CONVERTIBLE PROMISSORY NOTES

6 Months Ended

Dec. 31, 2017

CONVERTIBLE PROMISSORY NOTES [Text Block]

NOTE 7 – CONVERTIBLE PROMISSORY NOTES

Summary of convertible promissory notes at December 31, 2017 is as follows:

							Accretion
							of								Transfer
		June 30,			Principal		Issuance		Total						(Loan			June 30,
		2017			Issued		Cost		Converted			Repaid			Extinguished)			2017
February 13, 2013	$	10,954		$	-	$	-	$	-		$	(10,954	)	$	-		$	-
July 22, 2014		7,222			-		-		-			-			-			7,222
February 6, 2015		7,150			-		-		-			-			117,846			124,996
September 9, 2015		30,000			-		-		-			-			-			30,000
August 12, 2016		45,712			-		1,037		-			-			-			46,749
September 8, 2016		27,201			-		577		-			-			-			27,778
September 9, 2016		139,810			-		5,316		(145,126	)		-			-			-
September 9, 2016		20,925			-		-		-			-			-			20,925
September 15, 2016		-			-		4,719		-			-			-			4,719
September 19, 2016		1,165,000			-		-		(55,500	)		-			(708,000	)		401,500
September 27, 2016		121,655			-		4,358		-			-			-			126,013
October 10, 2016		99,740			-		2,628		-			-			-			102,368
October 27, 2016		45,365			-		3,036		-			-			-			48,401
October 31, 2016		157,594			-		5,740		-			-			-			163,334
November 14, 2016		28,569			-		2,542		-			-			-			31,111
November 22, 2016		27,693			-		2,006		-			-			-			29,699
November 30, 2016		94,215			-		5,785		-			-			-			100,000
December 23, 2016		41,221			-		3,878		-			-			-			45,099
December 29, 2016		86,432			-		4,679		(91,111	)		-			-			-
January 17, 2017		46,179			-		4,177		-			-			-			50,356
January 25, 2017		112,735			-		19,488		(132,223	)		-			-			-
January 26, 2017		80,707			-		14,591		-			-			-			95,298
January 27, 2017		106,680			-		6,583		-			-			-			113,263
February 3, 2017		73,223			-		5,988		-			-			-			79,211
March 1, 2017		331,754			-		23,123		-			-			-			354,877
March 13, 2017		78,074			-		7,726		(85,800	)		-			-			-
March 20, 2017		77,870			-		5,263		-			-			-			83,133
March 28, 2017		128,167					8,698		(62,000	)		-			-			74,865
April 4, 2017		127,958			-		8,670		-			-			-			136,628
May 2, 2017		25,763			-		1,751		-			-			-			27,514
May 5, 2017		25,755			-		2,845		(28,600	)		-			-			-
May 15, 2017		308,729			-		21,008		-			-			-			329,737
May 17, 2017		309,655			-		21,453		-			-			-			331,108
June 8, 2017		76,985			-		5,252		-			-			-			82,237
June 8, 2017		76,985			-		5,252		-			-			-			82,237
June 30, 2017		100,063			-		6,884		-			-			-			106,947
July 3, 2017		-			100,000		4,869		-			-			-			104,869
July 14, 2017		-			15,000		1,066		-			-			-			16,066
July 26, 2017		-			15,000		1,054		-			-			-			16,054
July 26, 2017		-			30,000		1,461		-			-			-			31,461
August 4, 2017		-			30,000		1,461		-			-			-			31,461
August 4, 2017		-			30,000		2,089		-			-			-			32,089
September 5, 2017		-			30,000		1,461		-			-			-			31,461
September 7, 2017		-			55,000		3,691		-			-			-			58,691
September 28, 2017		-			50,000		3,191		-			-			-			53,191
October 4, 2017		-			35,000		942		-			-			-			35,942
October 24, 2017		-			35,000		1,261		-			-			-			36,261
November 1, 2017		-			30,000		1,050		-			-			-			31,050
November 9, 2017		-			10,000		338		-			-			-			10,338
December 15, 2017		-			3,000		83		-			-			-			3,083
December 15, 2017		-			8,000		163		-			-			-			8,163
	$	4,243,740		$	476,000	$	239,233	$	(600,359	)	$	(10,954	)	$	(590,154	)	$	3,757,507
Less: Unamortized debt discount	$	(1,402,631	)		-		-		-			-			-			(656,144	)
Total note payable, net of debt discount	$	2,841,109			-		-		-			-			-		$	3,101,363
Current portion	$	2,841,109			-		-		-			-			-		$	3,101,363
Long term portion	$	-			-		-		-			-			-		$	-

On July 3, 2017 Company issued an aggregate of $110,000 Convertible Promissory Notes with an issuance discount of $10,000 that matures on July 3, 2018. These notes bear 10% interest per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to the lessor of $1.00 or a discount of 25% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $132,991 of the embedded derivative, subject to the conversion limitation of beneficially owning not more than 9.99% shares together with the affiliates. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:	0.00%
Volatility	225.76%
Risk free rate:	1.03%

The initial fair values of the embedded debt derivative $57,619 was allocated as a debt discount with the remainder $75,372 was charged to current period operations as interest expense.

On July 14, 2017 Company issued an aggregate of $17,160 Convertible Promissory Notes with an issuance discount of $2,160 that matures on July 14, 2018. These notes bear 10% interest per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to the lessor of $1.00 or a discount of 25% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $20,747 of the embedded derivative, subject to the conversion limitation of beneficially owning not more than 9.99% shares together with the affiliates. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:	0.00%
Volatility	225.76%
Risk free rate:	1.03%

The initial fair values of the embedded debt derivative $8,989 was allocated as a debt discount with the remainder $11,758 was charged to current period operations as interest expense.

On July 26, 2017 Company issued an aggregate of $17,160 Convertible Promissory Notes with an issuance discount of $2,160 that matures on July 26, 2018. These notes bear 10% interest per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to the lessor of $1.00 or a discount of 25% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $20,747 of the embedded derivative, subject to the conversion limitation of beneficially owning not more than 9.99% shares together with the affiliates. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:	0.00%
Volatility	225.76%
Risk free rate:	1.03%

The initial fair values of the embedded debt derivative $8,989 was allocated as a debt discount with the remainder $11,758 was charged to current period operations as interest expense.

On July 26, 2017 Company issued an aggregate of $33,000 Convertible Promissory Notes with an issuance discount of $3,000 that matures on July 26, 2018. These notes bear 10% interest per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to the lessor of $1.00 or a discount of 25% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $39,897 of the embedded derivative, subject to the conversion limitation of beneficially owning not more than 9.99% shares together with the affiliates. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:	0.00%
Volatility	225.76%
Risk free rate:	1.03%

The initial fair values of the embedded debt derivative $17,286 was allocated as a debt discount with the remainder $22,612 was charged to current period operations as interest expense.

On August 4, 2017 Company issued an aggregate of $33,000 Convertible Promissory Notes with an issuance discount of $3,000 that matures on August 4, 2018. These notes bear 10% interest per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to the lessor of $1.00 or a discount of 25% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $47,543 of the embedded derivative, subject to the conversion limitation of beneficially owning not more than 9.99% shares together with the affiliates. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:	0.00%
Volatility	225.76%
Risk free rate:	1.03%

The initial fair values of the embedded debt derivative $25,667 was allocated as a debt discount with the remainder $21,876 was charged to current period operations as interest expense.

On August 4, 2017 Company issued an aggregate of $34,320 Convertible Promissory Notes with an issuance discount of $4,320 that matures on August 4, 2018. These notes bear 10% interest per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to the lessor of $1.00 or a discount of 25% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $49,445 of the embedded derivative, subject to the conversion limitation of beneficially owning not more than 9.99% shares together with the affiliates. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:	0.00%
Volatility	225.76%
Risk free rate:	1.03%

The initial fair values of the embedded debt derivative $26,693 was allocated as a debt discount with the remainder $22,751 was charged to current period operations as interest expense.

On September 5, 2017, the Company issued an aggregate of $33,000 Convertible Promissory Notes with an issuance discount of $3,000 that matures on September 5, 2018. These notes bear 10% interest per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to the lessor of $1.00 or a discount of 25% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $34,230 of the embedded derivative, subject to the conversion limitation of beneficially owning not more than 9.99% shares together with the affiliates. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:	0.00%
Volatility	225.76%
Risk free rate:	1.03%

The initial fair values of the embedded debt derivative $11,000 was allocated as a debt discount with the remainder $23,230 was charged to current period operations as interest expense.

On September 7, 2017, the Company issued an aggregate of $62,920 Convertible Promissory Notes with an issuance discount of $7,920 that matures on September 7, 2018. These notes bear 10% interest per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to the lessor of $1.00 or a discount of 25% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $80,426 of the embedded derivative, subject to the conversion limitation of beneficially owning not more than 9.99% shares together with the affiliates. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:	0.00%
Volatility	225.76%
Risk free rate:	1.03%

The initial fair values of the embedded debt derivative $37,752 was allocated as a debt discount up to the proceeds of the note with the remainder $42,674 was charged to current period operations as interest expense.

On September 28, 2017, the Company issued an aggregate of $57,200 Convertible Promissory Notes with an issuance discount of $7,200 that matures on September 28, 2018. These notes bear 10% interest per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to the lessor of $1.00 or a discount of 25% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $73,114 of the embedded derivative, subject to the conversion limitation of beneficially owning not more than 9.99% shares together with the affiliates. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:	0.00%
Volatility	225.76%
Risk free rate:	1.03%

The initial fair values of the embedded debt derivative $34,320 was allocated as a debt discount up to the proceeds of the note with the remainder $38,794 was charged to current period operations as interest expense.

On October 4, 2017, the Company issued a $40,040 Convertible Promissory Note with an issuance discount of $5,040 that matures on May 15, 2018. The notes bears 10% interest per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to the lessor of $1.00 or a discount of 25% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $44,066 of the embedded derivative, subject to the conversion limitation of beneficially owning not more than 9.99% shares together with the affiliates. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:	0.00%
Volatility	254.34%
Risk free rate:	1.03%

The initial fair values of the embedded debt derivative $13,347 was allocated as a debt discount with the remaining $30,719 charged to current period operations as interest expense.

On October 24, 2017, the Company issued a $40,040 Convertible Promissory Note with an issuance discount of $5,040 that matures on June 8, 2018. The notes bears 10% interest per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to the lessor of $1.00 or a discount of 25% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $56,401 of the embedded derivative, subject to the conversion limitation of beneficially owning not more than 9.99% shares together with the affiliates. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:	0.00%
Volatility	254.34%
Risk free rate:	1.03%

The initial fair values of the embedded debt derivative $26,693 was allocated as a debt discount with the remaining $29,707 charged to current period operations as interest expense.

On November 1, 2017, the Company issued a $34,320 Convertible Promissory Note with an issuance discount of $4,320 that matures on June 8, 2018. The notes bears 10% interest per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to the lessor of $1.00 or a discount of 25% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $48,343 of the embedded derivative, subject to the conversion limitation of beneficially owning not more than 9.99% shares together with the affiliates. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:	0.00%
Volatility	254.34%
Risk free rate:	1.03%

The initial fair values of the embedded debt derivative $22,880 was allocated as a debt discount with the remaining $25,463 charged to current period operations as interest expense.

On November 9, 2017, the Company issued a $11,440 Convertible Promissory Note with an issuance discount of $1,440 that matures on June 8, 2018. The notes bears 10% interest per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to the lessor of $1.00 or a discount of 25% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $16,114 of the embedded derivative, subject to the conversion limitation of beneficially owning not more than 9.99% shares together with the affiliates. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:	0.00%
Volatility	254.34%
Risk free rate:	1.03%

The initial fair values of the embedded debt derivative $7,627 was allocated as a debt discount with the remaining $8,488 charged to current period operations as interest expense.

On December 15, 2017, the Company issued a $3,432 Convertible Promissory Note with an issuance discount of $432 that matures on June 8, 2018. The notes bears 10% interest per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to the lessor of $1.00 or a discount of 25% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $4,834 of the embedded derivative, subject to the conversion limitation of beneficially owning not more than 9.99% shares together with the affiliates. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:	0.00%
Volatility	254.34%
Risk free rate:	1.03%

The initial fair values of the embedded debt derivative $2,288 was allocated as a debt discount with the remaining $2,546 charged to current period operations as interest expense.

On December 15, 2017, the Company issued a $9,152 Convertible Promissory Note with an issuance discount of $1,152 that matures on June 8, 2018. The notes bears 10% interest per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to the lessor of $1.00 or a discount of 25% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $13,839 of the embedded derivative, subject to the conversion limitation of beneficially owning not more than 9.99% shares together with the affiliates. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:	0.00%
Volatility	254.34%
Risk free rate:	1.03%

The initial fair values of the embedded debt derivative $7,118 was allocated as a debt discount with the remaining $6,721 charged to current period operations as interest expense.

The modification of the Notes was evaluated under FASB Accounting Standards Codification (“ASC”) Topic No. 470-50-40, “Debt Modification and Extinguishments”. Therefore, according to the guidance, the instruments were determined to be substantially different, and the transaction qualified for extinguishment accounting. During the six months ended December 31, 2017 and 2016, $108,860 and $1,539,701, respectively, was recorded as loss on extinguishment of debt due to settlement agreement with note holders. The $1,539,701 consists of net increase in principal of convertible promissory notes of $1,429,501 (net of extinguished interests of $137,883), increase in principal of non-convertible promissory notes of $520,000, extinguished derivative liabilities for debt and warrants with fair values on date of conversion was $298,728 and $111,072 respectively.

On June 28, 2017, the Company entered into a Note and Warrant Repayment and Repurchase Agreement whereby the Company agreed to repurchase 1,011 warrants and settle an outstanding convertible note payable from the holder totaling $21,908 for two payments to the holder of $100,000 each. The first $100,000 payment was made on June 30, 2017 resulting in the repurchase of 506 warrants and a $10,954 reduction of the note. The portion of the payment allocated to the warrant repurchase ($89,046) was recorded as a loss on settlement and is included in interest expense for the year ended June 28, 2017. The second and final $100,000 payment was made to the holder on July 3, 2017, resulting in the repurchase of the remaining 505 warrants and settlement of the remaining balance of the note of $10,954. The portion of the payment allocated to the warrant repurchase ($89,046) was recorded as a loss on settlement and is included in interest expense for the six months ended December 31, 2017.

During the six months ended December 31, 2017 and 2016 the Company amortized the debt discount on all the notes of $1,484,829 and $546,358, respectively to operations as expense including $239,233 and $33,052, respectively, for accretion expenses. During the three months ended December 31, 2017 and 2016 the Company amortized the debt discount on all the notes of $723,298 and $404,026, respectively to operations as expense including $123,568 and $28,957, respectively, for accretion expenses

Derivative Liability - Debt

The fair value of the described embedded derivative on all debt was valued at $2,727,997 and $3,386,252 at December 31, 2017 and June 30, 2017, respectively, which was determined using the Black Scholes Model with the following assumptions:

	December 31, 2017	June 30, 2017
Dividend yield:	0%	0%
Volatility	254.34 – 258.62%	247.5 – 284.4%
Risk free rate:	1.03 – 1.76%	1.03 – 1.89%

The Company recorded change in fair value of the derivative liability on debt to market resulting in non-cash, non-operating gain (loss) of $638,378 and $(270,809) for the six months ended December 31, 2017 and 2016, respectively. The Company recorded change in fair value of the derivative liability on debt to market resulting in non-cash, non-operating gain (loss) of $(242,895) and $1,239,892 for the three months ended December 31, 2017 and 2016, respectively

During the periods ended December 31, 2017 and June 30, 2017 the Company issued 10,966,465 and 11,696,896 shares of the Company’s common stock in settlement of $625,051 and $1,266,819, respectively, of convertible note and interest.

During the six months period ended December 31, 2017 and year ended June 30, 2017 the Company reclassed the derivative liability of $703,782 and $1,818,596, respectively, to additional paid in capital on conversion of convertible note.

The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of December 31, 2017 and June 30, 2017:

		Derivative
		Liability (convertible
		promissory notes)
Balance, June 30, 2016	$	1,162,058
Initial fair value at note issuances		5,290,359
Fair value of liability at note conversion		(1,818,596	)
Extinguishment of derivative liability		(298,728	)
Mark-to-market at June 30, 2017		(948,842	)
Balance, June 30, 2017	$	3,386,251
Initial fair value at note issuances		682,736
Fair value of liability at note conversion		(702,612	)
Extinguishment of derivative liability		-
Mark-to-market at December 31, 2017		(638,378	)
Balance, December 31, 2017	$	2,727,997
Net gain for the period included in earnings relating to the liabilities held at December 31, 2017	$	638,378

Derivative Liability- Warrants

Along with the promissory notes, the Company issued warrants that bear a cashless exercise provision. The warrants also include anti-dilution protection with respect to lower priced issuances of common stock or securities convertible or exchangeable into common stock, which provision resulted in derivative liability treatment under ASC 480. The warrants are recorded at fair value using the Black-Scholes option pricing model and marked-to-market at each reporting period, with the changes in the fair value recorded in the consolidated statement of operations and comprehensive income (loss).

During the six months ended December 31, 2017, a total of 1,371,429 warrants were issued related to amendments of convertible notes. During the six months ended December 31, 2016 no warrants were issued along with convertible notes.

The fair value of the described embedded derivative on all warrants was valued at $479,059 at December 31, 2017 and $338,873 at June 30, 2017 which was determined using the Black Scholes Model with the following assumptions:

	December 31, 2017	June 30, 2017
Dividend yield:	0%	0%
Volatility	263.85 - 269.45%	247.5%
Risk free rate:	1.31 – 2.20%	1.89%

	Warrants			Weighted	Weighted
	Outstanding			Average	Average
				Exercise	Remaining
				Price	life
Balance, June 30, 2016	135		$	20,040	2.79 years
Exercised	(1	)		42,480	-
Issued					-
Expired	(3	)		56,000	-
Cancelled	(58	)		38,160	-
Balance, June 30, 2017	74		$	42,752	2.55 years
Exercised	-				-
Issued	1,371,429			0.58	-
Expired	-				-
Cancelled	(3	)		42,816	-
Balance, December 31, 2017	1,371,500		$	0.74	4.61 years

The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of December 31, 2017:

		Derivative
		Liability (warrants)
Balance, June 30, 2016	$	268,611
Fair value of warrant cancelled		(111,073	)
Fair value of warrant exercised		(71,595	)
Mark-to-market at June 30, 2017 – warrant liability		252,931
Balance, June 30, 2017	$	338,874
Initial fair value of warrant derivatives at note issuances		190,841
Fair value of warrant cancelled		-
Fair value of warrant exercised		-
Mark-to-market at December 31, 2017 – warrant liability		(50,656	)
Balance, December 31, 2017	$	479,059
Net gain for the period included in earnings relating to the liabilities held at December $31, 2017		50,656

The Company recorded change in fair value of the derivative liability on warrants to market resulting in non-cash, non-operating gain of $50,656 and a loss of $112,517 for the six months ended December 31, 2017 and 2016, respectively. The Company recorded change in fair value of the derivative liability on warrants to market resulting in non-cash, non-operating loss of $49,634 and a gain of $68,730 for the three months ended December 31, 2017 and 2016, respectively

During the period ended December 31, 2017 and June 30, 2017 the Company reclassed the derivative liability on warrants of $0 and $71,595, respectively, to additional paid in capital on exercise of warrants.