Notes Payable

12 Months Ended

Dec. 31, 2017

Debt Disclosure [Abstract]

Notes Payable

NOTE 5 – NOTES PAYABLE

JMJ Convertible Note

On April 2, 2015, the Company issued a convertible note in favor of JMJ Financial in the principal amount of $100,000 out of a total of a possible $250,000, with a maturity date of April 1, 2017 (the “JMJ Note”). The JMJ Note was issued with a 10% original issue discount, and is convertible at any time. The $10,000 on-issuance discount will be amortized over the life of the note. The Company was to repay any principal balance due under the note including a one-time charge of 12% interest on the principal balance outstanding if not repaid within 90 days. The Company had the option to prepay the JMJ Note prior to maturity. The JMJ Note was convertible into shares of the Company’s common stock as calculated by multiplying 60% of the lowest trade price in the 25 trading days prior to the conversion date.

Due to the variable conversion feature of the note, derivative accounting is required. The Company valued the derivative upon issuance, at each reporting period, and at the conversion date as indicated below. The initial value of the derivative liability was $412,212, resulting in a day one loss $312,212. The discount on the convertible note was being amortized over the life of the note and accelerated as the note was converted. For the years ended December 31, 2016 and 2015, amortization of the discount was $32,886 and $77,114, respectively, with $0 remaining as of December 31, 2016.

	Final Conversion April 5, 2016 (excluding inception)			December 31, 2015
Annual dividend yield		-			-
Expected life (years)		0.99			1.25 – 2.00
Risk-free interest rate		0.56	%		0.61 – 1.06	%
Expected volatility		188	%		282 - 304	%

During the year ended December 31, 2016, the Company issued 105,741,400 shares of common stock for the conversion of $52,950 of principal and $12,550 of interest. The note was fully converted on April 5, 2016.

AKR Promissory Note

On April 8, 2014, the Company issued a promissory note in favor of AKR Inc, (“AKR”) in the principal aggregate amount of $350,000 (the “AKR Note”). The AKR Note was originally due on April 8, 2015; however, the Company received an extension through December 31, 2018 The AKR Note requires the Company to (i) incur interest at five percent (5%) per annum; (ii) issue on April 8, 2014 to AKR warrants allowing them to buy 7,350,000 common shares of the Company at an exercise price of $0.007 per common share, such warrants to expire on April 8, 2016 (“AKR Warrant A”); (iii) issue on August 8, 2014 to AKR warrants allowing them to buy 7,350,000 common shares of the Company at an exercise price of $0.007 per common share, such warrants to expire on April 8, 2016 (“AKR Warrant B”); and (iv) issue on November 8, 2014 to AKR warrants allowing them to buy 8,400,000 common shares of the Company at an exercise price of $0.007 per common share, such warrants to expire on April 8, 2016 (“AKR Warrant C”, together with AKR Warrant A and AKR Warrant B the “AKR Warrants”). The Company may prepay the debt, prior to maturity with no prepayment penalty.

On April 24, 2014, the Company issued a promissory note in favor of AKR in the principal aggregate amount of $30,000 (“2nd AKR Note”). The 2^nd AKR Note was due on July 24, 2014, however, the Company received an extension through December 31, 2018. Pursuant to the terms of the 2^nd AKR Note, the Company is to repay any principal balance and interest, at 5% per annum at maturity. Company may prepay the debt, prior to maturity with no prepayment penalty.

There was no financial impact of the note and warrants during the years ended December 31, 2017 and 2016.

Tarpon Bay Convertible Notes

Pursuant to a 3(a)10 transaction with Tarpon Bay Partners LLC (“Tarpon”), on August 31, 2016, the Company issued to Tarpon a convertible promissory note in the principal amount of $25,000 (the “Tarpon Initial Note”). Under the terms of the Tarpon Initial Note, the Company shall pay Tarpon $25,000 on the date of maturity which was February 28, 2017. This note is convertible by Tarpon into the Company’s common shares at a 50% discount to the lowest closing bid price for the common stock for the twenty (20) trading days ending on the trading day immediately before the conversion date.

The above note was issued without funds being received. Accordingly, the note was issued with a full on-issuance discount that was amortized over the term of the note. During the year ended December 31, 2017 and 2016, amortization of $3,889 and $21,111 respectively, was recognized to interest expense related to the discount on the note. As of December 31, 2017, a discount of $0 remained.

Because the conversion price was variable and did not contain a floor, the conversion feature represented a derivative liability upon issuance. Accordingly, the Company calculated the derivative liability using the Black-Sholes pricing model for the notes upon inception, resulting in a day one loss of approximately $36,000. The derivative liability was marked to market each quarter and as of December 31, 2017 which resulted in a loss of approximately $3,763. The Company used the following range of assumptions for the years ended December 31:

	December 31, 2017			December 31, 2016
Annual dividend yield		-			-
Expected life (years)		0.5			0.16 – 0.5
Risk-free interest rate		0.74 – 1.00	%		0.47 – 0.51	%
Expected volatility		143 - 174	%		176 - 196	%

During the year ended December 31, 2017, the Company issued 54,444,445 shares of common stock to pay down $25,000 of principal and $3,200 in fees of the Tarpon Bay Convertible Note. $30,353 was reclassed to APIC during 2017. The note was fully converted as of September 30, 2017.

Pursuant to the 3(a)10 transaction with Tarpon Bay Partners LLC (“Tarpon”), the Company owes a success fee convertible note to Tarpon Bay Partners LLC “the “Tarpon Success Fee Note”). Under the terms of the Tarpon Success Fee Note, the Company shall pay Tarpon $49,981. No formal note agreement has been signed but as of December 31, 2017 the Company has recorded the derivative liability for this note in the accompanying financial statements. This note will be convertible by Tarpon into the Company’s common shares at a 50% discount to the lowest closing bid price for the common stock for the twenty (20) trading days ending on the trading day immediately before the conversion date pursuant to the agreements in place.

The above note was issued without funds being received. Accordingly, the note was issued with a full on-issuance discount that was amortized over the term of the note. During the year ended December 31, 2017, amortization of $22,491, was recognized to interest expense related to the discount on the note. As of December 31, 2017, a discount of $27,489 remained which is being amortized through the maturity date.

Because the conversion price was variable and did not contain a floor, the conversion feature represented a derivative liability upon issuance. Accordingly, the Company calculated the derivative liability using the Black-Sholes pricing model for the notes upon inception, resulting in a day one loss of $66,672. The derivative liability was marked to market at December 31, 2017 being valued at $59,486, which resulted in a gain of ($7,186). The Company used the following range of assumptions for the year ended December 31, 2017:

	Year ended December 31, 2017
Annual dividend yield	-
Expected life (years)	0.50- 0.277
Risk-free interest rate	1.25% - 1.39	%
Expected volatility	188% -192	%

Kodiak Promissory Note

On December 17, 2014, the Company entered into the equity Purchase Agreement with Kodiak. Pursuant to the terms of the Purchase Agreement, for a period of twenty-four (24) months commencing on the date of effectiveness of the registration statement, Kodiak shall commit to purchase up to $1,500,000 of Put Shares, pursuant to Puts (as defined in the Purchase Agreement), covering the Registered Securities (as defined in the Purchase Agreement). See Note 9 for more information.

As further consideration for Kodiak entering into and structuring the Purchase Agreement, the Company issued Kodiak a promissory note in the principal aggregate amount of $60,000 (the “Kodiak Note”) that bears no interest and had maturity date of July 17, 2015. The Company is currently in default of the Kodiak Note. As of December 31, 2017, the balance outstanding on the Kodiak Note was $40,000. No funds were received from the Kodiak Note. Because the Kodiak Note was issued for no cash consideration, there was a full on-issuance discount, for which there was no financial statement impact for the years ended December 31, 2017 and 2016.