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Convertible Promissory Notes

6 Months Ended

Dec. 31, 2019

As of December 31, 2019, the outstanding convertible promissory notes, net of debt discount of $230,503 are summarized as follows:

Convertible Promissory Notes, net of debt discount	$	1,849,797
Less current portion		119,797
Total long-term liabilities	$	1,730,000

Maturities of long-term debt net of debt discount for the next four years are as follows:


Period Ended December 31,	Amount
2020		350,300
2021		540,000
2022		605,000
2023		585,000
	$	2,080,300
Less debt discount		(230,503	)
Long-term debt net of debt discount	$	1,849,797

At December 31, 2019, the Company had $2,080,300 in convertible promissory notes that had a remaining debt discount of $230,503, leaving a net balance of $1,849,797.

On April 9, 2015, the Company issued a 10% convertible promissory note (the "April 2015 Note") in the aggregate principal amount of up to $500,000. Upon execution of the convertible promissory note, the Company received a tranche of $50,000. The Company received additional tranches in the amount of $450,000 for an aggregate sum of $500,000. The April 2015 Note matured nine (9) months from the effective dates of each respective tranche. A second extension was granted to October 9, 2016. On January 19, 2017, the investor extended the April 2015 Note for an additional (60) months from the effective date of each tranche, which matures on April 9, 2020.The April 2015 Note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price since the original effective date of each respective advance or the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. If the Company fails to deliver shares in accordance with the timeframe of three (3) business days of the receipt of a notice of conversion, the lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the principal sum with the rescinded conversion shares returned to the Company. In no event shall the lender be entitled to convert any portion of the April 2015 Note such that would result in beneficial ownership by the lender and its affiliates of more than 4.99% of the outstanding shares of common stock of the Company. In addition, for each conversion, in the event, that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. During the six months ended December 31, 2019, the Company issued 147,662,611 shares of common stock upon conversion of $148,800 in principal, plus accrued interest of $56,890. The balance of the April 2015 Note as of December 31, 2019 was $43,800.

On January 28, 2016, the Company issued a 10% convertible promissory note (the "Jan 2016 Note") in the aggregate principal amount of up to $500,000. Upon execution of the convertible promissory note, the Company received a tranche of $10,000. The Company received additional tranches in the amount of $490,000 for an aggregate sum of $500,000. The Jan 2016 Note matures twelve (12) months from the effective dates of each respective tranche. On January 19, 2017, the investor extended the Jan 2016 Note for an additional sixty (60) months from the effective date of each tranche, which matures on January 27, 2022. The Jan 2016 Note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price since the original effective date of each respective tranche or the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. If the Company fails to deliver shares in accordance with the timeframe of three (3) business days of the receipt of a notice of conversion, the lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the principal sum with the rescinded conversion shares returned to the Company. In no event shall the lender be entitled to convert any portion of the Jan 2016 Note such that would result in beneficial ownership by the lender and its affiliates of more than 4.99% of the outstanding shares of common stock of the Company. In addition, for each conversion, in the event that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. The balance of the Jan 2016 Note as of December 31, 2019 was $500,000.

On February 3, 2017, the Company issued a 10% convertible promissory note (the "Feb 2017 Note") in the aggregate principal amount of up to $500,000. Upon execution of the convertible promissory note, the Company received a tranche of $60,000. The Company received additional tranches in the amount of $440,000 for an aggregate sum of $500,000. The Feb 2017 Note matures twelve (12) months from the effective dates of each respective tranche. The Feb 2017 Note matures on February 3, 2018, with an automatic extension of sixty (60) months from the effective date of each tranche. The Feb 2017 Note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price since the original effective date of each respective tranche or the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. If the Company fails to deliver shares in accordance with the timeframe of three (3) business days of the receipt of a notice of conversion, the lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the principal sum with the rescinded conversion shares returned to the Company. In no event shall the lender be entitled to convert any portion of the Feb 2017 Note such that would result in beneficial ownership by the lender and its affiliates of more than 4.99% of the outstanding shares of common stock of the Company. In addition, for each conversion, in the event, that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. The balance of the Feb 2017 Note as of December 31, 2019 was $500,000.

On November 9, 2017, for the sale of a 10% convertible promissory note (the "Nov 2017 Note") in the aggregate principal amount of up to $500,000. Upon execution of the convertible promissory note, the Company received a tranche of $45,000. The Company received additional tranches in the amount of $455,000 for an aggregate sum of $500,000. The Nov 2017 Note matures twelve (12) months from the effective dates of each respective tranche. The Nov 2017 Note matures on November 9, 2018, with an automatic extension of sixty (60) months from the effective date of each tranche. The Nov 2017 Note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price since the original effective date of each respective tranche or the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. If the Company fails to deliver shares in accordance with the timeframe of three (3) business days of the receipt of a notice of conversion, the lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the principal sum with the rescinded conversion shares returned to the Company. In no event shall the lender be entitled to convert any portion of the Nov 2017 Note such that would result in beneficial ownership by the lender and its affiliates of more than 4.99% of the outstanding shares of common stock of the Company. In addition, for each conversion, in the event that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. The balance of the Nov 2017 Note as of December 31, 2019 was $500,000.

On June 27, 2018, for the sale of a 10% convertible promissory note (the "Jun 2018 Note") in the aggregate principal amount of up to $500,000. Upon execution of the convertible promissory note, the Company received a tranche of $50,000. On October 9, 2018, the Company received another tranche of $40,000, for a total aggregate of $90,000 as of December 31, 2019. The Jun 2018 Note matures twelve (12) months from the effective dates of each respective tranche. The Jun 2018 Note matured on June 27, 2019, which was automatically extended for sixty (60) months from the effective date of each tranche. The Jun 2018 Note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price since the original effective date of each respective tranche or the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. If the Company fails to deliver shares in accordance with the timeframe of three (3) business days of the receipt of a notice of conversion, the lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the principal sum with the rescinded conversion shares returned to the Company. In no event shall the lender be entitled to convert any portion of the Jun 2018 Note such that would result in beneficial ownership by the lender and its affiliates of more than 4.99% of the outstanding shares of common stock of the Company. In addition, for each conversion, in the event, that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $2,823 during the six months ended December 31, 2019. The balance of the Jun 2018 Note as of December 31, 2019 was $90,000.

On August 10, 2018, the Company entered into a convertible promissory note with an investor, providing for the sale by the Company of a 10% unsecured convertible note (the "Aug 2018 Note") in the aggregate principal amount of up to $100,000. The Aug 2018 Note matures on August 10, 2019, with an extension of sixty (60) months from the date of the note. The Aug 2018 Note may be converted into shares of the Company's common stock at a conversion price of the lesser of a) $0.005 per share or b) sixty-one (61%) percent of the lowest trading price per common stock recorded on any trade day after the effective date. The conversion feature of the Aug 2018 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Note. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $11,233 during the six months ended December 31, 2019. The balance of the Aug 2018 Note as of December 31, 2019 was $100,000.

From February 14, 2019 through August 12, 2019, the Company entered into convertible promissory notes with an investor, providing for the sale by the Company of a 10% unsecured convertible note (the "Feb-Aug Notes") in the aggregate principal amount of up to $249,000. The Feb-Aug Notes matures on February 14, 2020 thru August 12, 2020. The Feb-Aug Notes may be converted into shares of the Company's common stock at a conversion price of sixty-one (61%) percent of the average of the two (2) lowest trading prices per common stock during the fifteen (15) trading days prior to the conversion date. The conversion feature of the Feb-Aug Notes was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Notes. During the six months ended December 31, 2019, the Company issued 29,277,330 shares of common stock upon conversion of principal in the amount of $78,000, plus accrued interest of $3,900, with a fair value loss on conversion of debt in the amount of $51,821. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $76,880 during the six months ended December 31, 2019. The balance of the Feb-Aug Notes as of December 31, 2019 was $53,000.

On December 14, 2018, January 18, 2019, and July 3, 2019, the Company entered into convertible promissory notes with an investor, providing for the sale by the Company of 10% unsecured convertible notes (the "Dec-Jul Notes") in the total aggregate principal amount of $86,500. During the six months ended December 31, 2019, an aggregate of $78,886 in principal, plus accrued interest of $8,650, and legal fees of $4,000 in connection with the notes issued in December 2018 and January 2019 were converted into an aggregate of 63,957,592 shares of the Company's common stock, which represented a conversion price equal to sixty-one (61%) percent of the lowest trading price per common stock during the twenty five (25) trading days prior to the conversion date of each note. The remaining note issued on July 3, 2019 matures on July 3, 2020 and may be converted into shares of the Company's common stock at a conversion price of sixty-one (61%) percent of the lowest trading price per common stock during the twenty five (25) trading days prior to the conversion date. The conversion feature of the Dec-Jul Notes was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Note. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $66,960 during the six months ended December 31, 2019. The balance of the Dec-Jul Notes as of December 31, 2019 was $53,500.

On January 31, 2019 and March 6, 2019, the Company entered into convertible promissory notes with an investor, providing for the sale by the Company of 10% unsecured convertible notes (the "Jan-Mar Notes") in the total aggregate principal amount of $160,000. The Jan-Mar Notes mature on January 31, 2020 and March 6, 2020, respectively, and may be converted into shares of the Company's common stock at a conversion price of sixty-one (61%) percent of the average of the two lowest (2) trading prices per common stock during the fifteen (15) trading days prior to the conversion date. The conversion feature of the Jan-Mar Notes was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Jan-Mar Notes. The Company issued 76,592,777 shares of common stock upon the conversion of principal in the amount of $160,000, plus accrued interest of $8,399, and legal fees of $1,500, with a fair value loss on conversion of debt in the amount of $189,237. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $101,698 during the six months ended December 31, 2019. The balance of the Jan-Mar Notes as of December 31, 2019 was $0.

On August 28, 2019, the Company entered into a convertible promissory note (the "Aug Note") with an investor, providing for the sale by the Company of a 10% unsecured convertible note (the "Aug Note") in the principal amount of $80,000. The Company received funds of $78,000, less other fees of $2,000. The Aug Note matures on August 28, 2020. The Aug Note may be converted into shares of the Company's common stock at a conversion price of sixty-one (61%) percent of the average of the two (2) lowest trading prices per common stock during the fifteen (15) trading days prior to the conversion date. The conversion feature of the Aug Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Aug Note. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $5,305 during the six months ended December 31, 2019. The balance of the Aug Note as of December 31, 2019 was $80,000.

On October 2, 2019, the Company entered into a convertible promissory note with an investor, providing for the sale by the Company of a 10% unsecured convertible note (the "Oct Note") in the principal amount of $80,000. The Company received funds of $78,000, less other fees of $2,000. The Oct Note matures on October 2, 2020. The Oct Note may be converted into shares of the Company's common stock at a conversion price of sixty-one (61%) percent of the average of the two (2) lowest trading prices per common stock during the fifteen (15) trading days prior to the conversion date. The conversion feature of the Oct Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Oct Note. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $19,672 during the six months ended December 31, 2019. The balance of the Oct Note as of December 31, 2019 was $80,000.

On December 2, 2019, the Company entered into convertible promissory note with an investor, providing for the sale by the Company of a 10% unsecured convertible note (the "Dec Note") in the principal amount of $80,000. The Company received funds of $78,000, less other fees of $2,000. The Dec Note matures on December 2, 2020. The Dec Note may be converted into shares of the Company's common stock at a conversion price of sixty-one (61%) percent of the average of the two (2) lowest trading prices per common stock during the fifteen (15) trading days prior to the conversion date. The conversion feature of the Dec Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Dec Note. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $5,902 during the six months ended December 31, 2019. The balance of the Dec Note as of December 31, 2019 was $80,000.