STOCKHOLDERS DEFICIT

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Note 8 - STOCKHOLDERS DEFICIT

Shares issued to settle outstanding obligations

Executive Officers

During the nine months ended September 30, 2018, the Company entered into conversion and cancellation of debt agreements with two executive officers. The Company agreed to convert a note payable for $74,131 and aggregate accrued payroll of $419,805 into 3,746,660 shares of the Company’ stock, valued at $74,933 using the closing market price of the Company’s stock on the date of the conversion and cancellation of debt agreements. The difference between the total executive obligations converted of $493,936, and the market value of the shares issued of $74,933, was recorded as contributed capital of $419,003 in the condensed consolidated statements of stockholders’ deficit for the nine months ended September 30, 2018.

Vendors

During the nine months ended September 30, 2018, the Company entered into conversion and cancellation of debt agreements with several of its vendors. The Company agreed to convert $202,094 of outstanding vendor obligations into 5,616,086 shares of the Company’ stock, valued at $160,983 using the closing market price of the Company’s stock on the date of the conversion and cancellation of debt agreements. The difference between the total vendor obligations converted of $202,094, and the market value of the shares issued of $160,983, was recorded as a gain on settlement of obligations of $41,111 in other income in the condensed consolidated statements of operations for the nine months ended September 30, 2018.

Conversion of Debt

On April 8, 2018 and April 12, 2018, the Company entered into conversion and cancellation of debt agreements relating to two outstanding convertible notes. The Company agreed to convert the outstanding aggregate principal and interest balances of $35,752 into 4,400,000 shares of common stock with a fair value of $150,000, and recorded a loss on cancellation of debt of $114,248.

Shares issued for services

In May and July of 2018, the Company issued an aggregate of 1,300,000 shares valued at $32,500, for services received relating to consulting agreements.

Shares issued for acquisition

On July 27, 2018, the Company issued 2,275,000 shares valued at $68,250, or $0.03 per share, related to an acquisition (see Note 3).

Shares to be issued

As of December 31, 2017, the Company had not yet issued 6,537,352 shares of common stock with a value of $932,734 due for past services provided. During the nine months ended September 30, 2018, the Company issued 3,813,000 shares of common stock with a value of $707,895 related to the prior year unissued shares. In addition, the Company agreed to issue a total of 620,000 shares valued at $13,652, or $0.02 per share, for services rendered. As of September 30, 2018, the Company had not yet issued 3,404,352 shares of common stock with a value of $238,491 for past services provided and an acquisition.

Warrants

A summary of warrant activity for the nine months ended September 30, 2018, is as follows:

	Number of		Weighted - Average
	Warrants		Exercise Price
Outstanding at December 31, 2017		5,004,708	$	0.014
Granted		3,000,000		0.015
Forfeited		-		-
Outstanding at September 30, 2018		8,004,708	$	0.014
Exercisable at September 30, 2018		8,004,708	$	0.014

Information relating to outstanding warrants at September 30, 2018, summarized by exercise price, is as follows:

Outstanding							Exercisable
					Weighted				Weighted
					Average				Average
Range of					Exercise				Exercise
Exercise	Shares		Life in Years		Price		Shares		Price
$0.01 - $0.15		8,004,708		2.14	$	0.014		8,004,708	$	0.014
		8,004,708						8,004,708

During the nine months ended September 30, 2018, the Company issued 3,000,000 warrants with a three (3) year expiration date and an exercise price of $0.015 per share to purchase the Company’s common stock as an inducement to enter into certain convertible note agreements. The aggregate relative fair value of the warrants granted was determined to be $24,085 which was recorded as a debt discount and is being amortized to financing costs over the term of the related convertible notes.

The weighted-average remaining contractual life of warrants outstanding and exercisable at September 30, 2018 was 2.14 years. The intrinsic value of both outstanding and exercisable warrants at September 30, 2018 was $13,353.