10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
	FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2018
¨	TRANSITION REPORT UNDER SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	FOR THE TRANSITION PERIOD FROM __________ TO __________

COMMISSION FILE NUMBER: 000-54817

DIGITAL LOCATIONS, INC.

(Name of registrant in its charter)

Nevada	20-5451302
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3700 State Street, Suite 350, Santa Barbara, California 93105

(Address of principal executive offices) (Zip Code)

Issuer’s telephone Number: (805) 456-7000

Indicate by check mark whether the registrant (1) has filed all reports required 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 every Interactive Data File required to be submitted 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). Yes x No o

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

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
Emerging growth company	¨

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The number of shares of registrant’s common stock outstanding, as of November 13, 2018 was 39,674,732.

DIGITAL LOCATIONS, INC. 

INDEX

PART I: FINANCIAL INFORMATION
ITEM 1	FINANCIAL STATEMENTS (Unaudited)	3
	Condensed Balance Sheets	3
	Condensed Statements of Operations	4
	Condensed Statements of Cash Flows	5
	Notes to Condensed Financial Statements	6
ITEM 2	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	20
ITEM 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	26
ITEM 4	CONTROLS AND PROCEDURES	26
PART II: OTHER INFORMATION
ITEM 1	LEGAL PROCEEDINGS	27
ITEM 1A	RISK FACTORS	27
ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	27
ITEM 3	DEFAULTS UPON SENIOR SECURITIES	27
ITEM 4	MINE SAFETY DISCLOSURES	27
ITEM 5	OTHER INFORMATION	27
ITEM 6	EXHIBITS	28
SIGNATURES		29

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

DIGITAL LOCATIONS, INC.

Condensed Balance Sheets

	September 30, 2018			December 31, 2017
ASSETS	(Unaudited)
Current assets:
Cash	$	25,898		$	23,461
Prepaid expenses		8,696			1,998
Total current assets		34,594			25,459
Property and equipment, net		1,453			2,464
Total assets	$	36,047		$	27,923
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	116,758		$	112,768
Accrued expenses and other current liabilities		2,102			2,011
Accrued interest, notes payable		290,622			155,070
Derivative liabilities		6,524,132			8,072,904
Convertible notes payable		29,500			29,500
Convertible notes payable, net of discount of $289,575 and $423,219, respectively		1,731,524			1,117,380
Total current liabilities		8,694,638			9,489,633
Stockholders’ deficit:
Preferred stock, $0.001 par value; 20,000,000 shares authorized:
Series A, 0 and 1,000 shares issued and outstanding, respectively		-			1
Series B, 16,155 shares issued and outstanding		16			16
Common stock, $0.001 par value; 2,000,000,000 shares authorized, 38,776,436 shares issued and outstanding		38,776			38,776
Additional paid-in capital		20,537,951			20,537,950
Accumulated deficit		(29,235,334	)		(30,038,453	)
Total stockholders’ deficit		(8,658,591	)		(9,461,710	)
Total liabilities and stockholders’ deficit	$	36,047		$	27,923

 

See notes to condensed financial statements

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DIGITAL LOCATIONS, INC.

Condensed Statements of Operations

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Revenue	$	-		$	-		$	-		$	-
Operating Expenses:
General and administrative		98,055			228,234			475,446			573,010
Research and development		-			32,504			-			65,009
Depreciation and amortization		337			149			1,011			499
Total operating expenses		98,392			260,887			476,457			638,518
Loss from operations		(98,392	)		(260,887	)		(476,457	)		(638,518	)
Other income (expense):
Other income		-			2,500			-			2,500
Gain (loss) on settlement of debt		-			14,054			-			(29,371	)
Gain (loss) on change in derivative liabilities		(235,651	)		(9,820,930	)		2,029,272			(11,759,174	)
Interest expense		(237,595	)		(224,313	)		(749,696	)		(647,249	)
Total other income (expense)		(473,246	)		(10,028,689	)		1,279,576			(12,433,294	)
Income (loss) before income taxes		(571,638	)		(10,289,576	)		803,119			(13,071,812	)
Provision for income taxes		-			-			-			-
Net income (loss)	$	(571,638	)	$	(10,289,576	)	$	803,119		$	(13,071,812	)
Net income (loss) per common share:
Basic	$	(0.01	)	$	(0.28	)	$	0.02		$	(0.36	)
Diluted	$	(0.01	)	$	(0.28	)	$	0.02		$	(0.36	)
Weighted average number of common shares outstanding:
Basic		38,776,436			36,768,082			38,776,436			36,410,439
Diluted		38,776,436			36,768,082			38,776,436			36,410,439

See notes to condensed financial statements

 

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DIGITAL LOCATIONS, INC.

Condensed Statements of Cash Flows

(Unaudited)

	Nine Months Ended September 30,
	2018			2017
Cash flows from operating activities:
Net income (loss)	$	803,119		$	(13,071,812	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		1,011			499
Loss on settlement of debt		-			29,371
Amortization of debt discount to interest expense		614,144			571,556
(Gain) loss on change in derivative liabilities		(2,029,272	)		11,759,174
Preferred stock issued for services		-			1
Changes in assets and liabilities:
Increase in prepaid expenses		(6,698	)		(6,781	)
Increase in:
Accounts payable		3,990			9,211
Accrued expenses and other current liabilities		135,643			71,326
Net cash used in operating activities		(478,063	)		(637,455	)
Cash flows from investing activities		-			-
Cash flows from financing activities:
Proceeds from convertible notes payable		480,500			640,000
Payments of convertible notes payable		-			(10,417	)
Net cash provided by financing activities		480,500			629,583
Net increase (decrease) in cash		2,437			(7,872	)
Cash, beginning of period		23,461			39,934
Cash, end of period	$	25,898		$	32,062

 

See notes to condensed financial statements

5

DIGITAL LOCATIONS, INC.

Notes to Condensed Financial Statements

Nine Months Ended September 30, 2018

(Unaudited)

1. ORGANIZATION AND BASIS OF PRESENTATION

Organization

Digital Locations, Inc. (the “Company”) was incorporated in the State of Nevada on August 25, 2006 as Zingerang, Inc. On April 2, 2007, the Company changed its name to Carbon Sciences, Inc. and on November 14, 2017, the Company changed its name to Digital Locations, Inc.

Basis of Presentation

The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the three months and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. For further information refer to the financial statements and notes thereto included in the Company's Form 10-K for the year ended December 31, 2017.

Going Concern

The accompanying unaudited condensed financial statements of the Company have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities, and commitments in the normal course of business. The accompanying condensed financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company does not generate any revenue, and has negative cash flows from operations, which raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon, among other things, raising additional capital. Since its inception through September 30, 2018, the Company has obtained funds primarily from the issuance of common stock and debt. Management believes this funding will continue, and continues to pursue funding opportunities. Management believes the existing shareholders and lenders and prospective new investors will provide the additional cash needed to meet the Company’s obligations as they become due, and will allow the development of its business plan. However, there can be no assurance that the Company will be successful in accomplishing its objectives. Without such additional capital, the Company may be required to cease operations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies of the Company are disclosed in Note 2 to the Notes to Financial Statements included in the Company’s Annual Report on Form 10-K. The following summary of significant accounting policies of the Company is presented to assist in understanding the Company’s interim financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

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Income (Loss) per Share Calculations

Basic net income or loss per common share is computed by dividing net income or loss by the weighted average number of common shares outstanding. Diluted net income or loss per common share is computed by dividing net income or loss by the sum of the weighted average number of common shares outstanding and the dilutive potential common share equivalents then outstanding. Potential dilutive common share equivalents consist of shares issuable upon the exercise of outstanding stock options and warrants to acquire common stock using the treasury stock method and the average market price per share during the period, and shares issuable upon exercise of convertible notes payable and convertible preferred stock.

Since the Company had no dilutive effect of stock options, warrants, convertible notes payable and convertible preferred stock for the three months and nine months ended September 30, 2018, basic weighted average number of common shares outstanding is the same as diluted weighted average number of common shares outstanding. The Company has excluded 1,406,250 common shares for exercisable options, approximately 819,763,230 common shares issuable upon exercise of convertible notes payable and approximately 359,000,000 common shares issuable upon the conversion of outstanding shares of Series B preferred stock for the three months and nine months ended September 30, 2018.

Since the Company had no dilutive effect of stock options, warrants, convertible notes payable and convertible preferred stock for the three months and nine months ended September 30, 2017, basic weighted average number of common shares outstanding is the same as diluted weighted average number of common shares outstanding. The Company has excluded 1,408,750 common shares for exercisable options, 6,000 common shares for exercisable common stock purchase warrants, approximately 229,567,000 common shares issuable upon exercise of convertible notes payable and approximately 359,000,000 common shares issuable upon the conversion of outstanding shares of Series B preferred stock for the three months and nine months ended September 30, 2017.

Fair Value of Financial Instruments

Disclosures about fair value of financial instruments, require disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of September 30, 2018 and December 31, 2017, the Company believes the amounts reported for cash, prepaid expenses, accounts payable, accrued interest, accrued expenses and other current liabilities, and convertible notes payable approximate fair value because of their short maturities.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASC”) Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

· Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

· Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

· Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

7

We measure certain financial instruments at fair value on a recurring basis. Liabilities measured at fair value on a recurring basis are as follows at September 30, 2018 and December 31, 2017:

	Total		Level 1		Level 2		Level 3
September 30, 2018:
Derivative liabilities	$	6,524,132	$	-	$	-	$	6,524,132
Total liabilities measured at fair value	$	6,524,132	$	-	$	-	$	6,524,132
December 31, 2017:
Derivative liabilities	$	8,072,904	$	-	$	-	$	8,072,904
Total liabilities measured at fair value	$	8,072,904	$	-	$	-	$	8,072,904

During the nine months ended September 30, 2018, the Company had the following activity in its derivative liabilities account:

	Convertible Notes Payable			Series B Preferred Stock			Total
Derivative liabilities at December 31, 2017	$	5,241,762		$	2,831,142		$	8,072,904
Addition to liabilities for new debt/shares issued		480,500			-			480,500
Change in fair value		(1,257,529	)		(771,743	)		(2,029,272	)
Derivative liabilities at September 30, 2018	$	4,464,733		$	2,059,399		$	6,524,132

Derivative Liabilities

We have identified the conversion features of our convertible notes payable and our Series B Preferred Stock as derivatives. We estimate the fair value of the derivatives using a multinomial lattice model based on a probability weighted discounted cash flow model. We estimate the fair value of the derivative liabilities at the inception of the financial instruments, at the date of conversions to equity and at each reporting date, recording a derivative liability, debt discount, additional paid-in capital and a gain or loss on change in derivative liabilities as applicable. These estimates are based on multiple inputs, including the market price of our stock, interest rates, our stock price volatility, variable conversion prices based on market prices as defined in the respective agreements and probabilities of certain outcomes based on management projections. These inputs are subject to significant changes from period to period and to management’s judgment; therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material.

8

Recently Issued Accounting Pronouncements

There were no new accounting pronouncements issued by the FASB during the nine months ended September 30, 2018 and through the date of filing of this report that the Company believes will have a material impact on its financial statements.

Reclassifications

Certain amounts in the condensed financial statements for the three months and nine months ended September 30, 2017 have been reclassified to conform to the presentation for the three months and nine months ended September 30, 2018.

3. CAPITAL STOCK

At September 30, 2018, the Company’s authorized stock included 2,000,000,000 shares of common stock, with a par value of $0.001 per share. The Company is also authorized to issue 20,000,000 shares of preferred stock, with a par value of $0.001 per share. The rights, preferences and privileges of the holders of the preferred stock will be determined by the Board of Directors prior to issuance of such shares.

Common Stock

On April 20, 2016, the Company amended its articles of incorporation to reduce the number of authorized shares of common stock from 1,000,000,000 to 100,000,000 and to affect a one-for-ten reverse stock split of its authorized, issued and outstanding shares of common stock. The Company has given retroactive affect for the reverse stock split in all periods presented in the accompanying financial statements.

On April 29, 2016, our Board of Directors and the holder of a majority of the total issued and outstanding voting stock of the Company authorized and approved an amendment to the Company's articles of incorporation to increase the number of authorized shares of common stock from 100,000,000 to 2,000,000,000.

As of September 30, 2018, the Company had 38,776,436 shares of common stock issued and outstanding. During the nine months ended September 30, 2018, the Company did not issue any shares of common stock.

During the nine months ended September 30, 2017, the Company issued a total of 2,565,527 shares of common stock at fair value in consideration for the conversion of $24,000 of convertible promissory notes and accrued interest payable of $4,649. In connection with the debt conversion, the Company increased common stock by $2,565 and additional paid-in capital by $105,123, reduced derivative liabilities by $49,668 and recognized a loss of $29,371 on conversion of the notes.

Series A Preferred Stock

On August 31, 2017, the Company filed a Withdrawal of Certificate of Designation for its original Series A Preferred Stock with the Secretary of State of Nevada. On September 4, 2017, the Board of Directors of the Company authorized (a) the execution and recording with the Nevada Secretary of State of a new Certificate of Designation (the “Series A Certificate”) for its new Series A preferred stock (“Series A Preferred Stock”), authorizing up to 1,000 shares of Series A Preferred Stock, and (b) the issuance of 1,000 shares of Series A Preferred Stock to the Company’s President and Director, William E. Beifuss, Jr.

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The shares of Series A Preferred Stock have a par value of $0.001 per share. The shares of Series A Preferred Stock do not have a dividend right or rate, or liquidation preference, and are not convertible into shares of common stock.

The shares of the Series A Preferred Stock were automatically redeemed by the Company at their par value in January 2018, 120 days after the effective date of the Series A Certificate

Series B Preferred Stock

On March 2, 2016, the Company filed a Certificate of Designation for its Series B Preferred Stock (the “Series B Certificate”) with the Secretary of State of Nevada designating 30,000 shares of its authorized preferred stock as Series B Preferred Stock. The shares of Series B Preferred Stock have a par value of $0.001 per share.

The total face value of this entire series is three million dollars ($3,000,000). Each share of Series B Preferred Stock has a stated face value of One Hundred Dollars ($100) (“Share Value”), and is convertible into shares of fully paid and non-assessable shares of common stock of the Company.

As of September 30, 2018 and December 31, 2017, the Company had 16,155 shares of Series B Preferred Stock outstanding, with a face value of $1,615,500. These shares were issued in March 2016 for the redemption and cancellation of $1,615,362 of convertible promissory notes and $264,530 of accrued interest payable.

The holders of outstanding shares of the Series B Preferred Stock (the “Holders”) are entitled to receive dividends pari passu with the holders of common stock, except upon a liquidation, dissolution and winding up of the Company, in which case the Series B Preferred Stock has a preference. Such dividends will be paid equally to all outstanding shares of Series B Preferred Stock and common stock, on an as-if-converted basis with respect to the Series B Preferred Stock. The Holders may elect to use the most favorable conversion price for the purpose of determining the as-if-converted number of shares.

In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, the Holder of each outstanding share of the Series B Preferred Stock shall be entitled to receive, out of the assets of the Company available for distribution to its shareholders upon such liquidation, whether such assets are capital or surplus of any nature, an amount equal to one hundred dollars ($100) for each such share of the Series B Preferred Stock (as adjusted for any combinations, consolidations, stock distributions, stock splits or stock dividends with respect to such shares), plus all dividends, if any, declared and unpaid thereon as of the date of such distribution, before any payment is made or any assets distributed to the holders of the common stock. After such payment, the remaining assets of the Company will be distributed to the holders of common stock.

If the assets to be distributed to the Holders of the Series B Preferred Stock are insufficient to permit the receipt by such Holders of the full preferential amounts, then all of such assets will be distributed among such Holders ratably in accordance with the number of such shares then held by each such Holder.

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The sale of all or substantially all of the Company’s assets, any consolidation or merger of the Company with or into any other entity or person, or any other corporate reorganization, in which the stockholders of the Company immediately prior to such consolidation, merger or reorganization, own less than fifty percent (50%) of the Company’s voting power immediately after such consolidation, merger or reorganization, or any transaction or series of related transactions to which the Company is a party in which in excess of fifty percent (50%) of the Company’s voting power is transferred, excluding any consolidation or merger effected exclusively to change the domicile of the Company, is deemed to be a liquidation, dissolution or winding up.

The Holder has the right, at any time, at its election, to convert all or part of the Share Value into shares of common stock. The conversion price is the lesser of (1) Fifty Percent (50%) of the lowest trade price of common stock recorded on any trade day after December 12, 2012 or (2) the lowest effective price per share granted to any person or entity, including the Holder but excluding officers and directors of the Company, to acquire common stock, or adjusted, whether by operation of purchase price adjustment, settlement agreements, exchange agreements, reset provision, floating conversion or otherwise, any outstanding warrant, option or other right to acquire common stock or outstanding common stock equivalents (the “Conversion Price”).

The Conversion Price is subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Company relating to the Company’s securities or the securities of any subsidiary of the Company, combinations, recapitalization, reclassifications, extraordinary distributions and similar events. No fractional shares of the common stock shall be issuable upon the conversion of shares of the Series B Preferred Stock and the Company shall pay the cash equivalent of any fractional share upon such conversion.

If the Company fails to deliver shares in accordance with the required time frame, then for each conversion, a penalty of $1,500 per day will be assessed for each day after the third business day (inclusive of the day of the conversion) until share delivery is made. Such penalty may be converted into common stock at the Conversion Price or payable in cash, at the sole option of the Holder (under the Holder’s and the Company’s expectations that any penalty amounts shall tack back to the original date of the issuance of Series B Preferred Stock, consistent with applicable securities laws).

In no event will the Holder be entitled to convert any Series B Preferred Stock, such that upon conversion the sum of (1) the number of shares of common stock beneficially owned by the Holder and its affiliates (other than shares of common stock which may be deemed beneficially owned through the ownership of the unconverted portion of this Series B Preferred Stock or the unexercised or unconverted portion of any other security of the Company subject to a limitation on conversion or exercise analogous to these limitations), and (2) the number of shares of common stock issuable upon the conversion of Series B Preferred Stock, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of common stock. The limitations on conversion may be waived by the Holder upon, at the election of the Holder, not less than 61 days prior notice to the Company, and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver).

Except as required by law, the Holders of Series B Preferred Stock are not entitled to vote, as a separate class or otherwise, on any matter presented to the stockholders of the Company for their action or consideration at any meeting of stockholders of the Company (or by written consent of stockholders in lieu of meeting). Each Holder of outstanding shares of Series B Preferred Stock will be entitled, on the same basis as holders of common stock, to receive notice of such action or meeting.

So long as any shares of the Series B Preferred Stock remain outstanding, the Company will not, without first obtaining the approval (by vote or written consent, as provided by law) of the holders of at least a majority of the then outstanding shares of Series B Preferred Stock voting together as one class: (a) alter or change the rights, preferences or privileges of the shares of the Series B Preferred Stock so as to affect materially and adversely such shares; or (b) create any new class of shares having preference over the Series B Preferred Stock.

The Holder has the right, at its sole discretion, to elect a fixed conversion price for the Series B Preferred Stock. The Fixed Conversion Price may not be lower than the Conversion Price. The Company will not, by amendment of its Certificate of Incorporation, bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Series B Certificate, and will at all times carry out all the provisions of the Series B Certificate.

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4. STOCK OPTIONS AND WARRANTS

Stock Options

As of September 30, 2018, the Board of Directors of the Company had granted non-qualified stock options exercisable for a total of 1,408,750 shares of common stock to its employees, officers, and consultants. Stock-based compensation cost is measured at the grant date based on the value of the award granted using the Black-Scholes option pricing model, and recognized over the period in which the award vests, which is generally 25 months. We recognized no stock-based compensation expense for the three months and nine months ended September 30, 2018. As of September 30, 2018, we had no unrecognized stock-based compensation expense.

A summary of the Company’s stock option awards as of September 30, 2018, and changes during the nine months then ended is as follows:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contract Term (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2017		1,408,750		$	0.17		2.72	$	-
Granted		-		$	-
Exercised		-		$	-
Forfeited or expired		(2,500	)	$	-
Outstanding and exercisable at September 30, 2018		1,406,250		$	0.11		1.98	$	-

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on the closing price of our common stock of $0.0079 as of September 30, 2018, which would have been received by the holders of in-the-money options had the option holders exercised their options as of that date.

Warrants

As of September 30, 2018, the Company had no common stock purchase warrants outstanding.

Former Chief Executive Officer Option

On October 12, 2017, Unleashed Future Holdings, LLC, a limited liability company owned by a retirement account of which Mr. Gerard Hug, former chief executive officer and a director of the Company, is a beneficiary, purchased an option for $7,000 to buy up to 7,000 shares of Series B Preferred Stock from the current holder of the Series B Preferred Stock (the “Option”). The exercise price of the Option is $100 per share of Series B Preferred Stock for a total exercise price of $700,000. The Option may be exercised on a cash or a cashless basis. Each share of Series B Preferred Stock is convertible into shares of the Company’s common stock in accordance with the terms and conditions of the Series B Certificate. Unleashed Future Holdings, LLC is eligible to exercise all or part of the Option after the Company’s consolidated gross revenue, calculated in accordance with generally accepted accounting principles, consistently applied, equals or exceeds $2,000,000, on an annualized basis, as reported in the Company’s quarterly or annual financial statements.

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5. CONVERTIBLE NOTES PAYABLE

Convertible Promissory Notes - Services of $58,600

On December 31, 2012, we issued 5% convertible promissory notes to two individuals in exchange for services rendered in the aggregate amount of $58,600. The notes are convertible into shares of our common stock at a conversion price equal to the lesser of $2.00 per share or the closing price per share of common stock recorded on the trading day immediately preceding the date of conversion. We recorded a total debt discount of $57,050 related to the conversion feature of the notes, which has been fully amortized to interest expense, along with a derivative liability at inception. One of the notes with a principal balance of $25,980 at September 30, 2018 matured on December 31, 2014 and is currently in default. The maturity date of a second note with a principal balance of $32,620 at September 30, 2018 has been extended to December 31, 2018.

Convertible Promissory Note – Accounts Payable of $29,500

On March 14, 2013, we issued a 5% convertible promissory note in the principal amount of $29,500, which is convertible into shares of our common stock at a conversion price equal to the lesser of $1.50 per share or the closing price per share of common stock recorded on the trading day immediately preceding the date of conversion. The note, with a principal balance of $29,500 at September 30, 2018, matured two years from its effective date, or March 14, 2015, and is currently in default.

March 2016 Convertible Promissory Note – $1,000,000

On March 4, 2016, we issued a convertible promissory note in the aggregate principal amount of up to $1,000,000 (the "March 2016 $1,000,000 CPN"). The lender may advance the Company consideration for the note in such amounts as the lender may choose in its sole discretion. The note is convertible into shares of our common stock at a price per share equal to the lesser of: $0.03; 50% of the lowest trade price of our common stock subsequent to the effective date of the note; or the lowest effective price per share granted to any person or entity (exclusive of our officers and directors) to acquire common stock subsequent to the effective date of the note. The note initially matured, with respect to each advance, one year from the effective date of each advance. Subsequently, the lender extended the maturity date, with the note payable upon demand, but in no event later than 60 months from March 4, 2016.

On March 4, 2016, we received proceeds of $25,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $25,000 related to the conversion feature of the note, along with a derivative liability at inception. The debt discount has been fully amortized to interest expense. In September and December 2017, we issued the lender a total of 1,632,272 shares of our common stock in consideration for the conversion of principal of $25,000 and accrued interest of $3,956, extinguishing the note in full.

On March 14, 2016, we received proceeds of $27,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $27,000 related to the conversion feature of the note, along with a derivative liability at inception. The debt discount has been fully amortized to interest expense. In December 2017, we issued the lender 469,041 shares of our common stock in consideration for the conversion of principal of $5,000 and accrued interest of $863, resulting in a principal balance of $22,000 at September 30, 2018.

On March 17, 2016, we received proceeds of $33,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $33,000 related to the conversion feature of the note, along with a derivative liability at inception. The debt discount has been fully amortized to interest expense.

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On April 11, 2016, we received proceeds of $90,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $90,000 related to the conversion feature of the note, along with a derivative liability at inception. The debt discount has been fully amortized to interest expense.

On May 20, 2016, we received proceeds of $60,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. The debt discount has been fully amortized to interest expense.

On June 22, 2016, we received proceeds of $50,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $50,000 related to the conversion feature of the note, along with a derivative liability at inception. The debt discount has been fully amortized to interest expense.

On July 6, 2016, we received proceeds of $87,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $87,000 related to the conversion feature of the note, along with a derivative liability at inception. The debt discount has been fully amortized to interest expense.

On August 8, 2016, we received proceeds of $60,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. The debt discount has been fully amortized to interest expense.

On September 13, 2016, we received proceeds of $55,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $55,000 related to the conversion feature of the note, along with a derivative liability at inception. The debt discount has been fully amortized to interest expense.

On October 17, 2016, we received proceeds of $55,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $55,000 related to the conversion feature of the note, along with a derivative liability at inception. The debt discount has been fully amortized to interest expense.

On November 8, 2016, we received proceeds of $55,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $55,000 related to the conversion feature of the note, along with a derivative liability at inception. The debt discount has been fully amortized to interest expense.

On December 6, 2016, we received proceeds of $60,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. The debt discount has been fully amortized to interest expense.

On January 10, 2017, we received proceeds of $60,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $1,644 and the debt discount was fully amortized to interest expense.

On February 13, 2017, we received proceeds of $60,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $7,233 and the debt discount was fully amortized to interest expense.

On March 9, 2017, we received proceeds of $60,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $11,178 and the debt discount was fully amortized to interest expense.

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On April 12, 2017, we received proceeds of $95,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $95,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $26,548 and the debt discount was fully amortized to interest expense.

On May 8, 2017, we received proceeds of $60,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $21,041 and the debt discount was fully amortized to interest expense.

June 2017 Convertible Promissory Note – $500,000

On June 2, 2017, we issued a convertible promissory note in the aggregate principal amount of up to $500,000 (the "June 2017 $500,000 CPN"). The lender may advance the Company consideration for the note in such amounts as the lender may choose in its sole discretion. The note is convertible into shares of our common stock at a price per share equal to the lesser of: $0.03; 50% of the lowest trade price of our common stock subsequent to the effective date of the note; or the lowest effective price per share granted to any person or entity (exclusive of our officers and directors) to acquire common stock subsequent to the effective date of the note. The note initially matured, with respect to each advance, one year from the effective date of each advance. Subsequently, the lender extended the maturity date, with the note payable upon demand, but in no event later than 60 months from June 2, 2017.

On June 2, 2017, we received proceeds of $60,000 pursuant to the June 2017 $500,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $25,151 and the debt discount was fully amortized to interest expense.

On July 10, 2017, we received proceeds of $80,000 pursuant to the June 2017 $500,000 CPN. We recorded a debt discount of $80,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $41,863 and the debt discount was fully amortized to interest expense.

On August 11, 2017, we received proceeds of $80,000 pursuant to the June 2017 $500,000 CPN. We recorded a debt discount of $80,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $48,877 and the debt discount was fully amortized to interest expense.

On September 12, 2017, we received proceeds of $85,000 pursuant to the June 2017 $500,000 CPN. We recorded a debt discount of $85,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $59,384 and the debt discount was fully amortized to interest expense.

On October 13, 2017, we received proceeds of $80,000 pursuant to the June 2017 $500,000 CPN. We recorded a debt discount of $80,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $58,753, resulting in a remaining debt discount of $2,849 as of September 30, 2018.

On November 8, 2017, we received proceeds of $75,000 pursuant to the June 2017 $500,000 CPN. We recorded a debt discount of $75,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $54,644, resulting in a remaining debt discount of $8,014 as of September 30, 2018.

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December 2017 Convertible Promissory Note – $500,000

On December 14, 2017, we issued a convertible promissory note in the aggregate principal amount of up to $500,000 (the "December 2017 $500,000 CPN"). The lender may advance the Company consideration for the note in such amounts as the lender may choose in its sole discretion. The note is convertible into shares of our common stock at a price per share equal to the lesser of: $0.03; 50% of the lowest trade price of our common stock subsequent to the effective date of the note; or the lowest effective price per share granted to any person or entity (exclusive of our officers and directors) to acquire common stock subsequent to the effective date of the note. The note matures, with respect to each advance, one year from the effective date of each advance. 

On December 14, 2017, we received proceeds of $60,000 pursuant to the December 2017 $500,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $43,712, resulting in a remaining debt discount of $12,329 as of September 30, 2018.

On January 11, 2018, we received proceeds of $70,000 pursuant to the December 2017 $500,000 CPN. We recorded a debt discount of $70,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $50,247, resulting in a remaining debt discount of $19,753 as of September 30, 2018.

On February 7, 2018, we received proceeds of $60,000 pursuant to the December 2017 $500,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $38,630, resulting in a remaining debt discount of $21,370 as of September 30, 2018.

On March 8, 2018, we received proceeds of $55,000 pursuant to the December 2017 $500,000 CPN. We recorded a debt discount of $55,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $31,041, resulting in a remaining debt discount of $23,959 as of September 30, 2018.

On March 14, 2018, we received proceeds of $6,500 pursuant to the December 2017 $500,000 CPN. We recorded a debt discount of $6,500 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $3,562, resulting in a remaining debt discount of $2,938 as of September 30, 2018.

On April 9, 2018, we received proceeds of $77,000 pursuant to the December 2017 $500,000 CPN.  We recorded a debt discount of $77,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $24,000, resulting in a remaining debt discount of $36,000 as of September 30, 2018.

On May 7, 2018, we received proceeds of $60,000 pursuant to the December 2017 $500,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $30,800, resulting in a remaining debt discount of $29,200 as of September 30, 2018.

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On June 7, 2018, we received proceeds of $52,000 pursuant to the December 2017 $500,000 CPN.  We recorded a debt discount of $52,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $16,384, resulting in a remaining debt discount of $35,616 as of September 30, 2018.

On July 10, 2018, we received proceeds of $35,000 pursuant to the December 2017 $500,000 CPN. We recorded a debt discount of $35,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $7,863, resulting in a remaining debt discount of $27,137 as of September 30, 2018.

On August 16, 2018, we received proceeds of $24,500 pursuant to the December 2017 $500,000 CPN. We recorded a debt discount of $24,500 related to the conversion feature of the note, along with a derivative liability at inception.  During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $3,020, resulting in a remaining debt discount of $21,480 as of September 30, 2018.

August 2018 Convertible Promissory Note – $500,000

On August 17, 2018, we issued a convertible promissory note in the aggregate principal amount of up to $500,000 (the "August 2018 $500,000 CPN"). The lender may advance the Company consideration for the note in such amounts as the lender may choose in its sole discretion. The note is convertible into shares of our common stock at a price per share equal to the lesser of: $0.01; 50% of the lowest trade price of our common stock subsequent to the effective date of the note; or the lowest effective price per share granted to any person or entity (exclusive of our officers and directors) to acquire common stock subsequent to the effective date of the note. The note matures, with respect to each advance, one year from the effective date of each advance. 

On August 17, 2018, we received proceeds of $10,500 pursuant to the August 2018 $500,000 CPN. We recorded a debt discount of $10,500 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $1,266, resulting in a remaining debt discount of $9,234 as of September 30, 2018.

On September 13, 2018, we received proceeds of $30,000 pursuant to the August 2018 $500,000 CPN. We recorded a debt discount of $30,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $1,397, resulting in a remaining debt discount of $28,603 as of September 30, 2018.

We reported no gain or loss on settlement of debt, including conversions to common stock, during the three months and nine months ended September 30, 2018. We reported a gain on settlement of debt of $14,054 for the three months ended September 30, 2017 and a loss on settlement of debt of $29,371 during the nine months ended September 30, 2017.

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6. DERIVATIVE LIABILITIES

The fair value of the Company’s derivative liabilities is estimated at the issuance date and is revalued at each subsequent reporting date. We estimate the fair value of derivative liabilities associated with our convertible notes payable and our Series B Preferred Stock using a multinomial lattice model based on projections of various potential future outcomes.

The significant assumptions used in the valuation of the derivative liabilities at September 30, 2018 are as follows:

Conversion to stock	Monthly
Stock price on the valuation date	$	0.0079
Conversion price	$	0.0045
Years to maturity		15.0
Expected volatility		230.0–271.0	%

The value of the derivative liabilities associated with our convertible notes payable was estimated at $4,464,733 and $5,241,762 at September 30, 2018 and December 31, 2017, respectively. The value of the derivative liabilities associated with our Series B Preferred Stock was estimated at $2,059,399 and $2,831,142 at September 30, 2018 and December 31, 2017, respectively.

The calculation input assumptions are subject to significant changes from period to period and to management’s judgment; therefore, the estimated fair value of the derivative liability will fluctuate from period to period, and the fluctuation may be material.

7. SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION

During the nine months ended September 30, 2018 and 2017, the Company paid no amounts for income taxes.

During the nine months ended September 30, 2018 and 2017, the Company paid $0 and $1,328 for interest, respectively.

During the nine months ended September 30, 2018, the Company had the following non-cash investing and financing activities:

· The Company increased debt discount and derivative liabilities by $480,500 for the issuance of new convertible debt.

· The Company decreased Series A Preferred Stock and increased additional paid-in capital by $1 for the redemption of 1,000 shares of Series A Preferred Stock.

 

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During the nine months ended September 30, 2017, the Company had the following non-cash investing and financing activities:

· The Company issued a total of 2,565,527 shares of common stock for the conversion of $24,000 in convertible notes payable, plus $4,649 of accrued interest payable, increasing common stock by $2,565, increasing additional paid-in capital by $105,123, decreasing derivative liabilities by $49,668 and recording a loss on settlement of debt of $29,371.

· The Company increased debt discount and derivative liabilities by $640,000 for the issuance of new convertible debt.

  

8. RELATED PARTY TRANSACTIONS

On January 2, 2018, 1,000 shares of Series A Preferred Stock issued to the Company's President and director, William E. Beifuss, Jr., for services rendered were automatically redeemed at par value of $1 (see Note 3).

See Note 5 for discussion of convertible notes payable to related parties, including multiple lenders who are also shareholders of the Company.

9. SUBSEQUENT EVENTS

Management has evaluated subsequent events according to the requirements of ASC TOPIC 855, and has reported the following:

Subsequent Borrowings

We received two advances under the August 2018 $500,000 CPN totaling $37,000 in October 2018 and an advance of $25,000 in November 2018.

Debt Conversion

Effective November 7, 2018, the Company issued 898,296 shares of its common stock at fair value in consideration for the conversion of $1,065 principal of a convertible promissory note and accrued interest payable of $282.

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ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” below, and elsewhere in this report, are not related to historical results, and are forward-looking statements. Forward-looking statements present our expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. 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 such forward-looking statements. Forward-looking statements frequently are accompanied by such words such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” or the negative of such terms or other words and terms of similar meaning. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements, or timeliness of such results. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such forward-looking statements. We are under no duty to update any of the forward-looking statements contained herein after the date of this report. Subsequent written and oral forward looking statements attributable to us or to persons acting in our behalf are expressly qualified in their entirety by the cautionary statements and risk factors set forth in our annual report on Form 10-K for the year ended December 31, 2017 filed with the SEC on March 30, 2018, and in other reports filed by us with the SEC

You should read the following description of our financial condition and results of operations in conjunction with the condensed financial statements and accompanying notes included in this report.

OVERVIEW

Digital Locations is a development stage provider of proximity based data solutions that help businesses better understand and interact with consumers in various physical locations. We hope to enable solutions that serve as a “bridge” between the physical and digital worlds, connecting people to place. By helping businesses transform their locations into smart venues, they can drastically improve their in-venue mobile experience. In addition, we help businesses identify, segment and activate their most socially influential customers at events, conferences or business locations, leading to increased brand loyalty, engagement, message amplification and revenue. Whether the locations are airports, sports venues, movie theaters, or political rallies, we enable smart interaction and data collection.

Our solutions will be delivered as both a custom integration (non-recurring) and Enterprise Software as a Service or SaaS (monthly recurring) revenue model.

Previously, our business was focused on developing a low-cost method to produce graphene. We have completed our development and research efforts around graphene through our sponsored research agreements with the University of California – Santa Barbara and do not see an opportunity to commercialize the findings of the research agreement. We have determined to refocus our efforts to becoming a proximity based data solutions provider to businesses.

On February 9, 2016, we announced a growth-by-acquisition strategy to extend our presence in the information technology market.

We have not yet generated revenues. We currently have negative working capital and received an opinion from our independent auditors on our financial statements for the fiscal year ended December 31, 2017 that expressed substantial doubt about our ability to continue as a going concern. The accompanying financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities, and commitments in the normal course of business. The accompanying financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon, among other things, raising additional capital. Since our inception through the date of this report, the Company has obtained funds primarily from the issuance of common stock and debt. Management believes this funding will continue, and is continually seeking funding opportunities. Management believes the existing shareholders and lenders and prospective new investors will provide the additional cash needed to meet our obligations as they become due, and will allow the development of our business plan. However, there can be no assurance that such financing will be available upon terms that are acceptable to us, if at all.

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Critical Accounting Policies

Our significant accounting policies are disclosed in Note 2 to our condensed financial statements and in the notes to our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017. The following is a summary of those accounting policies that involve significant estimates and judgment of management.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the accompanying financial statements. Significant estimates made in preparing these financial statements include the estimate of useful lives of property and equipment, the deferred tax valuation allowance, the fair value of stock options and derivative liabilities. Actual results could differ from those estimates.

Fair Value of Financial Instruments

Disclosures about fair value of financial instruments, require disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of September 30, 2018 and December 31, 2017, the Company believes the amounts reported for cash, prepaid expenses, accounts payable, accrued interest, accrued expenses and other current liabilities, and convertible notes payable approximate fair value because of their short maturities.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASC”) Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

· Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

· Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

· Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

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We measure certain financial instruments at fair value on a recurring basis. Liabilities measured at fair value on a recurring basis are as follows at September 30, 2018 and December 31, 2017:

	Total		Level 1		Level 2		Level 3
September 30, 2018:
Derivative liabilities	$	6,524,132	$	-	$	-	$	6,524,132
Total liabilities measured at fair value	$	6,524,132	$	-	$	-	$	6,524,132
December 31, 2017:
Derivative liabilities	$	8,072,904	$	-	$	-	$	8,072,904
Total liabilities measured at fair value	$	8,072,904	$	-	$	-	$	8,072,904

Derivative Liabilities

We have identified the conversion features of our convertible notes payable and our Series B Preferred Stock as derivatives. We estimate the fair value of the derivatives associated with our convertible notes payable and the fair value of the derivatives associated with our outstanding Series B Preferred Stock using a multinomial lattice model based on projections of various potential future outcomes. We estimate the fair value of the derivative liabilities at the inception of the financial instruments, at the date of conversions to equity and at each reporting date, recording a derivative liability, debt discount, additional paid-in capital and a gain or loss on change in derivative liabilities as applicable. These estimates are based on multiple inputs, including the market price of our stock, interest rates, our stock price volatility, variable conversion prices based on market prices as defined in the respective agreements and probabilities of certain outcomes based on management projections. These inputs are subject to significant changes from period to period and to management's judgment; therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material.

Income Taxes

We account for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

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Stock-Based Compensation

Stock-based compensation is measured at the grant date based on the value of the award granted using the Black-Scholes option pricing model, and recognized over the period in which the award vests. For stock awards no longer expected to vest, any previously recognized stock compensation expense is reversed in the period of termination. The stock-based compensation expense is included in general and administrative expenses.

Recently Issued Accounting Pronouncements

See Note 2 to our condensed financial statements for a discussion of recently issued accounting pronouncements.

Results of Operations

Three Months and Nine Months Ended September 30, 2018 Compared to the Three Months and Nine Months Ended September 30, 2017

General and Administrative Expenses

General and administrative expenses decreased by $130,179 to $98,055 in the three months ended September 30, 2018 compared to $228,234 in the three months ended September 30, 2017. The decrease in general and administrative expenses in the third quarter of the current year is due primarily to a decrease in salaries as a result of an officer resignation in June 2018 and a decrease in consulting fees.

General and administrative expenses decreased by $97,564 to $475,446 in the nine months ended September 30, 2018 compared to $573,010 in the nine months ended September 30, 2017. The decrease in general and administrative expenses on a year-to-date basis in the current year is due primarily to a decrease in salaries as a result of an officer resignation in June 2018 and a decrease in consulting fees.

Research and Development Expenses

Research and development expenses were $32,504 and $65,009 in the three months and nine months ended September 30, 2017, respectively, and related to our third sponsored research agreement with University of California – Santa Barbara (“UCSB”). As discussed above, we have completed our development and research efforts around graphene through our sponsored research agreements with UCSB. As a result, we reported no research and development expenses in the three months and nine months ended September 30, 2018.

Depreciation and Amortization Expense

Depreciation and amortization expense was $337 and $149 for the three months ended September 30, 2018 and 2017, respectively, and $1,011 and $499 for the nine months ended September 30, 2018 and 2017, respectively. Our investment in property and equipment currently is not material to our operations.

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Other Income (Expense)

Total other expense was $473,246 and $10,028,689 for the three months ended September 30, 2018 and 2017, respectively. Total other income was $1,279,576 for the nine months ended September 30, 2018 and total other expense was $12,433,294 for the nine months ended September 30, 2017. The change in total other income (expense) in each respective period is primarily due to the fluctuation in gain (loss) on change in derivative liabilities.

We had no other income in the three months and nine months ended September 30, 2018. We had other income of $2,500 in the three months and nine months ended September 30, 2017.

We had no gain or loss on settlement of debt in the three months and nine months ended September 30, 2018. We reported a gain on settlement of debt of $14,054 in the three months ended September 30, 2017 and a loss on settlement of debt of $29,371 in the nine months ended September 30, 2017, resulting from the conversion of convertible debt into equity.

We reported a loss on change in derivative liabilities of $235,651 and $9,820,930 in the three months ended September 30, 2018 and 2017, respectively. We reported a gain on change in derivative liabilities of $2,029,272 in the nine months ended September 30, 2018 compared to a loss on change in derivative liabilities of $11,759,174 in the nine months ended September 30, 2017. We estimate the fair value of the derivatives associated with our convertible notes and our Series B Preferred Stock using a multinomial lattice model based on projections of various potential future outcomes. These estimates are based on multiple inputs, including the market price of our stock, interest rates, our stock price volatility, variable conversion prices based on market prices as defined in the respective agreements and probabilities of certain outcomes based on management projections. These inputs are subject to significant changes from period to period and to management’s judgment; therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material.

Our interest expense increased by $13,282 to $237,595 for the three months ended September 30, 2018 from $224,313 for the three months ended September 30, 2017. Our interest expense increased by $102,447 to $749,696 for the nine months ended September 30, 2018 from $647,249 for the nine months ended September 30, 2017. The increase in interest expense is the result of additional convertible notes payable in the current fiscal year and the amortization of debt discount for the new convertible debt.

Net Income (Loss)

As a result of the activity discussed above, we reported a net loss of $571,638 and $10,289,576 in the three months ended September 30, 2018 and 2017, respectively, and net income of $803,119 in the nine months ended September 30, 2018 and a net loss of $13,071,812 in the nine months ended September 30, 2017.

Liquidity and Capital Resources

As of September 30, 2018, we had total current assets of $34,594, including cash of $25,898, and total current liabilities of $8,694,638, resulting in a working capital deficit of $8,660,044. Included in our current liabilities at September 30, 2018 are derivative liabilities totaling $6,524,132, which we do not anticipate will require cash payments to settle.

During the nine months ended September 30, 2018, we used net cash of $478,063 in operating activities as a result of our net income of $803,119, non-cash expenses totaling $615,155 and increases in accounts payable of $3,990 and accrued expenses of $135,643, offset by non-cash gain of $2,029,272 and increase in prepaid expenses of $6,698.

During the nine months ended September 30, 2017, we used net cash of $637,455 in operating activities as a result of our net loss of $13,071,812, and increase in prepaid expenses of $6,781, partially offset by non-cash expenses totaling $12,360,601 and increases in accounts payable of $9,211 and accrued expenses and other current liabilities of $71,326.

24

During the nine months ended September 30, 2018 and 2017, we had no net cash provided by or used in investing activities.

Net cash provided by financing activities during the nine months ended September 30, 2018 was $480,500, comprised of proceeds from convertible notes payable.

Net cash provided by financing activities during the nine months ended September 30, 2017 was $629,583, comprised of proceeds from convertible notes payable of $640,000, partially offset by repayment of convertible notes payable of $10,417.

Although most recently, proceeds received from the issuance of debt are sufficient to fund our current operating expenses, we will need to raise additional funds in the future to continue our operations and emerge from the development stage. Therefore, our future operations are dependent on our ability to secure additional financing. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and the challenges faced by smaller companies whose securities are not listed on an exchange to access the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences, or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital may restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we may have to curtail our marketing and development plans and possibly cease our operations.

We believe that we have assets to ensure that we can continue to operate without liquidation over the next twelve months, due to our current cash, and our experience in the past in being able to raise money from our investor base. Therefore, we believe we have the ability to continue our operations for the foreseeable future and will be able to realize assets and discharge liabilities in the normal course of our operations.

The accompanying financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities, and commitments in the normal course of business. The accompanying financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company does not generate any revenue, and has negative cash flows from operations, which raises substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon, among other things, raising additional capital. Since our inception through September 30, 2018, the Company has obtained funds primarily from the issuance of common stock and debt. Management believes this funding will continue, and continues to pursue funding opportunities. Management believes the existing shareholders and lenders and prospective new investors will provide the additional cash needed to meet the Company’s obligations as they become due, and will allow the development of its business plan. However, there can be no assurance that the Company will be successful in accomplishing its objectives. Without such additional capital, the Company may be required to cease operations.

25

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

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 by the Company in the reports that it files under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer that it files under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer and principal financial officers, or persons performing similar functions as appropriate to allow timely decisions regarding required disclosure. The Company’s president and chief financial officer is responsible for establishing and maintaining disclosure controls and procedures for the Company.

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our Interim Chief Executive Officer and Acting Chief Financial Officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our Interim Chief Executive Officer and Acting Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms, and (ii) accumulated and communicated to our management, including our Interim Chief Executive Officer and Acting Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, (as defined in Rule 13a-15(f) under the Exchange Act). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Furthermore, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to change in conditions, or the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control Over Financial Reporting

There was no change to our internal controls or in other factors that could affect these controls during the three-month period ended September 30, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

26

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not a party to any pending legal proceeding, nor is our property the subject of a pending legal proceeding, that is not in the ordinary course of business or otherwise material to the financial condition of our business. None of our directors, officers or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.

ITEM 1A. RISK FACTORS

There are no material changes from the risk factors previously disclosed in our annual report on Form 10-K filed on March 30, 2018.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

We had no unregistered sales of equity securities during the three months ended September 30, 2018.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

None.

27

ITEM 6. EXHIBITS

31.1*	Certification of the Interim Chief Executive Officer and Interim Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of the Interim Chief Executive Officer and Interim Chief Financial Officer furnished pursuant to Section 1350 of Chapter 63 of 18 U.S.C. as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
EX-101.INS	XBRL INSTANCE DOCUMENT
EX-101.SCH	XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
EX-101.CAL	XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
EX-101.DEF	XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
EX-101.LAB	XBRL TAXONOMY EXTENSION LABELS LINKBASE
EX-101.PRE	XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

_____ 

*Filed herewith

28

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Santa Barbara, State of California, on November 13, 2018.

DIGITAL LOCATIONS, INC.
By:	/s/ William E. Beifuss, Jr.
	Interim Chief Executive Officer (Principal Executive Officer ) Acting Chief Financial Officer (Principal Financial/Accounting Officer)

29

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, William E. Beifuss, Jr., certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Digital Locations, Inc. for the quarter ended September 30, 2018;
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 (the registrant's fourth fiscal quarter in the case of an annual report) 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 officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the 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.

November 13, 2018

/s/ William E. Beifuss, Jr.

William E. Beifuss, Jr.

Interim Chief Executive Officer

(Principal Executive Officer )

Acting Chief Financial Officer

(Principal Financial/Accounting Officer)

EX-32.1

EXHIBIT 32.1

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 Digital Locations, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, William E. Beifuss, Jr., Interim Chief Executive Officer and Acting Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 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 and Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

November 13, 2018	/s/ William E. Beifuss, Jr.
	William E. Beifuss, Jr.
	Interim Chief Executive Officer (Principal Executive Officer )
	Acting Chief Financial Officer
	(Principal Financial/Accounting Officer)

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 13, 2018
Document And Entity Information
Entity Registrant Name	DIGITAL LOCATIONS, INC.
Entity Central Index Key	0001407878
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		39,674,732
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2018
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Ex Transition Period	false

XML

Condensed Balance Sheets - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Current assets:
Cash	$ 25,898	$ 23,461
Prepaid expenses	8,696	1,998
Total current assets	34,594	25,459
Property and equipment, net	1,453	2,464
Total assets	36,047	27,923
Current liabilities:
Accounts payable	116,758	112,768
Accrued expenses and other current liabilities	2,102	2,011
Accrued interest, notes payable	290,622	155,070
Derivative liabilities	6,524,132	8,072,904
Convertible notes payable	29,500	29,500
Convertible notes payable, net of discount of $289,575 and $423,219, respectively	1,731,524	1,117,380
Total current liabilities	8,694,638	9,489,633
Stockholders' deficit:
Common stock, $0.001 par value; 2,000,000,000 shares authorized, 38,776,436 shares issued and outstanding	38,776	38,776
Additional paid-in capital	20,537,951	20,537,950
Accumulated deficit	(29,235,334)	(30,038,453)
Total stockholders’ deficit	(8,658,591)	(9,461,710)
Total liabilities and stockholders’ deficit	36,047	27,923
Preferred Stock Series A [Member]
Stockholders' deficit:
Preferred stock, value		1
Preferred Stock Series B [Member]
Stockholders' deficit:
Preferred stock, value	$ 16	$ 16

XML

Condensed Balance Sheets (Parenthetical) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Current liabilities:
Convertible notes payable, net of discount	$ 289,575	$ 423,219
Stockholders' deficit:
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, authorized shares	20,000,000	20,000,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, authorized shares	2,000,000,000	2,000,000,000
Common stock, issued shares	38,776,436	38,776,436
Common stock, outstanding shares	38,776,436	38,776,436
Preferred Stock Series A [Member]
Stockholders' deficit:
Preferred stock, issued shares	0	1,000
Preferred stock, outstanding shares	0	1,000
Preferred Stock Series B [Member]
Stockholders' deficit:
Preferred stock, issued shares	16,155	16,155
Preferred stock, outstanding shares	16,155	16,155

XML

Condensed Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Condensed Statements Of Operations
Revenue
Operating Expenses:
General and administrative	98,055	228,234	475,446	573,010
Research and development		32,504		65,009
Depreciation and amortization	337	149	1,011	499
Total operating expenses	98,392	260,887	476,457	638,518
Loss from operations	(98,392)	(260,887)	(476,457)	(638,518)
Other income (expense):
Other income		2,500		2,500
Gain (loss) on settlement of debt		14,054		(29,371)
Gain (loss) on change in derivative liabilities	(235,651)	(9,820,930)	2,029,272	(11,759,174)
Interest expense	(237,595)	(224,313)	(749,696)	(647,249)
Total other income (expense)	(473,246)	(10,028,689)	1,279,576	(12,433,294)
Income (loss) before income taxes	(571,638)	(10,289,576)	803,119	(13,071,812)
Provision for income taxes
Net income (loss)	$ (571,638)	$ (10,289,576)	$ 803,119	$ (13,071,812)
Net income (loss) per common share:
Basic	$ (0.01)	$ (0.28)	$ 0.02	$ (0.36)
Diluted	$ (0.01)	$ (0.28)	$ 0.02	$ (0.36)
Weighted average number of common shares outstanding:
Basic	38,776,436	36,768,082	38,776,436	36,410,439
Diluted	38,776,436	36,768,082	38,776,436	36,410,439

XML

Condensed Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Cash flows from operating activities:
Net income (loss)	$ 803,119	$ (13,071,812)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization	1,011	499
Loss on settlement of debt		29,371
Amortization of debt discount to interest expense	614,144	571,556
(Gain) loss on change in derivative liabilities	(2,029,272)	11,759,174
Preferred stock issued for services		1
Changes in assets and liabilities:
Increase in prepaid expenses	(6,698)	(6,781)
Increase in:
Accounts payable	3,990	9,211
Accrued expenses and other current liabilities	135,643	71,326
Net cash used in operating activities	(478,063)	(637,455)
Cash flows from investing activities:
Cash flows from financing activities:
Proceeds from convertible notes payable	480,500	640,000
Payments of convertible notes payable		(10,417)
Net cash provided by financing activities	480,500	629,583
Net increase (decrease) in cash	2,437	(7,872)
Cash, beginning of period	23,461	39,934
Cash, end of period	$ 25,898	$ 32,062

XML

ORGANIZATION AND BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

1. ORGANIZATION AND BASIS OF PRESENTATION

Organization

Digital Locations, Inc. (the “Company”) was incorporated in the State of Nevada on August 25, 2006 as Zingerang, Inc. On April 2, 2007, the Company changed its name to Carbon Sciences, Inc. and on November 14, 2017, the Company changed its name to Digital Locations, Inc.

Basis of Presentation

The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the three months and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. For further information refer to the financial statements and notes thereto included in the Company's Form 10-K for the year ended December 31, 2017.

Going Concern

The accompanying unaudited condensed financial statements of the Company have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities, and commitments in the normal course of business. The accompanying condensed financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company does not generate any revenue, and has negative cash flows from operations, which raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon, among other things, raising additional capital. Since its inception through September 30, 2018, the Company has obtained funds primarily from the issuance of common stock and debt. Management believes this funding will continue, and continues to pursue funding opportunities. Management believes the existing shareholders and lenders and prospective new investors will provide the additional cash needed to meet the Company’s obligations as they become due, and will allow the development of its business plan. However, there can be no assurance that the Company will be successful in accomplishing its objectives. Without such additional capital, the Company may be required to cease operations.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies of the Company are disclosed in Note 2 to the Notes to Financial Statements included in the Company’s Annual Report on Form 10-K. The following summary of significant accounting policies of the Company is presented to assist in understanding the Company’s interim financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

Income (Loss) per Share Calculations

Basic net income or loss per common share is computed by dividing net income or loss by the weighted average number of common shares outstanding. Diluted net income or loss per common share is computed by dividing net income or loss by the sum of the weighted average number of common shares outstanding and the dilutive potential common share equivalents then outstanding. Potential dilutive common share equivalents consist of shares issuable upon the exercise of outstanding stock options and warrants to acquire common stock using the treasury stock method and the average market price per share during the period, and shares issuable upon exercise of convertible notes payable and convertible preferred stock.

Since the Company had no dilutive effect of stock options, warrants, convertible notes payable and convertible preferred stock for the three months and nine months ended September 30, 2018, basic weighted average number of common shares outstanding is the same as diluted weighted average number of common shares outstanding. The Company has excluded 1,406,250 common shares for exercisable options, approximately 819,763,230 common shares issuable upon exercise of convertible notes payable and approximately 359,000,000 common shares issuable upon the conversion of outstanding shares of Series B preferred stock for the three months and nine months ended September 30, 2018.

Since the Company had no dilutive effect of stock options, warrants, convertible notes payable and convertible preferred stock for the three months and nine months ended September 30, 2017, basic weighted average number of common shares outstanding is the same as diluted weighted average number of common shares outstanding. The Company has excluded 1,408,750 common shares for exercisable options, 6,000 common shares for exercisable common stock purchase warrants, approximately 229,567,000 common shares issuable upon exercise of convertible notes payable and approximately 359,000,000 common shares issuable upon the conversion of outstanding shares of Series B preferred stock for the three months and nine months ended September 30, 2017.

Fair Value of Financial Instruments

Disclosures about fair value of financial instruments, require disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of September 30, 2018 and December 31, 2017, the Company believes the amounts reported for cash, prepaid expenses, accounts payable, accrued interest, accrued expenses and other current liabilities, and convertible notes payable approximate fair value because of their short maturities.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASC”) Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

· Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

· Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

· Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

We measure certain financial instruments at fair value on a recurring basis. Liabilities measured at fair value on a recurring basis are as follows at September 30, 2018 and December 31, 2017:

	Total		Level 1		Level 2		Level 3
September 30, 2018:
Derivative liabilities	$	6,524,132	$	-	$	-	$	6,524,132
Total liabilities measured at fair value	$	6,524,132	$	-	$	-	$	6,524,132
December 31, 2017:
Derivative liabilities	$	8,072,904	$	-	$	-	$	8,072,904
Total liabilities measured at fair value	$	8,072,904	$	-	$	-	$	8,072,904

During the nine months ended September 30, 2018, the Company had the following activity in its derivative liabilities account:

	Convertible Notes Payable			Series B Preferred Stock			Total
Derivative liabilities at December 31, 2017	$	5,241,762		$	2,831,142		$	8,072,904
Addition to liabilities for new debt/shares issued		480,500			-			480,500
Change in fair value		(1,257,529	)		(771,743	)		(2,029,272	)
Derivative liabilities at September 30, 2018	$	4,464,733		$	2,059,399		$	6,524,132

Derivative Liabilities

We have identified the conversion features of our convertible notes payable and our Series B Preferred Stock as derivatives. We estimate the fair value of the derivatives using a multinomial lattice model based on a probability weighted discounted cash flow model. We estimate the fair value of the derivative liabilities at the inception of the financial instruments, at the date of conversions to equity and at each reporting date, recording a derivative liability, debt discount, additional paid-in capital and a gain or loss on change in derivative liabilities as applicable. These estimates are based on multiple inputs, including the market price of our stock, interest rates, our stock price volatility, variable conversion prices based on market prices as defined in the respective agreements and probabilities of certain outcomes based on management projections. These inputs are subject to significant changes from period to period and to management’s judgment; therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material.

Recently Issued Accounting Pronouncements

There were no new accounting pronouncements issued by the FASB during the nine months ended September 30, 2018 and through the date of filing of this report that the Company believes will have a material impact on its financial statements.

Reclassifications

Certain amounts in the condensed financial statements for the three months and nine months ended September 30, 2017 have been reclassified to conform to the presentation for the three months and nine months ended September 30, 2018.

XML

CAPITAL STOCK

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

3. CAPITAL STOCK

At September 30, 2018, the Company’s authorized stock included 2,000,000,000 shares of common stock, with a par value of $0.001 per share. The Company is also authorized to issue 20,000,000 shares of preferred stock, with a par value of $0.001 per share. The rights, preferences and privileges of the holders of the preferred stock will be determined by the Board of Directors prior to issuance of such shares.

Common Stock

On April 20, 2016, the Company amended its articles of incorporation to reduce the number of authorized shares of common stock from 1,000,000,000 to 100,000,000 and to affect a one-for-ten reverse stock split of its authorized, issued and outstanding shares of common stock. The Company has given retroactive affect for the reverse stock split in all periods presented in the accompanying financial statements.

On April 29, 2016, our Board of Directors and the holder of a majority of the total issued and outstanding voting stock of the Company authorized and approved an amendment to the Company's articles of incorporation to increase the number of authorized shares of common stock from 100,000,000 to 2,000,000,000.

As of September 30, 2018, the Company had 38,776,436 shares of common stock issued and outstanding. During the nine months ended September 30, 2018, the Company did not issue any shares of common stock.

During the nine months ended September 30, 2017, the Company issued a total of 2,565,527 shares of common stock at fair value in consideration for the conversion of $24,000 of convertible promissory notes and accrued interest payable of $4,649. In connection with the debt conversion, the Company increased common stock by $2,565 and additional paid-in capital by $105,123, reduced derivative liabilities by $49,668 and recognized a loss of $29,371 on conversion of the notes.

Series A Preferred Stock

On August 31, 2017, the Company filed a Withdrawal of Certificate of Designation for its original Series A Preferred Stock with the Secretary of State of Nevada. On September 4, 2017, the Board of Directors of the Company authorized (a) the execution and recording with the Nevada Secretary of State of a new Certificate of Designation (the “Series A Certificate”) for its new Series A preferred stock (“Series A Preferred Stock”), authorizing up to 1,000 shares of Series A Preferred Stock, and (b) the issuance of 1,000 shares of Series A Preferred Stock to the Company’s President and Director, William E. Beifuss, Jr.

The shares of Series A Preferred Stock have a par value of $0.001 per share. The shares of Series A Preferred Stock do not have a dividend right or rate, or liquidation preference, and are not convertible into shares of common stock.

The shares of the Series A Preferred Stock were automatically redeemed by the Company at their par value in January 2018, 120 days after the effective date of the Series A Certificate

Series B Preferred Stock

On March 2, 2016, the Company filed a Certificate of Designation for its Series B Preferred Stock (the “Series B Certificate”) with the Secretary of State of Nevada designating 30,000 shares of its authorized preferred stock as Series B Preferred Stock. The shares of Series B Preferred Stock have a par value of $0.001 per share.

The total face value of this entire series is three million dollars ($3,000,000). Each share of Series B Preferred Stock has a stated face value of One Hundred Dollars ($100) (“Share Value”), and is convertible into shares of fully paid and non-assessable shares of common stock of the Company.

As of September 30, 2018 and December 31, 2017, the Company had 16,155 shares of Series B Preferred Stock outstanding, with a face value of $1,615,500. These shares were issued in March 2016 for the redemption and cancellation of $1,615,362 of convertible promissory notes and $264,530 of accrued interest payable.

The holders of outstanding shares of the Series B Preferred Stock (the “Holders”) are entitled to receive dividends pari passu with the holders of common stock, except upon a liquidation, dissolution and winding up of the Company, in which case the Series B Preferred Stock has a preference. Such dividends will be paid equally to all outstanding shares of Series B Preferred Stock and common stock, on an as-if-converted basis with respect to the Series B Preferred Stock. The Holders may elect to use the most favorable conversion price for the purpose of determining the as-if-converted number of shares.

In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, the Holder of each outstanding share of the Series B Preferred Stock shall be entitled to receive, out of the assets of the Company available for distribution to its shareholders upon such liquidation, whether such assets are capital or surplus of any nature, an amount equal to one hundred dollars ($100) for each such share of the Series B Preferred Stock (as adjusted for any combinations, consolidations, stock distributions, stock splits or stock dividends with respect to such shares), plus all dividends, if any, declared and unpaid thereon as of the date of such distribution, before any payment is made or any assets distributed to the holders of the common stock. After such payment, the remaining assets of the Company will be distributed to the holders of common stock.

If the assets to be distributed to the Holders of the Series B Preferred Stock are insufficient to permit the receipt by such Holders of the full preferential amounts, then all of such assets will be distributed among such Holders ratably in accordance with the number of such shares then held by each such Holder.

The sale of all or substantially all of the Company’s assets, any consolidation or merger of the Company with or into any other entity or person, or any other corporate reorganization, in which the stockholders of the Company immediately prior to such consolidation, merger or reorganization, own less than fifty percent (50%) of the Company’s voting power immediately after such consolidation, merger or reorganization, or any transaction or series of related transactions to which the Company is a party in which in excess of fifty percent (50%) of the Company’s voting power is transferred, excluding any consolidation or merger effected exclusively to change the domicile of the Company, is deemed to be a liquidation, dissolution or winding up.

The Holder has the right, at any time, at its election, to convert all or part of the Share Value into shares of common stock. The conversion price is the lesser of (1) Fifty Percent (50%) of the lowest trade price of common stock recorded on any trade day after December 12, 2012 or (2) the lowest effective price per share granted to any person or entity, including the Holder but excluding officers and directors of the Company, to acquire common stock, or adjusted, whether by operation of purchase price adjustment, settlement agreements, exchange agreements, reset provision, floating conversion or otherwise, any outstanding warrant, option or other right to acquire common stock or outstanding common stock equivalents (the “Conversion Price”).

The Conversion Price is subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Company relating to the Company’s securities or the securities of any subsidiary of the Company, combinations, recapitalization, reclassifications, extraordinary distributions and similar events. No fractional shares of the common stock shall be issuable upon the conversion of shares of the Series B Preferred Stock and the Company shall pay the cash equivalent of any fractional share upon such conversion.

If the Company fails to deliver shares in accordance with the required time frame, then for each conversion, a penalty of $1,500 per day will be assessed for each day after the third business day (inclusive of the day of the conversion) until share delivery is made. Such penalty may be converted into common stock at the Conversion Price or payable in cash, at the sole option of the Holder (under the Holder’s and the Company’s expectations that any penalty amounts shall tack back to the original date of the issuance of Series B Preferred Stock, consistent with applicable securities laws).

In no event will the Holder be entitled to convert any Series B Preferred Stock, such that upon conversion the sum of (1) the number of shares of common stock beneficially owned by the Holder and its affiliates (other than shares of common stock which may be deemed beneficially owned through the ownership of the unconverted portion of this Series B Preferred Stock or the unexercised or unconverted portion of any other security of the Company subject to a limitation on conversion or exercise analogous to these limitations), and (2) the number of shares of common stock issuable upon the conversion of Series B Preferred Stock, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of common stock. The limitations on conversion may be waived by the Holder upon, at the election of the Holder, not less than 61 days prior notice to the Company, and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver).

Except as required by law, the Holders of Series B Preferred Stock are not entitled to vote, as a separate class or otherwise, on any matter presented to the stockholders of the Company for their action or consideration at any meeting of stockholders of the Company (or by written consent of stockholders in lieu of meeting). Each Holder of outstanding shares of Series B Preferred Stock will be entitled, on the same basis as holders of common stock, to receive notice of such action or meeting.

So long as any shares of the Series B Preferred Stock remain outstanding, the Company will not, without first obtaining the approval (by vote or written consent, as provided by law) of the holders of at least a majority of the then outstanding shares of Series B Preferred Stock voting together as one class: (a) alter or change the rights, preferences or privileges of the shares of the Series B Preferred Stock so as to affect materially and adversely such shares; or (b) create any new class of shares having preference over the Series B Preferred Stock.

The Holder has the right, at its sole discretion, to elect a fixed conversion price for the Series B Preferred Stock. The Fixed Conversion Price may not be lower than the Conversion Price. The Company will not, by amendment of its Certificate of Incorporation, bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Series B Certificate, and will at all times carry out all the provisions of the Series B Certificate.

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STOCK OPTIONS AND WARRANTS

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

4. STOCK OPTIONS AND WARRANTS

Stock Options

As of September 30, 2018, the Board of Directors of the Company had granted non-qualified stock options exercisable for a total of 1,408,750 shares of common stock to its employees, officers, and consultants. Stock-based compensation cost is measured at the grant date based on the value of the award granted using the Black-Scholes option pricing model, and recognized over the period in which the award vests, which is generally 25 months. We recognized no stock-based compensation expense for the three months and nine months ended September 30, 2018. As of September 30, 2018, we had no unrecognized stock-based compensation expense.

A summary of the Company’s stock option awards as of September 30, 2018, and changes during the nine months then ended is as follows:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contract Term (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2017		1,408,750		$	0.17		2.72	$	-
Granted		-		$	-
Exercised		-		$	-
Forfeited or expired		(2,500	)	$	-
Outstanding and exercisable at September 30, 2018		1,406,250		$	0.11		1.98	$	-

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on the closing price of our common stock of $0.0079 as of September 30, 2018, which would have been received by the holders of in-the-money options had the option holders exercised their options as of that date.

Warrants

As of September 30, 2018, the Company had no common stock purchase warrants outstanding.

Former Chief Executive Officer Option

On October 12, 2017, Unleashed Future Holdings, LLC, a limited liability company owned by a retirement account of which Mr. Gerard Hug, former chief executive officer and a director of the Company, is a beneficiary, purchased an option for $7,000 to buy up to 7,000 shares of Series B Preferred Stock from the current holder of the Series B Preferred Stock (the “Option”). The exercise price of the Option is $100 per share of Series B Preferred Stock for a total exercise price of $700,000. The Option may be exercised on a cash or a cashless basis. Each share of Series B Preferred Stock is convertible into shares of the Company’s common stock in accordance with the terms and conditions of the Series B Certificate. Unleashed Future Holdings, LLC is eligible to exercise all or part of the Option after the Company’s consolidated gross revenue, calculated in accordance with generally accepted accounting principles, consistently applied, equals or exceeds $2,000,000, on an annualized basis, as reported in the Company’s quarterly or annual financial statements.

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CONVERTIBLE NOTES PAYABLE

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

5. CONVERTIBLE NOTES PAYABLE

Convertible Promissory Notes - Services of $58,600

On December 31, 2012, we issued 5% convertible promissory notes to two individuals in exchange for services rendered in the aggregate amount of $58,600. The notes are convertible into shares of our common stock at a conversion price equal to the lesser of $2.00 per share or the closing price per share of common stock recorded on the trading day immediately preceding the date of conversion. We recorded a total debt discount of $57,050 related to the conversion feature of the notes, which has been fully amortized to interest expense, along with a derivative liability at inception. One of the notes with a principal balance of $25,980 at September 30, 2018 matured on December 31, 2014 and is currently in default. The maturity date of a second note with a principal balance of $32,620 at September 30, 2018 has been extended to December 31, 2018.

Convertible Promissory Note – Accounts Payable of $29,500

On March 14, 2013, we issued a 5% convertible promissory note in the principal amount of $29,500, which is convertible into shares of our common stock at a conversion price equal to the lesser of $1.50 per share or the closing price per share of common stock recorded on the trading day immediately preceding the date of conversion. The note, with a principal balance of $29,500 at September 30, 2018, matured two years from its effective date, or March 14, 2015, and is currently in default.

March 2016 Convertible Promissory Note – $1,000,000

On March 4, 2016, we issued a convertible promissory note in the aggregate principal amount of up to $1,000,000 (the "March 2016 $1,000,000 CPN"). The lender may advance the Company consideration for the note in such amounts as the lender may choose in its sole discretion. The note is convertible into shares of our common stock at a price per share equal to the lesser of: $0.03; 50% of the lowest trade price of our common stock subsequent to the effective date of the note; or the lowest effective price per share granted to any person or entity (exclusive of our officers and directors) to acquire common stock subsequent to the effective date of the note. The note initially matured, with respect to each advance, one year from the effective date of each advance. Subsequently, the lender extended the maturity date, with the note payable upon demand, but in no event later than 60 months from March 4, 2016.

On March 4, 2016, we received proceeds of $25,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $25,000 related to the conversion feature of the note, along with a derivative liability at inception. The debt discount has been fully amortized to interest expense. In September and December 2017, we issued the lender a total of 1,632,272 shares of our common stock in consideration for the conversion of principal of $25,000 and accrued interest of $3,956, extinguishing the note in full.

On March 14, 2016, we received proceeds of $27,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $27,000 related to the conversion feature of the note, along with a derivative liability at inception. The debt discount has been fully amortized to interest expense. In December 2017, we issued the lender 469,041 shares of our common stock in consideration for the conversion of principal of $5,000 and accrued interest of $863, resulting in a principal balance of $22,000 at September 30, 2018.

On March 17, 2016, we received proceeds of $33,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $33,000 related to the conversion feature of the note, along with a derivative liability at inception. The debt discount has been fully amortized to interest expense.

On April 11, 2016, we received proceeds of $90,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $90,000 related to the conversion feature of the note, along with a derivative liability at inception. The debt discount has been fully amortized to interest expense.

On May 20, 2016, we received proceeds of $60,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. The debt discount has been fully amortized to interest expense.

On June 22, 2016, we received proceeds of $50,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $50,000 related to the conversion feature of the note, along with a derivative liability at inception. The debt discount has been fully amortized to interest expense.

On July 6, 2016, we received proceeds of $87,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $87,000 related to the conversion feature of the note, along with a derivative liability at inception. The debt discount has been fully amortized to interest expense.

On August 8, 2016, we received proceeds of $60,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. The debt discount has been fully amortized to interest expense.

On September 13, 2016, we received proceeds of $55,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $55,000 related to the conversion feature of the note, along with a derivative liability at inception. The debt discount has been fully amortized to interest expense.

On October 17, 2016, we received proceeds of $55,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $55,000 related to the conversion feature of the note, along with a derivative liability at inception. The debt discount has been fully amortized to interest expense.

On November 8, 2016, we received proceeds of $55,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $55,000 related to the conversion feature of the note, along with a derivative liability at inception. The debt discount has been fully amortized to interest expense.

On December 6, 2016, we received proceeds of $60,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. The debt discount has been fully amortized to interest expense.

On January 10, 2017, we received proceeds of $60,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $1,644 and the debt discount was fully amortized to interest expense.

On February 13, 2017, we received proceeds of $60,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $7,233 and the debt discount was fully amortized to interest expense.

On March 9, 2017, we received proceeds of $60,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $11,178 and the debt discount was fully amortized to interest expense.

On April 12, 2017, we received proceeds of $95,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $95,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $26,548 and the debt discount was fully amortized to interest expense.

On May 8, 2017, we received proceeds of $60,000 pursuant to the March 2016 $1,000,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $21,041 and the debt discount was fully amortized to interest expense.

June 2017 Convertible Promissory Note – $500,000

On June 2, 2017, we issued a convertible promissory note in the aggregate principal amount of up to $500,000 (the "June 2017 $500,000 CPN"). The lender may advance the Company consideration for the note in such amounts as the lender may choose in its sole discretion. The note is convertible into shares of our common stock at a price per share equal to the lesser of: $0.03; 50% of the lowest trade price of our common stock subsequent to the effective date of the note; or the lowest effective price per share granted to any person or entity (exclusive of our officers and directors) to acquire common stock subsequent to the effective date of the note. The note initially matured, with respect to each advance, one year from the effective date of each advance. Subsequently, the lender extended the maturity date, with the note payable upon demand, but in no event later than 60 months from June 2, 2017.

On June 2, 2017, we received proceeds of $60,000 pursuant to the June 2017 $500,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $25,151 and the debt discount was fully amortized to interest expense.

On July 10, 2017, we received proceeds of $80,000 pursuant to the June 2017 $500,000 CPN. We recorded a debt discount of $80,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $41,863 and the debt discount was fully amortized to interest expense.

On August 11, 2017, we received proceeds of $80,000 pursuant to the June 2017 $500,000 CPN. We recorded a debt discount of $80,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $48,877 and the debt discount was fully amortized to interest expense.

On September 12, 2017, we received proceeds of $85,000 pursuant to the June 2017 $500,000 CPN. We recorded a debt discount of $85,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $59,384 and the debt discount was fully amortized to interest expense.

On October 13, 2017, we received proceeds of $80,000 pursuant to the June 2017 $500,000 CPN. We recorded a debt discount of $80,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $58,753, resulting in a remaining debt discount of $2,849 as of September 30, 2018.

On November 8, 2017, we received proceeds of $75,000 pursuant to the June 2017 $500,000 CPN. We recorded a debt discount of $75,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $54,644, resulting in a remaining debt discount of $8,014 as of September 30, 2018.

December 2017 Convertible Promissory Note – $500,000

On December 14, 2017, we issued a convertible promissory note in the aggregate principal amount of up to $500,000 (the "December 2017 $500,000 CPN"). The lender may advance the Company consideration for the note in such amounts as the lender may choose in its sole discretion. The note is convertible into shares of our common stock at a price per share equal to the lesser of: $0.03; 50% of the lowest trade price of our common stock subsequent to the effective date of the note; or the lowest effective price per share granted to any person or entity (exclusive of our officers and directors) to acquire common stock subsequent to the effective date of the note. The note matures, with respect to each advance, one year from the effective date of each advance. 

On December 14, 2017, we received proceeds of $60,000 pursuant to the December 2017 $500,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $43,712, resulting in a remaining debt discount of $12,329 as of September 30, 2018.

On January 11, 2018, we received proceeds of $70,000 pursuant to the December 2017 $500,000 CPN. We recorded a debt discount of $70,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $50,247, resulting in a remaining debt discount of $19,753 as of September 30, 2018.

On February 7, 2018, we received proceeds of $60,000 pursuant to the December 2017 $500,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $38,630, resulting in a remaining debt discount of $21,370 as of September 30, 2018.

On March 8, 2018, we received proceeds of $55,000 pursuant to the December 2017 $500,000 CPN. We recorded a debt discount of $55,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $31,041, resulting in a remaining debt discount of $23,959 as of September 30, 2018.

On March 14, 2018, we received proceeds of $6,500 pursuant to the December 2017 $500,000 CPN. We recorded a debt discount of $6,500 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $3,562, resulting in a remaining debt discount of $2,938 as of September 30, 2018.

On April 9, 2018, we received proceeds of $77,000 pursuant to the December 2017 $500,000 CPN. We recorded a debt discount of $77,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $24,000, resulting in a remaining debt discount of $36,000 as of September 30, 2018.

On May 7, 2018, we received proceeds of $60,000 pursuant to the December 2017 $500,000 CPN. We recorded a debt discount of $60,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $30,800, resulting in a remaining debt discount of $29,200 as of September 30, 2018.

On June 7, 2018, we received proceeds of $52,000 pursuant to the December 2017 $500,000 CPN. We recorded a debt discount of $52,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $16,384, resulting in a remaining debt discount of $35,616 as of September 30, 2018.

On July 10, 2018, we received proceeds of $35,000 pursuant to the December 2017 $500,000 CPN. We recorded a debt discount of $35,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $7,863, resulting in a remaining debt discount of $27,137 as of September 30, 2018.

On August 16, 2018, we received proceeds of $24,500 pursuant to the December 2017 $500,000 CPN. We recorded a debt discount of $24,500 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $3,020, resulting in a remaining debt discount of $21,480 as of September 30, 2018.

August 2018 Convertible Promissory Note – $500,000

On August 17, 2018, we issued a convertible promissory note in the aggregate principal amount of up to $500,000 (the "August 2018 $500,000 CPN"). The lender may advance the Company consideration for the note in such amounts as the lender may choose in its sole discretion. The note is convertible into shares of our common stock at a price per share equal to the lesser of: $0.01; 50% of the lowest trade price of our common stock subsequent to the effective date of the note; or the lowest effective price per share granted to any person or entity (exclusive of our officers and directors) to acquire common stock subsequent to the effective date of the note. The note matures, with respect to each advance, one year from the effective date of each advance. 

On August 17, 2018, we received proceeds of $10,500 pursuant to the August 2018 $500,000 CPN. We recorded a debt discount of $10,500 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $1,266, resulting in a remaining debt discount of $9,234 as of September 30, 2018.

On September 13, 2018, we received proceeds of $30,000 pursuant to the August 2018 $500,000 CPN. We recorded a debt discount of $30,000 related to the conversion feature of the note, along with a derivative liability at inception. During the nine months ended September 30, 2018, amortization of debt discount was recorded to interest expense in the amount of $1,397, resulting in a remaining debt discount of $28,603 as of September 30, 2018.

We reported no gain or loss on settlement of debt, including conversions to common stock, during the three months and nine months ended September 30, 2018. We reported a gain on settlement of debt of $14,054 for the three months ended September 30, 2017 and a loss on settlement of debt of $29,371 during the nine months ended September 30, 2017.

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DERIVATIVE LIABILITIES

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

6. DERIVATIVE LIABILITIES

The fair value of the Company’s derivative liabilities is estimated at the issuance date and is revalued at each subsequent reporting date. We estimate the fair value of derivative liabilities associated with our convertible notes payable and our Series B Preferred Stock using a multinomial lattice model based on projections of various potential future outcomes.

The significant assumptions used in the valuation of the derivative liabilities at September 30, 2018 are as follows:

Conversion to stock	Monthly
Stock price on the valuation date	$	0.0079
Conversion price	$	0.0045
Years to maturity		15.0
Expected volatility		230.0–271.0	%

The value of the derivative liabilities associated with our convertible notes payable was estimated at $4,464,733 and $5,241,762 at September 30, 2018 and December 31, 2017, respectively. The value of the derivative liabilities associated with our Series B Preferred Stock was estimated at $2,059,399 and $2,831,142 at September 30, 2018 and December 31, 2017, respectively.

The calculation input assumptions are subject to significant changes from period to period and to management’s judgment; therefore, the estimated fair value of the derivative liability will fluctuate from period to period, and the fluctuation may be material.

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SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

7. SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION

During the nine months ended September 30, 2018 and 2017, the Company paid no amounts for income taxes.

During the nine months ended September 30, 2018 and 2017, the Company paid $0 and $1,328 for interest, respectively.

During the nine months ended September 30, 2018, the Company had the following non-cash investing and financing activities:

· The Company increased debt discount and derivative liabilities by $480,500 for the issuance of new convertible debt.

· The Company decreased Series A Preferred Stock and increased additional paid-in capital by $1 for the redemption of 1,000 shares of Series A Preferred Stock.

During the nine months ended September 30, 2017, the Company had the following non-cash investing and financing activities:

· The Company issued a total of 2,565,527 shares of common stock for the conversion of $24,000 in convertible notes payable, plus $4,649 of accrued interest payable, increasing common stock by $2,565, increasing additional paid-in capital by $105,123, decreasing derivative liabilities by $49,668 and recording a loss on settlement of debt of $29,371.

· The Company increased debt discount and derivative liabilities by $640,000 for the issuance of new convertible debt.

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

8. RELATED PARTY TRANSACTIONS

On January 2, 2018, 1,000 shares of Series A Preferred Stock issued to the Company's President and director, William E. Beifuss, Jr., for services rendered were automatically redeemed at par value of $1 (see Note 3).

See Note 5 for discussion of convertible notes payable to related parties, including multiple lenders who are also shareholders of the Company.

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

9. SUBSEQUENT EVENTS

Management has evaluated subsequent events according to the requirements of ASC TOPIC 855, and has reported the following:

Subsequent Borrowings

We received two advances under the August 2018 $500,000 CPN totaling $37,000 in October 2018 and an advance of $25,000 in November 2018.

Debt Conversion

Effective November 7, 2018, the Company issued 898,296 shares of its common stock at fair value in consideration for the conversion of $1,065 principal of a convertible promissory note and accrued interest payable of $282.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2018

Summary Of Significant Accounting Policies

Income (Loss) per Share Calculations

Basic net income or loss per common share is computed by dividing net income or loss by the weighted average number of common shares outstanding. Diluted net income or loss per common share is computed by dividing net income or loss by the sum of the weighted average number of common shares outstanding and the dilutive potential common share equivalents then outstanding. Potential dilutive common share equivalents consist of shares issuable upon the exercise of outstanding stock options and warrants to acquire common stock using the treasury stock method and the average market price per share during the period, and shares issuable upon exercise of convertible notes payable and convertible preferred stock.

Since the Company had no dilutive effect of stock options, warrants, convertible notes payable and convertible preferred stock for the three months and nine months ended September 30, 2018, basic weighted average number of common shares outstanding is the same as diluted weighted average number of common shares outstanding. The Company has excluded 1,406,250 common shares for exercisable options, approximately 819,763,230 common shares issuable upon exercise of convertible notes payable and approximately 359,000,000 common shares issuable upon the conversion of outstanding shares of Series B preferred stock for the three months and nine months ended September 30, 2018.

Since the Company had no dilutive effect of stock options, warrants, convertible notes payable and convertible preferred stock for the three months and nine months ended September 30, 2017, basic weighted average number of common shares outstanding is the same as diluted weighted average number of common shares outstanding. The Company has excluded 1,408,750 common shares for exercisable options, 6,000 common shares for exercisable common stock purchase warrants, approximately 229,567,000 common shares issuable upon exercise of convertible notes payable and approximately 359,000,000 common shares issuable upon the conversion of outstanding shares of Series B preferred stock for the three months and nine months ended September 30, 2017.

Fair Value of Financial Instruments

Disclosures about fair value of financial instruments, require disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of September 30, 2018 and December 31, 2017, the Company believes the amounts reported for cash, prepaid expenses, accounts payable, accrued interest, accrued expenses and other current liabilities, and convertible notes payable approximate fair value because of their short maturities.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASC”) Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

· Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

· Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

· Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

We measure certain financial instruments at fair value on a recurring basis. Liabilities measured at fair value on a recurring basis are as follows at September 30, 2018 and December 31, 2017:

	Total		Level 1		Level 2		Level 3
September 30, 2018:
Derivative liabilities	$	6,524,132	$	-	$	-	$	6,524,132
Total liabilities measured at fair value	$	6,524,132	$	-	$	-	$	6,524,132
December 31, 2017:
Derivative liabilities	$	8,072,904	$	-	$	-	$	8,072,904
Total liabilities measured at fair value	$	8,072,904	$	-	$	-	$	8,072,904

During the nine months ended September 30, 2018, the Company had the following activity in its derivative liabilities account:

	Convertible Notes Payable			Series B Preferred Stock			Total
Derivative liabilities at December 31, 2017	$	5,241,762		$	2,831,142		$	8,072,904
Addition to liabilities for new debt/shares issued		480,500			-			480,500
Change in fair value		(1,257,529	)		(771,743	)		(2,029,272	)
Derivative liabilities at September 30, 2018	$	4,464,733		$	2,059,399		$	6,524,132

Derivative Liabilities

We have identified the conversion features of our convertible notes payable and our Series B Preferred Stock as derivatives. We estimate the fair value of the derivatives using a multinomial lattice model based on a probability weighted discounted cash flow model. We estimate the fair value of the derivative liabilities at the inception of the financial instruments, at the date of conversions to equity and at each reporting date, recording a derivative liability, debt discount, additional paid-in capital and a gain or loss on change in derivative liabilities as applicable. These estimates are based on multiple inputs, including the market price of our stock, interest rates, our stock price volatility, variable conversion prices based on market prices as defined in the respective agreements and probabilities of certain outcomes based on management projections. These inputs are subject to significant changes from period to period and to management’s judgment; therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material.

Recently Issued Accounting Pronouncements

There were no new accounting pronouncements issued by the FASB during the nine months ended September 30, 2018 and through the date of filing of this report that the Company believes will have a material impact on its financial statements.

Reclassifications

Certain amounts in the condensed financial statements for the three months and nine months ended September 30, 2017 have been reclassified to conform to the presentation for the three months and nine months ended September 30, 2018.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2018

Summary Of Significant Accounting Policies Tables Abstract

Fair Value Measurements, Assets and Liabilities, Recurring Basis

	Total		Level 1		Level 2		Level 3
September 30, 2018:
Derivative liabilities	$	6,524,132	$	-	$	-	$	6,524,132
Total liabilities measured at fair value	$	6,524,132	$	-	$	-	$	6,524,132
December 31, 2017:
Derivative liabilities	$	8,072,904	$	-	$	-	$	8,072,904
Total liabilities measured at fair value	$	8,072,904	$	-	$	-	$	8,072,904

Schedule of Derivative Liabilities at Fair Value

	Convertible Notes Payable			Series B Preferred Stock			Total
Derivative liabilities at December 31, 2017	$	5,241,762		$	2,831,142		$	8,072,904
Addition to liabilities for new debt/shares issued		480,500			-			480,500
Change in fair value		(1,257,529	)		(771,743	)		(2,029,272	)
Derivative liabilities at September 30, 2018	$	4,464,733		$	2,059,399		$	6,524,132

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STOCK OPTIONS AND WARRANTS (Tables)

9 Months Ended

Sep. 30, 2018

Stock Options And Warrants

Schedule of Stock Options, Activity

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contract Term (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2017		1,408,750		$	0.17		2.72	$	-
Granted		-		$	-
Exercised		-		$	-
Forfeited or expired		(2,500	)	$	-
Outstanding and exercisable at September 30, 2018		1,406,250		$	0.11		1.98	$	-

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DERIVATIVE LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2018

Derivative Liabilities Tables Abstract

Schedule of valuation of the derivative liabilities

Conversion to stock	Monthly
Stock price on the valuation date	$	0.0079
Conversion price	$	0.0045
Years to maturity		15.0
Expected volatility		230.0–271.0	%

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ORGANIZATION AND LINE OF BUSINESS (Details Narrative)	9 Months Ended
	Sep. 30, 2018
Organization And Line Of Business
State of incorporation	Nevada
Date of incorporation	Aug. 25, 2006

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Derivative liabilities	$ 6,524,132	$ 8,072,904
Total liabilities measured at fair value	6,524,132	8,072,904
Level 1 [Member]
Derivative liabilities
Total liabilities measured at fair value
Level 2 [Member]
Derivative liabilities
Total liabilities measured at fair value
Level 3 [Member]
Derivative liabilities	6,524,132	8,072,904
Total liabilities measured at fair value	$ 6,524,132	$ 8,072,904

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1)	9 Months Ended
	Sep. 30, 2018 USD ($)
Derivative liability beginning	$ 8,072,904
Addition to liability for new debt/shares issued	480,500
Change in fair value	(2,029,272)
Derivative liability ending	6,524,132
Series B Preferred Stock
Derivative liability beginning	2,831,142
Addition to liability for new debt/shares issued
Change in fair value	(771,743)
Derivative liability ending	2,059,399
Convertible Notes Payable [Member]
Derivative liability beginning	5,241,762
Addition to liability for new debt/shares issued	480,500
Change in fair value	(1,257,529)
Derivative liability ending	$ 4,464,733

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Common shares excluded for exercisable options	1,406,250		1,406,250
Common shares excluded for exercisable warrants				6,000
Options [Member]
Common shares excluded for exercisable options		1,408,750		1,408,750
Convertible Notes Payable [Member]
Common shares issuable upon exercise	819,763,230	229,567,000	819,763,230
Series B Preferred Stock
Common shares issuable upon exercise	359,000,000	359,000,000	359,000,000	359,000,000

XML

CAPITAL STOCK (Details Narrative) - USD ($)	3 Months Ended			9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Mar. 31, 2016	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	Aug. 31, 2017	Apr. 29, 2016	Apr. 28, 2016	Mar. 02, 2016
Common stock, par value	$ 0.001			$ 0.001		$ 0.001
Common stock, authorized shares	2,000,000,000			2,000,000,000		2,000,000,000		2,000,000,000	100,000,000
Preferred stock, par value	$ 0.001			$ 0.001		$ 0.001
Preferred stock, authorized shares	20,000,000			20,000,000		20,000,000
Reverse stock split description				<p style="margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">On April 20, 2016, the Company amended its articles of incorporation to reduce the number of authorized shares of common stock from 1,000,000,000 to 100,000,000 and to affect a one-for-ten reverse stock split of its authorized, issued and outstanding shares of common stock.</font></p>
Common stock, shares issued	38,776,436			38,776,436		38,776,436
Common stock, shares outstanding	38,776,436			38,776,436		38,776,436
Loss on settlement of debt		$ 14,054			$ (29,371)
Additional paid-in capital	20,537,951			$ 20,537,951		$ 20,537,950
Series A Certificate [Member]
Document effective date				120 days
Series B Preferred Stock
Voting power for the merger amount				50.00%
Conversion price, description				<p style="margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The conversion price is the lesser of (1) Fifty Percent (50%) of the lowest trade price of Common Stock recorded on any trade day after December 12, 2012 or (2) the lowest effective price per share granted to any person or entity, including the Holder but excluding officers and directors of the Company, to acquire Common Stock, or adjusted, whether by operation of purchase price adjustment, settlement agreements, exchange agreements, reset provision, floating conversion or otherwise, any outstanding warrant, option or other right to acquire Common Stock or outstanding Common Stock equivalents (the "Conversion Price").</font></p>
Preferred stock including additional paid in capital	3,000,000			$ 3,000,000
Preferred stock, face value shares	$ 100			$ 100
Preferred stock, outstanding shares	16,155			16,155		16,155
Preferred stock, value outstanding	$ 1,615,500			$ 1,615,500		$ 1,615,500
Penalty per day for failure to deliver shares	$ 1,500			$ 1,500
Outstanding common share, percentage	4.99%			4.99%
Prior notice description				<p style="margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The limitations on conversion may be waived by the Holder upon, at the election of the Holder, not less than 61 days prior notice to the Company, and the provisions of the conversion limitation shall continue to apply until such 61st day</font></p>
Series B Preferred Stock | Series B Certificate [Member]
Preferred stock, par value										$ 0.001
Preferred stock, authorized shares										30,000
Series A Preferred Stock | President and Director [Member]
Preferred stock, par value	$ 0.001			$ 0.001
Series A Preferred Stock | President and Director [Member] | Maximum [Member]
Preferred stock, authorized shares							1,000
Preferred stock, shares issued							1,000
Convertible Promissory Notes [Member]
Debt conversion, converted instrument, amount					$ 24,000
Debt conversion, converted instrument, shares issued					2,565,527
Preferred stock redemption and cancellation amount			$ 1,615,362
Loss on settlement of debt					$ 29,371
Debt conversion converted amount, accrued interest			$ 264,530		4,649
Debt conversion converted amount, derivative liability					49,668
Increased common stock value					2,565
Change in addtional paid in capital due to conversion of debt					$ 105,123

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STOCK OPTIONS AND WARRANTS (Details)	9 Months Ended
	Sep. 30, 2018 USD ($) shares
Shares
Outstanding shares, beginning	1,408,750
Granted
Exercised
Forfeited or expired	(2,500)
Outstanding and exercisable shares, ending	1,406,250
Weighted Average Exercise Price
Weighted average exercise price, beginning	0.17
Weighted average exercise price, granted
Weighted average exercise price, exercised
Weighted average exercise price, forfeited or expired
Weighted average exercise price, ending	0.11
Weighted Average Remaining Contract Term (Years)
Exercisable weighted average remaining contract term Beginning	2 years 8 months 19 days
Exercisable weighted average remaining contract term ending	1 year 11 months 23 days
Aggregate Intrinsic Value
Exercisable, aggregate intrinsic value, beginning | $
Exercisable, aggregate intrinsic value, ending | $

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STOCK OPTIONS AND WARRANTS (Details Narrative) - USD ($)		9 Months Ended
	Oct. 12, 2017	Sep. 30, 2018	Dec. 31, 2017
Stock options granted		1,406,250	1,408,750
Vesting Period of Award		25 months
Stock price		$ 0.0079
Option price	$ 7,000
Series B Preferred Stock
Shares purchase from option	7,000
Exercise price of Option per share	$ 100
Total exercise price of option	$ 700,000
Employees, Officers And Consultants [Member]
Stock options granted		1,408,750
Unleashed Future Holdings, LLC [Member]
Option exercise description	<p style="font: 12pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Unleashed Future Holdings, LLC is eligible to exercise all or part of the Option after the Company’s consolidated gross revenue, calculated in accordance with generally accepted accounting principles, consistently applied, equals or exceeds $2,000,000, on an annualized basis, as reported in the Company’s quarterly or annual financial statements.</font></p>

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CONVERTIBLE NOTES PAYABLE (Details Narrative) - USD ($)					1 Months Ended		3 Months Ended		9 Months Ended		12 Months Ended
	Dec. 14, 2017	Jun. 02, 2017	Mar. 04, 2016	Mar. 14, 2013	Aug. 17, 2018	Dec. 31, 2012	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	Sep. 13, 2018	Aug. 16, 2018	Jul. 10, 2018	Jun. 07, 2018	May 07, 2018	Apr. 09, 2018	Mar. 14, 2018	Mar. 08, 2018	Feb. 07, 2018	Jan. 11, 2018	Nov. 08, 2017	Oct. 13, 2017	Sep. 12, 2017	Aug. 11, 2017	Jul. 10, 2017	May 08, 2017	Apr. 12, 2017	Mar. 09, 2017	Feb. 13, 2017	Jan. 10, 2017	Dec. 06, 2016	Nov. 08, 2016	Oct. 17, 2016	Sep. 13, 2016	Aug. 08, 2016	Jul. 06, 2016	Jun. 22, 2016	May 20, 2016	Apr. 11, 2016	Mar. 17, 2016	Mar. 14, 2016
Debt Instrument, conversion price							$ 0.0045		$ 0.0045
Amortization of debt discount to interest expense									$ 614,144	$ 571,556
Loss on settlement of debt								$ 14,054		$ (29,371)
Convertible Notes Payable 3 [Member] | Accounts Payable [Member]
Debt instrument, interest rate				5.00%
Convertible promissory note, principal amount				$ 29,500			29,500		29,500
Debt Instrument, conversion price				$ 1.50
Debt Instrument, maturity date				Mar. 14, 2015
December 2017 Convertible Promissory Note [Member] | Convertible Notes Payable 40 [Member]
Proceeds from convertible promissory notes													$ 24,500
Debt discount													$ 24,500
Amortization of debt discount to interest expense									3,020
Debt instrument remaining discount									21,480
December 2017 Convertible Promissory Note [Member] | Convertible Notes Payable 38 [Member]
Proceeds from convertible promissory notes															$ 52,000
Debt discount															$ 52,000
Amortization of debt discount to interest expense									16,384
Debt instrument remaining discount									35,616
December 2017 Convertible Promissory Note [Member] | Convertible Notes Payable 36 [Member]
Proceeds from convertible promissory notes																	$ 77,000
Debt discount																	$ 77,000
Amortization of debt discount to interest expense									24,000
Debt instrument remaining discount									36,000
December 2017 Convertible Promissory Note [Member] | Convertible Notes Payable 42 [Member]
Proceeds from convertible promissory notes												$ 30,000
Debt discount												$ 30,000
Amortization of debt discount to interest expense									1,397
Debt instrument remaining discount									28,603
December 2017 Convertible Promissory Note [Member] | Convertible Notes Payable 41 [Member]
Debt instrument, interest rate					50.00%
Convertible promissory note, principal amount					$ 500,000
Proceeds from convertible promissory notes					$ 10,500
Debt Instrument, conversion price					$ 0.01
Debt discount					$ 10,500
Debt instrument, convertible, terms of conversion feature					convertible into shares of our common stock at a price per share equal to the lesser of: $0.01; 50% of the lowest trade price of our common stock subsequent to the effective date of the note; or the lowest effective price per share granted to any person or entity (exclusive of our officers and directors) to acquire common stock subsequent to the effective date of the note.
Amortization of debt discount to interest expense									1,266
Debt instrument remaining discount									9,234
December 2017 Convertible Promissory Note [Member] | Convertible Notes Payable 39 [Member]
Proceeds from convertible promissory notes														$ 35,000
Debt discount														$ 35,000
Amortization of debt discount to interest expense									7,863
Debt instrument remaining discount									27,137
December 2017 Convertible Promissory Note [Member] | Convertible Notes Payable 37 [Member]
Proceeds from convertible promissory notes																$ 60,000
Debt discount																$ 60,000
Amortization of debt discount to interest expense									30,800
Debt instrument remaining discount									29,200
December 2017 Convertible Promissory Note [Member] | Convertible Notes Payable 35 [Member]
Proceeds from convertible promissory notes																		$ 6,500
Debt discount																		$ 6,500
Amortization of debt discount to interest expense									3,562
Debt instrument remaining discount									2,938
December 2017 Convertible Promissory Note [Member] | Convertible Notes Payable 34 [Member]
Proceeds from convertible promissory notes																			$ 55,000
Debt discount																			$ 55,000
Amortization of debt discount to interest expense									31,041
Debt instrument remaining discount									23,959
December 2017 Convertible Promissory Note [Member] | Convertible Notes Payable 33 [Member]
Proceeds from convertible promissory notes																				$ 60,000
Debt discount																				$ 60,000
Amortization of debt discount to interest expense									38,630
Debt instrument remaining discount									21,370
December 2017 Convertible Promissory Note [Member] | Convertible Notes Payable 32 [Member]
Proceeds from convertible promissory notes																					$ 70,000
Debt discount																					$ 70,000
Amortization of debt discount to interest expense									50,247
Debt instrument remaining discount									19,753
December 2017 Convertible Promissory Note [Member] | Convertible Notes Payable 31 [Member]
Proceeds from convertible promissory notes	$ 60,000
Debt discount	$ 60,000
Amortization of debt discount to interest expense									43,712
Debt instrument remaining discount									12,329
December 2017 Convertible Promissory Note [Member] | Convertible Notes Payable 30 [Member]
Debt instrument, interest rate	50.00%
Convertible promissory note, principal amount	$ 500,000
Debt Instrument, conversion price	$ 0.03
Debt instrument, convertible, terms of conversion feature	convertible into shares of our common stock at a price per share equal to the lesser of: $0.03; 50% of the lowest trade price of our common stock subsequent to the effective date of the note; or the lowest effective price per share granted to any person or entity (exclusive of our officers and directors) to acquire common stock subsequent to the effective date of the note.
June 2017 Convertible Promissory Note [Member] | Convertible Notes Payable 28 [Member]
Proceeds from convertible promissory notes																							$ 80,000
Debt discount																							$ 80,000
Amortization of debt discount to interest expense									58,753
Debt instrument remaining discount									2,849
June 2017 Convertible Promissory Note [Member] | Convertible Notes Payable 27 [Member]
Proceeds from convertible promissory notes																								$ 85,000
Debt discount																								$ 85,000
Amortization of debt discount to interest expense									59,384
June 2017 Convertible Promissory Note [Member] | Convertible Notes Payable 26 [Member]
Proceeds from convertible promissory notes																									$ 80,000
Debt discount																									$ 80,000
Amortization of debt discount to interest expense									48,877
June 2017 Convertible Promissory Note [Member] | Convertible Notes Payable 25 [Member]
Proceeds from convertible promissory notes																										$ 80,000
Debt discount																										$ 80,000
Amortization of debt discount to interest expense									41,863
June 2017 Convertible Promissory Note [Member] | Convertible Notes Payable 29 [Member]
Proceeds from convertible promissory notes																						$ 75,000
Debt discount																						$ 75,000
Amortization of debt discount to interest expense									54,644
Debt instrument remaining discount									8,014
June 2017 Convertible Promissory Note [Member] | Convertible Notes Payable 23 [Member]
Debt instrument, interest rate		3.00%
Convertible promissory note, principal amount		$ 500,000
Debt instrument, convertible, terms of conversion feature		convertible into shares of our common stock at a price per share equal to the lesser of: $0.03; 50% of the lowest trade price of our common stock subsequent to the effective date of the note; or the lowest effective price per share granted to any person or entity (exclusive of our officers and directors) to acquire common stock subsequent to the effective date of the note.
Amortization of debt discount to interest expense									25,151
June 2017 Convertible Promissory Note [Member] | Convertible Notes Payable 24 [Member]
Proceeds from convertible promissory notes		$ 60,000
Debt discount		$ 60,000
March 2016 Convertible Promissory Note [Member] | Convertible Notes Payable 9 [Member]
Proceeds from convertible promissory notes																																								$ 90,000
Debt discount																																								$ 90,000
March 2016 Convertible Promissory Note [Member] | Convertible Notes Payable 8 [Member]
Proceeds from convertible promissory notes																																									$ 33,000
Debt discount																																									$ 33,000
March 2016 Convertible Promissory Note [Member] | Convertible Notes Payable 7 [Member]
Convertible promissory note, principal amount																																										$ 1,000,000
Proceeds from convertible promissory notes							22,000		22,000																																	27,000
Debt discount							5,000		5,000																																	$ 27,000
Debt conversion, converted instrument, shares issued											469,041
Accrued interest							863		863
March 2016 Convertible Promissory Note [Member] | Convertible Notes Payable 6 [Member]
Convertible promissory note, principal amount			$ 1,000,000
Proceeds from convertible promissory notes			$ 25,000								$ 25,000
Debt Instrument, conversion price			$ 0.03
Debt discount			$ 25,000
Debt instrument, convertible, terms of conversion feature			convertible into shares of our common stock at a price per share equal to the lesser of: $0.03; 50% of the lowest trade price of our common stock subsequent to the effective date of the note; or the lowest effective price per share granted to any person or entity (exclusive of our officers and directors) to acquire common stock subsequent to the effective date of the note.
Debt conversion, converted instrument, shares issued											1,632,272
Accrued interest											$ 3,956
March 2016 Convertible Promissory Note [Member] | Convertible Notes Payable 22 [Member]
Proceeds from convertible promissory notes																											$ 60,000
Debt discount																											$ 60,000
Amortization of debt discount to interest expense									21,041
March 2016 Convertible Promissory Note [Member] | Convertible Notes Payable 21 [Member]
Proceeds from convertible promissory notes																												$ 95,000
Debt discount																												$ 95,000
Amortization of debt discount to interest expense									26,548
March 2016 Convertible Promissory Note [Member] | Convertible Notes Payable 20 [Member]
Proceeds from convertible promissory notes																													$ 60,000
Debt discount																													$ 60,000
Amortization of debt discount to interest expense									11,178
March 2016 Convertible Promissory Note [Member] | Convertible Notes Payable 19 [Member]
Proceeds from convertible promissory notes																														$ 60,000
Debt discount																														$ 60,000
Debt instrument remaining discount									7,233
March 2016 Convertible Promissory Note [Member] | Convertible Notes Payable 18 [Member]
Proceeds from convertible promissory notes																															$ 60,000
Debt discount																															$ 60,000
Debt instrument remaining discount									1,644
March 2016 Convertible Promissory Note [Member] | Convertible Notes Payable 17 [Member]
Proceeds from convertible promissory notes																																$ 60,000
Debt discount																																$ 60,000
March 2016 Convertible Promissory Note [Member] | Convertible Notes Payable 16 [Member]
Proceeds from convertible promissory notes																																	$ 55,000
Debt discount																																	$ 55,000
March 2016 Convertible Promissory Note [Member] | Convertible Notes Payable 15 [Member]
Proceeds from convertible promissory notes																																		$ 55,000
Debt discount																																		$ 55,000
March 2016 Convertible Promissory Note [Member] | Convertible Notes Payable 14 [Member]
Proceeds from convertible promissory notes																																			$ 55,000
Debt discount																																			$ 55,000
March 2016 Convertible Promissory Note [Member] | Convertible Notes Payable 13 [Member]
Proceeds from convertible promissory notes																																				$ 60,000
Debt discount																																				$ 60,000
March 2016 Convertible Promissory Note [Member] | Convertible Notes Payable 12 [Member]
Proceeds from convertible promissory notes																																					$ 87,000
Debt discount																																					$ 87,000
March 2016 Convertible Promissory Note [Member] | Convertible Notes Payable 11 [Member]
Proceeds from convertible promissory notes																																						$ 50,000
Debt discount																																						$ 50,000
March 2016 Convertible Promissory Note [Member] | Convertible Notes Payable 10 [Member]
Proceeds from convertible promissory notes																																							$ 60,000
Debt discount																																							$ 60,000
Convertible Promissory Notes - Services 1 [Member] | Convertible Notes Payable 2 [Member]
Convertible promissory note, principal amount							32,620		32,620
Convertible Promissory Notes - Services 1 [Member] | Convertible Notes Payable 1 [Member]
Debt instrument, interest rate						5.00%
Convertible promissory note, principal amount						$ 58,600
Proceeds from convertible promissory notes							$ 25,980		$ 25,980
Debt Instrument, conversion price						$ 2.00
Debt discount						$ 57,050
Debt Instrument, maturity date						Dec. 31, 2014

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DERIVATIVE LIABILITIES (Details)	9 Months Ended
	Sep. 30, 2018 $ / shares
Conversion to stock	Monthly
Stock price on the valuation date	$ 0.0079
Conversion price	$ 0.0045
Years to maturity	15 years
Minimum [Member]
Expected volatility	230.00%
Maximum [Member]
Expected volatility	271.00%

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DERIVATIVE LIABILITIES (Details Narrative) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Derivative liability	$ 6,524,132	$ 8,072,904
Series B Preferred Stock
Derivative liability	2,059,399	2,831,142
Convertible Notes Payable [Member]
Derivative liability	$ 4,464,733	$ 5,241,762

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SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION (Details Narrative) - USD ($)	3 Months Ended			9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Mar. 31, 2016	Sep. 30, 2018	Sep. 30, 2017
Interest Paid				$ 0	$ 1,328
Income tax paid				0	0
Loss on settlement of debt		$ 14,054			(29,371)
Series A Preferred Stock
Convertible preferred stock shares redeemed				1,000
Additional Paid-in Capital | Series A Preferred Stock
Change in additional paid in capital due to redemption of preferred stock				$ 1
Convertible Debt [Member]
Increase decrease in debt discount for the period				$ 480,500	$ 640,000
Convertible Promissory Notes [Member]
Debt conversion, converted instrument, shares issued					2,565,527
Debt conversion, original debt, amount					$ 24,000
Debt conversion converted amount, accrued interest			$ 264,530		4,649
Common stock value increased upon conversion of debt					2,565
Debt conversion converted amount, derivative liability					49,668
Change in addtional paid in capital due to conversion of debt					105,123
Loss on settlement of debt					$ 29,371

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RELATED PARTY TRANSACTIONS (Details Narrative) - Series A Preferred Stock - President and Director [Member]	Jan. 02, 2018 $ / shares shares
Preferred stock shares issued | shares	1,000
Preferred stock redeemed at par value | $ / shares	$ 1

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SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] - USD ($)	Nov. 07, 2018	Nov. 30, 2018	Oct. 31, 2018	Aug. 31, 2018
Advances received against convertible promissory note		$ 25,000	$ 37,000	$ 500,000
Debt instrument converted principal amount	$ 1,065
Debt instrument converted accrued interest amount	$ 282
Debt conversion, converted instrument, shares issued	898,296