31, 2018

Property, Plant and Equipment [Abstract]

PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT

The following table summarizes property, plant and equipment as of March 31, 2018 and December 31, 2017:

	As of March 31,			As of December 31,
	2018			2017
Building	$	5,828,960		$	5,828,960
Furniture, fixtures, computer hardware and computer software	489,421			489,421
Manufacturing machinery and equipment	30,327,481			30,327,481
Property, plant and equipment	36,645,862			36,645,862
Less: Accumulated depreciation and amortization	(32,072,422		)	(32,013,686		)
Net property, plant and equipment	$	4,573,440		$	4,632,176

The Company analyzes its long-lived assets for impairment, both individually and as a group, whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. No assets were impaired for the three months ended March 31, 2018 or for the year ended December 31, 2017.

Depreciation expense for the three months ended March 31, 2018 was $58,736, compared to depreciation expense of $334,624 for the three months ended March 31, 2017. Depreciation expense is recorded under “Depreciation and amortization expense” in the Condensed Consolidated Statements of Operations.

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INVENTORIES

3 Months Ended

Mar. 31, 2018

Inventory Disclosure [Abstract]

INVENTORIES

INVENTORIES

Inventories consisted of the following at March 31, 2018 and December 31, 2017:

	As of March 31,		As of December 31,
	2018		2017
Raw materials	$	695,474	$	688,904
Work in process	5,106		11,878
Finished goods	373,739		337,072
Total	$	1,074,319	$	1,037,854

The Company analyzes its inventory for impairment, both categorically and as a group, whenever events or changes in circumstances indicate that the carrying amount of the inventory may not be recoverable. During the three months ended March 31, 2018, the Company did not impair inventory, compared to an impairment of $363,758, for the three months ended March 31, 2017.

Inventory amounts are shown net of allowance of $458,097 and $562,140 for the three months ended March 31, 2018 and the year ended December 31, 2017, respectively.

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NOTES PAYABLE

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

NOTES PAYABLE

NOTES PAYABLE

On February 24, 2017, the Company entered into an agreement with a vendor to convert the balance of their account into three notes payable in the aggregate amount of $765,784. The notes bear interest of 6% per annum and matured on February 24, 2018; all outstanding principal and accrued interest is due and payable upon maturity. As of March 31, 2018, the Company had not made any payments on these notes, the accrued interest was $51,052, and the note is due upon demand.

On March 23, 2017, the Company entered into an agreement with a vendor to convert the balance of their account into a note payable in the amount of $356,742. The note bears interest of 5% per annum and matured on March 31, 2018; all outstanding principal and accrued interest is due and payable upon maturity. As of March 31, 2018, the Company had not made any payments on the note, the accrued interest was $18,228, and the note is due upon demand.

On June 30, 2017, the Company entered into an agreement with a vendor to convert the balance of their account into a note payable in the amount of $250,000. The note bears interest of 5% per annum and matured on February 28, 2018; all outstanding principal and accrued interest is due and payable upon maturity. As of March 31, 2018, the Company had not made any payments on these notes, the accrued interest was $9,384, and the note is due upon demand.

On September 30, 2017, the Company entered into a settlement agreement with a customer to convert the credit balance of their account into a note payable in the amount of $215,234. The note bears interest of 5% per annum and matures on September 30, 2018. The Company has not made the monthly payments of $18,426 that were to commence on October 30, 2017; as of March 31, 2018 the company had paid principal of $20,029 and interest of $897. The remaining principal and interest balances, as of March 31, 2018, were $195,205 and $4,138 , respectively.

SECURED PROMISSORY NOTE

On November 30, 2017, the Company, entered into a note purchase and exchange agreement (the “Note SPA”) with Global Ichiban Ltd (“Investor”), for the private placement of up to $2,000,000 of the Company’s Secured Convertible Promissory Notes (“Notes”) in exchange for $2,000,000 of gross proceeds in several tranches through June 2018, The closing of each tranche is conditioned upon the Company having an average daily trading volume for its Common Stock of at least $50,000 for the 20 trading day period preceding such future tranche closing dates.

Pursuant to the terms of the Note SPA, the Company and the Investor also agreed to exchange certain outstanding securities held by the Investor for additional Notes. As of November 30, 2017, the Investor surrendered for cancellation (i) its outstanding promissory note dated September 13, 2017 ($3,359,539 principal and accrued interest), (ii) its outstanding promissory note dated October 31, 2017 ($252,466 principal and accrued interest), and (iii) its 400 shares of outstanding Series J Preferred Stock ( $445,222 of capital and accrued dividends). In exchange, the Company issued to the Investor $4,057,227 aggregate principal amount of additional Notes. Please refer to Note 11 and Note 21 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for further discussion on the canceled promissory notes and the canceled Series J Preferred Stock shares.

All principal and accrued interest on the Notes are convertible at any time, in whole or in part, at the option of the Investor into shares of Common Stock at a variable conversion price equal to the lowest of (i) 85% of the average VWAP for the shares over the prior 5 trading days, (ii) the closing bid price for the shares on the prior trading day, or (iii) $0.002 per share

The Notes may not be converted and shares of Common Stock may not be issued pursuant to the Notes if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 9.99% of the outstanding shares of Common Stock.

Of the Notes issued on November 30, 2017, $3,359,539 aggregate principal amount will mature on December 15, 2020. Principal and interest was originally to be payable in 36 equal monthly installments of $111,585 beginning January 15, 2018. During the three months ended March 31, 2018, principal of $1,250,000 was converted into 2,450,980,392 shares of common stock, and $96,121 of interest was converted to principal. The remaining note is payable in 32 equal monthly installments of $80,036 beginning May 15, 2018.

Of the Notes issued on November 30, 2017, $697,688 aggregate principal amount will mature on November 30, 2018. Principal and interest will be payable upon maturity.

The $2,000,000 aggregate principal amount of Notes, issued in eight tranches, will mature on the first anniversary of the respective issuance date. Principal and interest will be payable upon maturity. As of March 31, 2018, the closing dates, closing amounts, and maturity dates on completed Note SPA tranches are as follows:

Closing Date	Closing Amount		Maturity Date
11/30/2017	$	250,000	11/30/2018
12/28/2017	$	250,000	12/28/2018
1/11/2018	$	250,000	1/11/2019
1/25/2018	$	250,000	1/25/2019
2/8/2018	$	250,000	2/8/2019
2/21/2018	$	250,000	2/21/2019
3/7/2018	$	250,000	3/7/2019
3/21/2018	$	250,000	3/21/2019

The Notes will be secured by a security interest on substantially all of the Company’s assets, bear interest at a rate of 12% per annum and contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the Notes, and (ii) bankruptcy or insolvency of the Company. There are no registration rights applicable to the Notes.

As of March 31, 2018, the aggregate principal and interest balance of the Notes were $4,903,348 and $83,406, respectively.

Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion option in the Notes were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Notes approximates management’s estimate of the fair value of the embedded derivative liability based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions identified below.

Due to the varying terms and varying issue dates, the tranches of this instrument were broken into four separate instruments for valuation purposes.

1) The first valuation was done on the November 30, 2017 Note with term of three years. The derivative value of this note was $3,742,002 as of December 31, 2017.

1) The second valuation was done on the group of Notes dated November 30, 2017, that had a term of one year. The derivative value of this group of notes was $888,168 as of December 31, 2017.

2) The third valuation was done on the Note dated December 28, 2017, which had a term of one year. The derivative value of this note was $267,008 on December 31, 2017.

3) For the Notes dated in the first quarter of 2018, we did a fourth valuation. Although the notes were entered into at various dates, we used a weighted average issuance date of February 15, 2018 for a combined valuation purpose. Management's analysis, using the following assumptions: annual volatility of 54% present value discount rate of 12% and a dividend yield of 0%, resulted in a fair value of the embedded derivative associated with these Notes of $1,151,162 as of February 15, 2018. The value of the embedded derivative associated with these Notes was recorded as a debt discount.

The derivative liability associated with the Notes is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2018, the Company conducted a fair value assessment of the embedded derivative associated with the three valuation groups discussed above.

1) For the November 30, 2017 3yr Note: Management conducted a fair value assessment with the following assumptions: annual volatility of 64% present value discount rate of 12% and a dividend yield of 0% as of March 31, 2018. As a result of the fair value assessment, the Company recorded a gain of $612,155 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $3,129,847 as of March 31, 2018.

2) For the November 30, 2017 1yr Notes: Management conducted a fair value assessment with the following assumptions: annual volatility of 52% present value discount rate of 12% and a dividend yield of 0% as of March 31, 2018. As a result of the fair value assessment, the Company recorded a gain of $174,989 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $713,179 as of March 31, 2018.

3) For the December 28, 2017 1yr Note: Management conducted a fair value assessment with the following assumptions: annual volatility of 52% present value discount rate of 12% and a dividend yield of 0% as of March 31, 2018. As a result of the fair value assessment, the Company recorded a gain of $78,871 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $188,137 as of March 31, 2018.

4) For the first quarter 2018 1yr Notes: Management conducted a fair value assessment with the following assumptions: annual volatility of 52% present value discount rate of 12% and a dividend yield of 0% as of March 31, 2018. As a result of the fair value assessment, the Company recorded a loss of $878,973 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $2,030,135 as of March 31, 2018.

During the first quarter 2018, a net loss of $12,958 had been recorded to reflect the total derivative liability of $6,061,298 as of March 31, 2018.

PROMISSORY NOTES

Offering of Unsecured, Non-Convertible Notes

During October 2016, the Company received $420,000 from a separate private investor. These funds, along with $250,000 of additional funding, were rolled into a promissory note, executed on January 17, 2017, in the amount of $700,000 issued with a discount of $30,000 which will be charged to interest expense ratably over the term of the note. The note bears interest at 12% per annum and matures on July 17, 2017. Principal and interest on this note are payable at maturity. This note is not convertible into equity shares of the Company and is unsecured.

On June 30, 2017, the Company and the private investor agreed to a 12 month payment plan on the balance of this promissory note. Interest will continue to accrue on this note at 12% per annum and payments of approximately $62,000 will be made monthly beginning in July 2017. The Company has not made all the payments according to this payment plan, and the note is payable upon demand.

As of March 31, 2018, $205,563 of principal and $45,414 of interest had been paid on this note. The outstanding principal and accrued interest balances on the note as of March 31, 2018 were $494,437 and $41,756, respectively.

On November 16, 2017, the Company initiated a non-convertible, unsecured promissory note with a private investor for $275,000. The promissory note was issued with an original issue discount of $25,000, resulting in proceeds to the company of $250,000. The note does not have a stated interest rate and matured on December 18, 2017. As of March 31, 2018, no payments had been made on this note and the Company has accrued interest at an inferred rate of 12% resulting in an accrued interest balance of $9,493, as of March 31, 2018. This note is payable upon demand.

On January 31, 2018, the Company initiated a non-convertible, unsecured promissory note with a private investor for an aggregate principal amount of $200,000. The promissory note was issued with an original issue discount of $22,500, resulting in proceeds to the company of $177,500, which was received in December 2017. The note bears interest at 12% per annum and matures on December 29, 2018. All principal and interest is payable upon maturity. The Company received $30,000 in additional proceeds from this investor during the three months ended March 31, 2018, and the Company has received further proceeds as of the date of this report (please refer to Note 18 for further information). As of the date of this report, the amended note has not been finalized. As of March 31, 2018, the principal and interest balances on this note were $230,000 and $6,473, respectively.

ST. GEORGE CONVERTIBLE NOTE

On September 8, 2017, the Company entered into a securities purchase agreement with St. George Investments LLC (“Investor”), for the private placement of $1,725,000 principal amount of the Company’s Original Issue Discount Convertible Promissory Notes.

On September 11, 2017, the Company sold and issued $1,725,000 principal amount of the convertible notes to the Investor in exchange for $1,500,000 of gross proceeds, and paid $20,000 in financing costs. The original issue discount of $225,000, and the financing fee, will be charged to interest expense, ratably, over the life of the note.

Unless earlier converted or prepaid, the convertible notes will mature on March 11, 2019. The notes do not bear interest in the absence of an event of default.

For the first six months after the issuance of the notes, the Company will make a monthly cash repayment on the notes of approximately $96,000. Thereafter, the Investor may request that the Company make monthly partial redemptions of the note up to $150,000 per month. If the Investor does not request the full $150,000 redemption amount in any one month, the unused portion of such monthly redemption amount can be added to future monthly redemption amounts. But in no event can the amount requested by the Investor for any one month exceed $275,000.

Redemption amounts are payable by the Company in cash. Beginning ten months after the issuance of the convertible notes, cash redemption payments by the Company will be subject to a 15% redemption premium.

Beginning six months after the issuance of the convertible notes, the Company also has the option (subject to customary equity conditions) to pay redemption amounts in the form of shares of common stock. Payments in the form of shares would be calculated using a variable conversion price equal to the lower of (i) 85% of the average VWAP for the shares over the prior five trading days or (ii) the closing bid price for the shares on the prior trading day.

All principal and accrued interest on the Notes are convertible at any time, in whole or in part, at the option of the Investor into shares of Common Stock at a fixed conversion price of $0.004 per share.

The Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the Notes; and (ii) bankruptcy or insolvency of the Company. Upon the occurrence of an event of default, the Notes will begin to bear interest at the rate of 22% per annum. In addition, upon the occurrence of an event of default, the Investor has the option to increase the outstanding balance of the Notes by 25%.

In connection with the closing under the Note SPA, the Company issued 37,500,000 unregistered shares of common stock to the Investor as an origination fee. The closing stock price on the date of close was $0.0017 resulting in an interest expense of $63,750 being recorded as of the date of close.

The Notes may not be converted and shares of Common Stock may not be issued pursuant to the Notes if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 4.99% of the outstanding shares of Common Stock.

As of March 31, 2018, cash payments of $191,667 had been made on this note, and $75,000 had been converted into 187,500,000 shares of the Company's common stock. The remaining balance on the note was $1,458,333 as of March 31, 2018.

In lieu of making the December 2017 through March 2018 cash payments, the share reserve was increased by 5 billion shares, and the variable conversion price changed to the lower of (i) 60% of the average VWAP for the shares over the prior five trading days or (ii) the closing bid price for the shares on the prior trading day, please refer to Note 18 for more information on the change in VWAP discount.

Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion option in the Convertible Promissory Notes were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. As of December 31, 2017, the derivative liability was $394,280.

The derivative liability associated with the Convertible Promissory Notes is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2018, the Company conducted a fair value assessment of the embedded derivative associated with the St. George Convertible Notes. As a result of the fair value assessment, the Company recorded a $824,900 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2018, to properly reflect the fair value of the embedded derivative of $1,219,180 as of March 31, 2018.

The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Convertible Promissory Notes approximates management’s estimate of the fair value of the embedded derivative liability at March 31, 2018 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 56% present value discount rate of 12% and dividend yield of 0%.

BAYBRIDGE CONVERTIBLE NOTE

On December 6, 2017, the Company entered into a securities exchange agreement (the “Exchange Agreement”) with BayBridge Capital Fund LP (“BayBridge”).

Pursuant to the terms of the Exchange Agreement, the Investor agreed to surrender and exchange 675 shares of outstanding Series J Preferred Stock ($755,417 of capital and accrued dividends). In exchange, the Company issued to the Investor an unsecured promissory note with an aggregate principal amount of $840,000 (the “Exchange Note”), with an original issue discount of $84,583. Please refer to Note 21 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for further discussion on the Series J Preferred Stock.

The Exchange Note is unsecured, has no applicable registration rights, bears interest at a rate of 12% per annum, matures on December 6, 2018, and contains standard and customary events of default including but not limited to: (i) failure to make payments when due under the Exchange Note, and (ii) bankruptcy or insolvency of the Company. Principal and interest are payable upon maturity.

Payments of principal and accrued interest on the Exchange Note are payable in cash or, at the option of the Company, in shares of Common Stock at a variable conversion price equal to the lowest of (i) 85% of the average VWAP for the shares over the prior 5 trading days, (ii) the closing bid price for the shares on the prior trading day, or (iii) $0.003 per share. Payments in shares of Common Stock may not be issued pursuant to the Exchange Note if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 9.99% of the outstanding shares of Common Stock.

Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion option in the Exchange Note was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2017, the derivative liability associated with the promissory note was $542,733.

The derivative liability associated with the Exchange Note is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2018, the Company conducted a fair value assessment of the embedded derivative associated with the Exchange Note. As a result of the fair value assessment, the Company recorded a $349,048 gain as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, to properly reflect the fair value of the embedded derivative of $193,685 as of March 31, 2018.

The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Exchange Note approximates management’s estimate of the fair value of the embedded derivative liability at March 31, 2018 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 50%, present value discount rate of 12% and dividend yield of 0%.

As of March 31, 2018, principal of $380,000 and interest of $20,717 had been converted into 897,418,314 shares of common stock and no cash payments of principal or interest had been made. The principal and accrued interest balances as of March 31, 2018 were $460,000 and $653, respectively.

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DEBT

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

DEBT

DEBT

On February 8, 2008, the Company acquired a manufacturing and office facility in Thornton, Colorado, for approximately $5.5 million. The purchase was financed by a promissory note, deed of trust and construction loan agreement (the “Construction Loan”) with the Colorado Housing and Finance Authority (“CHFA”), which provided the Company borrowing availability of up to $7.5 million for the building and building improvements. In 2009, the Construction Loan was converted to a permanent loan pursuant to a Loan Modification Agreement between the Company and CHFA (the “Permanent Loan”). The Permanent Loan, collateralized by the building, has an interest rate of 6.6% and the principal will be amortized through its term to January 2028. Further, pursuant to certain negative covenants in the Permanent Loan, the Company may not, among other things, without CHFA’s prior written consent (which by the terms of the deed of trust is subject to a reasonableness requirement): create or incur additional indebtedness (other than obligations created or incurred in the ordinary course of business); merge or consolidate with any other entity; or make loans or advances to the Company’s officers, shareholders, directors or employees.

On November 1, 2016, the Company and the CFHA agreed to modify the original agreement described above with the addition of a forbearance period. Per the modification agreement, no payments of principal and interest shall be due under the note during the forbearance period commencing on November 1, 2016 and continuing through April 1, 2017. The amount of interest that should have been paid by the Company during the forbearance period in the total amount of $180,043 shall be added to the outstanding principal balance of the note. As a result, on May 1, 2017, the principal balance of the note was $5,704,932. Commencing on May 1, 2017, the monthly payments of principal and interest due under the note resumed at $57,801, and the Company shall continue to make such monthly payments over the remaining term of the note ending on February 1, 2028.

The outstanding principal balance of the Permanent Loan was $5,378,077 and $5,461,819 as of March 31, 2018 and December 31, 2017, respectively.

As of March 31, 2018, remaining future principal payments on long-term debt are due as follows:

2018	$	259,654
2019	366,757
2020	391,709
2021	418,358
2022	446,821
Thereafter	3,494,778
	$	5,378,077

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SECURED PROMISSORY NOTE

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

SECURED PROMISSORY NOTE/PROMISSORY NOTES

NOTES PAYABLE

On February 24, 2017, the Company entered into an agreement with a vendor to convert the balance of their account into three notes payable in the aggregate amount of $765,784. The notes bear interest of 6% per annum and matured on February 24, 2018; all outstanding principal and accrued interest is due and payable upon maturity. As of March 31, 2018, the Company had not made any payments on these notes, the accrued interest was $51,052, and the note is due upon demand.

On March 23, 2017, the Company entered into an agreement with a vendor to convert the balance of their account into a note payable in the amount of $356,742. The note bears interest of 5% per annum and matured on March 31, 2018; all outstanding principal and accrued interest is due and payable upon maturity. As of March 31, 2018, the Company had not made any payments on the note, the accrued interest was $18,228, and the note is due upon demand.

On June 30, 2017, the Company entered into an agreement with a vendor to convert the balance of their account into a note payable in the amount of $250,000. The note bears interest of 5% per annum and matured on February 28, 2018; all outstanding principal and accrued interest is due and payable upon maturity. As of March 31, 2018, the Company had not made any payments on these notes, the accrued interest was $9,384, and the note is due upon demand.

On September 30, 2017, the Company entered into a settlement agreement with a customer to convert the credit balance of their account into a note payable in the amount of $215,234. The note bears interest of 5% per annum and matures on September 30, 2018. The Company has not made the monthly payments of $18,426 that were to commence on October 30, 2017; as of March 31, 2018 the company had paid principal of $20,029 and interest of $897. The remaining principal and interest balances, as of March 31, 2018, were $195,205 and $4,138 , respectively.

SECURED PROMISSORY NOTE

On November 30, 2017, the Company, entered into a note purchase and exchange agreement (the “Note SPA”) with Global Ichiban Ltd (“Investor”), for the private placement of up to $2,000,000 of the Company’s Secured Convertible Promissory Notes (“Notes”) in exchange for $2,000,000 of gross proceeds in several tranches through June 2018, The closing of each tranche is conditioned upon the Company having an average daily trading volume for its Common Stock of at least $50,000 for the 20 trading day period preceding such future tranche closing dates.

Pursuant to the terms of the Note SPA, the Company and the Investor also agreed to exchange certain outstanding securities held by the Investor for additional Notes. As of November 30, 2017, the Investor surrendered for cancellation (i) its outstanding promissory note dated September 13, 2017 ($3,359,539 principal and accrued interest), (ii) its outstanding promissory note dated October 31, 2017 ($252,466 principal and accrued interest), and (iii) its 400 shares of outstanding Series J Preferred Stock ( $445,222 of capital and accrued dividends). In exchange, the Company issued to the Investor $4,057,227 aggregate principal amount of additional Notes. Please refer to Note 11 and Note 21 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for further discussion on the canceled promissory notes and the canceled Series J Preferred Stock shares.

All principal and accrued interest on the Notes are convertible at any time, in whole or in part, at the option of the Investor into shares of Common Stock at a variable conversion price equal to the lowest of (i) 85% of the average VWAP for the shares over the prior 5 trading days, (ii) the closing bid price for the shares on the prior trading day, or (iii) $0.002 per share

The Notes may not be converted and shares of Common Stock may not be issued pursuant to the Notes if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 9.99% of the outstanding shares of Common Stock.

Of the Notes issued on November 30, 2017, $3,359,539 aggregate principal amount will mature on December 15, 2020. Principal and interest was originally to be payable in 36 equal monthly installments of $111,585 beginning January 15, 2018. During the three months ended March 31, 2018, principal of $1,250,000 was converted into 2,450,980,392 shares of common stock, and $96,121 of interest was converted to principal. The remaining note is payable in 32 equal monthly installments of $80,036 beginning May 15, 2018.

Of the Notes issued on November 30, 2017, $697,688 aggregate principal amount will mature on November 30, 2018. Principal and interest will be payable upon maturity.

The $2,000,000 aggregate principal amount of Notes, issued in eight tranches, will mature on the first anniversary of the respective issuance date. Principal and interest will be payable upon maturity. As of March 31, 2018, the closing dates, closing amounts, and maturity dates on completed Note SPA tranches are as follows:

Closing Date	Closing Amount		Maturity Date
11/30/2017	$	250,000	11/30/2018
12/28/2017	$	250,000	12/28/2018
1/11/2018	$	250,000	1/11/2019
1/25/2018	$	250,000	1/25/2019
2/8/2018	$	250,000	2/8/2019
2/21/2018	$	250,000	2/21/2019
3/7/2018	$	250,000	3/7/2019
3/21/2018	$	250,000	3/21/2019

The Notes will be secured by a security interest on substantially all of the Company’s assets, bear interest at a rate of 12% per annum and contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the Notes, and (ii) bankruptcy or insolvency of the Company. There are no registration rights applicable to the Notes.

As of March 31, 2018, the aggregate principal and interest balance of the Notes were $4,903,348 and $83,406, respectively.

Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion option in the Notes were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Notes approximates management’s estimate of the fair value of the embedded derivative liability based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions identified below.

Due to the varying terms and varying issue dates, the tranches of this instrument were broken into four separate instruments for valuation purposes.

1) The first valuation was done on the November 30, 2017 Note with term of three years. The derivative value of this note was $3,742,002 as of December 31, 2017.

1) The second valuation was done on the group of Notes dated November 30, 2017, that had a term of one year. The derivative value of this group of notes was $888,168 as of December 31, 2017.

2) The third valuation was done on the Note dated December 28, 2017, which had a term of one year. The derivative value of this note was $267,008 on December 31, 2017.

3) For the Notes dated in the first quarter of 2018, we did a fourth valuation. Although the notes were entered into at various dates, we used a weighted average issuance date of February 15, 2018 for a combined valuation purpose. Management's analysis, using the following assumptions: annual volatility of 54% present value discount rate of 12% and a dividend yield of 0%, resulted in a fair value of the embedded derivative associated with these Notes of $1,151,162 as of February 15, 2018. The value of the embedded derivative associated with these Notes was recorded as a debt discount.

The derivative liability associated with the Notes is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2018, the Company conducted a fair value assessment of the embedded derivative associated with the three valuation groups discussed above.

1) For the November 30, 2017 3yr Note: Management conducted a fair value assessment with the following assumptions: annual volatility of 64% present value discount rate of 12% and a dividend yield of 0% as of March 31, 2018. As a result of the fair value assessment, the Company recorded a gain of $612,155 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $3,129,847 as of March 31, 2018.

2) For the November 30, 2017 1yr Notes: Management conducted a fair value assessment with the following assumptions: annual volatility of 52% present value discount rate of 12% and a dividend yield of 0% as of March 31, 2018. As a result of the fair value assessment, the Company recorded a gain of $174,989 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $713,179 as of March 31, 2018.

3) For the December 28, 2017 1yr Note: Management conducted a fair value assessment with the following assumptions: annual volatility of 52% present value discount rate of 12% and a dividend yield of 0% as of March 31, 2018. As a result of the fair value assessment, the Company recorded a gain of $78,871 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $188,137 as of March 31, 2018.

4) For the first quarter 2018 1yr Notes: Management conducted a fair value assessment with the following assumptions: annual volatility of 52% present value discount rate of 12% and a dividend yield of 0% as of March 31, 2018. As a result of the fair value assessment, the Company recorded a loss of $878,973 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $2,030,135 as of March 31, 2018.

During the first quarter 2018, a net loss of $12,958 had been recorded to reflect the total derivative liability of $6,061,298 as of March 31, 2018.

PROMISSORY NOTES

Offering of Unsecured, Non-Convertible Notes

During October 2016, the Company received $420,000 from a separate private investor. These funds, along with $250,000 of additional funding, were rolled into a promissory note, executed on January 17, 2017, in the amount of $700,000 issued with a discount of $30,000 which will be charged to interest expense ratably over the term of the note. The note bears interest at 12% per annum and matures on July 17, 2017. Principal and interest on this note are payable at maturity. This note is not convertible into equity shares of the Company and is unsecured.

On June 30, 2017, the Company and the private investor agreed to a 12 month payment plan on the balance of this promissory note. Interest will continue to accrue on this note at 12% per annum and payments of approximately $62,000 will be made monthly beginning in July 2017. The Company has not made all the payments according to this payment plan, and the note is payable upon demand.

As of March 31, 2018, $205,563 of principal and $45,414 of interest had been paid on this note. The outstanding principal and accrued interest balances on the note as of March 31, 2018 were $494,437 and $41,756, respectively.

On November 16, 2017, the Company initiated a non-convertible, unsecured promissory note with a private investor for $275,000. The promissory note was issued with an original issue discount of $25,000, resulting in proceeds to the company of $250,000. The note does not have a stated interest rate and matured on December 18, 2017. As of March 31, 2018, no payments had been made on this note and the Company has accrued interest at an inferred rate of 12% resulting in an accrued interest balance of $9,493, as of March 31, 2018. This note is payable upon demand.

On January 31, 2018, the Company initiated a non-convertible, unsecured promissory note with a private investor for an aggregate principal amount of $200,000. The promissory note was issued with an original issue discount of $22,500, resulting in proceeds to the company of $177,500, which was received in December 2017. The note bears interest at 12% per annum and matures on December 29, 2018. All principal and interest is payable upon maturity. The Company received $30,000 in additional proceeds from this investor during the three months ended March 31, 2018, and the Company has received further proceeds as of the date of this report (please refer to Note 18 for further information). As of the date of this report, the amended note has not been finalized. As of March 31, 2018, the principal and interest balances on this note were $230,000 and $6,473, respectively.

ST. GEORGE CONVERTIBLE NOTE

On September 8, 2017, the Company entered into a securities purchase agreement with St. George Investments LLC (“Investor”), for the private placement of $1,725,000 principal amount of the Company’s Original Issue Discount Convertible Promissory Notes.

On September 11, 2017, the Company sold and issued $1,725,000 principal amount of the convertible notes to the Investor in exchange for $1,500,000 of gross proceeds, and paid $20,000 in financing costs. The original issue discount of $225,000, and the financing fee, will be charged to interest expense, ratably, over the life of the note.

Unless earlier converted or prepaid, the convertible notes will mature on March 11, 2019. The notes do not bear interest in the absence of an event of default.

For the first six months after the issuance of the notes, the Company will make a monthly cash repayment on the notes of approximately $96,000. Thereafter, the Investor may request that the Company make monthly partial redemptions of the note up to $150,000 per month. If the Investor does not request the full $150,000 redemption amount in any one month, the unused portion of such monthly redemption amount can be added to future monthly redemption amounts. But in no event can the amount requested by the Investor for any one month exceed $275,000.

Redemption amounts are payable by the Company in cash. Beginning ten months after the issuance of the convertible notes, cash redemption payments by the Company will be subject to a 15% redemption premium.

Beginning six months after the issuance of the convertible notes, the Company also has the option (subject to customary equity conditions) to pay redemption amounts in the form of shares of common stock. Payments in the form of shares would be calculated using a variable conversion price equal to the lower of (i) 85% of the average VWAP for the shares over the prior five trading days or (ii) the closing bid price for the shares on the prior trading day.

All principal and accrued interest on the Notes are convertible at any time, in whole or in part, at the option of the Investor into shares of Common Stock at a fixed conversion price of $0.004 per share.

The Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the Notes; and (ii) bankruptcy or insolvency of the Company. Upon the occurrence of an event of default, the Notes will begin to bear interest at the rate of 22% per annum. In addition, upon the occurrence of an event of default, the Investor has the option to increase the outstanding balance of the Notes by 25%.

In connection with the closing under the Note SPA, the Company issued 37,500,000 unregistered shares of common stock to the Investor as an origination fee. The closing stock price on the date of close was $0.0017 resulting in an interest expense of $63,750 being recorded as of the date of close.

The Notes may not be converted and shares of Common Stock may not be issued pursuant to the Notes if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 4.99% of the outstanding shares of Common Stock.

As of March 31, 2018, cash payments of $191,667 had been made on this note, and $75,000 had been converted into 187,500,000 shares of the Company's common stock. The remaining balance on the note was $1,458,333 as of March 31, 2018.

In lieu of making the December 2017 through March 2018 cash payments, the share reserve was increased by 5 billion shares, and the variable conversion price changed to the lower of (i) 60% of the average VWAP for the shares over the prior five trading days or (ii) the closing bid price for the shares on the prior trading day, please refer to Note 18 for more information on the change in VWAP discount.

Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion option in the Convertible Promissory Notes were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. As of December 31, 2017, the derivative liability was $394,280.

The derivative liability associated with the Convertible Promissory Notes is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2018, the Company conducted a fair value assessment of the embedded derivative associated with the St. George Convertible Notes. As a result of the fair value assessment, the Company recorded a $824,900 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2018, to properly reflect the fair value of the embedded derivative of $1,219,180 as of March 31, 2018.

The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Convertible Promissory Notes approximates management’s estimate of the fair value of the embedded derivative liability at March 31, 2018 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 56% present value discount rate of 12% and dividend yield of 0%.

BAYBRIDGE CONVERTIBLE NOTE

On December 6, 2017, the Company entered into a securities exchange agreement (the “Exchange Agreement”) with BayBridge Capital Fund LP (“BayBridge”).

Pursuant to the terms of the Exchange Agreement, the Investor agreed to surrender and exchange 675 shares of outstanding Series J Preferred Stock ($755,417 of capital and accrued dividends). In exchange, the Company issued to the Investor an unsecured promissory note with an aggregate principal amount of $840,000 (the “Exchange Note”), with an original issue discount of $84,583. Please refer to Note 21 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for further discussion on the Series J Preferred Stock.

The Exchange Note is unsecured, has no applicable registration rights, bears interest at a rate of 12% per annum, matures on December 6, 2018, and contains standard and customary events of default including but not limited to: (i) failure to make payments when due under the Exchange Note, and (ii) bankruptcy or insolvency of the Company. Principal and interest are payable upon maturity.

Payments of principal and accrued interest on the Exchange Note are payable in cash or, at the option of the Company, in shares of Common Stock at a variable conversion price equal to the lowest of (i) 85% of the average VWAP for the shares over the prior 5 trading days, (ii) the closing bid price for the shares on the prior trading day, or (iii) $0.003 per share. Payments in shares of Common Stock may not be issued pursuant to the Exchange Note if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 9.99% of the outstanding shares of Common Stock.

Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion option in the Exchange Note was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2017, the derivative liability associated with the promissory note was $542,733.

The derivative liability associated with the Exchange Note is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2018, the Company conducted a fair value assessment of the embedded derivative associated with the Exchange Note. As a result of the fair value assessment, the Company recorded a $349,048 gain as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, to properly reflect the fair value of the embedded derivative of $193,685 as of March 31, 2018.

The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Exchange Note approximates management’s estimate of the fair value of the embedded derivative liability at March 31, 2018 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 50%, present value discount rate of 12% and dividend yield of 0%.

As of March 31, 2018, principal of $380,000 and interest of $20,717 had been converted into 897,418,314 shares of common stock and no cash payments of principal or interest had been made. The principal and accrued interest balances as of March 31, 2018 were $460,000 and $653, respectively.

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PROMISSORY NOTES

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

SECURED PROMISSORY NOTE/PROMISSORY NOTES

NOTES PAYABLE

On February 24, 2017, the Company entered into an agreement with a vendor to convert the balance of their account into three notes payable in the aggregate amount of $765,784. The notes bear interest of 6% per annum and matured on February 24, 2018; all outstanding principal and accrued interest is due and payable upon maturity. As of March 31, 2018, the Company had not made any payments on these notes, the accrued interest was $51,052, and the note is due upon demand.

On March 23, 2017, the Company entered into an agreement with a vendor to convert the balance of their account into a note payable in the amount of $356,742. The note bears interest of 5% per annum and matured on March 31, 2018; all outstanding principal and accrued interest is due and payable upon maturity. As of March 31, 2018, the Company had not made any payments on the note, the accrued interest was $18,228, and the note is due upon demand.

On June 30, 2017, the Company entered into an agreement with a vendor to convert the balance of their account into a note payable in the amount of $250,000. The note bears interest of 5% per annum and matured on February 28, 2018; all outstanding principal and accrued interest is due and payable upon maturity. As of March 31, 2018, the Company had not made any payments on these notes, the accrued interest was $9,384, and the note is due upon demand.

On September 30, 2017, the Company entered into a settlement agreement with a customer to convert the credit balance of their account into a note payable in the amount of $215,234. The note bears interest of 5% per annum and matures on September 30, 2018. The Company has not made the monthly payments of $18,426 that were to commence on October 30, 2017; as of March 31, 2018 the company had paid principal of $20,029 and interest of $897. The remaining principal and interest balances, as of March 31, 2018, were $195,205 and $4,138 , respectively.

SECURED PROMISSORY NOTE

On November 30, 2017, the Company, entered into a note purchase and exchange agreement (the “Note SPA”) with Global Ichiban Ltd (“Investor”), for the private placement of up to $2,000,000 of the Company’s Secured Convertible Promissory Notes (“Notes”) in exchange for $2,000,000 of gross proceeds in several tranches through June 2018, The closing of each tranche is conditioned upon the Company having an average daily trading volume for its Common Stock of at least $50,000 for the 20 trading day period preceding such future tranche closing dates.

Pursuant to the terms of the Note SPA, the Company and the Investor also agreed to exchange certain outstanding securities held by the Investor for additional Notes. As of November 30, 2017, the Investor surrendered for cancellation (i) its outstanding promissory note dated September 13, 2017 ($3,359,539 principal and accrued interest), (ii) its outstanding promissory note dated October 31, 2017 ($252,466 principal and accrued interest), and (iii) its 400 shares of outstanding Series J Preferred Stock ( $445,222 of capital and accrued dividends). In exchange, the Company issued to the Investor $4,057,227 aggregate principal amount of additional Notes. Please refer to Note 11 and Note 21 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for further discussion on the canceled promissory notes and the canceled Series J Preferred Stock shares.

All principal and accrued interest on the Notes are convertible at any time, in whole or in part, at the option of the Investor into shares of Common Stock at a variable conversion price equal to the lowest of (i) 85% of the average VWAP for the shares over the prior 5 trading days, (ii) the closing bid price for the shares on the prior trading day, or (iii) $0.002 per share

The Notes may not be converted and shares of Common Stock may not be issued pursuant to the Notes if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 9.99% of the outstanding shares of Common Stock.

Of the Notes issued on November 30, 2017, $3,359,539 aggregate principal amount will mature on December 15, 2020. Principal and interest was originally to be payable in 36 equal monthly installments of $111,585 beginning January 15, 2018. During the three months ended March 31, 2018, principal of $1,250,000 was converted into 2,450,980,392 shares of common stock, and $96,121 of interest was converted to principal. The remaining note is payable in 32 equal monthly installments of $80,036 beginning May 15, 2018.

Of the Notes issued on November 30, 2017, $697,688 aggregate principal amount will mature on November 30, 2018. Principal and interest will be payable upon maturity.

The $2,000,000 aggregate principal amount of Notes, issued in eight tranches, will mature on the first anniversary of the respective issuance date. Principal and interest will be payable upon maturity. As of March 31, 2018, the closing dates, closing amounts, and maturity dates on completed Note SPA tranches are as follows:

Closing Date	Closing Amount		Maturity Date
11/30/2017	$	250,000	11/30/2018
12/28/2017	$	250,000	12/28/2018
1/11/2018	$	250,000	1/11/2019
1/25/2018	$	250,000	1/25/2019
2/8/2018	$	250,000	2/8/2019
2/21/2018	$	250,000	2/21/2019
3/7/2018	$	250,000	3/7/2019
3/21/2018	$	250,000	3/21/2019

The Notes will be secured by a security interest on substantially all of the Company’s assets, bear interest at a rate of 12% per annum and contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the Notes, and (ii) bankruptcy or insolvency of the Company. There are no registration rights applicable to the Notes.

As of March 31, 2018, the aggregate principal and interest balance of the Notes were $4,903,348 and $83,406, respectively.

Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion option in the Notes were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Notes approximates management’s estimate of the fair value of the embedded derivative liability based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions identified below.

Due to the varying terms and varying issue dates, the tranches of this instrument were broken into four separate instruments for valuation purposes.

1) The first valuation was done on the November 30, 2017 Note with term of three years. The derivative value of this note was $3,742,002 as of December 31, 2017.

1) The second valuation was done on the group of Notes dated November 30, 2017, that had a term of one year. The derivative value of this group of notes was $888,168 as of December 31, 2017.

2) The third valuation was done on the Note dated December 28, 2017, which had a term of one year. The derivative value of this note was $267,008 on December 31, 2017.

3) For the Notes dated in the first quarter of 2018, we did a fourth valuation. Although the notes were entered into at various dates, we used a weighted average issuance date of February 15, 2018 for a combined valuation purpose. Management's analysis, using the following assumptions: annual volatility of 54% present value discount rate of 12% and a dividend yield of 0%, resulted in a fair value of the embedded derivative associated with these Notes of $1,151,162 as of February 15, 2018. The value of the embedded derivative associated with these Notes was recorded as a debt discount.

The derivative liability associated with the Notes is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2018, the Company conducted a fair value assessment of the embedded derivative associated with the three valuation groups discussed above.

1) For the November 30, 2017 3yr Note: Management conducted a fair value assessment with the following assumptions: annual volatility of 64% present value discount rate of 12% and a dividend yield of 0% as of March 31, 2018. As a result of the fair value assessment, the Company recorded a gain of $612,155 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $3,129,847 as of March 31, 2018.

2) For the November 30, 2017 1yr Notes: Management conducted a fair value assessment with the following assumptions: annual volatility of 52% present value discount rate of 12% and a dividend yield of 0% as of March 31, 2018. As a result of the fair value assessment, the Company recorded a gain of $174,989 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $713,179 as of March 31, 2018.

3) For the December 28, 2017 1yr Note: Management conducted a fair value assessment with the following assumptions: annual volatility of 52% present value discount rate of 12% and a dividend yield of 0% as of March 31, 2018. As a result of the fair value assessment, the Company recorded a gain of $78,871 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $188,137 as of March 31, 2018.

4) For the first quarter 2018 1yr Notes: Management conducted a fair value assessment with the following assumptions: annual volatility of 52% present value discount rate of 12% and a dividend yield of 0% as of March 31, 2018. As a result of the fair value assessment, the Company recorded a loss of $878,973 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $2,030,135 as of March 31, 2018.

During the first quarter 2018, a net loss of $12,958 had been recorded to reflect the total derivative liability of $6,061,298 as of March 31, 2018.

PROMISSORY NOTES

Offering of Unsecured, Non-Convertible Notes

During October 2016, the Company received $420,000 from a separate private investor. These funds, along with $250,000 of additional funding, were rolled into a promissory note, executed on January 17, 2017, in the amount of $700,000 issued with a discount of $30,000 which will be charged to interest expense ratably over the term of the note. The note bears interest at 12% per annum and matures on July 17, 2017. Principal and interest on this note are payable at maturity. This note is not convertible into equity shares of the Company and is unsecured.

On June 30, 2017, the Company and the private investor agreed to a 12 month payment plan on the balance of this promissory note. Interest will continue to accrue on this note at 12% per annum and payments of approximately $62,000 will be made monthly beginning in July 2017. The Company has not made all the payments according to this payment plan, and the note is payable upon demand.

As of March 31, 2018, $205,563 of principal and $45,414 of interest had been paid on this note. The outstanding principal and accrued interest balances on the note as of March 31, 2018 were $494,437 and $41,756, respectively.

On November 16, 2017, the Company initiated a non-convertible, unsecured promissory note with a private investor for $275,000. The promissory note was issued with an original issue discount of $25,000, resulting in proceeds to the company of $250,000. The note does not have a stated interest rate and matured on December 18, 2017. As of March 31, 2018, no payments had been made on this note and the Company has accrued interest at an inferred rate of 12% resulting in an accrued interest balance of $9,493, as of March 31, 2018. This note is payable upon demand.

On January 31, 2018, the Company initiated a non-convertible, unsecured promissory note with a private investor for an aggregate principal amount of $200,000. The promissory note was issued with an original issue discount of $22,500, resulting in proceeds to the company of $177,500, which was received in December 2017. The note bears interest at 12% per annum and matures on December 29, 2018. All principal and interest is payable upon maturity. The Company received $30,000 in additional proceeds from this investor during the three months ended March 31, 2018, and the Company has received further proceeds as of the date of this report (please refer to Note 18 for further information). As of the date of this report, the amended note has not been finalized. As of March 31, 2018, the principal and interest balances on this note were $230,000 and $6,473, respectively.

ST. GEORGE CONVERTIBLE NOTE

On September 8, 2017, the Company entered into a securities purchase agreement with St. George Investments LLC (“Investor”), for the private placement of $1,725,000 principal amount of the Company’s Original Issue Discount Convertible Promissory Notes.

On September 11, 2017, the Company sold and issued $1,725,000 principal amount of the convertible notes to the Investor in exchange for $1,500,000 of gross proceeds, and paid $20,000 in financing costs. The original issue discount of $225,000, and the financing fee, will be charged to interest expense, ratably, over the life of the note.

Unless earlier converted or prepaid, the convertible notes will mature on March 11, 2019. The notes do not bear interest in the absence of an event of default.

For the first six months after the issuance of the notes, the Company will make a monthly cash repayment on the notes of approximately $96,000. Thereafter, the Investor may request that the Company make monthly partial redemptions of the note up to $150,000 per month. If the Investor does not request the full $150,000 redemption amount in any one month, the unused portion of such monthly redemption amount can be added to future monthly redemption amounts. But in no event can the amount requested by the Investor for any one month exceed $275,000.

Redemption amounts are payable by the Company in cash. Beginning ten months after the issuance of the convertible notes, cash redemption payments by the Company will be subject to a 15% redemption premium.

Beginning six months after the issuance of the convertible notes, the Company also has the option (subject to customary equity conditions) to pay redemption amounts in the form of shares of common stock. Payments in the form of shares would be calculated using a variable conversion price equal to the lower of (i) 85% of the average VWAP for the shares over the prior five trading days or (ii) the closing bid price for the shares on the prior trading day.

All principal and accrued interest on the Notes are convertible at any time, in whole or in part, at the option of the Investor into shares of Common Stock at a fixed conversion price of $0.004 per share.

The Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the Notes; and (ii) bankruptcy or insolvency of the Company. Upon the occurrence of an event of default, the Notes will begin to bear interest at the rate of 22% per annum. In addition, upon the occurrence of an event of default, the Investor has the option to increase the outstanding balance of the Notes by 25%.

In connection with the closing under the Note SPA, the Company issued 37,500,000 unregistered shares of common stock to the Investor as an origination fee. The closing stock price on the date of close was $0.0017 resulting in an interest expense of $63,750 being recorded as of the date of close.

The Notes may not be converted and shares of Common Stock may not be issued pursuant to the Notes if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 4.99% of the outstanding shares of Common Stock.

As of March 31, 2018, cash payments of $191,667 had been made on this note, and $75,000 had been converted into 187,500,000 shares of the Company's common stock. The remaining balance on the note was $1,458,333 as of March 31, 2018.

In lieu of making the December 2017 through March 2018 cash payments, the share reserve was increased by 5 billion shares, and the variable conversion price changed to the lower of (i) 60% of the average VWAP for the shares over the prior five trading days or (ii) the closing bid price for the shares on the prior trading day, please refer to Note 18 for more information on the change in VWAP discount.

Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion option in the Convertible Promissory Notes were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. As of December 31, 2017, the derivative liability was $394,280.

The derivative liability associated with the Convertible Promissory Notes is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2018, the Company conducted a fair value assessment of the embedded derivative associated with the St. George Convertible Notes. As a result of the fair value assessment, the Company recorded a $824,900 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2018, to properly reflect the fair value of the embedded derivative of $1,219,180 as of March 31, 2018.

The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Convertible Promissory Notes approximates management’s estimate of the fair value of the embedded derivative liability at March 31, 2018 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 56% present value discount rate of 12% and dividend yield of 0%.

BAYBRIDGE CONVERTIBLE NOTE

On December 6, 2017, the Company entered into a securities exchange agreement (the “Exchange Agreement”) with BayBridge Capital Fund LP (“BayBridge”).

Pursuant to the terms of the Exchange Agreement, the Investor agreed to surrender and exchange 675 shares of outstanding Series J Preferred Stock ($755,417 of capital and accrued dividends). In exchange, the Company issued to the Investor an unsecured promissory note with an aggregate principal amount of $840,000 (the “Exchange Note”), with an original issue discount of $84,583. Please refer to Note 21 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for further discussion on the Series J Preferred Stock.

The Exchange Note is unsecured, has no applicable registration rights, bears interest at a rate of 12% per annum, matures on December 6, 2018, and contains standard and customary events of default including but not limited to: (i) failure to make payments when due under the Exchange Note, and (ii) bankruptcy or insolvency of the Company. Principal and interest are payable upon maturity.

Payments of principal and accrued interest on the Exchange Note are payable in cash or, at the option of the Company, in shares of Common Stock at a variable conversion price equal to the lowest of (i) 85% of the average VWAP for the shares over the prior 5 trading days, (ii) the closing bid price for the shares on the prior trading day, or (iii) $0.003 per share. Payments in shares of Common Stock may not be issued pursuant to the Exchange Note if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 9.99% of the outstanding shares of Common Stock.

Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion option in the Exchange Note was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2017, the derivative liability associated with the promissory note was $542,733.

The derivative liability associated with the Exchange Note is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2018, the Company conducted a fair value assessment of the embedded derivative associated with the Exchange Note. As a result of the fair value assessment, the Company recorded a $349,048 gain as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, to properly reflect the fair value of the embedded derivative of $193,685 as of March 31, 2018.

The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Exchange Note approximates management’s estimate of the fair value of the embedded derivative liability at March 31, 2018 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 50%, present value discount rate of 12% and dividend yield of 0%.

As of March 31, 2018, principal of $380,000 and interest of $20,717 had been converted into 897,418,314 shares of common stock and no cash payments of principal or interest had been made. The principal and accrued interest balances as of March 31, 2018 were $460,000 and $653, respectively.

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OCTOBER 2016 CONVERTIBLE NOTES AND EXCHANGE OF SERIES A PREFERRED STOCK

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

OCTOBER 2016 CONVERTIBLE NOTES AND EXCHANGE OF SERIES A PREFERRED STOCK

OCTOBER 2016 CONVERTIBLE NOTES AND EXCHANGE OF SERIES A PREFERRED STOCK

October 2016 Convertible Notes

On October 5, 2016, the Company entered into a securities purchase agreement with a private investor for the private placement of $330,000 principal amount of October 2016 Convertible Notes. At Closing, the Company sold and issued $330,000 principal amount of October 2016 Convertible Notes in exchange for $330,000 of gross proceeds.

Unless earlier converted or prepaid, the October 2016 Convertible Notes matured on December 31, 2017. The October 2016 Convertible Notes bear interest at a rate of 6% per annum, subject to increase to 24% per annum upon the occurrence and continuance of an event of default (as described below). Principal and accrued interest on the October 2016 Convertible Notes is payable upon demand.

All principal and accrued interest on the October 2016 Convertible Notes are convertible at any time, in whole or in part, at the option of Adar Bays, into shares of common stock at a variable conversion price equal to 80% of the lowest closing bid price of the Company’s common stock for the fifteen consecutive trading day period prior to the conversion date. After the six month anniversary of the issuance of any October 2016 Convertible Note, the conversion price for such note shall thereafter be equal to 50% of the lowest closing bid price of the Company’s common stock for the fifteen consecutive trading day period prior to the conversion date.

The October 2016 Convertible Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the October 2016 Convertible Notes; and (ii) bankruptcy or insolvency of the Company.

Outstanding principal and accrued interest on the October 2016 Convertible Notes were $330,000 and $29,810, respectively as of March 31, 2018.

Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion option in the October 2016 Convertible Notes were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At closing, a derivative liability and a corresponding debt discount in the amount of $330,000 was recorded. The fair value of the derivative was greater than the face value at issuance and the difference of $341,114 was charged to interest expense at issuance. The remaining debt discount will be charged to interest expense ratably over the life of the October 2016 Convertible Notes. As of December 31, 2017, the fair value of the derivative liability was $572,643.

The derivative liability associated with the October 2016 Convertible Notes is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2018, the Company conducted a fair value assessment of the embedded derivative associated with the October 2016 Convertible Notes. As a result of the fair value assessment, the Company recorded a $62,276 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2018, to properly reflect the fair value of the embedded derivative of $634,919 as of March 31, 2018.

The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the October 2016 Convertible Notes approximates management’s estimate of the fair value of the embedded derivative liability at March 31, 2018 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 53% present value discount rate of 12% and dividend yield of 0%.

Exchange of Outstanding Series A Preferred Stock for Convertible Notes

In 2013, the Company completed a private placement to one accredited investor (the “Series A Holder”) of its Series A Convertible Preferred Stock. Prior to the exchange agreement described below the Company had 165,541 shares of Series A Preferred Stock that remained outstanding as of October 6, 2016.

On October 6, 2016, the Series A Holder entered into an exchange agreement with private investor. Pursuant to the exchange agreement, beginning December 5, 2016, the private investor has the option to exchange, from time to time, all or any portion of the October 2016 Convertible Notes for outstanding shares of Series A Preferred Stock from the Series A Holder.

As of March 31, 2017, the private investor had elected to exchange all outstanding October 2016 Convertible Notes, in accordance with the exchange agreement, and the Series A Holder held $330,000 of the October 2016 Convertible Notes.

SERIES A PREFERRED STOCK

In June 2013, the Company entered into a Securities Purchase Agreement with an investor to sell an aggregate of 750,000 shares of Series A Preferred Stock at a price of $8.00 per share, resulting in gross proceeds of $6,000,000. This purchase agreement included warrants to purchase up to 13,125 shares of common stock of the Company. The transfer of cash and securities took place incrementally, the first closing occurring on June 17, 2013 with the transfer of 125,000 shares of Series A Preferred Stock and a warrant to purchase 2,187 shares of common stock for $1,000,000. The final closings took place in August 2013, with the transfer of 625,000 shares of Series A Preferred Stock and a warrant to purchase 10,938 shares of common stock for $5,000,000.

Holders of Series A Preferred Stock are entitled to cumulative dividends at a rate of 8% per annum when and if declared by the Board of Directors in its sole discretion. The dividends may be paid in cash or in the form of common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period), at the discretion of the Board of Directors. The dividend rate on the Series A Preferred Stock is indexed to the Company's stock price and subject to adjustment. In addition, the Series A Preferred Stock contains a make-whole provision whereby, conversion or redemption of the preferred stock within 4 years of issuance will require dividends for the full four year period to be paid by the Company in cash or common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period). This make-whole provision expired in June 2017 and future conversions and redemptions will be paid out with accrued dividends per the holding period of the shares of Series A Preferred stock. Please see Note 23 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for more information.

The Series A Preferred Stock may be converted into shares of common stock at the option of the Company if the closing price of the common stock exceeds $232, as adjusted, for 20 consecutive trading days, or by the holder at any time. The Company has the right to redeem the Series A Preferred Stock at a price of $8.00 per share, plus any accrued and unpaid dividends, plus the make-whole amount (if applicable). At March 31, 2018, the preferred shares were not eligible for conversion to common shares at the option of the Company. The holder of the preferred shares may convert to common shares at any time, at no cost, at a ratio of 1 preferred share into 1 common share (subject to standard ratable anti-dilution adjustments). Upon any conversion (whether at the option of the Company or the holder), the holder is entitled to receive any accrued but unpaid dividends.

On October 6, 2016, the Series A Holder entered into an exchange agreement with a private investor. Pursuant to the exchange agreement, beginning December 5, 2016, the investor has the option to exchange, from time to time, all or any portion of the October 2016 Convertible Notes (see Note 11) for outstanding shares of Series A Preferred Stock from the Series A Holder.

As of March 31, 2017, the investor had elected to exchange all outstanding October 2016 Convertible Notes, in accordance with the exchange agreement, resulting in the exchange of 104,785 shares of Series A Preferred Stock. As of March 31, 2017, the investor had also converted their 104,785 shares of Series A Preferred Stock, and the related make whole dividend, which resulted in the issuance of 173,946,250 shares of common stock.

Except as otherwise required by law (or with respect to approval of certain actions), the Series A Preferred Stock shall have no voting rights. Upon any liquidation, dissolution or winding up of the Company, after payment or provision for payment of debts and other liabilities of the Company, the holders of Series A Preferred Stock shall be entitled to receive, pari passu with any distribution to the holders of common stock of the Company, an amount equal to $8.00 per share of Series A Preferred Stock plus any accrued and unpaid dividends.

As of March 31, 2018, there were 60,756 shares of Series A Preferred Stock outstanding and accrued and unpaid dividends of $295,004.

SERIES K PREFERRED STOCK

On February 8, 2017, the Company, entered into a securities purchase agreement (“Series K SPA”) with a private investor (“Investor”), for the private placement of up to $20,000,000 of the Company’s newly designated Series K Convertible Preferred Stock (“Series K Preferred Stock”).

Per the terms of the Series K SPA, the Company was scheduled to sell 1,000 shares of Series K Preferred Stock to Investor in exchange for $1,000,000 of gross proceeds on or before each of (i) February 24, 2017, (ii) March 27, 2017, (iii) April 27, 2017, (iv) May 27, 2017 and (v) June 27, 2017. The Company was also scheduled to sell 15,000 shares of Series K Preferred Stock to Investor in exchange for $15,000,000 of gross proceeds on or before July 27, 2017. As of March 31, 2018, the Company had sold 9,010 shares of Series K Preferred Stock in exchange for $9,010,000 in cash proceeds from the private investor. The Company does not expect to receive any more funding from this investor. The following summarizes the closings and proceeds received as of March 31, 2018:

Closing Period	Preferred Series K Shares Purchased	Closing Amount
Q1 2017	150	$	150,000
Q2 2017	4,100	4,100,000
Q3 2017	4,760	$	4,760,000
	9,010	$	9,010,000

The Series K Preferred Stock ranks senior to the Company’s common stock in respect to dividends and rights upon liquidation. The Series K Preferred Stock will not have voting rights and the holders of the Series K Preferred Stock will not be entitled to any fixed rate of dividends.

The shares of the Series K Preferred Stock will be convertible at the option of the holder into common stock at a fixed conversion price equal to $0.004. At no time may the Series K Preferred Stock be converted if the number of shares of common stock to be received by Investor pursuant to such conversion, when aggregated with all other shares of common stock then beneficially (or deemed beneficially) owned by Investor, would result in Investor beneficially owning more than 19.99% of all common stock then outstanding. The following table summarizes the conversion activity of Series K Preferred Stock:

Conversion Period	Preferred Series K Shares Converted	Value of Series K Preferred Shares		Common Shares Issued
Q2 2017	3,200	$	3,200,000	800,000,000
Q3 2017	3,000	$	3,000,000	750,000,000
	6,200	$	6,200,000	1,550,000,000

As of March 31, 2018, the investor owned approximately 12% of the Company's outstanding common stock and there are 2,810 shares of Series K Preferred Stock Outstanding, representing a value of $2,810,000. Subsequent to March 31, 2018, the investor converted their remaining Series K Preferred Shares into common stock. Please refer to Note 18 for further information.

The Company is required to redeem for cash any outstanding shares of the Series K Preferred Stock at a price per share equal to $1,000 plus any accrued but unpaid dividends (if any) thereon on the fifth anniversary of the date of the original issue of such shares.

Upon our liquidation, dissolution or winding up, holders of Series K Preferred Stock will be entitled to be paid out of our assets, prior to the holders of our common stock, an amount equal to $1,000 per share plus any accrued but unpaid dividends (if any) thereon.

Upon issuance, in accordance with ASC 480-10, the Series K Preferred Stock was classified as a liability on the Consolidated Balance Sheets. Pursuant to a number of factors outlined in ASC Topic 815, the conversion option in the Series K Preferred Stock was deemed to not require bifurcation or separate accounting treatment.

STOCKHOLDERS’ DEFICIT

Common Stock

At March 31, 2018, the Company had 20,000,000,000 shares of common stock, $0.0001 par value, authorized for issuance. Each share of common stock has the right to one vote. As of March 31, 2018, the Company had 12,738,084,718 shares of common stock outstanding. The Company has not declared or paid any dividends related to the common stock through March 31, 2018.

Preferred Stock

At March 31, 2018, the Company had 750,000 shares of preferred stock, $0.0001 par value, authorized for issuance. Preferred stock may be issued in classes or series. Designations, powers, preferences, rights, qualifications, limitations and restrictions are determined by the Company’s Board of Directors. 

The following table summarizes the designations, shares authorized, and shares outstanding for the Company's Preferred Stock:

Preferred Stock Series Designation	Shares Outstanding
Series A	60,756
Series K	2,810

Series A Preferred Stock

Refer to Note 14 descriptions of Series A Preferred Stock.

Series K Preferred Stock

Refer to Note 15 descriptions of Series K Preferred Stock.

Warrants

As of March 31, 2018, the Company has three outstanding warrants for an aggregate of 700 million shares of common stock: i) a warrant for 250 million shares of common stock which is exercisable at a fixed strike price of $0.004 and expires on July 24, 2018; ii) a warrant for 250 million shares of common stock which is exercisable at a fixed strike price of $0.003 and expires on August 10, 2018; and iii) a warrant for 200 million shares of common stock which is exercisable at a fixed strike price of $0.0018 and expires on June 30, 2018. None of the warrants may not be exercised if, after giving effect to the exercise, the holder, together with its affiliates, would beneficially own in excess of 9.99% of the Company's outstanding shares of common stock. Please refer to Note 24 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for further information about each warrant issuance.

The following table summarizes warrant activity:

	Warrant Shares	Warrant Weighted Average Exercise Price
Outstanding at December 31, 2016	—	$	—
Granted	700,000,000	$	0.003
Exercised	—	$	—
Canceled	—	$	—
Outstanding at December 31, 2017	700,000,000	$	0.003
Granted	—	$	—
Exercised	—	$	—
Canceled	—	$	—
Outstanding at March 31, 2018	700,000,000	$	0.003
Exercisable at March 31, 2018	700,000,000	$	0.003

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ST. GEORGE CONVERTIBLE NOTE

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

ST. GEORGE CONVERTIBLE NOTE/BAYBRIDGE CONVERTIBLE NOTE

NOTES PAYABLE

On February 24, 2017, the Company entered into an agreement with a vendor to convert the balance of their account into three notes payable in the aggregate amount of $765,784. The notes bear interest of 6% per annum and matured on February 24, 2018; all outstanding principal and accrued interest is due and payable upon maturity. As of March 31, 2018, the Company had not made any payments on these notes, the accrued interest was $51,052, and the note is due upon demand.

On March 23, 2017, the Company entered into an agreement with a vendor to convert the balance of their account into a note payable in the amount of $356,742. The note bears interest of 5% per annum and matured on March 31, 2018; all outstanding principal and accrued interest is due and payable upon maturity. As of March 31, 2018, the Company had not made any payments on the note, the accrued interest was $18,228, and the note is due upon demand.

On June 30, 2017, the Company entered into an agreement with a vendor to convert the balance of their account into a note payable in the amount of $250,000. The note bears interest of 5% per annum and matured on February 28, 2018; all outstanding principal and accrued interest is due and payable upon maturity. As of March 31, 2018, the Company had not made any payments on these notes, the accrued interest was $9,384, and the note is due upon demand.

On September 30, 2017, the Company entered into a settlement agreement with a customer to convert the credit balance of their account into a note payable in the amount of $215,234. The note bears interest of 5% per annum and matures on September 30, 2018. The Company has not made the monthly payments of $18,426 that were to commence on October 30, 2017; as of March 31, 2018 the company had paid principal of $20,029 and interest of $897. The remaining principal and interest balances, as of March 31, 2018, were $195,205 and $4,138 , respectively.

SECURED PROMISSORY NOTE

On November 30, 2017, the Company, entered into a note purchase and exchange agreement (the “Note SPA”) with Global Ichiban Ltd (“Investor”), for the private placement of up to $2,000,000 of the Company’s Secured Convertible Promissory Notes (“Notes”) in exchange for $2,000,000 of gross proceeds in several tranches through June 2018, The closing of each tranche is conditioned upon the Company having an average daily trading volume for its Common Stock of at least $50,000 for the 20 trading day period preceding such future tranche closing dates.

Pursuant to the terms of the Note SPA, the Company and the Investor also agreed to exchange certain outstanding securities held by the Investor for additional Notes. As of November 30, 2017, the Investor surrendered for cancellation (i) its outstanding promissory note dated September 13, 2017 ($3,359,539 principal and accrued interest), (ii) its outstanding promissory note dated October 31, 2017 ($252,466 principal and accrued interest), and (iii) its 400 shares of outstanding Series J Preferred Stock ( $445,222 of capital and accrued dividends). In exchange, the Company issued to the Investor $4,057,227 aggregate principal amount of additional Notes. Please refer to Note 11 and Note 21 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for further discussion on the canceled promissory notes and the canceled Series J Preferred Stock shares.

All principal and accrued interest on the Notes are convertible at any time, in whole or in part, at the option of the Investor into shares of Common Stock at a variable conversion price equal to the lowest of (i) 85% of the average VWAP for the shares over the prior 5 trading days, (ii) the closing bid price for the shares on the prior trading day, or (iii) $0.002 per share

The Notes may not be converted and shares of Common Stock may not be issued pursuant to the Notes if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 9.99% of the outstanding shares of Common Stock.

Of the Notes issued on November 30, 2017, $3,359,539 aggregate principal amount will mature on December 15, 2020. Principal and interest was originally to be payable in 36 equal monthly installments of $111,585 beginning January 15, 2018. During the three months ended March 31, 2018, principal of $1,250,000 was converted into 2,450,980,392 shares of common stock, and $96,121 of interest was converted to principal. The remaining note is payable in 32 equal monthly installments of $80,036 beginning May 15, 2018.

Of the Notes issued on November 30, 2017, $697,688 aggregate principal amount will mature on November 30, 2018. Principal and interest will be payable upon maturity.

The $2,000,000 aggregate principal amount of Notes, issued in eight tranches, will mature on the first anniversary of the respective issuance date. Principal and interest will be payable upon maturity. As of March 31, 2018, the closing dates, closing amounts, and maturity dates on completed Note SPA tranches are as follows:

Closing Date	Closing Amount		Maturity Date
11/30/2017	$	250,000	11/30/2018
12/28/2017	$	250,000	12/28/2018
1/11/2018	$	250,000	1/11/2019
1/25/2018	$	250,000	1/25/2019
2/8/2018	$	250,000	2/8/2019
2/21/2018	$	250,000	2/21/2019
3/7/2018	$	250,000	3/7/2019
3/21/2018	$	250,000	3/21/2019

The Notes will be secured by a security interest on substantially all of the Company’s assets, bear interest at a rate of 12% per annum and contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the Notes, and (ii) bankruptcy or insolvency of the Company. There are no registration rights applicable to the Notes.

As of March 31, 2018, the aggregate principal and interest balance of the Notes were $4,903,348 and $83,406, respectively.

Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion option in the Notes were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Notes approximates management’s estimate of the fair value of the embedded derivative liability based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions identified below.

Due to the varying terms and varying issue dates, the tranches of this instrument were broken into four separate instruments for valuation purposes.

1) The first valuation was done on the November 30, 2017 Note with term of three years. The derivative value of this note was $3,742,002 as of December 31, 2017.

1) The second valuation was done on the group of Notes dated November 30, 2017, that had a term of one year. The derivative value of this group of notes was $888,168 as of December 31, 2017.

2) The third valuation was done on the Note dated December 28, 2017, which had a term of one year. The derivative value of this note was $267,008 on December 31, 2017.

3) For the Notes dated in the first quarter of 2018, we did a fourth valuation. Although the notes were entered into at various dates, we used a weighted average issuance date of February 15, 2018 for a combined valuation purpose. Management's analysis, using the following assumptions: annual volatility of 54% present value discount rate of 12% and a dividend yield of 0%, resulted in a fair value of the embedded derivative associated with these Notes of $1,151,162 as of February 15, 2018. The value of the embedded derivative associated with these Notes was recorded as a debt discount.

The derivative liability associated with the Notes is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2018, the Company conducted a fair value assessment of the embedded derivative associated with the three valuation groups discussed above.

1) For the November 30, 2017 3yr Note: Management conducted a fair value assessment with the following assumptions: annual volatility of 64% present value discount rate of 12% and a dividend yield of 0% as of March 31, 2018. As a result of the fair value assessment, the Company recorded a gain of $612,155 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $3,129,847 as of March 31, 2018.

2) For the November 30, 2017 1yr Notes: Management conducted a fair value assessment with the following assumptions: annual volatility of 52% present value discount rate of 12% and a dividend yield of 0% as of March 31, 2018. As a result of the fair value assessment, the Company recorded a gain of $174,989 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $713,179 as of March 31, 2018.

3) For the December 28, 2017 1yr Note: Management conducted a fair value assessment with the following assumptions: annual volatility of 52% present value discount rate of 12% and a dividend yield of 0% as of March 31, 2018. As a result of the fair value assessment, the Company recorded a gain of $78,871 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $188,137 as of March 31, 2018.

4) For the first quarter 2018 1yr Notes: Management conducted a fair value assessment with the following assumptions: annual volatility of 52% present value discount rate of 12% and a dividend yield of 0% as of March 31, 2018. As a result of the fair value assessment, the Company recorded a loss of $878,973 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $2,030,135 as of March 31, 2018.

During the first quarter 2018, a net loss of $12,958 had been recorded to reflect the total derivative liability of $6,061,298 as of March 31, 2018.

PROMISSORY NOTES

Offering of Unsecured, Non-Convertible Notes

During October 2016, the Company received $420,000 from a separate private investor. These funds, along with $250,000 of additional funding, were rolled into a promissory note, executed on January 17, 2017, in the amount of $700,000 issued with a discount of $30,000 which will be charged to interest expense ratably over the term of the note. The note bears interest at 12% per annum and matures on July 17, 2017. Principal and interest on this note are payable at maturity. This note is not convertible into equity shares of the Company and is unsecured.

On June 30, 2017, the Company and the private investor agreed to a 12 month payment plan on the balance of this promissory note. Interest will continue to accrue on this note at 12% per annum and payments of approximately $62,000 will be made monthly beginning in July 2017. The Company has not made all the payments according to this payment plan, and the note is payable upon demand.

As of March 31, 2018, $205,563 of principal and $45,414 of interest had been paid on this note. The outstanding principal and accrued interest balances on the note as of March 31, 2018 were $494,437 and $41,756, respectively.

On November 16, 2017, the Company initiated a non-convertible, unsecured promissory note with a private investor for $275,000. The promissory note was issued with an original issue discount of $25,000, resulting in proceeds to the company of $250,000. The note does not have a stated interest rate and matured on December 18, 2017. As of March 31, 2018, no payments had been made on this note and the Company has accrued interest at an inferred rate of 12% resulting in an accrued interest balance of $9,493, as of March 31, 2018. This note is payable upon demand.

On January 31, 2018, the Company initiated a non-convertible, unsecured promissory note with a private investor for an aggregate principal amount of $200,000. The promissory note was issued with an original issue discount of $22,500, resulting in proceeds to the company of $177,500, which was received in December 2017. The note bears interest at 12% per annum and matures on December 29, 2018. All principal and interest is payable upon maturity. The Company received $30,000 in additional proceeds from this investor during the three months ended March 31, 2018, and the Company has received further proceeds as of the date of this report (please refer to Note 18 for further information). As of the date of this report, the amended note has not been finalized. As of March 31, 2018, the principal and interest balances on this note were $230,000 and $6,473, respectively.

ST. GEORGE CONVERTIBLE NOTE

On September 8, 2017, the Company entered into a securities purchase agreement with St. George Investments LLC (“Investor”), for the private placement of $1,725,000 principal amount of the Company’s Original Issue Discount Convertible Promissory Notes.

On September 11, 2017, the Company sold and issued $1,725,000 principal amount of the convertible notes to the Investor in exchange for $1,500,000 of gross proceeds, and paid $20,000 in financing costs. The original issue discount of $225,000, and the financing fee, will be charged to interest expense, ratably, over the life of the note.

Unless earlier converted or prepaid, the convertible notes will mature on March 11, 2019. The notes do not bear interest in the absence of an event of default.

For the first six months after the issuance of the notes, the Company will make a monthly cash repayment on the notes of approximately $96,000. Thereafter, the Investor may request that the Company make monthly partial redemptions of the note up to $150,000 per month. If the Investor does not request the full $150,000 redemption amount in any one month, the unused portion of such monthly redemption amount can be added to future monthly redemption amounts. But in no event can the amount requested by the Investor for any one month exceed $275,000.

Redemption amounts are payable by the Company in cash. Beginning ten months after the issuance of the convertible notes, cash redemption payments by the Company will be subject to a 15% redemption premium.

Beginning six months after the issuance of the convertible notes, the Company also has the option (subject to customary equity conditions) to pay redemption amounts in the form of shares of common stock. Payments in the form of shares would be calculated using a variable conversion price equal to the lower of (i) 85% of the average VWAP for the shares over the prior five trading days or (ii) the closing bid price for the shares on the prior trading day.

All principal and accrued interest on the Notes are convertible at any time, in whole or in part, at the option of the Investor into shares of Common Stock at a fixed conversion price of $0.004 per share.

The Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the Notes; and (ii) bankruptcy or insolvency of the Company. Upon the occurrence of an event of default, the Notes will begin to bear interest at the rate of 22% per annum. In addition, upon the occurrence of an event of default, the Investor has the option to increase the outstanding balance of the Notes by 25%.

In connection with the closing under the Note SPA, the Company issued 37,500,000 unregistered shares of common stock to the Investor as an origination fee. The closing stock price on the date of close was $0.0017 resulting in an interest expense of $63,750 being recorded as of the date of close.

The Notes may not be converted and shares of Common Stock may not be issued pursuant to the Notes if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 4.99% of the outstanding shares of Common Stock.

As of March 31, 2018, cash payments of $191,667 had been made on this note, and $75,000 had been converted into 187,500,000 shares of the Company's common stock. The remaining balance on the note was $1,458,333 as of March 31, 2018.

In lieu of making the December 2017 through March 2018 cash payments, the share reserve was increased by 5 billion shares, and the variable conversion price changed to the lower of (i) 60% of the average VWAP for the shares over the prior five trading days or (ii) the closing bid price for the shares on the prior trading day, please refer to Note 18 for more information on the change in VWAP discount.

Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion option in the Convertible Promissory Notes were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. As of December 31, 2017, the derivative liability was $394,280.

The derivative liability associated with the Convertible Promissory Notes is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2018, the Company conducted a fair value assessment of the embedded derivative associated with the St. George Convertible Notes. As a result of the fair value assessment, the Company recorded a $824,900 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2018, to properly reflect the fair value of the embedded derivative of $1,219,180 as of March 31, 2018.

The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Convertible Promissory Notes approximates management’s estimate of the fair value of the embedded derivative liability at March 31, 2018 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 56% present value discount rate of 12% and dividend yield of 0%.

BAYBRIDGE CONVERTIBLE NOTE

On December 6, 2017, the Company entered into a securities exchange agreement (the “Exchange Agreement”) with BayBridge Capital Fund LP (“BayBridge”).

Pursuant to the terms of the Exchange Agreement, the Investor agreed to surrender and exchange 675 shares of outstanding Series J Preferred Stock ($755,417 of capital and accrued dividends). In exchange, the Company issued to the Investor an unsecured promissory note with an aggregate principal amount of $840,000 (the “Exchange Note”), with an original issue discount of $84,583. Please refer to Note 21 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for further discussion on the Series J Preferred Stock.

The Exchange Note is unsecured, has no applicable registration rights, bears interest at a rate of 12% per annum, matures on December 6, 2018, and contains standard and customary events of default including but not limited to: (i) failure to make payments when due under the Exchange Note, and (ii) bankruptcy or insolvency of the Company. Principal and interest are payable upon maturity.

Payments of principal and accrued interest on the Exchange Note are payable in cash or, at the option of the Company, in shares of Common Stock at a variable conversion price equal to the lowest of (i) 85% of the average VWAP for the shares over the prior 5 trading days, (ii) the closing bid price for the shares on the prior trading day, or (iii) $0.003 per share. Payments in shares of Common Stock may not be issued pursuant to the Exchange Note if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 9.99% of the outstanding shares of Common Stock.

Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion option in the Exchange Note was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2017, the derivative liability associated with the promissory note was $542,733.

The derivative liability associated with the Exchange Note is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2018, the Company conducted a fair value assessment of the embedded derivative associated with the Exchange Note. As a result of the fair value assessment, the Company recorded a $349,048 gain as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, to properly reflect the fair value of the embedded derivative of $193,685 as of March 31, 2018.

The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Exchange Note approximates management’s estimate of the fair value of the embedded derivative liability at March 31, 2018 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 50%, present value discount rate of 12% and dividend yield of 0%.

As of March 31, 2018, principal of $380,000 and interest of $20,717 had been converted into 897,418,314 shares of common stock and no cash payments of principal or interest had been made. The principal and accrued interest balances as of March 31, 2018 were $460,000 and $653, respectively.

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BAYBRIDGE CONVERTIBLE NOTE

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

ST. GEORGE CONVERTIBLE NOTE/BAYBRIDGE CONVERTIBLE NOTE

NOTES PAYABLE

On February 24, 2017, the Company entered into an agreement with a vendor to convert the balance of their account into three notes payable in the aggregate amount of $765,784. The notes bear interest of 6% per annum and matured on February 24, 2018; all outstanding principal and accrued interest is due and payable upon maturity. As of March 31, 2018, the Company had not made any payments on these notes, the accrued interest was $51,052, and the note is due upon demand.

On March 23, 2017, the Company entered into an agreement with a vendor to convert the balance of their account into a note payable in the amount of $356,742. The note bears interest of 5% per annum and matured on March 31, 2018; all outstanding principal and accrued interest is due and payable upon maturity. As of March 31, 2018, the Company had not made any payments on the note, the accrued interest was $18,228, and the note is due upon demand.

On June 30, 2017, the Company entered into an agreement with a vendor to convert the balance of their account into a note payable in the amount of $250,000. The note bears interest of 5% per annum and matured on February 28, 2018; all outstanding principal and accrued interest is due and payable upon maturity. As of March 31, 2018, the Company had not made any payments on these notes, the accrued interest was $9,384, and the note is due upon demand.

On September 30, 2017, the Company entered into a settlement agreement with a customer to convert the credit balance of their account into a note payable in the amount of $215,234. The note bears interest of 5% per annum and matures on September 30, 2018. The Company has not made the monthly payments of $18,426 that were to commence on October 30, 2017; as of March 31, 2018 the company had paid principal of $20,029 and interest of $897. The remaining principal and interest balances, as of March 31, 2018, were $195,205 and $4,138 , respectively.

SECURED PROMISSORY NOTE

On November 30, 2017, the Company, entered into a note purchase and exchange agreement (the “Note SPA”) with Global Ichiban Ltd (“Investor”), for the private placement of up to $2,000,000 of the Company’s Secured Convertible Promissory Notes (“Notes”) in exchange for $2,000,000 of gross proceeds in several tranches through June 2018, The closing of each tranche is conditioned upon the Company having an average daily trading volume for its Common Stock of at least $50,000 for the 20 trading day period preceding such future tranche closing dates.

Pursuant to the terms of the Note SPA, the Company and the Investor also agreed to exchange certain outstanding securities held by the Investor for additional Notes. As of November 30, 2017, the Investor surrendered for cancellation (i) its outstanding promissory note dated September 13, 2017 ($3,359,539 principal and accrued interest), (ii) its outstanding promissory note dated October 31, 2017 ($252,466 principal and accrued interest), and (iii) its 400 shares of outstanding Series J Preferred Stock ( $445,222 of capital and accrued dividends). In exchange, the Company issued to the Investor $4,057,227 aggregate principal amount of additional Notes. Please refer to Note 11 and Note 21 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for further discussion on the canceled promissory notes and the canceled Series J Preferred Stock shares.

All principal and accrued interest on the Notes are convertible at any time, in whole or in part, at the option of the Investor into shares of Common Stock at a variable conversion price equal to the lowest of (i) 85% of the average VWAP for the shares over the prior 5 trading days, (ii) the closing bid price for the shares on the prior trading day, or (iii) $0.002 per share

The Notes may not be converted and shares of Common Stock may not be issued pursuant to the Notes if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 9.99% of the outstanding shares of Common Stock.

Of the Notes issued on November 30, 2017, $3,359,539 aggregate principal amount will mature on December 15, 2020. Principal and interest was originally to be payable in 36 equal monthly installments of $111,585 beginning January 15, 2018. During the three months ended March 31, 2018, principal of $1,250,000 was converted into 2,450,980,392 shares of common stock, and $96,121 of interest was converted to principal. The remaining note is payable in 32 equal monthly installments of $80,036 beginning May 15, 2018.

Of the Notes issued on November 30, 2017, $697,688 aggregate principal amount will mature on November 30, 2018. Principal and interest will be payable upon maturity.

The $2,000,000 aggregate principal amount of Notes, issued in eight tranches, will mature on the first anniversary of the respective issuance date. Principal and interest will be payable upon maturity. As of March 31, 2018, the closing dates, closing amounts, and maturity dates on completed Note SPA tranches are as follows:

Closing Date	Closing Amount		Maturity Date
11/30/2017	$	250,000	11/30/2018
12/28/2017	$	250,000	12/28/2018
1/11/2018	$	250,000	1/11/2019
1/25/2018	$	250,000	1/25/2019
2/8/2018	$	250,000	2/8/2019
2/21/2018	$	250,000	2/21/2019
3/7/2018	$	250,000	3/7/2019
3/21/2018	$	250,000	3/21/2019

The Notes will be secured by a security interest on substantially all of the Company’s assets, bear interest at a rate of 12% per annum and contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the Notes, and (ii) bankruptcy or insolvency of the Company. There are no registration rights applicable to the Notes.

As of March 31, 2018, the aggregate principal and interest balance of the Notes were $4,903,348 and $83,406, respectively.

Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion option in the Notes were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Notes approximates management’s estimate of the fair value of the embedded derivative liability based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions identified below.

Due to the varying terms and varying issue dates, the tranches of this instrument were broken into four separate instruments for valuation purposes.

1) The first valuation was done on the November 30, 2017 Note with term of three years. The derivative value of this note was $3,742,002 as of December 31, 2017.

1) The second valuation was done on the group of Notes dated November 30, 2017, that had a term of one year. The derivative value of this group of notes was $888,168 as of December 31, 2017.

2) The third valuation was done on the Note dated December 28, 2017, which had a term of one year. The derivative value of this note was $267,008 on December 31, 2017.

3) For the Notes dated in the first quarter of 2018, we did a fourth valuation. Although the notes were entered into at various dates, we used a weighted average issuance date of February 15, 2018 for a combined valuation purpose. Management's analysis, using the following assumptions: annual volatility of 54% present value discount rate of 12% and a dividend yield of 0%, resulted in a fair value of the embedded derivative associated with these Notes of $1,151,162 as of February 15, 2018. The value of the embedded derivative associated with these Notes was recorded as a debt discount.

The derivative liability associated with the Notes is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2018, the Company conducted a fair value assessment of the embedded derivative associated with the three valuation groups discussed above.

1) For the November 30, 2017 3yr Note: Management conducted a fair value assessment with the following assumptions: annual volatility of 64% present value discount rate of 12% and a dividend yield of 0% as of March 31, 2018. As a result of the fair value assessment, the Company recorded a gain of $612,155 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $3,129,847 as of March 31, 2018.

2) For the November 30, 2017 1yr Notes: Management conducted a fair value assessment with the following assumptions: annual volatility of 52% present value discount rate of 12% and a dividend yield of 0% as of March 31, 2018. As a result of the fair value assessment, the Company recorded a gain of $174,989 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $713,179 as of March 31, 2018.

3) For the December 28, 2017 1yr Note: Management conducted a fair value assessment with the following assumptions: annual volatility of 52% present value discount rate of 12% and a dividend yield of 0% as of March 31, 2018. As a result of the fair value assessment, the Company recorded a gain of $78,871 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $188,137 as of March 31, 2018.

4) For the first quarter 2018 1yr Notes: Management conducted a fair value assessment with the following assumptions: annual volatility of 52% present value discount rate of 12% and a dividend yield of 0% as of March 31, 2018. As a result of the fair value assessment, the Company recorded a loss of $878,973 as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Consolidated Statements of Operations to properly reflect the fair value of the embedded derivative of $2,030,135 as of March 31, 2018.

During the first quarter 2018, a net loss of $12,958 had been recorded to reflect the total derivative liability of $6,061,298 as of March 31, 2018.

PROMISSORY NOTES

Offering of Unsecured, Non-Convertible Notes

During October 2016, the Company received $420,000 from a separate private investor. These funds, along with $250,000 of additional funding, were rolled into a promissory note, executed on January 17, 2017, in the amount of $700,000 issued with a discount of $30,000 which will be charged to interest expense ratably over the term of the note. The note bears interest at 12% per annum and matures on July 17, 2017. Principal and interest on this note are payable at maturity. This note is not convertible into equity shares of the Company and is unsecured.

On June 30, 2017, the Company and the private investor agreed to a 12 month payment plan on the balance of this promissory note. Interest will continue to accrue on this note at 12% per annum and payments of approximately $62,000 will be made monthly beginning in July 2017. The Company has not made all the payments according to this payment plan, and the note is payable upon demand.

As of March 31, 2018, $205,563 of principal and $45,414 of interest had been paid on this note. The outstanding principal and accrued interest balances on the note as of March 31, 2018 were $494,437 and $41,756, respectively.

On November 16, 2017, the Company initiated a non-convertible, unsecured promissory note with a private investor for $275,000. The promissory note was issued with an original issue discount of $25,000, resulting in proceeds to the company of $250,000. The note does not have a stated interest rate and matured on December 18, 2017. As of March 31, 2018, no payments had been made on this note and the Company has accrued interest at an inferred rate of 12% resulting in an accrued interest balance of $9,493, as of March 31, 2018. This note is payable upon demand.

On January 31, 2018, the Company initiated a non-convertible, unsecured promissory note with a private investor for an aggregate principal amount of $200,000. The promissory note was issued with an original issue discount of $22,500, resulting in proceeds to the company of $177,500, which was received in December 2017. The note bears interest at 12% per annum and matures on December 29, 2018. All principal and interest is payable upon maturity. The Company received $30,000 in additional proceeds from this investor during the three months ended March 31, 2018, and the Company has received further proceeds as of the date of this report (please refer to Note 18 for further information). As of the date of this report, the amended note has not been finalized. As of March 31, 2018, the principal and interest balances on this note were $230,000 and $6,473, respectively.

ST. GEORGE CONVERTIBLE NOTE

On September 8, 2017, the Company entered into a securities purchase agreement with St. George Investments LLC (“Investor”), for the private placement of $1,725,000 principal amount of the Company’s Original Issue Discount Convertible Promissory Notes.

On September 11, 2017, the Company sold and issued $1,725,000 principal amount of the convertible notes to the Investor in exchange for $1,500,000 of gross proceeds, and paid $20,000 in financing costs. The original issue discount of $225,000, and the financing fee, will be charged to interest expense, ratably, over the life of the note.

Unless earlier converted or prepaid, the convertible notes will mature on March 11, 2019. The notes do not bear interest in the absence of an event of default.

For the first six months after the issuance of the notes, the Company will make a monthly cash repayment on the notes of approximately $96,000. Thereafter, the Investor may request that the Company make monthly partial redemptions of the note up to $150,000 per month. If the Investor does not request the full $150,000 redemption amount in any one month, the unused portion of such monthly redemption amount can be added to future monthly redemption amounts. But in no event can the amount requested by the Investor for any one month exceed $275,000.

Redemption amounts are payable by the Company in cash. Beginning ten months after the issuance of the convertible notes, cash redemption payments by the Company will be subject to a 15% redemption premium.

Beginning six months after the issuance of the convertible notes, the Company also has the option (subject to customary equity conditions) to pay redemption amounts in the form of shares of common stock. Payments in the form of shares would be calculated using a variable conversion price equal to the lower of (i) 85% of the average VWAP for the shares over the prior five trading days or (ii) the closing bid price for the shares on the prior trading day.

All principal and accrued interest on the Notes are convertible at any time, in whole or in part, at the option of the Investor into shares of Common Stock at a fixed conversion price of $0.004 per share.

The Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the Notes; and (ii) bankruptcy or insolvency of the Company. Upon the occurrence of an event of default, the Notes will begin to bear interest at the rate of 22% per annum. In addition, upon the occurrence of an event of default, the Investor has the option to increase the outstanding balance of the Notes by 25%.

In connection with the closing under the Note SPA, the Company issued 37,500,000 unregistered shares of common stock to the Investor as an origination fee. The closing stock price on the date of close was $0.0017 resulting in an interest expense of $63,750 being recorded as of the date of close.

The Notes may not be converted and shares of Common Stock may not be issued pursuant to the Notes if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 4.99% of the outstanding shares of Common Stock.

As of March 31, 2018, cash payments of $191,667 had been made on this note, and $75,000 had been converted into 187,500,000 shares of the Company's common stock. The remaining balance on the note was $1,458,333 as of March 31, 2018.

In lieu of making the December 2017 through March 2018 cash payments, the share reserve was increased by 5 billion shares, and the variable conversion price changed to the lower of (i) 60% of the average VWAP for the shares over the prior five trading days or (ii) the closing bid price for the shares on the prior trading day, please refer to Note 18 for more information on the change in VWAP discount.

Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion option in the Convertible Promissory Notes were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. As of December 31, 2017, the derivative liability was $394,280.

The derivative liability associated with the Convertible Promissory Notes is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2018, the Company conducted a fair value assessment of the embedded derivative associated with the St. George Convertible Notes. As a result of the fair value assessment, the Company recorded a $824,900 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2018, to properly reflect the fair value of the embedded derivative of $1,219,180 as of March 31, 2018.

The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Convertible Promissory Notes approximates management’s estimate of the fair value of the embedded derivative liability at March 31, 2018 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 56% present value discount rate of 12% and dividend yield of 0%.

BAYBRIDGE CONVERTIBLE NOTE

On December 6, 2017, the Company entered into a securities exchange agreement (the “Exchange Agreement”) with BayBridge Capital Fund LP (“BayBridge”).

Pursuant to the terms of the Exchange Agreement, the Investor agreed to surrender and exchange 675 shares of outstanding Series J Preferred Stock ($755,417 of capital and accrued dividends). In exchange, the Company issued to the Investor an unsecured promissory note with an aggregate principal amount of $840,000 (the “Exchange Note”), with an original issue discount of $84,583. Please refer to Note 21 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for further discussion on the Series J Preferred Stock.

The Exchange Note is unsecured, has no applicable registration rights, bears interest at a rate of 12% per annum, matures on December 6, 2018, and contains standard and customary events of default including but not limited to: (i) failure to make payments when due under the Exchange Note, and (ii) bankruptcy or insolvency of the Company. Principal and interest are payable upon maturity.

Payments of principal and accrued interest on the Exchange Note are payable in cash or, at the option of the Company, in shares of Common Stock at a variable conversion price equal to the lowest of (i) 85% of the average VWAP for the shares over the prior 5 trading days, (ii) the closing bid price for the shares on the prior trading day, or (iii) $0.003 per share. Payments in shares of Common Stock may not be issued pursuant to the Exchange Note if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 9.99% of the outstanding shares of Common Stock.

Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion option in the Exchange Note was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2017, the derivative liability associated with the promissory note was $542,733.

The derivative liability associated with the Exchange Note is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2018, the Company conducted a fair value assessment of the embedded derivative associated with the Exchange Note. As a result of the fair value assessment, the Company recorded a $349,048 gain as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations, to properly reflect the fair value of the embedded derivative of $193,685 as of March 31, 2018.

The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the Exchange Note approximates management’s estimate of the fair value of the embedded derivative liability at March 31, 2018 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 50%, present value discount rate of 12% and dividend yield of 0%.

As of March 31, 2018, principal of $380,000 and interest of $20,717 had been converted into 897,418,314 shares of common stock and no cash payments of principal or interest had been made. The principal and accrued interest balances as of March 31, 2018 were $460,000 and $653, respectively.

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SERIES A PREFERRED STOCK

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

SERIES A PREFERRED STOCK/SERIES K PREFERRED STOCK

OCTOBER 2016 CONVERTIBLE NOTES AND EXCHANGE OF SERIES A PREFERRED STOCK

October 2016 Convertible Notes

On October 5, 2016, the Company entered into a securities purchase agreement with a private investor for the private placement of $330,000 principal amount of October 2016 Convertible Notes. At Closing, the Company sold and issued $330,000 principal amount of October 2016 Convertible Notes in exchange for $330,000 of gross proceeds.

Unless earlier converted or prepaid, the October 2016 Convertible Notes matured on December 31, 2017. The October 2016 Convertible Notes bear interest at a rate of 6% per annum, subject to increase to 24% per annum upon the occurrence and continuance of an event of default (as described below). Principal and accrued interest on the October 2016 Convertible Notes is payable upon demand.

All principal and accrued interest on the October 2016 Convertible Notes are convertible at any time, in whole or in part, at the option of Adar Bays, into shares of common stock at a variable conversion price equal to 80% of the lowest closing bid price of the Company’s common stock for the fifteen consecutive trading day period prior to the conversion date. After the six month anniversary of the issuance of any October 2016 Convertible Note, the conversion price for such note shall thereafter be equal to 50% of the lowest closing bid price of the Company’s common stock for the fifteen consecutive trading day period prior to the conversion date.

The October 2016 Convertible Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the October 2016 Convertible Notes; and (ii) bankruptcy or insolvency of the Company.

Outstanding principal and accrued interest on the October 2016 Convertible Notes were $330,000 and $29,810, respectively as of March 31, 2018.

Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion option in the October 2016 Convertible Notes were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At closing, a derivative liability and a corresponding debt discount in the amount of $330,000 was recorded. The fair value of the derivative was greater than the face value at issuance and the difference of $341,114 was charged to interest expense at issuance. The remaining debt discount will be charged to interest expense ratably over the life of the October 2016 Convertible Notes. As of December 31, 2017, the fair value of the derivative liability was $572,643.

The derivative liability associated with the October 2016 Convertible Notes is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2018, the Company conducted a fair value assessment of the embedded derivative associated with the October 2016 Convertible Notes. As a result of the fair value assessment, the Company recorded a $62,276 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2018, to properly reflect the fair value of the embedded derivative of $634,919 as of March 31, 2018.

The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the October 2016 Convertible Notes approximates management’s estimate of the fair value of the embedded derivative liability at March 31, 2018 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 53% present value discount rate of 12% and dividend yield of 0%.

Exchange of Outstanding Series A Preferred Stock for Convertible Notes

In 2013, the Company completed a private placement to one accredited investor (the “Series A Holder”) of its Series A Convertible Preferred Stock. Prior to the exchange agreement described below the Company had 165,541 shares of Series A Preferred Stock that remained outstanding as of October 6, 2016.

On October 6, 2016, the Series A Holder entered into an exchange agreement with private investor. Pursuant to the exchange agreement, beginning December 5, 2016, the private investor has the option to exchange, from time to time, all or any portion of the October 2016 Convertible Notes for outstanding shares of Series A Preferred Stock from the Series A Holder.

As of March 31, 2017, the private investor had elected to exchange all outstanding October 2016 Convertible Notes, in accordance with the exchange agreement, and the Series A Holder held $330,000 of the October 2016 Convertible Notes.

SERIES A PREFERRED STOCK

In June 2013, the Company entered into a Securities Purchase Agreement with an investor to sell an aggregate of 750,000 shares of Series A Preferred Stock at a price of $8.00 per share, resulting in gross proceeds of $6,000,000. This purchase agreement included warrants to purchase up to 13,125 shares of common stock of the Company. The transfer of cash and securities took place incrementally, the first closing occurring on June 17, 2013 with the transfer of 125,000 shares of Series A Preferred Stock and a warrant to purchase 2,187 shares of common stock for $1,000,000. The final closings took place in August 2013, with the transfer of 625,000 shares of Series A Preferred Stock and a warrant to purchase 10,938 shares of common stock for $5,000,000.

Holders of Series A Preferred Stock are entitled to cumulative dividends at a rate of 8% per annum when and if declared by the Board of Directors in its sole discretion. The dividends may be paid in cash or in the form of common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period), at the discretion of the Board of Directors. The dividend rate on the Series A Preferred Stock is indexed to the Company's stock price and subject to adjustment. In addition, the Series A Preferred Stock contains a make-whole provision whereby, conversion or redemption of the preferred stock within 4 years of issuance will require dividends for the full four year period to be paid by the Company in cash or common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period). This make-whole provision expired in June 2017 and future conversions and redemptions will be paid out with accrued dividends per the holding period of the shares of Series A Preferred stock. Please see Note 23 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for more information.

The Series A Preferred Stock may be converted into shares of common stock at the option of the Company if the closing price of the common stock exceeds $232, as adjusted, for 20 consecutive trading days, or by the holder at any time. The Company has the right to redeem the Series A Preferred Stock at a price of $8.00 per share, plus any accrued and unpaid dividends, plus the make-whole amount (if applicable). At March 31, 2018, the preferred shares were not eligible for conversion to common shares at the option of the Company. The holder of the preferred shares may convert to common shares at any time, at no cost, at a ratio of 1 preferred share into 1 common share (subject to standard ratable anti-dilution adjustments). Upon any conversion (whether at the option of the Company or the holder), the holder is entitled to receive any accrued but unpaid dividends.

On October 6, 2016, the Series A Holder entered into an exchange agreement with a private investor. Pursuant to the exchange agreement, beginning December 5, 2016, the investor has the option to exchange, from time to time, all or any portion of the October 2016 Convertible Notes (see Note 11) for outstanding shares of Series A Preferred Stock from the Series A Holder.

As of March 31, 2017, the investor had elected to exchange all outstanding October 2016 Convertible Notes, in accordance with the exchange agreement, resulting in the exchange of 104,785 shares of Series A Preferred Stock. As of March 31, 2017, the investor had also converted their 104,785 shares of Series A Preferred Stock, and the related make whole dividend, which resulted in the issuance of 173,946,250 shares of common stock.

Except as otherwise required by law (or with respect to approval of certain actions), the Series A Preferred Stock shall have no voting rights. Upon any liquidation, dissolution or winding up of the Company, after payment or provision for payment of debts and other liabilities of the Company, the holders of Series A Preferred Stock shall be entitled to receive, pari passu with any distribution to the holders of common stock of the Company, an amount equal to $8.00 per share of Series A Preferred Stock plus any accrued and unpaid dividends.

As of March 31, 2018, there were 60,756 shares of Series A Preferred Stock outstanding and accrued and unpaid dividends of $295,004.

SERIES K PREFERRED STOCK

On February 8, 2017, the Company, entered into a securities purchase agreement (“Series K SPA”) with a private investor (“Investor”), for the private placement of up to $20,000,000 of the Company’s newly designated Series K Convertible Preferred Stock (“Series K Preferred Stock”).

Per the terms of the Series K SPA, the Company was scheduled to sell 1,000 shares of Series K Preferred Stock to Investor in exchange for $1,000,000 of gross proceeds on or before each of (i) February 24, 2017, (ii) March 27, 2017, (iii) April 27, 2017, (iv) May 27, 2017 and (v) June 27, 2017. The Company was also scheduled to sell 15,000 shares of Series K Preferred Stock to Investor in exchange for $15,000,000 of gross proceeds on or before July 27, 2017. As of March 31, 2018, the Company had sold 9,010 shares of Series K Preferred Stock in exchange for $9,010,000 in cash proceeds from the private investor. The Company does not expect to receive any more funding from this investor. The following summarizes the closings and proceeds received as of March 31, 2018:

Closing Period	Preferred Series K Shares Purchased	Closing Amount
Q1 2017	150	$	150,000
Q2 2017	4,100	4,100,000
Q3 2017	4,760	$	4,760,000
	9,010	$	9,010,000

The Series K Preferred Stock ranks senior to the Company’s common stock in respect to dividends and rights upon liquidation. The Series K Preferred Stock will not have voting rights and the holders of the Series K Preferred Stock will not be entitled to any fixed rate of dividends.

The shares of the Series K Preferred Stock will be convertible at the option of the holder into common stock at a fixed conversion price equal to $0.004. At no time may the Series K Preferred Stock be converted if the number of shares of common stock to be received by Investor pursuant to such conversion, when aggregated with all other shares of common stock then beneficially (or deemed beneficially) owned by Investor, would result in Investor beneficially owning more than 19.99% of all common stock then outstanding. The following table summarizes the conversion activity of Series K Preferred Stock:

Conversion Period	Preferred Series K Shares Converted	Value of Series K Preferred Shares		Common Shares Issued
Q2 2017	3,200	$	3,200,000	800,000,000
Q3 2017	3,000	$	3,000,000	750,000,000
	6,200	$	6,200,000	1,550,000,000

As of March 31, 2018, the investor owned approximately 12% of the Company's outstanding common stock and there are 2,810 shares of Series K Preferred Stock Outstanding, representing a value of $2,810,000. Subsequent to March 31, 2018, the investor converted their remaining Series K Preferred Shares into common stock. Please refer to Note 18 for further information.

The Company is required to redeem for cash any outstanding shares of the Series K Preferred Stock at a price per share equal to $1,000 plus any accrued but unpaid dividends (if any) thereon on the fifth anniversary of the date of the original issue of such shares.

Upon our liquidation, dissolution or winding up, holders of Series K Preferred Stock will be entitled to be paid out of our assets, prior to the holders of our common stock, an amount equal to $1,000 per share plus any accrued but unpaid dividends (if any) thereon.

Upon issuance, in accordance with ASC 480-10, the Series K Preferred Stock was classified as a liability on the Consolidated Balance Sheets. Pursuant to a number of factors outlined in ASC Topic 815, the conversion option in the Series K Preferred Stock was deemed to not require bifurcation or separate accounting treatment.

STOCKHOLDERS’ DEFICIT

Common Stock

At March 31, 2018, the Company had 20,000,000,000 shares of common stock, $0.0001 par value, authorized for issuance. Each share of common stock has the right to one vote. As of March 31, 2018, the Company had 12,738,084,718 shares of common stock outstanding. The Company has not declared or paid any dividends related to the common stock through March 31, 2018.

Preferred Stock

At March 31, 2018, the Company had 750,000 shares of preferred stock, $0.0001 par value, authorized for issuance. Preferred stock may be issued in classes or series. Designations, powers, preferences, rights, qualifications, limitations and restrictions are determined by the Company’s Board of Directors. 

The following table summarizes the designations, shares authorized, and shares outstanding for the Company's Preferred Stock:

Preferred Stock Series Designation	Shares Outstanding
Series A	60,756
Series K	2,810

Series A Preferred Stock

Refer to Note 14 descriptions of Series A Preferred Stock.

Series K Preferred Stock

Refer to Note 15 descriptions of Series K Preferred Stock.

Warrants

As of March 31, 2018, the Company has three outstanding warrants for an aggregate of 700 million shares of common stock: i) a warrant for 250 million shares of common stock which is exercisable at a fixed strike price of $0.004 and expires on July 24, 2018; ii) a warrant for 250 million shares of common stock which is exercisable at a fixed strike price of $0.003 and expires on August 10, 2018; and iii) a warrant for 200 million shares of common stock which is exercisable at a fixed strike price of $0.0018 and expires on June 30, 2018. None of the warrants may not be exercised if, after giving effect to the exercise, the holder, together with its affiliates, would beneficially own in excess of 9.99% of the Company's outstanding shares of common stock. Please refer to Note 24 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for further information about each warrant issuance.

The following table summarizes warrant activity:

	Warrant Shares	Warrant Weighted Average Exercise Price
Outstanding at December 31, 2016	—	$	—
Granted	700,000,000	$	0.003
Exercised	—	$	—
Canceled	—	$	—
Outstanding at December 31, 2017	700,000,000	$	0.003
Granted	—	$	—
Exercised	—	$	—
Canceled	—	$	—
Outstanding at March 31, 2018	700,000,000	$	0.003
Exercisable at March 31, 2018	700,000,000	$	0.003

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SERIES K PREFERRED STOCK SERIES K PREFERRED STOCK

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

SERIES A PREFERRED STOCK/SERIES K PREFERRED STOCK

OCTOBER 2016 CONVERTIBLE NOTES AND EXCHANGE OF SERIES A PREFERRED STOCK

October 2016 Convertible Notes

On October 5, 2016, the Company entered into a securities purchase agreement with a private investor for the private placement of $330,000 principal amount of October 2016 Convertible Notes. At Closing, the Company sold and issued $330,000 principal amount of October 2016 Convertible Notes in exchange for $330,000 of gross proceeds.

Unless earlier converted or prepaid, the October 2016 Convertible Notes matured on December 31, 2017. The October 2016 Convertible Notes bear interest at a rate of 6% per annum, subject to increase to 24% per annum upon the occurrence and continuance of an event of default (as described below). Principal and accrued interest on the October 2016 Convertible Notes is payable upon demand.

All principal and accrued interest on the October 2016 Convertible Notes are convertible at any time, in whole or in part, at the option of Adar Bays, into shares of common stock at a variable conversion price equal to 80% of the lowest closing bid price of the Company’s common stock for the fifteen consecutive trading day period prior to the conversion date. After the six month anniversary of the issuance of any October 2016 Convertible Note, the conversion price for such note shall thereafter be equal to 50% of the lowest closing bid price of the Company’s common stock for the fifteen consecutive trading day period prior to the conversion date.

The October 2016 Convertible Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the October 2016 Convertible Notes; and (ii) bankruptcy or insolvency of the Company.

Outstanding principal and accrued interest on the October 2016 Convertible Notes were $330,000 and $29,810, respectively as of March 31, 2018.

Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion option in the October 2016 Convertible Notes were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At closing, a derivative liability and a corresponding debt discount in the amount of $330,000 was recorded. The fair value of the derivative was greater than the face value at issuance and the difference of $341,114 was charged to interest expense at issuance. The remaining debt discount will be charged to interest expense ratably over the life of the October 2016 Convertible Notes. As of December 31, 2017, the fair value of the derivative liability was $572,643.

The derivative liability associated with the October 2016 Convertible Notes is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2018, the Company conducted a fair value assessment of the embedded derivative associated with the October 2016 Convertible Notes. As a result of the fair value assessment, the Company recorded a $62,276 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2018, to properly reflect the fair value of the embedded derivative of $634,919 as of March 31, 2018.

The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the October 2016 Convertible Notes approximates management’s estimate of the fair value of the embedded derivative liability at March 31, 2018 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 53% present value discount rate of 12% and dividend yield of 0%.

Exchange of Outstanding Series A Preferred Stock for Convertible Notes

In 2013, the Company completed a private placement to one accredited investor (the “Series A Holder”) of its Series A Convertible Preferred Stock. Prior to the exchange agreement described below the Company had 165,541 shares of Series A Preferred Stock that remained outstanding as of October 6, 2016.

On October 6, 2016, the Series A Holder entered into an exchange agreement with private investor. Pursuant to the exchange agreement, beginning December 5, 2016, the private investor has the option to exchange, from time to time, all or any portion of the October 2016 Convertible Notes for outstanding shares of Series A Preferred Stock from the Series A Holder.

As of March 31, 2017, the private investor had elected to exchange all outstanding October 2016 Convertible Notes, in accordance with the exchange agreement, and the Series A Holder held $330,000 of the October 2016 Convertible Notes.

SERIES A PREFERRED STOCK

In June 2013, the Company entered into a Securities Purchase Agreement with an investor to sell an aggregate of 750,000 shares of Series A Preferred Stock at a price of $8.00 per share, resulting in gross proceeds of $6,000,000. This purchase agreement included warrants to purchase up to 13,125 shares of common stock of the Company. The transfer of cash and securities took place incrementally, the first closing occurring on June 17, 2013 with the transfer of 125,000 shares of Series A Preferred Stock and a warrant to purchase 2,187 shares of common stock for $1,000,000. The final closings took place in August 2013, with the transfer of 625,000 shares of Series A Preferred Stock and a warrant to purchase 10,938 shares of common stock for $5,000,000.

Holders of Series A Preferred Stock are entitled to cumulative dividends at a rate of 8% per annum when and if declared by the Board of Directors in its sole discretion. The dividends may be paid in cash or in the form of common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period), at the discretion of the Board of Directors. The dividend rate on the Series A Preferred Stock is indexed to the Company's stock price and subject to adjustment. In addition, the Series A Preferred Stock contains a make-whole provision whereby, conversion or redemption of the preferred stock within 4 years of issuance will require dividends for the full four year period to be paid by the Company in cash or common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period). This make-whole provision expired in June 2017 and future conversions and redemptions will be paid out with accrued dividends per the holding period of the shares of Series A Preferred stock. Please see Note 23 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for more information.

The Series A Preferred Stock may be converted into shares of common stock at the option of the Company if the closing price of the common stock exceeds $232, as adjusted, for 20 consecutive trading days, or by the holder at any time. The Company has the right to redeem the Series A Preferred Stock at a price of $8.00 per share, plus any accrued and unpaid dividends, plus the make-whole amount (if applicable). At March 31, 2018, the preferred shares were not eligible for conversion to common shares at the option of the Company. The holder of the preferred shares may convert to common shares at any time, at no cost, at a ratio of 1 preferred share into 1 common share (subject to standard ratable anti-dilution adjustments). Upon any conversion (whether at the option of the Company or the holder), the holder is entitled to receive any accrued but unpaid dividends.

On October 6, 2016, the Series A Holder entered into an exchange agreement with a private investor. Pursuant to the exchange agreement, beginning December 5, 2016, the investor has the option to exchange, from time to time, all or any portion of the October 2016 Convertible Notes (see Note 11) for outstanding shares of Series A Preferred Stock from the Series A Holder.

As of March 31, 2017, the investor had elected to exchange all outstanding October 2016 Convertible Notes, in accordance with the exchange agreement, resulting in the exchange of 104,785 shares of Series A Preferred Stock. As of March 31, 2017, the investor had also converted their 104,785 shares of Series A Preferred Stock, and the related make whole dividend, which resulted in the issuance of 173,946,250 shares of common stock.

Except as otherwise required by law (or with respect to approval of certain actions), the Series A Preferred Stock shall have no voting rights. Upon any liquidation, dissolution or winding up of the Company, after payment or provision for payment of debts and other liabilities of the Company, the holders of Series A Preferred Stock shall be entitled to receive, pari passu with any distribution to the holders of common stock of the Company, an amount equal to $8.00 per share of Series A Preferred Stock plus any accrued and unpaid dividends.

As of March 31, 2018, there were 60,756 shares of Series A Preferred Stock outstanding and accrued and unpaid dividends of $295,004.

SERIES K PREFERRED STOCK

On February 8, 2017, the Company, entered into a securities purchase agreement (“Series K SPA”) with a private investor (“Investor”), for the private placement of up to $20,000,000 of the Company’s newly designated Series K Convertible Preferred Stock (“Series K Preferred Stock”).

Per the terms of the Series K SPA, the Company was scheduled to sell 1,000 shares of Series K Preferred Stock to Investor in exchange for $1,000,000 of gross proceeds on or before each of (i) February 24, 2017, (ii) March 27, 2017, (iii) April 27, 2017, (iv) May 27, 2017 and (v) June 27, 2017. The Company was also scheduled to sell 15,000 shares of Series K Preferred Stock to Investor in exchange for $15,000,000 of gross proceeds on or before July 27, 2017. As of March 31, 2018, the Company had sold 9,010 shares of Series K Preferred Stock in exchange for $9,010,000 in cash proceeds from the private investor. The Company does not expect to receive any more funding from this investor. The following summarizes the closings and proceeds received as of March 31, 2018:

Closing Period	Preferred Series K Shares Purchased	Closing Amount
Q1 2017	150	$	150,000
Q2 2017	4,100	4,100,000
Q3 2017	4,760	$	4,760,000
	9,010	$	9,010,000

The Series K Preferred Stock ranks senior to the Company’s common stock in respect to dividends and rights upon liquidation. The Series K Preferred Stock will not have voting rights and the holders of the Series K Preferred Stock will not be entitled to any fixed rate of dividends.

The shares of the Series K Preferred Stock will be convertible at the option of the holder into common stock at a fixed conversion price equal to $0.004. At no time may the Series K Preferred Stock be converted if the number of shares of common stock to be received by Investor pursuant to such conversion, when aggregated with all other shares of common stock then beneficially (or deemed beneficially) owned by Investor, would result in Investor beneficially owning more than 19.99% of all common stock then outstanding. The following table summarizes the conversion activity of Series K Preferred Stock:

Conversion Period	Preferred Series K Shares Converted	Value of Series K Preferred Shares		Common Shares Issued
Q2 2017	3,200	$	3,200,000	800,000,000
Q3 2017	3,000	$	3,000,000	750,000,000
	6,200	$	6,200,000	1,550,000,000

As of March 31, 2018, the investor owned approximately 12% of the Company's outstanding common stock and there are 2,810 shares of Series K Preferred Stock Outstanding, representing a value of $2,810,000. Subsequent to March 31, 2018, the investor converted their remaining Series K Preferred Shares into common stock. Please refer to Note 18 for further information.

The Company is required to redeem for cash any outstanding shares of the Series K Preferred Stock at a price per share equal to $1,000 plus any accrued but unpaid dividends (if any) thereon on the fifth anniversary of the date of the original issue of such shares.

Upon our liquidation, dissolution or winding up, holders of Series K Preferred Stock will be entitled to be paid out of our assets, prior to the holders of our common stock, an amount equal to $1,000 per share plus any accrued but unpaid dividends (if any) thereon.

Upon issuance, in accordance with ASC 480-10, the Series K Preferred Stock was classified as a liability on the Consolidated Balance Sheets. Pursuant to a number of factors outlined in ASC Topic 815, the conversion option in the Series K Preferred Stock was deemed to not require bifurcation or separate accounting treatment.

STOCKHOLDERS’ DEFICIT

Common Stock

At March 31, 2018, the Company had 20,000,000,000 shares of common stock, $0.0001 par value, authorized for issuance. Each share of common stock has the right to one vote. As of March 31, 2018, the Company had 12,738,084,718 shares of common stock outstanding. The Company has not declared or paid any dividends related to the common stock through March 31, 2018.

Preferred Stock

At March 31, 2018, the Company had 750,000 shares of preferred stock, $0.0001 par value, authorized for issuance. Preferred stock may be issued in classes or series. Designations, powers, preferences, rights, qualifications, limitations and restrictions are determined by the Company’s Board of Directors. 

The following table summarizes the designations, shares authorized, and shares outstanding for the Company's Preferred Stock:

Preferred Stock Series Designation	Shares Outstanding
Series A	60,756
Series K	2,810

Series A Preferred Stock

Refer to Note 14 descriptions of Series A Preferred Stock.

Series K Preferred Stock

Refer to Note 15 descriptions of Series K Preferred Stock.

Warrants

As of March 31, 2018, the Company has three outstanding warrants for an aggregate of 700 million shares of common stock: i) a warrant for 250 million shares of common stock which is exercisable at a fixed strike price of $0.004 and expires on July 24, 2018; ii) a warrant for 250 million shares of common stock which is exercisable at a fixed strike price of $0.003 and expires on August 10, 2018; and iii) a warrant for 200 million shares of common stock which is exercisable at a fixed strike price of $0.0018 and expires on June 30, 2018. None of the warrants may not be exercised if, after giving effect to the exercise, the holder, together with its affiliates, would beneficially own in excess of 9.99% of the Company's outstanding shares of common stock. Please refer to Note 24 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for further information about each warrant issuance.

The following table summarizes warrant activity:

	Warrant Shares	Warrant Weighted Average Exercise Price
Outstanding at December 31, 2016	—	$	—
Granted	700,000,000	$	0.003
Exercised	—	$	—
Canceled	—	$	—
Outstanding at December 31, 2017	700,000,000	$	0.003
Granted	—	$	—
Exercised	—	$	—
Canceled	—	$	—
Outstanding at March 31, 2018	700,000,000	$	0.003
Exercisable at March 31, 2018	700,000,000	$	0.003

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STOCKHOLDERS' DEFICIT

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

STOCKHOLDERS' DEFICIT

OCTOBER 2016 CONVERTIBLE NOTES AND EXCHANGE OF SERIES A PREFERRED STOCK

October 2016 Convertible Notes

On October 5, 2016, the Company entered into a securities purchase agreement with a private investor for the private placement of $330,000 principal amount of October 2016 Convertible Notes. At Closing, the Company sold and issued $330,000 principal amount of October 2016 Convertible Notes in exchange for $330,000 of gross proceeds.

Unless earlier converted or prepaid, the October 2016 Convertible Notes matured on December 31, 2017. The October 2016 Convertible Notes bear interest at a rate of 6% per annum, subject to increase to 24% per annum upon the occurrence and continuance of an event of default (as described below). Principal and accrued interest on the October 2016 Convertible Notes is payable upon demand.

All principal and accrued interest on the October 2016 Convertible Notes are convertible at any time, in whole or in part, at the option of Adar Bays, into shares of common stock at a variable conversion price equal to 80% of the lowest closing bid price of the Company’s common stock for the fifteen consecutive trading day period prior to the conversion date. After the six month anniversary of the issuance of any October 2016 Convertible Note, the conversion price for such note shall thereafter be equal to 50% of the lowest closing bid price of the Company’s common stock for the fifteen consecutive trading day period prior to the conversion date.

The October 2016 Convertible Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the October 2016 Convertible Notes; and (ii) bankruptcy or insolvency of the Company.

Outstanding principal and accrued interest on the October 2016 Convertible Notes were $330,000 and $29,810, respectively as of March 31, 2018.

Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion option in the October 2016 Convertible Notes were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At closing, a derivative liability and a corresponding debt discount in the amount of $330,000 was recorded. The fair value of the derivative was greater than the face value at issuance and the difference of $341,114 was charged to interest expense at issuance. The remaining debt discount will be charged to interest expense ratably over the life of the October 2016 Convertible Notes. As of December 31, 2017, the fair value of the derivative liability was $572,643.

The derivative liability associated with the October 2016 Convertible Notes is subject to revaluation on a quarterly basis to reflect the market value change of the embedded conversion option. At March 31, 2018, the Company conducted a fair value assessment of the embedded derivative associated with the October 2016 Convertible Notes. As a result of the fair value assessment, the Company recorded a $62,276 loss as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2018, to properly reflect the fair value of the embedded derivative of $634,919 as of March 31, 2018.

The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the October 2016 Convertible Notes approximates management’s estimate of the fair value of the embedded derivative liability at March 31, 2018 based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions: annual volatility of 53% present value discount rate of 12% and dividend yield of 0%.

Exchange of Outstanding Series A Preferred Stock for Convertible Notes

In 2013, the Company completed a private placement to one accredited investor (the “Series A Holder”) of its Series A Convertible Preferred Stock. Prior to the exchange agreement described below the Company had 165,541 shares of Series A Preferred Stock that remained outstanding as of October 6, 2016.

On October 6, 2016, the Series A Holder entered into an exchange agreement with private investor. Pursuant to the exchange agreement, beginning December 5, 2016, the private investor has the option to exchange, from time to time, all or any portion of the October 2016 Convertible Notes for outstanding shares of Series A Preferred Stock from the Series A Holder.

As of March 31, 2017, the private investor had elected to exchange all outstanding October 2016 Convertible Notes, in accordance with the exchange agreement, and the Series A Holder held $330,000 of the October 2016 Convertible Notes.

SERIES A PREFERRED STOCK

In June 2013, the Company entered into a Securities Purchase Agreement with an investor to sell an aggregate of 750,000 shares of Series A Preferred Stock at a price of $8.00 per share, resulting in gross proceeds of $6,000,000. This purchase agreement included warrants to purchase up to 13,125 shares of common stock of the Company. The transfer of cash and securities took place incrementally, the first closing occurring on June 17, 2013 with the transfer of 125,000 shares of Series A Preferred Stock and a warrant to purchase 2,187 shares of common stock for $1,000,000. The final closings took place in August 2013, with the transfer of 625,000 shares of Series A Preferred Stock and a warrant to purchase 10,938 shares of common stock for $5,000,000.

Holders of Series A Preferred Stock are entitled to cumulative dividends at a rate of 8% per annum when and if declared by the Board of Directors in its sole discretion. The dividends may be paid in cash or in the form of common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period), at the discretion of the Board of Directors. The dividend rate on the Series A Preferred Stock is indexed to the Company's stock price and subject to adjustment. In addition, the Series A Preferred Stock contains a make-whole provision whereby, conversion or redemption of the preferred stock within 4 years of issuance will require dividends for the full four year period to be paid by the Company in cash or common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period). This make-whole provision expired in June 2017 and future conversions and redemptions will be paid out with accrued dividends per the holding period of the shares of Series A Preferred stock. Please see Note 23 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for more information.

The Series A Preferred Stock may be converted into shares of common stock at the option of the Company if the closing price of the common stock exceeds $232, as adjusted, for 20 consecutive trading days, or by the holder at any time. The Company has the right to redeem the Series A Preferred Stock at a price of $8.00 per share, plus any accrued and unpaid dividends, plus the make-whole amount (if applicable). At March 31, 2018, the preferred shares were not eligible for conversion to common shares at the option of the Company. The holder of the preferred shares may convert to common shares at any time, at no cost, at a ratio of 1 preferred share into 1 common share (subject to standard ratable anti-dilution adjustments). Upon any conversion (whether at the option of the Company or the holder), the holder is entitled to receive any accrued but unpaid dividends.

On October 6, 2016, the Series A Holder entered into an exchange agreement with a private investor. Pursuant to the exchange agreement, beginning December 5, 2016, the investor has the option to exchange, from time to time, all or any portion of the October 2016 Convertible Notes (see Note 11) for outstanding shares of Series A Preferred Stock from the Series A Holder.

As of March 31, 2017, the investor had elected to exchange all outstanding October 2016 Convertible Notes, in accordance with the exchange agreement, resulting in the exchange of 104,785 shares of Series A Preferred Stock. As of March 31, 2017, the investor had also converted their 104,785 shares of Series A Preferred Stock, and the related make whole dividend, which resulted in the issuance of 173,946,250 shares of common stock.

Except as otherwise required by law (or with respect to approval of certain actions), the Series A Preferred Stock shall have no voting rights. Upon any liquidation, dissolution or winding up of the Company, after payment or provision for payment of debts and other liabilities of the Company, the holders of Series A Preferred Stock shall be entitled to receive, pari passu with any distribution to the holders of common stock of the Company, an amount equal to $8.00 per share of Series A Preferred Stock plus any accrued and unpaid dividends.

As of March 31, 2018, there were 60,756 shares of Series A Preferred Stock outstanding and accrued and unpaid dividends of $295,004.

SERIES K PREFERRED STOCK

On February 8, 2017, the Company, entered into a securities purchase agreement (“Series K SPA”) with a private investor (“Investor”), for the private placement of up to $20,000,000 of the Company’s newly designated Series K Convertible Preferred Stock (“Series K Preferred Stock”).

Per the terms of the Series K SPA, the Company was scheduled to sell 1,000 shares of Series K Preferred Stock to Investor in exchange for $1,000,000 of gross proceeds on or before each of (i) February 24, 2017, (ii) March 27, 2017, (iii) April 27, 2017, (iv) May 27, 2017 and (v) June 27, 2017. The Company was also scheduled to sell 15,000 shares of Series K Preferred Stock to Investor in exchange for $15,000,000 of gross proceeds on or before July 27, 2017. As of March 31, 2018, the Company had sold 9,010 shares of Series K Preferred Stock in exchange for $9,010,000 in cash proceeds from the private investor. The Company does not expect to receive any more funding from this investor. The following summarizes the closings and proceeds received as of March 31, 2018:

Closing Period	Preferred Series K Shares Purchased	Closing Amount
Q1 2017	150	$	150,000
Q2 2017	4,100	4,100,000
Q3 2017	4,760	$	4,760,000
	9,010	$	9,010,000

The Series K Preferred Stock ranks senior to the Company’s common stock in respect to dividends and rights upon liquidation. The Series K Preferred Stock will not have voting rights and the holders of the Series K Preferred Stock will not be entitled to any fixed rate of dividends.

The shares of the Series K Preferred Stock will be convertible at the option of the holder into common stock at a fixed conversion price equal to $0.004. At no time may the Series K Preferred Stock be converted if the number of shares of common stock to be received by Investor pursuant to such conversion, when aggregated with all other shares of common stock then beneficially (or deemed beneficially) owned by Investor, would result in Investor beneficially owning more than 19.99% of all common stock then outstanding. The following table summarizes the conversion activity of Series K Preferred Stock:

Conversion Period	Preferred Series K Shares Converted	Value of Series K Preferred Shares		Common Shares Issued
Q2 2017	3,200	$	3,200,000	800,000,000
Q3 2017	3,000	$	3,000,000	750,000,000
	6,200	$	6,200,000	1,550,000,000

As of March 31, 2018, the investor owned approximately 12% of the Company's outstanding common stock and there are 2,810 shares of Series K Preferred Stock Outstanding, representing a value of $2,810,000. Subsequent to March 31, 2018, the investor converted their remaining Series K Preferred Shares into common stock. Please refer to Note 18 for further information.

The Company is required to redeem for cash any outstanding shares of the Series K Preferred Stock at a price per share equal to $1,000 plus any accrued but unpaid dividends (if any) thereon on the fifth anniversary of the date of the original issue of such shares.

Upon our liquidation, dissolution or winding up, holders of Series K Preferred Stock will be entitled to be paid out of our assets, prior to the holders of our common stock, an amount equal to $1,000 per share plus any accrued but unpaid dividends (if any) thereon.

Upon issuance, in accordance with ASC 480-10, the Series K Preferred Stock was classified as a liability on the Consolidated Balance Sheets. Pursuant to a number of factors outlined in ASC Topic 815, the conversion option in the Series K Preferred Stock was deemed to not require bifurcation or separate accounting treatment.

STOCKHOLDERS’ DEFICIT

Common Stock

At March 31, 2018, the Company had 20,000,000,000 shares of common stock, $0.0001 par value, authorized for issuance. Each share of common stock has the right to one vote. As of March 31, 2018, the Company had 12,738,084,718 shares of common stock outstanding. The Company has not declared or paid any dividends related to the common stock through March 31, 2018.

Preferred Stock

At March 31, 2018, the Company had 750,000 shares of preferred stock, $0.0001 par value, authorized for issuance. Preferred stock may be issued in classes or series. Designations, powers, preferences, rights, qualifications, limitations and restrictions are determined by the Company’s Board of Directors. 

The following table summarizes the designations, shares authorized, and shares outstanding for the Company's Preferred Stock:

Preferred Stock Series Designation	Shares Outstanding
Series A	60,756
Series K	2,810

Series A Preferred Stock

Refer to Note 14 descriptions of Series A Preferred Stock.

Series K Preferred Stock

Refer to Note 15 descriptions of Series K Preferred Stock.

Warrants

As of March 31, 2018, the Company has three outstanding warrants for an aggregate of 700 million shares of common stock: i) a warrant for 250 million shares of common stock which is exercisable at a fixed strike price of $0.004 and expires on July 24, 2018; ii) a warrant for 250 million shares of common stock which is exercisable at a fixed strike price of $0.003 and expires on August 10, 2018; and iii) a warrant for 200 million shares of common stock which is exercisable at a fixed strike price of $0.0018 and expires on June 30, 2018. None of the warrants may not be exercised if, after giving effect to the exercise, the holder, together with its affiliates, would beneficially own in excess of 9.99% of the Company's outstanding shares of common stock. Please refer to Note 24 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for further information about each warrant issuance.

The following table summarizes warrant activity:

	Warrant Shares	Warrant Weighted Average Exercise Price
Outstanding at December 31, 2016	—	$	—
Granted	700,000,000	$	0.003
Exercised	—	$	—
Canceled	—	$	—
Outstanding at December 31, 2017	700,000,000	$	0.003
Granted	—	$	—
Exercised	—	$	—
Canceled	—	$	—
Outstanding at March 31, 2018	700,000,000	$	0.003
Exercisable at March 31, 2018	700,000,000	$	0.003

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EQUITY PLANS AND SHARE-BASED COMPENSATION

3 Months Ended

Mar. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

EQUITY PLANS AND SHARE-BASED COMPENSATION

EQUITY PLANS AND SHARE-BASED COMPENSATION

Share-Based Compensation: The Company measures share-based compensation cost at the grant date based on the fair value of the award and recognizes this cost as an expense over the grant recipients’ requisite service periods for all awards made to employees, officers, directors and consultants.

The share-based compensation expense recognized in the Condensed Consolidated Statements of Operations was as follows:

	For the three months ended March 31,
	2018		2017
Share-based compensation cost included in:
Research and development	$	454	$	16,610
Selling, general and administrative	13,870		63,127
Total share-based compensation cost	$	14,324	$	79,737

The following table presents share-based compensation expense by type:

	For the three months ended March 31,
	2018		2017
Type of Award:
Stock Options	$	14,324	$	53,408
Restricted Stock Units and Awards	—		26,329
Total share-based compensation cost	$	14,324	$	79,737

Stock Options: The Company recognized share-based compensation expense for stock options of approximately $14,324 to officers, directors and employees for the three months ended March 31, 2018 related to stock option awards ultimately expected to vest. There were no stock options granted during the three months ended March 31, 2018 or during the three months ended March 31, 2017.

As of March 31, 2018, total compensation cost related to non-vested stock options not yet recognized was approximately $24,000 which is expected to be recognized over a weighted average period of approximately 1.2 years, 67,965 shares were vested or expected to vest in the future at a weighted average exercise price of $31.82, and 195,883 shares remained available for future grants under the Option Plan.

Restricted Stock: The Company did not recognized share-based compensation expense related to restricted stock grants for the three months ended March 31, 2018. During the three months ended March 31, 2017, the Company recognized approximately $26,000 in share-based compensation related to restricted stock grants. There were no restricted stock grants for the three months ended March 31, 2018 or the three months ended March 31, 2017.

As of March 31, 2018, there was no unrecognized share-based compensation expense from unvested restricted stock, no shares were expected to vest in the future, and 518,388 shares remained available for future grants under the Restricted Stock Plan.

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2018

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

Update on Promissory Notes

During April and May 2018, the Company received aggregate proceeds of $255,000 from a private investor. As of the date of this report the funds had not been documented into a note agreement, the Company is imputing interest at 12% per annum.

Update on St. George Convertible Note

On May 1, 2018, effective as of April 3, 2018, the parties agreed to amend the variable conversion price formula outlined in the SPA. As amended, payments in the form of shares would be calculated using a variable conversion price equal to the lower of (i) 60% of the lowest VWAP for the shares during the prior five trading days or (ii) the closing bid price for the shares on the prior trading day.

On April 3, 2018, St. George requested a redemption of $50,000 on their convertible note, in accordance with the Securities Purchase Agreement dated September 9, 2017 ("SPA"). Also in accordance with the SPA, the Company elected to fulfill this redemption through the issuance of common stock; as a result, 208,333,333 shares of common stock were issued to St. George.

On April 13, 2018, St. George requested a redemption of $50,000 on their convertible note, in accordance with the SPA. Also in accordance with the SPA, the Company elected to fulfill this redemption through the issuance of common stock; as a result, 277,777,778 shares of common stock were issued to St. George.

On April 25, 2018, St. George requested a redemption of $75,000 on their convertible note, in accordance with the SPA. Also in accordance with the SPA, the Company elected to fulfill this redemption through the issuance of common stock; as a result, 416,666,667 shares of common stock were issued to St. George.

On May 9, 2018, St. George requested a redemption of $141,600 on their convertible note, in accordance with the SPA. Also in accordance with the SPA, the Company elected to fulfill this redemption through the issuance of common stock; as a result, 1,180,000,000 shares of common stock were issued to St. George.

As of the date of this report, the remaining principal balance on the St. George Convertible Note was $1,141,733.

Update on BayBridge Convertible Note

On April 13, 2018, BayBridge requested a redemption of $90,000 principal and $2,760 interest on their convertible note, in accordance with the Securities Purchase Agreement dated December 6, 2017. Also in accordance with said securities purchase agreement, the Company elected to fulfill this redemption through the issuance of common stock; as a result, 545,647,059 shares of common stock were issued to BayBridge.

On May 10, 2018, BayBridge requested a redemption of $318,000 principal and $3,330 interest on their convertible note, in accordance with the Securities Purchase Agreement dated December 6, 2017. Also in accordance with said securities purchase agreement, the Company elected to fulfill this redemption through the issuance of common stock; as a result, 1,890,176,471 shares of common stock were issued to BayBridge.

As of the date of this report, the principal balance on the BayBridge Convertible note was $52,000.

Update on Series K Preferred Stock

On May 8, 2018, the holder of the Series K Preferred stock converted the remaining 2,810 outstanding shares of Series K Preferred Stock into common stock, in accordance with the Securities Purchase Agreement dated February 8, 2017. The conversion resulted in the issuance of 702,500,000 shares of common stock. After giving effect to the conversion, immediately following the conversion, the investor held approximately 15% of the outstanding shares of the Company's common stock.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Basis of presentation

The accompanying condensed consolidated financial statements have been derived from the accounting records of Ascent Solar Technologies, Inc., Ascent Solar (Asia) Pte. Ltd., and Ascent Solar (Shenzhen) Co., Ltd. (collectively, "the Company") as of March 31, 2018 and December 31, 2017, and the results of operations for the three months ended March 31, 2018 and 2017. Ascent Solar (Shenzhen) Co., Ltd. is wholly owned by Ascent Solar (Asia) Pte. Ltd., which is wholly owned by Ascent Solar Technologies, Inc. All significant inter-company balances and transactions have been eliminated in the accompanying condensed consolidated financial statements.

The accompanying, unaudited, condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, these interim financial statements do not include all of the information and footnotes typically found in U.S. GAAP audited annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement have been included. The Condensed Consolidated Balance Sheet at December 31, 2017 has been derived from the audited financial statements as of that date but does not include all of the information and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. These condensed consolidated financial statements and notes should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Operating results for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.

Recent accounting pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The update will establish a comprehensive revenue recognition standard for virtually all industries in GAAP. ASU 2014-09 will change the amount and timing of revenue and cost recognition, implementation, disclosures and documentation. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of Effective Date. The amendments in ASU 2015-14 defer the effective date of ASU 2014-09 for all entities by one year. ASU 2014-09 is now effective for the Company in fiscal year 2018. The implementation of ASU 2014-09 did not have a material effect on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize all leases, including operating leases, on the balance sheet as a lease asset or lease liability, unless the lease is a short-term lease. ASU 2016-02 also requires additional disclosures regarding leasing arrangements. ASU 2016-02 is effective for interim periods and fiscal years beginning after December 15, 2018, and early application is permitted. The Company continues to evaluate the impact, that the adoption of this guidance will have on its consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718). ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 is effective for interim periods and fiscal years beginning after December 15, 2017, and early application is permitted. The implementation of ASU 2017-09 did not have a material effect on the Company's consolidated financial statements.

In July 2017, the FASB issued ASU No. 2017-11 Part I, Earnings Per Share (Topic 260), Distinguishing Liabilities fromEquity (Topic 480), Derivatives and Hedging (Topic 815). ASU 2017-11 Part I changes the classification analysis of certain equity linked financial instruments with down round features. ASU 2017-11 Part I is effective, for public business entities, for interim periods and fiscal years beginning after December 15, 2018, and early application is permitted. The Company is currently evaluating the impact, if any, that the adoption of this guidance will have on its consolidated financial statements.

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PROPERTY, PLANT AND EQUIPMENT (Tables)

3 Months Ended

Mar. 31, 2018

Property, Plant and Equipment [Abstract]

Property, plant and equipment

The following table summarizes property, plant and equipment as of March 31, 2018 and December 31, 2017:

	As of March 31,			As of December 31,
	2018			2017
Building	$	5,828,960		$	5,828,960
Furniture, fixtures, computer hardware and computer software	489,421			489,421
Manufacturing machinery and equipment	30,327,481			30,327,481
Property, plant and equipment	36,645,862			36,645,862
Less: Accumulated depreciation and amortization	(32,072,422		)	(32,013,686		)
Net property, plant and equipment	$	4,573,440		$	4,632,176

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INVENTORIES (Tables)

3 Months Ended

Mar. 31, 2018

Inventory Disclosure [Abstract]

Schedule of inventory, current

Inventories consisted of the following at March 31, 2018 and December 31, 2017:

	As of March 31,		As of December 31,
	2018		2017
Raw materials	$	695,474	$	688,904
Work in process	5,106		11,878
Finished goods	373,739		337,072
Total	$	1,074,319	$	1,037,854

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DEBT (Tables)

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Schedule of maturities of long-term debt

As of March 31, 2018, remaining future principal payments on long-term debt are due as follows:

2018	$	259,654
2019	366,757
2020	391,709
2021	418,358
2022	446,821
Thereafter	3,494,778
	$	5,378,077

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SECURED PROMISSORY NOTE (Tables)

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

As of March 31, 2018, the closing dates, closing amounts, and maturity dates on completed Note SPA tranches are as follows:

Closing Date	Closing Amount		Maturity Date
11/30/2017	$	250,000	11/30/2018
12/28/2017	$	250,000	12/28/2018
1/11/2018	$	250,000	1/11/2019
1/25/2018	$	250,000	1/25/2019
2/8/2018	$	250,000	2/8/2019
2/21/2018	$	250,000	2/21/2019
3/7/2018	$	250,000	3/7/2019
3/21/2018	$	250,000	3/21/2019

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SERIES K PREFERRED STOCK (Tables)

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

Preferred stock schedule of closings and proceeds received

The following summarizes the closings and proceeds received as of March 31, 2018:

Closing Period	Preferred Series K Shares Purchased	Closing Amount
Q1 2017	150	$	150,000
Q2 2017	4,100	4,100,000
Q3 2017	4,760	$	4,760,000
	9,010	$	9,010,000

Preferred stock conversion activity

The following table summarizes the conversion activity of Series K Preferred Stock:

Conversion Period	Preferred Series K Shares Converted	Value of Series K Preferred Shares		Common Shares Issued
Q2 2017	3,200	$	3,200,000	800,000,000
Q3 2017	3,000	$	3,000,000	750,000,000
	6,200	$	6,200,000	1,550,000,000

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STOCKHOLDERS' DEFICIT (Tables)

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

Preferred Stock

The following table summarizes the designations, shares authorized, and shares outstanding for the Company's Preferred Stock:

Preferred Stock Series Designation	Shares Outstanding
Series A	60,756
Series K	2,810

Schedule of Stockholders' Equity Note, Warrants or Rights

The following table summarizes warrant activity:

	Warrant Shares	Warrant Weighted Average Exercise Price
Outstanding at December 31, 2016	—	$	—
Granted	700,000,000	$	0.003
Exercised	—	$	—
Canceled	—	$	—
Outstanding at December 31, 2017	700,000,000	$	0.003
Granted	—	$	—
Exercised	—	$	—
Canceled	—	$	—
Outstanding at March 31, 2018	700,000,000	$	0.003
Exercisable at March 31, 2018	700,000,000	$	0.003

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EQUITY PLANS AND SHARE-BASED COMPENSATION (Tables)

3 Months Ended

Mar. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-based compensation cost by line item

The share-based compensation expense recognized in the Condensed Consolidated Statements of Operations was as follows:

	For the three months ended March 31,
	2018		2017
Share-based compensation cost included in:
Research and development	$	454	$	16,610
Selling, general and administrative	13,870		63,127
Total share-based compensation cost	$	14,324	$	79,737

Share-based compensation cost by award type

The following table presents share-based compensation expense by type:

	For the three months ended March 31,
	2018		2017
Type of Award:
Stock Options	$	14,324	$	53,408
Restricted Stock Units and Awards	—		26,329
Total share-based compensation cost	$	14,324	$	79,737

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ORGANIZATION (Details)	1 Months Ended
	Jan. 31, 2006 shares
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Common stock issued (in shares)	5,140

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LIQUIDITY AND CONTINUED OPERATIONS (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
LIQUIDITY AND CONTINUED OPERATIONS [Abstract]
Net cash (used in) operating activities	$ (1,494,744)	$ (2,661,194)
Notes payable	5,400,000
Notes payable, repayments of principal and interest in remainder of fiscal year	$ 500,000

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PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 36,645,862		$ 36,645,862
Less: Accumulated depreciation and amortization	(32,072,422)		(32,013,686)
Net property, plant and equipment	4,573,440		4,632,176
Depreciation expense	58,736	$ 334,624
Building [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment	5,828,960		5,828,960
Furniture, fixtures, computer hardware and computer software [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment	489,421		489,421
Manufacturing machinery and equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 30,327,481		$ 30,327,481

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INVENTORIES (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Inventory Disclosure [Abstract]
Raw materials	$ 695,474		$ 688,904
Work in process	5,106		11,878
Finished goods	373,739		337,072
Total	1,074,319		1,037,854
Inventory impairment costs	0	$ 363,758
Inventory allowance	$ 458,097		$ 562,140

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NOTES PAYABLE (Details)		3 Months Ended
	Feb. 24, 2017 USD ($) note	Mar. 31, 2018 USD ($)	Mar. 31, 2017 USD ($)	Sep. 30, 2017 USD ($)	Jun. 30, 2017 USD ($)	Mar. 23, 2017 USD ($)
Short-term Debt [Line Items]
Cash paid for interest		$ 106,617	$ 20,415
Note payable conversion one [Member] | Unsecured debt [Member]
Short-term Debt [Line Items]
Number of notes payable | note	3
Notes payable	$ 765,784
Stated interest rate	6.00%
Accrued interest		51,052
Note payable conversion two [Member] | Unsecured debt [Member]
Short-term Debt [Line Items]
Notes payable						$ 356,742
Stated interest rate						5.00%
Accrued interest		18,228
Note payable conversion three [Member] | Unsecured debt [Member]
Short-term Debt [Line Items]
Notes payable					$ 250,000
Stated interest rate					5.00%
Accrued interest		9,384
Note payable conversion four [Member] | Unsecured debt [Member]
Short-term Debt [Line Items]
Notes payable		195,205		$ 215,234
Stated interest rate				5.00%
Accrued interest		4,138
Monthly payments		18,426
Payments on principal		20,029
Cash paid for interest		$ 897

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DEBT - Narrative (Details) - USD ($)			5 Months Ended
	May 01, 2017	Feb. 08, 2008	Mar. 31, 2017	Mar. 31, 2018	Dec. 31, 2017	Dec. 31, 2009
Debt Instrument [Line Items]
Long-term debt				$ 5,378,077	$ 5,461,819
Construction Loan [Member]
Debt Instrument [Line Items]
Available borrowing capacity		$ 7,500,000
Permanent Loan [Member]
Debt Instrument [Line Items]
Stated interest rate						6.60%
Accrued interest			$ 180,043
Long-term debt	$ 5,704,932
Monthly payments	$ 57,801
Manufacturing and Office Facility [Member]
Debt Instrument [Line Items]
Cost of acquisition		$ 5,500,000

XML

DEBT - Schedule of Maturities of Long-term Debt (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Debt Disclosure [Abstract]
2018	$ 259,654
2019	366,757
2020	391,709
2021	418,358
2022	446,821
Thereafter	3,494,778
Total maturities	$ 5,378,077	$ 5,461,819

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SECURED PROMISSORY NOTE - Narrative (Details)					3 Months Ended
	Feb. 15, 2018 USD ($)	Dec. 28, 2017	Dec. 06, 2017 USD ($) shares	Nov. 30, 2017 USD ($) installment shares	Mar. 31, 2018 USD ($) installment $ / shares shares	Mar. 31, 2017 USD ($)	Dec. 31, 2017 USD ($)
Debt Instrument [Line Items]
Note purchase and exchange agreement, amount authorized to be issued				$ 2,000,000
Average daily trading volume of common stock				$ 50,000
Trading day period proceeding future tranche closing dates				20 days
Interest converted to principal					$ 96,120	$ 0
Unsecured debt [Member] | Promissory Note Three [Member]
Debt Instrument [Line Items]
Repurchase amount				$ 252,466
Secured Debt [Member] | Note Secured Promissory Agreement [Member]
Debt Instrument [Line Items]
Aggregate principal amount of Notes outstanding				4,057,227	$ 4,903,348
Average VWAP for redemption					85.00%
Measurement period after conversion date					5 days
Conversion price (in dollars per share) | $ / shares					$ 0.002
Ownership of outstanding common stock, percentage					9.99%
Stated interest rate					12.00%
Accrued interest expense, noncurrent					$ 83,406
Secured Debt [Member] | Note Secured Promissory Agreement, Maturing December 15, 2020 [Member]
Debt Instrument [Line Items]
Aggregate principal amount of Notes outstanding				$ 3,359,539
Number of monthly installments | installment				36	32
Monthly payments				$ 111,585	$ 80,036
Debt conversion, amount					$ 1,250,000
Debt conversion, converted instrument, shares issued | shares					2,450,980,392
Interest converted to principal					$ 96,121
Debt instrument, term				3 years
Make-whole dividend liability							$ 3,742,002
Derivative - expected annual volatility					64.00%
Derivative - present value of discount rate					12.00%
Derivative - expected dividend rate					0.00%
Secured Debt [Member] | Note Secured Promissory Agreement, Maturing November 30, 2018 [Member]
Debt Instrument [Line Items]
Aggregate principal amount of Notes outstanding				$ 697,688	$ 250,000
Debt instrument, term				1 year
Make-whole dividend liability							888,168
Derivative - expected annual volatility					52.00%
Derivative - present value of discount rate					12.00%
Derivative - expected dividend rate					0.00%
Secured Debt [Member] | Note Secured Promissory Agreement, Maturing December 28, 2018 [Member]
Debt Instrument [Line Items]
Aggregate principal amount of Notes outstanding					$ 250,000
Debt instrument, term		1 year
Make-whole dividend liability							$ 267,008
Derivative - expected annual volatility					52.00%
Derivative - present value of discount rate					12.00%
Derivative - expected dividend rate					0.00%
Secured Debt [Member] | Note Secured Promissory Agreement, First Quarter 2018 Notes [Member]
Debt Instrument [Line Items]
Make-whole dividend liability	$ 1,151,162
Derivative - expected annual volatility	54.00%				52.00%
Derivative - present value of discount rate	12.00%				12.00%
Derivative - expected dividend rate	0.00%				0.00%
Commercial Paper [Member] | Promissory Note Exchange Agreement [Member]
Debt Instrument [Line Items]
Repurchase amount				$ 3,359,539
Series J Preferred Stock [Member]
Debt Instrument [Line Items]
Number of shares exchanged (in shares) | shares			675	400
Capital and accrued dividends			$ 755,417	$ 445,222
Embedded derivative financial instruments [Member] | Secured Debt [Member] | Note Secured Promissory Agreement [Member]
Debt Instrument [Line Items]
Make-whole dividend liability					$ 6,061,298
Gain (loss) on change in fair value of derivative					(12,958)
Embedded derivative financial instruments [Member] | Secured Debt [Member] | Note Secured Promissory Agreement, Maturing December 15, 2020 [Member]
Debt Instrument [Line Items]
Make-whole dividend liability					3,129,847
Gain (loss) on change in fair value of derivative					612,155
Embedded derivative financial instruments [Member] | Secured Debt [Member] | Note Secured Promissory Agreement, Maturing November 30, 2018 [Member]
Debt Instrument [Line Items]
Make-whole dividend liability					713,179
Gain (loss) on change in fair value of derivative					174,989
Embedded derivative financial instruments [Member] | Secured Debt [Member] | Note Secured Promissory Agreement, Maturing December 28, 2018 [Member]
Debt Instrument [Line Items]
Make-whole dividend liability					188,137
Gain (loss) on change in fair value of derivative					78,871
Embedded derivative financial instruments [Member] | Secured Debt [Member] | Note Secured Promissory Agreement, First Quarter 2018 Notes [Member]
Debt Instrument [Line Items]
Make-whole dividend liability					2,030,135
Gain (loss) on change in fair value of derivative					$ (878,973)

XML

SECURED PROMISSORY NOTE - Summary of Secured Promissory Note (Details) - Secured Debt [Member] - USD ($)	Mar. 31, 2018	Nov. 30, 2017
Note Secured Promissory Agreement, Maturing November 30, 2018 [Member]
Debt Instrument [Line Items]
Aggregate principal amount of Notes outstanding	$ 250,000	$ 697,688
Note Secured Promissory Agreement, Maturing December 28, 2018 [Member]
Debt Instrument [Line Items]
Aggregate principal amount of Notes outstanding	250,000
Note Secured Promissory Agreement, Maturing January 11, 2019 [Member]
Debt Instrument [Line Items]
Aggregate principal amount of Notes outstanding	250,000
Note Secured Promissory Agreement, Maturing January 25, 2019 [Member]
Debt Instrument [Line Items]
Aggregate principal amount of Notes outstanding	250,000
Note Secured Promissory Agreement, Maturing February 8, 2019 [Member]
Debt Instrument [Line Items]
Aggregate principal amount of Notes outstanding	250,000
Note Secured Promissory Agreement, Maturing February 21, 2019 [Member]
Debt Instrument [Line Items]
Aggregate principal amount of Notes outstanding	250,000
Note Secured Promissory Agreement, Maturing March 7, 2019 [Member]
Debt Instrument [Line Items]
Aggregate principal amount of Notes outstanding	250,000
Note Secured Promissory Agreement, Maturing March 21, 2019 [Member]
Debt Instrument [Line Items]
Aggregate principal amount of Notes outstanding	$ 250,000

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PROMISSORY NOTES (Details) - USD ($)			1 Months Ended		3 Months Ended
	Nov. 16, 2017	Jun. 30, 2017	Dec. 31, 2017	Oct. 31, 2016	Mar. 31, 2018	Mar. 31, 2017	Jan. 31, 2018
Short-term Debt [Line Items]
Amortization of debt discount					$ 1,011,109	$ 1,474,135
Cash paid for interest					106,617	$ 20,415
Unsecured debt [Member] | Twelve Percent Unsecured Promissory Note From Private Investor [Member]
Short-term Debt [Line Items]
Proceeds from issuance of debt				$ 420,000
Additional proceeds from issuance of debt				250,000
Debt, principal				700,000	494,437
Amortization of debt discount				$ 30,000
Stated interest rate		12.00%		12.00%
Payment plan duration		12 months
Monthly payments		$ 62,000
Repurchased principal amount					205,563
Cash paid for interest					45,414
Accrued interest					$ 41,756
Unsecured debt [Member] | Promissory Note Four [Member]
Short-term Debt [Line Items]
Debt, principal	$ 275,000
Stated interest rate					12.00%
Accrued interest					$ 9,493
Debt instrument, unamortized discount (premium), net	25,000
Proceeds from the issuance of promissory notes	$ 250,000
Unsecured debt [Member] | Twelve Percent Promissory Note Due December 29, 2018 [Member]
Short-term Debt [Line Items]
Debt, principal					230,000
Stated interest rate							12.00%
Accrued interest					6,473
Debt instrument, unamortized discount (premium), net							$ 22,500
Proceeds from the issuance of promissory notes			$ 177,500		$ 30,000
Aggregate principal amount of Notes outstanding							$ 200,000

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OCTOBER 2016 CONVERTIBLE NOTES AND EXCHANGE OF SERIES A PREFERRED STOCK (Details) - USD ($)		3 Months Ended
	Oct. 05, 2016	Mar. 31, 2018	Dec. 31, 2017	Oct. 06, 2016
Series A Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, shares outstanding (in shares)		60,756	60,756	165,541
October 2016 Convertible Notes [Member] | Convertible debt [Member]
Class of Stock [Line Items]
Proceeds from issuance of stock	$ 330,000	$ 330,000
Proceeds from issuance of debt	$ 330,000
Stated interest rate	6.00%
Percent of average of two lowest volume weighted average prices	80.00%
Convertible debt, trading days	15 days
Debt instrument, convertible, conversion price, milestone percentage one	50.00%
Accrued interest		$ 29,810
Make-whole dividend liability	$ 330,000		$ 572,643
Interest expense	$ 341,114
Derivative - expected annual volatility		53.00%
Derivative - present value of discount rate		12.00%
Derivative - expected dividend rate		0.00%
October 2016 Convertible Notes [Member] | Maximum [Member] | Convertible debt [Member]
Class of Stock [Line Items]
Stated interest rate	24.00%
Embedded derivative financial instruments [Member] | October 2016 Convertible Notes [Member] | Convertible debt [Member]
Class of Stock [Line Items]
Make-whole dividend liability		$ 634,919
Embedded derivative financial instruments [Member] | Convertible preferred stock subject to mandatory redemption [Member] | October 2016 Convertible Notes [Member] | Convertible debt [Member]
Class of Stock [Line Items]
Gain (loss) on change in fair value of derivative		$ (62,276)

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ST. GEORGE CONVERTIBLE NOTE (Details) - USD ($)				3 Months Ended
	Nov. 30, 2017	Sep. 11, 2017	Sep. 08, 2017	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Debt Instrument [Line Items]
Payments of financing costs				$ 0	$ 42,500
Debt conversion, converted instrument				1,430,000	$ 1,699,731
Convertible debt [Member] | 2017 St. George Convertible Note [Member]
Debt Instrument [Line Items]
Aggregate principal amount of Notes		$ 1,725,000	$ 1,725,000	$ 1,458,333
Proceeds from issuance of debt		1,500,000
Payments of financing costs		20,000
Unamortized discount		$ 225,000
Maximum periodic payment allowable			$ 275,000
Redemption price ratio			15.00%
Average VWAP for redemption			85.00%	60.00%
Measurement period after conversion date			5 days
Conversion price (in dollars per share)			$ 0.004
Stated interest rate			22.00%
Increase in principal in event of default			25.00%
Stock issued as origination fee	37,500,000
Share price (in dollars per share)	$ 0.0017
Interest expense	$ 63,750
Ownership of outstanding common stock, percentage				4.99%
Repayments of short-term debt				$ 191,667
Debt conversion, converted instrument				$ 75,000
Debt conversion, converted instrument, shares issued				187,500,000
Shares reserved for future issuance (in shares)				5,000,000,000
Make-whole dividend liability						$ 394,280
Expected volatility rate				56.00%
Derivative - present value of discount rate				12.00%
Derivative - expected dividend rate				0.00%
Embedded derivative financial instruments [Member] | Convertible debt [Member] | 2017 St. George Convertible Note [Member]
Debt Instrument [Line Items]
Make-whole dividend liability				$ 1,219,180
Gain (loss) on change in fair value of derivative				$ (824,900)
First Six Months [Member] | Convertible debt [Member] | 2017 St. George Convertible Note [Member]
Debt Instrument [Line Items]
Principal payment			$ 96,000
Thereafter [Member] | Convertible debt [Member] | 2017 St. George Convertible Note [Member]
Debt Instrument [Line Items]
Principal payment			$ 150,000

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BAYBRIDGE CONVERTIBLE NOTE (Details) - USD ($)			3 Months Ended
	Dec. 06, 2017	Nov. 30, 2017	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Debt Instrument [Line Items]
Debt conversion, converted instrument			$ 1,430,000	$ 1,699,731
Baybridge Convertible Note [Member]
Debt Instrument [Line Items]
Unamortized discount			423,750		$ 565,000
Series J Preferred Stock [Member]
Debt Instrument [Line Items]
Number of shares exchanged (in shares)	675	400
Capital and accrued dividends	$ 755,417	$ 445,222
Convertible debt [Member] | Baybridge Convertible Note [Member]
Debt Instrument [Line Items]
Aggregate principal amount of Notes outstanding	840,000		$ 460,000
Unamortized discount	$ 84,583
Stated interest rate	12.00%
Average VWAP for redemption	85.00%
Measurement period after conversion date	5 days
Conversion price (in dollars per share)	$ 0.003
Ownership of outstanding common stock, percentage	9.99%
Make-whole dividend liability					$ 542,733
Derivative - expected annual volatility			50.00%
Derivative - present value of discount rate			12.00%
Derivative - expected dividend rate			0.00%
Debt conversion, converted instrument			$ 380,000
Interest converted			$ 20,717
Debt conversion, converted instrument, shares issued			897,418,314
Accrued interest			$ 653
Embedded derivative financial instruments [Member] | Convertible debt [Member] | Baybridge Convertible Note [Member]
Debt Instrument [Line Items]
Make-whole dividend liability			193,685
Gain (loss) on change in fair value of derivative			$ 349,048

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SERIES A PREFERRED STOCK (Details) - USD ($)		1 Months Ended	3 Months Ended
	Jun. 17, 2013	Aug. 31, 2016	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Oct. 06, 2016	Aug. 31, 2013	Jun. 30, 2013
Series A Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, shares issued (in shares)	125,000		60,756		60,756		625,000	750,000
Share price (in dollars per share)								$ 8.00
Preferred stock			$ 6		$ 6			$ 6,000,000
Preferred stock, dividend rate			8.00%
Preferred stock, dividend, make-whole dividend rate to market value			10.00%
Preferred stock, dividend issuance term			4 years
Preferred stock, redemption, term, required make-whole dividend			4 years
Preferred stock, conversion, required common share price			$ 232
Preferred stock, conversion, required common share price, term			20 days
Convertible preferred stock, shares issued upon conversion (in shares)			1
Preferred stock, shares outstanding (in shares)			60,756		60,756	165,541
Shares converted (in shares)				104,785
Accrued and unpaid dividends			$ 295,004
Common stock [Member]
Class of Stock [Line Items]
Class of warrant, number of securities called by warrants (in shares)	2,187						10,938	13,125
Proceeds from issuance of preferred stock	$ 1,000,000	$ 5,000,000
Series A, buyer [Member] | Series A Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, shares outstanding (in shares)				104,785
Conversion of shares (in shares)				173,946,250

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SERIES K PREFERRED STOCK - Narrative (Details) - Series K Preferred Stock [Member] - USD ($)				3 Months Ended
	Jul. 27, 2017	Feb. 24, 2017	Feb. 08, 2017	Mar. 31, 2018	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2017
Class of Stock [Line Items]
Proceeds from issuance of preferred stock					$ 4,760,000	$ 4,100,000	$ 150,000
Preferred stock, shares issued (in shares)					4,760	4,100	150
Ownership percentage			19.99%	12.00%
Preferred stock, shares outstanding (in shares)				2,810				2,810
Preferred stock				$ 2,810,000				$ 2,810,000
Private placement [Member]
Class of Stock [Line Items]
Proceeds from issuance of stock			$ 20,000,000
Issuance of common stock (in shares)	15,000	1,000
Proceeds from issuance of preferred stock	$ 15,000,000	$ 1,000,000		$ 9,010,000
Preferred stock, shares issued (in shares)				9,010
Convertible preferred stock, conversion price (in dollars per share)			$ 0.004
Parent company [Member]
Class of Stock [Line Items]
Preferred stock, redemption price per share (in dollars per share)			$ 1,000

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SERIES K PREFERRED STOCK - Closings and Proceeds Received (Details) - Series K Preferred Stock [Member] - USD ($)			3 Months Ended
	Jul. 27, 2017	Feb. 24, 2017	Mar. 31, 2018	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017
Class of Stock [Line Items]
Preferred stock, shares issued (in shares)				4,760	4,100	150
Proceeds from issuance of preferred stock				$ 4,760,000	$ 4,100,000	$ 150,000
Private placement [Member]
Class of Stock [Line Items]
Preferred stock, shares issued (in shares)			9,010
Proceeds from issuance of preferred stock	$ 15,000,000	$ 1,000,000	$ 9,010,000

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SERIES K PREFERRED STOCK - Conversion Activity (Details) - Series K Preferred Stock [Member] - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2017	Jun. 30, 2017	Sep. 30, 2017
Class of Stock [Line Items]
Shares converted (in shares)	3,000	3,200	6,200
Stock issued in lieu of cash, value	$ 3,000,000	$ 3,200,000	$ 6,200,000
Conversion of shares (in shares)	750,000,000	800,000,000	1,550,000,000

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STOCKHOLDERS' DEFICIT - Common Stock (Details)	3 Months Ended
	Mar. 31, 2018 vote $ / shares shares	Dec. 31, 2017 $ / shares shares
Equity [Abstract]
Common stock, shares authorized (in shares)	20,000,000,000	20,000,000,000
Common stock, par value (in dollars per share) | $ / shares	$ 0.0001	$ 0.0001
Number of votes per share | vote	1
Common stock, shares outstanding (in shares)	12,738,084,718	9,606,597,777

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STOCKHOLDERS' DEFICIT - Preferred Stock (Details) - $ / shares	Mar. 31, 2018	Dec. 31, 2017	Oct. 06, 2016
Series A Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, shares authorized (in shares)	750,000	750,000
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares outstanding (in shares)	60,756	60,756	165,541
Series K Preferred Stock [Member]
Class of Stock [Line Items]
Temporary equity, shares outstanding (in shares)	2,810	2,810

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STOCKHOLDERS' DEFICIT - Warrants (Details)	Mar. 31, 2018 warrents $ / shares shares	Dec. 31, 2017 shares	Jul. 24, 2017 $ / shares shares	Dec. 31, 2016 shares
Class of Warrant or Right [Line Items]
Number of warrants outstanding | warrents	3
Warrants issued (in shares)	700,000,000	700,000,000		0
Maximum ownership percentage threshold for conversion	9.99%
Warrant Expiring On July 24, 2018 [Member]
Class of Warrant or Right [Line Items]
Warrants issued (in shares)			250,000,000
Warrants exercise price (in dollars per share) | $ / shares			$ 0.004
Warrant Expiring On August 10, 2018 [Member]
Class of Warrant or Right [Line Items]
Warrants issued (in shares)	250,000,000
Warrants exercise price (in dollars per share) | $ / shares	$ 0.003
Warrant Expiring On June 30, 2018 [Member]
Class of Warrant or Right [Line Items]
Warrants issued (in shares)	200,000,000
Warrants exercise price (in dollars per share) | $ / shares	$ 0.0018

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STOCKHOLDERS' DEFICIT - Summary of Warrant Activity (Details) - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Warrant Shares
Beginning balance (in shares)	700,000,000	0
Granted (in shares)	0	700,000,000
Exercised (in shares)	0	0
Canceled (in shares)	0	0
Ending balance (in shares)	700,000,000	700,000,000
Exercisable at March 31, 2018 (in shares)	700,000,000
Warrant Weighted Average Exercise Price
Beginning balance (in dollars per share)	$ 0.003	$ 0.000
Granted (in dollars per share)	0.000	0.003
Exercised (in dollars per share)	0.000	0.000
Canceled (in dollars per share)	0.000	0.000
Ending balance (in dollars per share)	0.003	$ 0.003
Exercisable at March 31, 2018 (in dollars per share)	$ 0.003

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EQUITY PLANS AND SHARE-BASED COMPENSATION - Share-based Compensation Cost By Line Item And Award Type (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation cost	$ 14,324	$ 79,737
Stock options [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation cost	14,324	53,408
Restricted stock units and awards [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation cost	0	26,329
Research and development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation cost	454	16,610
Selling, general, administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation cost	$ 13,870	$ 63,127

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EQUITY PLANS AND SHARE-BASED COMPENSATION - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	$ 14,324	$ 79,737
Stock options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	14,324	53,408
Total compensation cost not yet recognized	$ 24,000
Recognized over a weighted average period	1 year 2 months
Vested and expected to vest shares (in shares)	67,965
Vested and expected to vest weighted average exercise price (in dollars per share)	$ 31.82
Number of shares available for grant (in shares)	195,883
Restricted stock units and awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	$ 0	$ 26,329
Number of shares available for grant (in shares)	518,388

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SUBSEQUENT EVENTS (Details) - USD ($)										1 Months Ended	3 Months Ended			6 Months Ended
	May 10, 2018	May 09, 2018	May 08, 2018	May 01, 2018	Apr. 25, 2018	Apr. 13, 2018	Apr. 03, 2018	Dec. 06, 2017	Sep. 08, 2017	May 11, 2018	Mar. 31, 2018	Sep. 30, 2017	Jun. 30, 2017	Sep. 30, 2017	Dec. 31, 2017	Sep. 11, 2017	Oct. 31, 2016
Subsequent Event [Member]
Subsequent Event [Line Items]
Conversion of shares (in shares)			702,500,000
Twelve Percent Unsecured Promissory Note From Private Investor [Member] | Unsecured debt [Member]
Subsequent Event [Line Items]
Stated interest rate													12.00%				12.00%
Twelve Percent Unsecured Promissory Note From Private Investor [Member] | Unsecured debt [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Proceeds from the issuance of promissory notes										$ 255,000
Stated interest rate										12.00%
2017 St. George Convertible Note [Member] | Convertible debt [Member]
Subsequent Event [Line Items]
Stated interest rate									22.00%
Average VWAP for redemption									85.00%		60.00%
Measurement period after conversion date									5 days
Aggregate principal amount of Notes outstanding									$ 1,725,000		$ 1,458,333					$ 1,725,000
2017 St. George Convertible Note [Member] | Convertible debt [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Average VWAP for redemption				60.00%
Measurement period after conversion date				5 days
Principal payment		$ 141,600			$ 75,000	$ 50,000	$ 50,000
Issuance of common stock (in shares)		1,180,000,000			416,666,667	277,777,778	208,333,333
Aggregate principal amount of Notes outstanding										$ 1,141,733
Baybridge Convertible Note [Member] | Convertible debt [Member]
Subsequent Event [Line Items]
Stated interest rate								12.00%
Average VWAP for redemption								85.00%
Measurement period after conversion date								5 days
Aggregate principal amount of Notes outstanding								$ 840,000			$ 460,000
Baybridge Convertible Note [Member] | Convertible debt [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Principal payment	$ 318,000					$ 90,000
Issuance of common stock (in shares)	1,890,176,471					545,647,059
Aggregate principal amount of Notes outstanding										$ 52,000
Interest requested to be paid	$ 3,330					$ 2,760
Series K Preferred Stock [Member]
Subsequent Event [Line Items]
Temporary equity, shares outstanding (in shares)											2,810				2,810
Conversion of shares (in shares)												750,000,000	800,000,000	1,550,000,000
Series K Preferred Stock [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Temporary equity, shares outstanding (in shares)			2,810
Investor [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Ownership percentage			15.00%