10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________.

Commission file number: 000-54267

FREEZE TAG, INC.

(Exact name of registrant as specified in its charter)

Delaware	20-4532392
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

18062 Irvine Blvd, Suite 103 Tustin, California	92780
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (714) 210-3850

Indicate by check mark whether the registrant (1) has filed all reports required to be filed 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 ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 ¨

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

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
(Do not check if a smaller reporting company)

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

Applicable only to issuers involved in bankruptcy proceedings during the preceding five years:

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ¨ No ¨

Applicable only to corporate issuers:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of May 10, 2017, there were 944,674,565 shares of common stock, $0.00001 par value, issued and outstanding.

FREEZE TAG, INC.

TABLE OF CONTENTS

QUARTER ENDED MARCH 31, 2017

PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	31

2

PART I – FINANCIAL INFORMATION

The accompanying condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the instructions for Form 10-Q. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements.

In the opinion of management, the condensed financial statements contain all material adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial condition, results of operations, and cash flows of the Company for the interim periods presented.

The results for the period ended March 31, 2017 are not necessarily indicative of the results of operations for the full year. These condensed financial statements and related notes should be read in conjunction with the financial statements and notes thereto included in the Company’s Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2016.

3

FREEZE TAG, INC.

(A DELAWARE CORPORATION)

CONDENSED BALANCE SHEETS

	March 31, 2017			December 31, 2016
ASSETS	(Unaudited)
Current assets:
Cash	$	710		$	19,934
Accounts receivable		6,551			7,745
Prepaid expenses and other current assets		4,986			5,281
Total current assets		12,247			32,960
Total assets	$	12,247		$	32,960
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	128,474		$	133,083
Accrued expenses		499,502			495,473
Accrued interest payable – related party		389,845			354,165
Accrued interest payable		416,424			361,503
Unearned royalties		127,198			127,201
Notes payable		58,096			58,096
Convertible notes payable – related party		1,447,041			1,447,041
Convertible notes payable, net of discount of $210,772 and $239,402, respectively		2,134,594			1,952,734
Derivative liabilities		1,556,264			1,934,617
Total current liabilities		6,757,438			6,863,913
Total liabilities		6,757,438			6,863,913
Commitments and contingencies
Stockholders’ deficit:
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding		-			-
Common stock; $0.00001 par value, 2,000,000,000 shares authorized, 820,236,456 and 648,436,785 shares issued and outstanding, respectively		8,202			6,484
Additional paid-in capital		4,285,179			4,259,692
Common stock payable		16,800			16,800
Accumulated deficit		(11,055,372	)		(11,113,929	)
Total stockholders’ deficit		(6,745,191	)		(6,830,953	)
Total liabilities and stockholders’ deficit	$	12,247		$	32,960

The accompanying notes are an integral part of the condensed financial statements

4

FREEZE TAG, INC.

(A DELAWARE CORPORATION)

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended March 31,
	2017			2016
Revenues	$	3,827		$	21,777
Operating costs and expenses:
Cost of sales		29,783			57,827
Selling, general and administrative expenses		154,174			153,092
Total operating costs and expenses		183,957			210,919
Loss from operations		(180,130	)		(189,142	)
Other income (expense):
Interest expense, net		(209,358	)		(214,674	)
Gain on change in derivative liabilities		448,045			54,979
Total other income (expense)		238,687			(159,695	)
Income (loss) before income taxes		58,557			(348,837	)
Provision for income taxes		-			1,725
Net income (loss)	$	58,557		$	(350,562	)
Weighted average number of common shares outstanding:
Basic		703,135,385			284,894,068
Diluted		2,000,000,000			284,894,068
Income (loss) per common share – basic and diluted	$	0.00		$	(0.00	)

The accompanying notes are an integral part of the condensed financial statements

5

FREEZE TAG, INC.

(A DELAWARE CORPORATION)

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended March 31,
	2017			2016
Cash flows from operating activities:
Net income (loss)	$	58,557		$	(350,562	)
Adjustments to reconcile net income (loss) to net cash used by operating activities:
Amortization of debt discount to interest expense		116,937			122,213
Gain on change in derivative liabilities		(448,045	)		(54,979	)
Changes in operating assets and liabilities:
Accounts receivable, net		1,194			(4,534	)
Prepaid expenses and other current assets		295			576
Accounts payable		(4,609	)		831
Accrued expenses		4,029			1,360
Accrued interest payable – related party		35,680			35,978
Accrued interest payable		56,741			56,483
Unearned royalties		(3	)		(1,686	)
Net cash used by operating activities		(179,224	)		(194,320	)
Cash flows from investing activities		-			-
Net cash provided by investing activities		-			-
Cash flows from financing activities:
Proceeds from convertible notes payable		160,000			130,000
Proceeds from notes payable		-			29,780
Net cash provided by financing activities		160,000			159,780
Net decrease in cash		(19,224	)		(34,540	)
Cash at the beginning of the period		19,934			42,052
Cash at the end of the period	$	710		$	7,512

Non-cash transactions:
Conversion of debt to common shares	$	6,770	$	4,400
Conversion of accrued interest to common shares		1,820		962
Conversion of derivative liabilities to common shares		18,615		8,531
Debt discount due to derivative		88,307		106,092

The accompanying notes are an integral part of the condensed financial statements

6

FREEZE TAG, INC.

(A DELAWARE CORPORATION)

Notes to Condensed Financial Statements

Three Months Ended March 31, 2017

(Unaudited)

NOTE 1 – THE COMPANY

Freeze Tag, Inc. (the “Company”) is a leading creator of mobile social games that are fun and engaging for all ages. Based on a free-to-play business model that has propelled games like Candy Crush Saga to worldwide success, the Company employs state-of-the-art data analytics and proprietary technology to dynamically optimize the gaming experience for revenue generation. Players can download and enjoy the Company’s games for free, or they can purchase virtual items and additional features within the game to increase the fun factor. The Company’s games encourage players to compete and engage with their friends on major social networks such as Facebook and Twitter.

NOTE 2 – GOING CONCERN

As shown in the accompanying financial statements, the Company had net income of $58,557 for the three months ended March 31, 2017 and incurred a net loss of $350,562 for the three months ended March 31, 2016. The Company has generally incurred net losses since its inception and, as of March 31, 2017, the Company’s accumulated deficit was $11,055,372. During the three months ended March 31, 2017 and the year ended December 3l, 2016, the Company experienced negative cash flows from operations largely due to its continued investment spending for product development of game titles for smartphones and tablets that are expected to benefit future periods. Those facts, along with our lack of access to a significant bank credit facility, create an uncertainty about the Company’s ability to continue as a going concern. Accordingly, the Company is currently evaluating its alternatives to secure financing sufficient to support the operating requirements of its current business plan, as well as continuing to execute its business strategy of distributing game titles to digital distribution outlets, including mobile gaming app stores, online PC and Mac gaming portals, and opportunities for new devices such as tablet (mobile internet device) applications, mobile gaming platforms and international licensing opportunities.

The Company’s ability to continue as a going concern is dependent upon its success in securing sufficient financing and in successfully executing its plans to return to positive cash flows during fiscal 2017. The Company’s financial statements do not include any adjustments that might be necessary if it were unable to continue as a going concern.

NOTE 3 – ACCRUED EXPENSES

Accrued liabilities consisted of the following at:

	March 31, 2017		December 31, 2016
Accrued vacation	$	70,268	$	66,194
Accrued royalties		410,686		410,533
Technology payable		18,000		18,000
Other		548		746
	$	499,502	$	495,473

7

Accrued royalties consist of amounts owed to other parties with whom the Company has revenue-sharing agreements or from whom it licenses certain trademarks or copyrights.

Unearned royalties consist of royalties received from licensees, which have not yet been earned. Unearned royalties were $127,198 and $127,201 at March 31, 2017 and December 31, 2016, respectively.

As of March 31, 2017 and December 31, 2016, the Company had technology payable of $18,000 resulting from a technology transfer agreement with an unrelated party entered into in June 2011, payable in 24 installments of $1,500 without interest.

NOTE 4 – DEBT

Notes Payable

On February 1, 2016, the Company entered into a Game Marketing Agreement with an investor whereby the investor agreed, at its option, to loan up to $250,000 (the “Marketing Fund”) to the Company to exclusively fund user acquisition efforts for the game Kitty Pawp (the “Game”). The investor will receive 50% of Net Receipts (as defined in the agreement) from the Game until the Marketing Fund is fully recouped. Once the Marketing Fund is recouped, the investor will receive 50% of Net Receipts from the Game until the investor receives a 50% return on the Marketing Funds advanced.

The Company has recorded Marketing Fund advances as notes payable in the accompanying condensed balance sheets. Upon receiving a Marketing Fund advance, the Company accrues the 50% return as interest expense and includes the obligation in accrued interest payable in the accompanying condensed balance sheets. As of March 31, 2017 and December 31, 2016, total advances recorded as notes payable were $58,096 and accrued interest payable included a total of $22,046 of the 50% guaranteed return.

Convertible Notes Payable – Related Party

Convertible notes payable, related party consisted of the following at:

	March 31, 2017		December 31, 2016
Convertible note payable to the Holland Family Trust, maturing on December 31, 2017, with interest at 10%	$	222,572	$	222,572
Convertible note payable to Craig Holland, maturing on December 31, 2017, with interest at 10%		813,602		813,602
Convertible note payable to Craig Holland, maturing on December 31, 2017, with interest at 10%		186,450		186,450
Convertible note payable to Mick Donahoo, maturing on December 31, 2017, with interest at 10%		186,450		186,450
Convertible note payable to Craig Holland, maturing on December 31, 2017, with interest at 10%		6,925		6,925
Convertible note payable to Mick Donahoo, maturing on December 31, 2017, with interest at 10%		31,042		31,042
Total	$	1,447,041	$	1,447,041

The “Holland Family Trust Convertible Note” is convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the date of conversion. “Fixed Conversion Price” shall mean $0.00005.

8

The Company evaluated the Holland Family Trust Convertible Note and determined that the shares issuable pursuant to the conversion option were determinate due to the Fixed Conversion Price and, as such, does not constitute a derivative liability as the Company has obtained authorization from a majority of shareholders such that should conversion occur at the Fixed Conversion Price the appropriate number of shares will be available or issuable for settlement to occur. The note payable is convertible into common stock at the discretion of the Holland Family Trust. Furthermore, at any time, the Company may pay the balance of the unconverted note payable in cash.

As of September 30, 2014, $72,107 of accrued interest was added to the note principal and $813,602 of the note was transferred to Craig Holland. A new convertible note for $222,572 was issued to the Holland Family Trust with the same terms as the previous note, with the exception of the maturity date, which was extended to December 31, 2017. As of March 31, 2017 and December 31, 2016, accrued interest related to the Holland Family Trust Convertible Note was $55,613 and $50,124, respectively.

On September 30, 2014, $813,602 principal balance (including interest) of the Holland Family Trust Convertible Note was transferred to Craig Holland (the “Holland Transferred Convertible Note”). The Holland Transferred Convertible Note retains the same terms as the original Holland Family Trust Convertible Note with the exception of the maturity date, which was extended to December 31, 2017. As of March 31, 2017 and December 31, 2016, accrued interest related to the Holland Transferred Convertible Note was $283,289 and $183,228, respectively.

On December 31, 2013, the Company converted $186,450 of accrued salaries due to Craig Holland into a convertible note (the “Holland Accrued Salary Note”) and converted $186,450 of accrued salaries due to Mick Donahoo into a convertible note (the “Donahoo Accrued Salary Note”). The Holland Accrued Salary Note and the Donahoo Accrued Salary Note are convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. “Fixed Conversion Price” shall mean $0.00005. The maturity date of the note has been extended to December 31, 2017.

The Company evaluated the Holland Accrued Salary Note and the Donahoo Accrued Salary Note and determined that the shares issuable pursuant to the conversion option were determinate due to the Fixed Conversion Price and, as such, the conversion feature does not constitute a derivative liability as the Company has obtained authorization from a majority of shareholders such that should conversion occur at the Fixed Conversion Price the appropriate number of shares will be available or issuable for settlement to occur. As of March 31, 2017 and December 31, 2016, there was $60,532 and $55,935, respectively, of accrued interest related to each of the notes.

On December 31, 2013, the Company converted a note payable to Mick Donahoo of $55,250 and accrued interest of $15,399 into a new convertible related party note in the amount of $70,649 (the “Mick Donahoo Convertible Note”).

On December 31, 2013, the Company converted a note payable to Craig Holland of $35,100 and accrued interest of $11,432 into a new convertible related party note in the amount of $46,532 (the “Craig Holland Convertible Note”).

9

The Mick Donahoo Convertible Note and the Craig Holland Convertible Note are convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. “Fixed Conversion Price” shall mean $0.00005. The maturity date of the notes has been extended to December 31, 2017.

The Company evaluated the Mick Donahoo Convertible Note and the Craig Holland Convertible Note and determined that the shares issuable pursuant to the conversion option were determinate due to the Fixed Conversion Price and, as such, does not constitute a derivative liability as the Company has obtained authorization from a majority of shareholders such that should conversion occur at the Fixed Conversion Price the appropriate number of shares will be available or issuable for settlement to occur. The agreements modified the debt to make it convertible into common stock of the Company. As of March 31, 2017 and December 31, 2016, there was accrued interest payable related to these notes totaling $9,879 and $8,943, respectively.

On October 23, 2014, Craig Holland converted $35,000 principal and $2,836 accrued interest into 39,829,849 shares of the Company’s common stock.

On October 23, 2014, Mick Donahoo converted $35,000 principal and $2,836 accrued interest into 39,829,849 shares of the Company’s common stock.

On October 8, 2015, Craig Holland converted $4,607 principal and $2,028 accrued interest into 12,637,860 shares of the Company's common stock.

On October 8, 2015, Mick Donahoo converted $4,607 principal and $2,028 accrued interest into 12,637,860 shares of the Company's common stock.

Effective October 15, 2015, the Company entered into an Amendment to Convertible Promissory Note with each of Craig Holland and Mick Donahoo with respect to the Craig Holland Convertible Note and the Mick Donahoo Convertible Note. The parties agreed to modify the terms of the notes such that in the event the lender issues a valid conversion notice and the conversion notice results in a conversion price less than the then-par value of the Company's common stock, the conversion will be effected at par value with additional principal amounts added to the note equal to the value of the common shares that were not able to be issued due to the conversion price being less than the par value of the Company's common stock. As the amendment did not alter the shares received by converting the notes, no additional value was recorded by the Company as a result of these amendments.

Total accrued interest payable for the related party convertible notes was $389,845 and $354,165 as of March 31, 2017 and December 31, 2016, respectively.

10

Convertible Notes Payable – Non-Related Party

Convertible notes payable – non-related party consisted of the following at:

	March 31, 2017		December 31, 2016
Convertible note payable to Robert Cowdell, maturing on December 31, 2017, with interest at 10%	$	61,443	$	61,443
Tranche #2 from 12/20/2013 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than December 20, 2018, with interest at 10%		14,966		14,966
Tranche #3 from 12/20/2013 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than December 20, 2018, with interest at 10%		50,000		50,000
Tranche #4 from 12/20/2013 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than December 20, 2018, with interest at 10%		50,000		50,000
Tranche #5 from 12/20/2013 $500,000 convertible  note payable to an accredited investor, payable on demand, but due no later than December 20, 2018, with interest at 10%		50,000		50,000
Tranche #6 from 12/20/2013 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than December 20, 2018, with interest at 10%		50,000		50,000
Tranche #1 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		26,957		33,727
Tranche #2 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		50,000		50,000
Tranche #3 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		50,000		50,000
Tranche #4 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		50,000		50,000
Tranche #5 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		50,000		50,000
Tranche #6 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		100,000		100,000
Tranche #7 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		50,000		50,000
Tranche #8 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		70,000		70,000

11

Tranche #9 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%	30,000	30,000
Tranche #1 from 2/11/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than February 11, 2020, with interest at 10%	30,000	30,000
Tranche #2 from 2/11/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than February 11, 2020, with interest at 10%	40,000	40,000
Tranche #3 from 2/11/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than February 11, 2020, with interest at 10%	110,000	110,000
Tranche #4 from 2/11/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than February 11, 2020, with interest at 10%	88,000	88,000
Tranche #5 from 2/11/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than February 11, 2020, with interest at 10%	90,000	90,000
Tranche #6 from 2/11/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than February 11, 2020, with interest at 10%	90,000	90,000
Tranche #1 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%	65,000	65,000
Tranche #2 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%	65,000	65,000
Tranche #3 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%	60,000	60,000
Tranche #4 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%	50,000	50,000
Tranche #5 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%	50,000	50,000
Tranche #6 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%	55,000	55,000
Tranche #7 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%	25,000	25,000
Tranche #8 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%	55,000	55,000

12

Tranche #9 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%		50,000			50,000
Tranche #1 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		60,000			60,000
Tranche #2 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		45,000			45,000
Tranche #3 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		55,000			55,000
Tranche #4 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		27,000			27,000
Tranche #5 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		10,000			10,000
Tranche #6 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		48,000			48,000
Tranche #7 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		24,000			24,000
Tranche #8 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		50,000			50,000
Tranche #9 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		50,000			50,000
Tranche #10 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		50,000			50,000
Tranche #11 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		45,000			45,000
Tranche #12 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		45,000			45,000
Tranche #13 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		45,000			-
Tranche #1 from 2/8/17 $500,000 convertible note payable to an accredited investor, maturing on February 8, 2018, with interest at 10%		55,000			-
Tranche #2 from 2/8/17 $500,000 convertible note payable to an accredited investor, maturing on February 8, 2018, with interest at 10%		60,000			-
Total		2,345,366			2,192,136
Less discount		(210,772	)		(239,402	)
Net	$	2,134,594		$	1,952,734

13

On December 31, 2013, the Company converted $55,429 of convertible debt and $6,014 in accrued interest due to Robert Cowdell (the “Convertible Cowdell Note”) into a convertible note. The Convertible Cowdell Note is convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. “Fixed Conversion Price” shall mean $0.00005. The maturity date of the note has been extended to December 31, 2017. The Convertible Cowdell Note had accrued interest of $19,948 and $18,433 as of March 31, 2017 and December 31, 2016, respectively.

The Company evaluated the Convertible Cowdell Note and determined that the shares issuable pursuant to the conversion option were determinate due to the Fixed Conversion Price and, as such, does not constitute a derivative liability as the Company has obtained authorization from a majority of shareholders such that should conversion occur at the Fixed Conversion Price the appropriate number of shares will be available or issuable for settlement to occur. The agreement modified the debt to make it convertible into common stock of the Company.

The $500,000 principal amount convertible note dated December 20, 2013 to an accredited investor (“Accredited Investor #1”) with an outstanding balance of $214,966 at March 31, 2017 was funded in $50,000 tranches in January, February, March, April and May 2014. The note is convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. “Fixed Conversion Price” shall mean $0.00005. The note also includes conversion price reset features that are triggered when the Company issues certain new equity instruments; as a result, this feature caused the Company to consider this feature a derivative liability. The maturity date of the note initially was one year from the date of funding, but was subsequently extended and changed to be such that the note amount is payable upon demand (with ten days written notice) by the accredited investor, but in no event later than December 20, 2018.

The $500,000 principal amount convertible note dated June 25, 2014 to an accredited investor (“Accredited Investor #2”) with an outstanding balance of $476,957 at March 31, 2017 was funded in $50,000 tranches in June, July, August, September, October, and December 2014, and tranches of $100,000 in November 2014, $70,000 in January 2015, and $30,000 in February 2015. The note is convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. “Fixed Conversion Price” shall mean $0.00005. The note also includes conversion price reset features that are triggered when the Company issues certain new equity instruments; as a result, this feature caused the Company to consider this feature a derivative liability. The maturity date of the note initially was one year from the date of funding, with the maturity date subsequently extended to June 25, 2017.

14

The $500,000 principal amount convertible note dated February 11, 2015 to Accredited Investor #2 with an outstanding balance of $448,000 at March 31, 2017 was funded by tranches of $30,000 in February 2015, $40,000 in February 2015, $110,000 in March 2015, $88,000 in April 2015, $90,000 in May and June 2015. The note is convertible into Company common stock at the lesser of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three (3) lowest trade prices on three (3) separate trading days of Common Stock recorded after the original Effective Date of the note. “Fixed Conversion Price” shall mean $0.003. The note also includes conversion price reset features that are triggered when the Company issues certain new equity instruments; as a result, this feature caused the Company to consider this feature a derivative liability. The maturity date of the note initially was nine months from the date of funding, but was subsequently extended and changed to be such that the note amount is payable upon demand (with ten days written notice) by the accredited investor, but in no event later than February 11, 2020.

The $500,000 principal amount convertible note dated July 28, 2015 to Accredited Investor #2 with an outstanding balance of $475,000 at March 31, 2017 was funded by tranches of $65,000 in July and August 2015, $60,000 in September 2015, $50,000 in October and November 2015, $55,000 in December 2015, $25,000 in January 2016, $55,000 in February 2016, and $50,000 in March 2016. The note is convertible into Company common stock at the lesser of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three (3) lowest trade prices on three (3) separate trading days of Common Stock recorded after the original Effective Date of the note. “Fixed Conversion Price” shall mean $0.003. The note also includes conversion price reset features that are triggered when the Company issues certain new equity instruments; as a result, this feature caused the Company to consider this feature a derivative liability. The maturity date of the note initially was nine months from the date of funding, but was subsequently extended and changed to be such that the note amount is payable upon demand (with ten days written notice) by the accredited investor, but in no event later than July 28, 2020.

The $600,000 principal amount convertible note, dated April 7, 2016 and amended on January 18, 2017, to Accredited Investor #2 with an outstanding balance of $554,000 at March 31, 2017 was funded by tranches of $60,000 in April 2016, $45,000 in May 2016, $55,000, $27,000 and $10,000 in June 2016, $48,000 and $24,000 in July 2016, $50,000 in August 2016, $50,000 in September 2016, $50,000 in October 2016 and $45,000 in November and December 2016 and $45,000 in July 2017. The note is convertible into Company common stock at the lesser of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three (3) lowest trade prices on three (3) separate trading days of Common Stock recorded after the original Effective Date of the note. “Fixed Conversion Price” shall mean $0.003. The note also includes conversion price reset features that are triggered when the Company issues certain new equity instruments; as a result, this feature caused the Company to consider this feature a derivative liability. The maturity date of the note was extended and changed to be such that the note amount is payable upon demand (with ten days written notice) by the accredited investor, but in no event later than April 7, 2021.

15

The $500,000 principal amount convertible note, dated February 8, 2017 to Accredited Investor #2 with an outstanding balance of $115,000 at March 31, 2017, was funded by tranches of $55,000 in February 2017 and $60,000 in April 2017. The note is convertible into Company common stock at the lesser of (a) $0.0003 per share, (b) 50% of the average three (3) lowest trade prices on three (3) separate trading days of Common Stock recorded after the original Effective Date of the note or (c) the lowest effective price per share granted to any person or entity after the Effective Date of the note. “Fixed Conversion Price” shall mean $0.003. Because of these and other variable features of the note, the Company considers the conversion feature to be a derivative liability. The maturity date of the note February 8, 2017.

The January 2014 derivative was valued as of January 6, 2014 at $44,493, of which all was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The January 2014 note had accrued interest of $5,258 and $4,025 as of March 31, 2017 and December 31, 2016, respectively.

The February 2014 derivative was valued as of February 18, 2014 at $44,556, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The February 2014 note had accrued interest of $15,562 and $14,329 as of March 31, 2017 and December 31, 2016, respectively.

The March 2014 derivative was valued as of March 26, 2014 at $77,884, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at March 31, 2017. The March 2014 note had accrued interest of $15,068 and $13,836 as of March 31, 2017 and December 31, 2016, respectively.

The April 2014 derivative was valued as of April 25, 2014 at $90,605, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at March 31, 2017. The April 2014 note had accrued interest of $14,658 and $13,425 as of March 31, 2017 and December 31, 2016, respectively.

The May 2014 derivative was valued as of May 21, 2014 at $95,029, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at March 31, 2017. The May 2014 note had accrued interest of $13,437 and $13,068 as of March 31, 2017 and December 31, 2016, respectively.

The June 2014 derivative was valued as of June 25, 2014 at $83,184, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at March 31, 2017. The June 2014 note had accrued interest of $7,431 and $8,470 as of March 31, 2017 and December 31, 2016, respectively.

The July 2014 derivative was valued as of July 15, 2014 at $73,999, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at March 31, 2017. The July 2014 note had accrued interest of $13,534 and $12,301 as of March 31, 2017 and December 31, 2016, respectively.

The August 2014 derivative was valued as of August 19, 2014 at $64,104, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at March 31, 2017. The August 2014 note had accrued interest of $13,068 and $11,836 as of March 31, 2017 and December 31, 2016, respectively.

16

The September 2014 derivative was valued as of September 17, 2014 at $62,915, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at March 31, 2017. The September 2014 note had accrued interest of $12,671 and $11,438 as of March 31, 2017 and December 31, 2016, respectively.

The October 2014 derivative was valued as of October 13, 2014 at $63,347, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at March 31, 2017. The October 2014 note had accrued interest of $12,301 and $11,068 as of March 31, 2017 and December 31, 2016, respectively.

The November 2014 derivative was valued as of November 7, 2014 at $99,757, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The November 2014 note had accrued interest of $24,110 and $21,644 as of March 31, 2017 and December 31, 2016, respectively.

The December 2014 derivative was valued as of December 17, 2014 at $58,456, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at March 31, 2017. The December 2014 note had accrued interest of $11,411 and $10,178 as of March 31, 2017 and December 31, 2016, respectively.

The January 2015 derivative was valued as of January 14, 2015 at $29,360, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The January 2015 note had accrued interest of $15,477 and $13,751 as of March 31, 2017 and December 31, 2016, respectively.

The first February 2015 derivative was valued as of February 10, 2015 at $23,984, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The first February 2015 note had accrued interest of $6,411 and $5,671 as of March 31, 2017 and December 31, 2016, respectively.

The second February 2015 derivative was valued as of February 11, 2015 at $18,003, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The second February 2015 note had accrued interest of $6,409 and $5,669 as of March 31, 2017 and December 31, 2016, respectively.

The third February 2015 derivative was valued as of February 25, 2015 at $19,494, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The third February 2015 note had accrued interest of $12,575 and $11,096 as of March 31, 2017 and December 31, 2016, respectively.

The March 2015 derivative was valued as of March 10, 2015 at $31,885, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The March 2015 note had accrued interest of $22,663 and $19,951 as of March 31, 2017 and December 31, 2016, respectively.

The April 2015 derivative was valued as of April 17, 2015 at $31,397, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The April 2015 note had accrued interest of $17,214 and $15,044 as of March 31, 2017 and December 31, 2016, respectively.

17

The May 2015 derivative was valued as of May 22, 2015 at $36,550, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The May 2015 note had accrued interest of $16,742 and $14,523 as of March 31, 2017 and December 31, 2016, respectively.

The June 2015 derivative was valued as of June 23, 2015 at $41,878, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The June 2015 note had accrued interest of $15,953 and $13,734 as of March 31, 2017 and December 31, 2016, respectively.

The July 2015 derivative was valued as of July 28, 2015 at $38,600, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The July 2015 note had accrued interest of $10,899 and $9,296 as of March 31, 2017 and December 31, 2016, respectively.

The August 2015 derivative was valued as of August 21, 2015 at $37,269, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The August 2015 note had accrued interest of $10,471 and $8,869 as of March 31, 2017 and December 31, 2016, respectively.

The September 2015 derivative was valued as of September 24, 2015 at $37,820, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The September 2015 note had accrued interest of $9,866 and $8,263 as of March 31, 2017 and December 31, 2016, respectively.

The October 2015 derivative was valued as of October 23, 2015 at $35,290, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The October 2015 note had accrued interest of $7,192 and $5,959 as of March 31, 2017 and December 31, 2016, respectively.

The November 2015 derivative was valued as of November 30, 2015 at $36,448, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The November 2015 note had accrued interest of $6,671 and $5,438 as of March 31, 2017 and December 31, 2016, respectively.

The December 2015 derivative was valued as of December 21, 2015 at $37,163, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The December 2015 note had accrued interest of $7,022 and $5,666 as of March 31, 2017 and December 31, 2016, respectively.

The January 2016 derivative was valued as of January 22, 2016 at $30,855, of which $25,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at March 31, 2017. The January 2016 note had accrued interest of $2,973 and $2,357 as of March 31, 2017 and December 31, 2016, respectively.

The February 2016 derivative was valued as of February 8, 2016 at $37,835, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The February 2016 note had accrued interest of $6,270 and $4,914 as of March 31, 2017 and December 31, 2016, respectively.

18

The March 2016 derivative was valued as of March 7, 2016 at $37,402, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The March 2016 note had accrued interest of $5,318 and $4,085 as of March 31, 2017 and December 31, 2016, respectively.

The April 2016 derivative was valued as of April 7, 2016 at $53,978, which was recorded as a debt discount. During the three months ended March 31, 2017, $13,310 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $1,035. The April 2016 note had accrued interest of $5,873 and $4,393 as of March 31, 2017 and December 31, 2016, respectively.

The May 2016 derivative was valued as of May 10, 2016 at $47,249, of which $45,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2017, $11,096 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $4,931. The May 2016 note had accrued interest of $4,011 and $2,902 as of March 31, 2017 and December 31, 2016, respectively.

The first June 2016 derivative was valued as of June 6, 2016 at $48,678, which was recorded as a debt discount. During the three months ended March 31, 2017, $12,003 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $8,935. The first June 2016 note had accrued interest of $4,497 and $3,142 as of March 31, 2017 and December 31, 2016, respectively.

The second June 2016 derivative was valued as of June 9, 2016 at $35,935, of which $27,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2017, $6,658 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $5,178. The second June 2016 note had accrued interest of $2,178 and $1,512 as of March 31, 2017 and December 31, 2016, respectively.

The third June 2016 derivative was valued as of June 30, 2016 at $14,630, of which $10,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2017, $2,466 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $2,493. The third June 2016 note had accrued interest of $752 and $506 as of March 31, 2017 and December 31, 2016, respectively.

The first July 2016 derivative was valued as of July 13, 2016 at $46,259, which was recorded as a debt discount. During the three months ended March 31, 2017, $11,406 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $13,181. The first July 2016 note had accrued interest of $3,439 and $2,256 as of March 31, 2017 and December 31, 2016, respectively.

The second July 2016 derivative was valued as of July 21, 2016 at $32,140, of which $24,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2017, $5,918 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $7,364. The second July 2016 note had accrued interest of $1,667 and $1,075 as of March 31, 2017 and December 31, 2016, respectively.

The August 2016 derivative was valued as of August 15, 2016 at $20,723, which was recorded as a debt discount. During the three months ended March 31, 2017, $5,110 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $7,778. The August 2016 note had accrued interest of $3,132 and $1,899 as of March 31, 2017 and December 31, 2016, respectively.

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The September 2016 derivative was valued as of September 13, 2016 at $21,612, which was recorded as a debt discount. During the three months ended March 31, 2017, $5,329 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $9,829. The September 2016 note had accrued interest of $2,736 and $1,503 as of March 31, 2017 December 31, 2016, respectively.

The October 2016 derivative was valued as of October 11, 2016 at $52,130, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2017, $12,329 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $26,575. The October 2016 note had accrued interest of $2,353 and $1,120 as of March 31, 2017 and December 31, 2016, respectively.

The November 2016 derivative was valued as of November 15, 2016 at $43,444, which was recorded as a debt discount. During the three months ended March 31, 2017, $10,712 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $27,257. The November 2016 note had accrued interest of $1,687 and $578 as of March 31, 2017 and December 31, 2016, respectively.

The December 2016 derivative was valued as of December 13, 2016 at $29,988, which was recorded as a debt discount. During the three months ended March 31, 2017, $7,394 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $21,115. The December 2016 note had accrued interest of $1,343 and $234 as of March 31, 2017 and December 31, 2016, respectively.

The January 2017 derivative was valued as of January 11, 2017 at $38,071, which was recorded as a debt discount. During the three months ended March 31, 2017, $8,240 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $29,831. The January 2017 note had accrued interest of $984 as of March 31, 2017.

The February 2017 derivative was valued as of February 8, 2017 at $24,398, which was recorded as a debt discount. During the three months ended March 31, 2017, $3,409 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $20,989. The February 2017 note had accrued interest of $766 as of March 31, 2017.

The March 2017 derivative was valued as of March 9, 2017 at $25,838, which was recorded as a debt discount. During the three months ended March 31, 2017, $1,557 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $24,281. The March 2017 note had accrued interest of $377 as of March 31, 2017.

Total accrued interest payable for the non-related party convertible notes was $416,424 and $361,503 as of March 31, 2017 and December 31, 2016, respectively.

The Company recorded total interest expense, including debt discount and beneficial conversion feature amortization, for all debt of $209,358 and $214,674 for the three months ended March 31, 2017 and 2016, respectively.

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NOTE 5 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company adopted FASB ASC 820 on October 1, 2008. Under this FASB, 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 (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.

The Company has various financial instruments that must be measured under the new fair value standard including: cash and debt. The Company currently does not have non-financial assets or non-financial liabilities that are required to be measured at fair value on a recurring basis. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. The fair value of the Company’s cash is based on quoted prices and therefore classified as Level 1.

Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

Cash, accounts receivable, capitalized production costs, prepaid royalties, prepaid expenses, accounts payable, accrued compensation, accrued royalties, accrued interest, accrued expenses, unearned royalties, notes payable – related party and technology payables reported on the balance sheet are estimated by management to approximate fair market value due to their short term nature.

The following tables provide a summary of the fair values of assets and liabilities measured on a non-recurring basis as of March 31, 2017 and December 31, 2016:

March 31, 2017	Total		Level 1		Level 2		Level 3		Gains (Losses)
Derivative liabilities	$	1,556,264	$	-	$	-	$	1,556,264	$	448,045

December 31, 2016	Total		Level 1		Level 2		Level 3		Gains (Losses)
Derivative liabilities	$	1,934,617	$	-	$	-	$	1,934,617	$	(616,286	)

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NOTE 6 – DERIVATIVE FINANCIAL INSTRUMENTS

As discussed in Note 4, the Company issued convertible notes payable to non-related parties that contain anti-dilutive, or down round, price protection and other variable features. Pursuant to ASC 815-15, Embedded Derivatives, and ASC 815-40, Contracts in Entity’s Own Equity, the Company recorded a derivative liability for the price protection provisions issued within the convertible debt transactions.

The fair values of the Company’s derivative liabilities are estimated at the issuance date and are revalued at each subsequent reporting date using a multinomial lattice model simulation discussed below. At March 31, 2017 and December 31, 2016, the Company recorded current derivative liabilities of $1,556,264 and $1,934,617, respectively. The net change in fair value of the derivative liabilities resulted in gains of $448,045 and $54,979 for the three months ended March 31, 2017 and 2016, respectively, which are reported as other income in the condensed statements of operations.

The following table presents details of the Company’s derivative liabilities for the three months ended March 31, 2017:

Balance, December 31, 2016	$	1,934,617
Increases in derivative value due to new issuances of notes		88,307
Derivative adjustment due to debt conversion		(18,615	)
Change in fair value of derivative liabilities		(448,045	)
Balance, March 31, 2017	$	1,556,264

The Company calculated the fair value of the compound embedded derivatives using a multinomial lattice model simulation. The model is based on a probability weighted discounted cash flow model using projections of the various potential outcomes.

Key inputs and assumptions used in valuing the Company’s derivative liabilities are as follows for issuances of notes:

· Stock prices on all measurement dates were based on the fair market value

· Down round protection is based on the subsequent issuance of common stock at prices less than the conversion feature

· The probability of future financing was estimated at 100%

· Computed volatility ranging from 336% to 420%

See Note 5 for a discussion of fair value measurements.

NOTE 7 – STOCKHOLDERS’ DEFICIT

Stock Issuances

The Company is authorized to issue up to 2,000,000,000 shares of its $0.00001 par value common stock, and up to 10,000,000 shares of its $.001 par value preferred stock.

As of March 31, 2017 and December 31, 2016, the Company had common stock payable of $16,800 resulting from a technology transfer agreement with an unrelated party that obligated the Company to issue a total of 96,000 shares of its common stock, payable in 8 quarterly installments of 12,000 shares.

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During the three months ended March 31, 2017, the Company issued a total of 171,799,671 shares of its common stock to an accredited investor in conversion of $6,770 principal and $1,820 accrued interest payable at a conversion price of $0.00045 per share and settled $18,615 of derivative liabilities. As a result of the debt conversion and derivative settlement, common stock was increased by $1,718 and additional paid-in capital was increased by $25,487.

2006 Stock Option Plan

The Company’s 2006 Stock Option Plan adopted by our Board of Directors in March of 2006 terminated in the year ended December 31, 2016. As of March 31, 2017, there were 560,000 stock options outstanding under the 2006 Stock Option Plan.

The Company did not grant any stock options or warrants during the three months ended March 31, 2017, and did not record any stock-based compensation expense during the three months ended March 31, 2017 and 2016.

A summary of the status of the options and warrants issued by the Company as of March 31, 2017, and changes during the three months then ended is presented below:

			Weighted Average
	Shares		Exercise Price
Outstanding, December 31, 2016		560,000	$	0.10
Granted		-		-
Canceled / Expired		-		-
Exercised		-		-
Outstanding, March 31, 2017		560,000	$	0.10

The outstanding options expire on various dates beginning May 2020 through August 2020.

NOTE 8 – LOSS PER COMMON SHARE

The computation of basic earnings per common share is based on the weighted average number of shares outstanding during the period. The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the period plus the weighted average common stock equivalents which would arise from the exercise of stock options, warrants and rights outstanding using the treasury stock method and the average market price per share during the period.

For the three months ended March 31, 2017, potential dilutive securities included 1,296,864,615 shares issuable for convertible debt, using the treasury stock method. For the three months ended March 31, 2016, the diluted weighted average number of shares is the same as the basic weighted average number of shares as the conversion of debt, options and warrants would be anti-dilutive.

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NOTE 9 – RELATED PARTY TRANSACTIONS

The Company had convertible notes payable to related parties totaling $1,447,041 as of March 31, 2017 and December 31, 2016. See Note 4 for a detailed disclosure of this related party debt, including interest rates, terms of conversion and other repayment terms. Accrued interest payable to related parties was $389,845 and $354,165 as of March 31, 2017 and December 31, 2016, respectively.

NOTE 10 – RECENT ACCOUNTING PRONOUNCEMENTS

In January 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-4, “Intangibles – Goodwill and Other (Topic 350): “Simplifying the Test for Goodwill Impairment.” This update simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Instead, under the amendments in this update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity should apply the amendments in this update on a prospective basis. An entity is required to disclose the nature of and reason for the change in accounting principle upon transition. That disclosure should be provided in the first annual period and in the interim period within the first annual period when the entity initially adopts the amendments in this update. A public business entity that is an SEC filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company is currently unable to determine the impact on its financial statements of the adoption of this new accounting pronouncement.

In January 2017, the FASB issued ASU No. 2017-1, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” The amendments in this update clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The amendments of this ASU are effective for public business entities for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The amendments in this Update are to be applied prospectively on or after the effective date. The Company is currently unable to determine the impact on its financial statements of the adoption of this new accounting pronouncement.

Although there are several other new accounting pronouncements issued or proposed by the FASB, which the Company has adopted or will adopt, as applicable, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its financial position or results of operations.

NOTE 11 – SUBSEQUENT EVENTS

Subsequent to March 31, 2017, the Company issued a total of 124,438,109 shares of common stock in the conversion of convertible notes payable principal totaling $4,855 and accrued interest payable totaling $1,367.

On April 12, 2017, the Company received additional proceeds of $55,000 from the February 8, 2017 Convertible Promissory Note to an Accredited Investor. The note bears interest at 10% per annum and matures 12 months from its effective date.

On May 9, 2017, the Company received additional proceeds of $55,000 from the February 8, 2017 Convertible Promissory Note to an Accredited Investor. The note bears interest at 10% per annum and matures 12 months from its effective date.

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ITEM 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.

Although the forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

The following discussion and analysis of our financial condition and results of operations is based upon, and should be read in conjunction with, its unaudited condensed financial statements and related notes located elsewhere in this Quarterly Report on Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United States.

Summary Overview

Freeze Tag, Inc. is a leading creator of mobile social games that are fun and engaging for all ages. Based on a free-to-play business model that has propelled games built and marketed by some of our competitors to worldwide to worldwide success, we employ state-of-the-art data analytics and proprietary technology to dynamically optimize the gaming experience for revenue generation. Players can download and enjoy our games for free, or they can purchase virtual items and additional features within the game to increase the fun factor. Our games encourage players to compete and engage with their friends on major social networks such as Facebook and Twitter.

During our most recent fiscal quarter ended March 31, 2017, we generated revenues of $3,827 from the sales of our games or in-app purchases in our games compared to $21,777 for the fiscal quarter ended March 31, 2016. The decrease in revenues stems from a decline in revenue for the Kitty Pawp game which was responsible for the majority of the sales of Q1 2016.

In Q1 of 2017, we continued the steady flow of new games by using some existing game frameworks and working with outside developers. As a result, we launched 4 new mobile games and one version of an existing game (Kitty Pawp) between January and March 31, 2017:

· Jelly Drop! – January 3, 2017

· Zoom Trivia - Food Edition – January 23, 2017

· Kitty Pawp: Free Bubble Shooter Featuring Garfield (Asian Language edition) – January 26, 2017 through publishing partner Chorus Worldwide

· Clouds - Free Flying Paper Airplane Game – February 8, 2017

· Alpha Bunny - Easter Egg Word Hunt – March 28, 2017

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As we continue to monitor trends in the mobile gaming industry, we are researching and pursuing new types of games that consumers find engaging and fun. For example, in July of 2016, mobile game developer Niantic introduced a new type of game that combined Augmented Reality and Location. This game was the very successful Pokemon Go, which generated gross revenues of $950 million in 2016 according to app research firm App Annie.

Soon after Pokemon Go was launched, we embarked on development of new augmented reality location-based games. In April 2017, we publicly announced the soft launch (single territory) of our first Augmented Reality Location-Based game, Garfield GO! in Australia.

We continue to pursue opportunities to grow the company through acquisition. We feel that the time is right to build an alliance of mobile game developers who can become stronger and more successful by working together to build a company that can leverage market intelligence, development expertise and cross-promotional opportunities to achieve great results for our customers and shareholders.

Results of Operations

Revenues

Our revenues decreased $17,950 to $3,827 for the three months ended March 31, 2017 from $21,777 for the three months ended March 31, 2016. Our revenue can typically fluctuate based on when we release our games and the popularity of the games we release. Previously, the majority of our released game titles were "pay-per-download", where the consumer paid to download the game onto their device, leading to revenue per download. Now our games are free to download and play, but have built-in features that require the consumer to pay if they want to access the feature, which means our revenue is tied to when the consumer pays to access the features, if they do. We anticipate the vast majority of our revenue in future years will be derived from consumers making in-game purchases in one of our free-to-play games and that revenue from consumers paying to download a game will be minimal.

Operating Costs and Expenses

Our cost of sales decreased $28,044 to $29,783 for the three months ended March 31, 2017 from $57,827 for the three months ended March 31, 2016 due to fewer new titles that we have in development. Our cost of sales includes royalties, subcontractors and internal costs of programming, analytics, and design.

Our current year selling, general and administrative expenses were relatively constant compared to the prior year. Our selling, general and administrative expenses increased $1,082 to $154,174 for the three months ended March 31, 2017 from $153,092 for the three months ended March 31, 2016.

Other Income (Expense)

Our interest expense decreased $5,316 to $209,358 for the three months ended March 31, 2017 from $214,674 for the three months ended March 31, 2016. During the three months ended March 31, 2017, we continued to increase our convertible debt and the related debt discount that is amortized to interest expense. However, the increased interest expense attributable to the new debt was offset by decreased interest expense attributable to prior years' debt resulting from debt discount being fully amortized in prior periods.

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Our estimate of the fair value of the derivative liabilities for the conversion feature of our convertible notes payable is based on multiple inputs, including the market price of our stock, interest rates, our stock price volatility, and variable conversion prices based on market prices as defined in the respective loan agreements. These inputs are subject to significant changes from period to period; therefore, the estimated fair value of the derivative liability will fluctuate from period to period and the fluctuation may be material. Our derivative liabilities also increase with the increase in our convertible debt. We reported a gain on change in derivative liabilities of $448,045 and $54,979 for the three months ended March 31, 2017 and 2016, respectively.

Provision for Income Taxes

Currently our provision for income taxes is not material to our operations, and is comprised of minimum state income taxes, recognized in the period when paid.

Net Loss

As a result of the above, we reported net income of $58,557 and a net loss of $350,562 for the three months ended March 31, 2017 and 2016, respectively.

Liquidity and Capital Resources

Introduction

As of March 31, 2017, we had current assets of $12,247 and current liabilities of $6,757,438, resulting in a working capital deficit and total stockholders’ deficit of $6,745,191. In addition, we had an accumulated deficit of $11,055,372 at March 31, 2017. Our current liabilities and working capital deficit are negatively impacted by our derivative liabilities, which had a balance of $1,556,264. We do not believe, however, that our derivative liabilities will require cash to be extinguished.

During the three months ended March 31, 2017, because of our operating losses, we did not generate positive operating cash flows. Our cash balance as of March 31, 2017 was $710, and our monthly cash flow burn rate is currently approximately $60,000. As a result, we have significant short-term cash needs. These needs are currently being satisfied primarily from the proceeds from short-term convertible debt. We intend to raise additional capital through the issuance of debt from third parties and other related parties until such time as our cash flows from operations will satisfy our cash flow needs. There can be no assurance that we will be successful in these efforts.

Sources and Uses of Cash

We used net cash of $179,224 in operating activities for the three months ended March 31, 2017 as a result of our net income of $58,557, non-cash expense of $116,937, decreases in accounts receivable of $1,194 and prepaid expenses and other current assets of $295, and increases in accrued expenses of $4,029, accrued interest payable – related party of $35,680 and accrued interest payable of $56,741, partially offset by non-cash gain of $448,045 and decreases in accounts payable of $4,609 and unearned royalties of $3.

By comparison, we used net cash of $194,320 in operating activities for the three months ended March 31, 2017 as a result of our net loss of $350,562, non-cash gain of $54,979, increase in accounts receivable of $4,534 and decrease in unearned royalties of $1,686, partially offset by non-cash expense of $122,213, decrease in prepaid expenses and other current assets of $576, and increases in accounts payable of $831, accrued expenses of $1,360, accrued interest payable – related party of $35,978 and accrued interest payable of $56,483.

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We had no net cash provided by or used in investing activities for the three months ended March 31, 2017 and 2016.

For the three months ended March 31, 2017, we had net cash provided by financing activities of $160,000, comprised of proceeds from convertible notes payable. We had net cash provided by financing activities of $159,780 for the three months ended March 31, 2016, comprised of proceeds from note payable of $29,780 and proceeds from convertible notes payable of $130,000.

Notes Payable

On February 1, 2016, we entered into a Game Marketing Agreement with an investor whereby the investor agreed, at its option, to loan us up to $250,000 (the “Marketing Fund”) to exclusively fund user acquisition efforts for the game Kitty Pawp (the “Game”). The investor will receive 50% of Net Receipts (as defined in the agreement) from the Game until the Marketing Fund is fully recouped. Once the Marketing Fund is recouped, the investor will receive 50% of Net Receipts from the Game until the investor receives a 50% return on the Marketing Funds advanced.

We recorded Marketing Fund advances as notes payable in the accompanying condensed balance sheets. Upon receiving a Marketing Fund advance, we accrue the 50% return as interest expense and includes the obligation in accrued interest payable in the accompanying condensed balance sheets. As of March 31, 2017, total advances recorded as notes payable were $58,096 and accrued interest payable included a total of $22,046 of the 50% guaranteed return, net of repayments.

Convertible Note Payable

On February 8, 2017, we entered into a convertible promissory note (the "Note") with an accredited investor (the "Accredited Investor") under which the Accredited Investor agreed to loan us up to $500,000. The Note bears interest at 10% per annum and matures on February 8, 2018. Under the terms of the Note, the Accredited Investor agreed to loan us $55,000 upon execution of the Note and can loan us the additional amounts up to $500,000 at any time in their sole discretion. The Accredited Investor has the right, at any time after February 8, 2017, at its election, to convert all or part of the amounts due to it under the Note into shares of our common stock. The conversion price shall be the lesser of (a) $0.0003 per share of our common stock or (b) Fifty Percent (50%) of the average of the three (3) lowest trade prices on three (3) separate trading days of our common stock recorded after February 8, 2017, or (c) the lowest effective price per share granted to any person or entity after February 8, 2017 to acquire our common stock or adjust, 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 our common stock or outstanding our common stock equivalents, excluding any lower price per share offered to any of our officers and directors. However, the Accredited Investor may not convert the amounts due under the Note into shares of our common stock if such conversion would cause it to own more than 4.99% of our then-outstanding common stock. The Note also contains piggyback registration rights. In the event we default under the terms of the Note, we immediately owe 150% of the principal amount then due under the Note.

Debt Instruments, Guarantees, and Related Covenants

We have no disclosures required by this item.

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Critical Accounting Policies

The preparation of our condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs, expenses and related disclosures. These estimates and assumptions are often based on historical experience and judgments that we believe to be reasonable under the circumstances at the time made. However, all such estimates and assumptions are inherently uncertain and unpredictable and actual results may differ. For further information on our significant accounting policies see the notes to our condensed financial statements included in this filing and Note 2 to our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016. There have been no changes to our significant accounting policies since December 31, 2016.

ITEM 3 Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company, we are not required to provide the information required by this Item.

ITEM 4 Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined) in Exchange Act Rules 13a – 15(c) and 15d – 15(e). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer, who are our principal executive officer and principal financial officers, respectively, concluded that, as of the end of the three month period ended March 31, 2017, our disclosure controls and procedures were effective (1) to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (2) to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to us, including our chief executive and chief financial officers, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1 Legal Proceedings

We are not a party to or otherwise involved in any legal proceedings.

In the ordinary course of business, we are from time to time involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations. However, in the opinion of our management, other than as set forth herein, matters currently pending or threatened against us are not expected to have a material adverse effect on our financial position or results of operations.

ITEM 1A Risk Factors

As a smaller reporting company, we are not required to provide the information required by this Item.

ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended March 31, 2017, we had the following unregistered sales of equity securities:

During the three months ended March 31, 2017, we issued a total of 171,799,671 shares of our common stock to a non-affiliate holder of one of our outstanding convertible promissory notes pursuant to notices of conversion submitted to us from the holder notifying us of their election to convert a total of $6,770 principal and $1,820 interest due under the promissory note into the shares. Due to the length of time since the holder lent us the funds and that the holder has held the note, the shares were issued without a standard Rule 144 restrictive legend. Based on the representations of the investor in the Convertible Promissory Note and the Notice of Conversion, the issuance of the shares was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933. The investor was accredited and sophisticated, familiar with our operations, and there was no solicitation.

ITEM 3 Defaults Upon Senior Securities

There is no information required to be disclosed by this Item.

ITEM 4 Mine Safety Disclosures

There is no information required to be disclosed by this Item.

ITEM 5 Other Information

There is no information required to be disclosed by this Item.

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ITEM 6 Exhibits

3.1 (1)	Articles of Incorporation of Freeze Tag, Inc.
3.2 (1)	Articles of Amendment to Articles of Incorporation
3.3 (1)	Bylaws of Freeze Tag, Inc.
3.4 (10)	Articles of Amendment to Certificate of Incorporation February 4, 2014
3.5 (14)	Articles of Amendment to Certificate of Incorporation filed on February 18, 2016
4.1 (1)	Freeze Tag, Inc. 2006 Stock Plan
10.1 (1)	10% Convertible Promissory Note dated July 1, 2010 with The Holland Family Trust
10.2 (1)	Support Services Agreement with Cardiff Partners, LLC dated October 12, 2009
10.3 (1)	Amendment No. 1 to Support Services Agreement with Cardiff Partners, LLC dated March 2, 2010
10.4 (1)	Amendment No. 2 to Support Services Agreement with Cardiff Partners, LLC dated March 3, 2010
10.5 (1)	Form of Conversion Agreement for October 2009 Conversions
10.6 (1)	Form of Option Conversion Agreement for October 2009 Conversions
10.7 (1)	Placement Agent and Advisory Services Agreement with Monarch Bay Associates, LLC dated October 12, 2009
10.8 (1)	Corporate Communications Consulting Agreement Michael Southworth dated September 25, 2009
10.9 (1)	Lock-Up Agreement dated November 10, 2009
10.10 (2)	Loan Agreement with Sunwest Bank dated October 20, 2006, as amended
10.11 (3)	Securities Purchase Agreement with Asher Enterprises, Inc. dated July 21, 2011
10.12 (3)	Convertible Promissory Note with Asher Enterprises, Inc. dated July 21, 2011
10.13 (4)	Technology Transfer Agreement dated June 22, 2011

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10.14 (5)	Securities Purchase Agreement with Asher Enterprises, Inc. dated September 16, 2011
10.15 (5)	Convertible Promissory Note with Asher Enterprises, Inc. dated September 16, 2011
10.16 (6)	Securities Purchase Agreement with Asher Enterprises, Inc. dated December 6, 2011
10.16 (6)	Convertible Promissory Note with Asher Enterprises, Inc. dated December 6, 2011
10.17 (7)	Letter Agreement with Crucible Capital, Inc. dated February 29, 2012
10.18 (8)	Amendment No. 1 to Securities Purchase Agreement with Asher Enterprises, Inc. dated July 21, 2011
10.19 (8)	Amendment No. 1 to Securities Purchase Agreement with Asher Enterprises, Inc. dated September 16, 2011
10.20 (8)	Amendment No. 1 to Securities Purchase Agreement with Asher Enterprises, Inc. dated December 6, 2011
10.21 (8)	Amendment No. 1 to Promissory Note with The Lebrecht Group, APLC dated November 17, 2011
10.22 (9)	Convertible Promissory Note (10%) dated December 20, 2013 – Accredited Investor
10.23 (9)	Convertible Promissory Note (10%) dated December 31, 2013 – Holland Family Trust
10.24 (9)	Convertible Promissory Note (10%) dated December 31, 2013 – Craig Holland Debt
10.25 (9)	Convertible Promissory Note (10%) dated December 31, 2013 – Craig Holland Salary
10.26 (9)	Convertible Promissory Note (10%) dated December 31, 2013 – Mick Donahoo Salary
10.27 (9)	Convertible Promissory Note (10%) dated December 31, 2013 – Mick Donahoo Debt
10.28 (9)	Convertible Promissory Note (10%) dated December 31, 2013 – Robert Cowdell
10.29 (15)	Convertible Promissory Note with an Accredited Investor dated June 25, 2014
10.30 (11)	Convertible Promissory Note (10%) dated September 30, 2014 – Holland Family Trust
10.31 (11)	Convertible Promissory Note (10%) dated September 30, 2014 – Craig Holland
10.32 (12)	Consulting and Co-Development Agreement with Gogii Games Corp. dated November 17, 2014 (Redacted Version)

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10.33 (12)	Convertible Promissory Note with an accredited investor dated February 11, 2015
10.34 (12)	Master Development Agreement with TIC TOC STUDIOS, LLC dated February 18, 2015 (Redacted Version)
10.35 (13)	Convertible Promissory Note with an accredited investor dated July 28, 2015
10.36 (13)	Amendment to Convertible Promissory Note dated December 31, 2013 – Craig Holland
10.37 (13)	Amendment to Convertible Promissory Note dated December 31, 2013 – Mick Donahoo
10.38 (13)	Amendment to Convertible Promissory Note with an accredited investor dated December 30, 2013
10.39 (15)	Convertible Promissory Note with an accredited investor dated April 7, 2016
10.40 (16)	License Agreement with Munzee, Inc. dated October 19, 2016
10.41 (16)	License Agreement with Paws, Incorporation dated November 1, 2016 (Redacted Version)
10.42 (17)	Amendment #1 to Convertible Promissory Note with an accredited investor dated April 7, 2016
10.43 (17)	Convertible Promissory Note with an accredited investor dated February 8, 2017
31.1*	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2*	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

32.1*	Section 1350 Certification of Chief Executive Officer
32.2*	Section 1350 Certification of Chief Financial Officer.

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101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema Document
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document

__________

* Filed herewith.

** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Act of 1934 and otherwise are not subject to liability.

(1) Incorporated by reference from our Registration Statement on Form S-1, filed with the Commission on August 16, 2010.

(2) Incorporated by reference from Amendment No. 2 to our Registration Statement on Form S-1/A2, filed with the Commission on October 25, 2010.

(3) Incorporated by reference from Current Report on Form 8-K filed with the Commission on August 3, 2011.

(4) Incorporated by reference from Quarterly Report on Form 10-Q for the period ended June 30, 2011 filed with the Commission on August 15, 2011.

(5) Incorporated by reference from Current Report on Form 8-K filed with the Commission on September 21, 2011.

(6) Incorporated by reference from Current Report on Form 8-K filed with the Commission on December 23, 2011.

(7) Incorporated by reference from Current Report on Form 8-K filed with the Commission on March 8, 2012.

(8) Incorporated by reference from Annual Report on Form 10-K filed with the Commission on March 30, 2012.

(9) Incorporated by reference from Current Report on Form 8-K filed with the Commission on Februay 4, 2014.

(10) Incorporated by reference from Definitive Information Statement on Schedule 14-C filed with the Commission on December 31, 2013.

(11) Incorporated by reference from our Quarterly Report on Form 10-Q filed with the Commission on November 14, 2014.

(12) Incorporated by reference from our Quarterly Report on Form 10-Q filed with the Commission on May 15, 2015.

(13) Incorporated by reference from our Quarterly Report on Form 10-Q filed with the Commission on November 16, 2015.

(14) Incorporated by reference from Annual Report on Form 10-K filed with the Commission on March 30, 2016.

(15) Incorporated by reference from our Quarterly Report on Form 10-Q filed with the Commission on August 14, 2016.

 
(16) Incorporated by reference from our Quarterly Report on Form 10-Q filed with the Commission on November 14, 2016.

(17) Incorporated by reference from Annual Report on Form 10-K filed with the Commission on March 31, 2017.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 

	Freeze Tag, Inc.
Dated: May 15, 2017	By:	/s/ Craig Holland
		Craig Holland
	Its:	President and Chief Executive Officer

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EX-31.1

EXHIBIT 31.1

Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

I, Craig Holland, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Freeze Tag, Inc.;
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 Exhibit 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.

Dated: May 15, 2017	By:	/s/ Craig Holland
		Craig Holland
		Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

I, Mick Donahoo, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Freeze Tag, Inc.;
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 Exhibit 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.

Dated: May 15, 2017	By:	/s/ Mick Donahoo
		Mick Donahoo
		Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 USC, SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Freeze Tag, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2017, as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, Craig Holland, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 15, 2017	By:	/s/ Craig Holland
		Craig Holland
		Chief Executive Officer

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

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 USC, SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Freeze Tag, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2017, as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, Mick Donahoo, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 15, 2017	By:	/s/ Mick Donahoo
		Mick Donahoo
		Chief Financial Officer

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

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 10, 2017
Document And Entity Information
Entity Registrant Name	FREEZE TAG, INC.
Entity Central Index Key	0001485074
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		944,674,565
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2017

XML

CONDENSED BALANCE SHEETS - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash	$ 710	$ 19,934
Accounts receivable	6,551	7,745
Prepaid expenses and other current assets	4,986	5,281
Total current assets	12,247	32,960
Total assets	12,247	32,960
Current liabilities:
Accounts payable	128,474	133,083
Accrued expenses	499,502	495,473
Accrued interest payable - related party	389,845	354,165
Accrued interest payable	416,424	361,503
Unearned royalties	127,198	127,201
Notes payable	58,096	58,096
Convertible notes payable, related party	1,447,041	1,447,041
Convertible notes payable, net of discount of $210,772 and $239,402, respectively	2,134,594	1,952,734
Derivative liabilities	1,556,264	1,934,617
Total current liabilities	6,757,438	6,863,913
Total liabilities	6,757,438	6,863,913
Stockholder's deficit:
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding
Common stock; $0.00001 par value, 2,000,000,000 shares authorized, 820,236,456 and 648,436,785 shares issued and outstanding, respectively	8,202	6,484
Additional paid-in capital	4,285,179	4,259,692
Common stock payable	16,800	16,800
Accumulated deficit	(11,055,372)	(11,113,929)
Total stockholder's deficit	(6,745,191)	(6,830,953)
Total liabilities and stockholders' deficit	$ 12,247	$ 32,960

XML

CONDENSED BALANCE SHEETS (Parenthetical) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Current Liabilities
Convertible notes payable, discounts	$ 210,772	$ 239,402
Stockholder's deficit:
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, authorized shares	10,000,000	10,000,000
Preferred stock, issued shares	0	0
Preferred stock, outstanding shares	0	0
Common stock, par value	$ 0.00001	$ 0.00001
Common stock, authorized shares	2,000,000,000	2,000,000,000
Common stock, issued shares	820,236,456	648,436,785
Common stock, outstanding shares	820,236,456	648,436,785

XML

CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Condensed Statements Of Operations
Revenues	$ 3,827	$ 21,777
Operating costs and expenses:
Cost of sales	29,783	57,827
Selling, general and administrative expenses	154,174	153,092
Total operating costs and expenses	183,957	210,919
Loss from operations	(180,130)	(189,142)
Other income (expense):
Interest expense, net	(209,358)	(214,674)
Gain on change in derivative liabilities	448,045	54,979
Total other income (expense)	238,687	(159,695)
Income (loss) before income taxes	58,557	(348,837)
Provision for income taxes		1,725
Net income (loss)	$ 58,557	$ (350,562)
Weighted average number of common shares outstanding
Basic	703,135,385	284,894,068
Diluted	2,000,000,000	284,894,068
Income (loss) per common share - basic and diluted	$ 0.00	$ 0.00

XML

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash flows from operating activities:
Net income (loss)	$ 58,557	$ (350,562)
Adjustments to reconcile net income (loss) to net cash used by operating activities
Amortization of debt discount to interest expense	116,937	122,213
Gain on change in derivative liabilities	(448,045)	(54,979)
Changes in operating assets and liabilities:
Accounts receivable, net	1,194	(4,534)
Prepaid expenses and other current assets	295	576
Accounts payable	(4,609)	831
Accrued expenses	4,029	1,360
Accrued interest payable - related party	35,680	35,978
Accrued interest payable	56,741	56,483
Unearned royalties	(3)	(1,686)
Net cash used by operating activities	(179,224)	(194,320)
Cash flows from Investing activities:
Net cash provided by investing activities
Cash flows from financing activities:
Proceeds from convertible notes payable	160,000	130,000
Proceeds from notes payable		29,780
Net cash provided by financing activities	160,000	159,780
Net decrease in cash	(19,224)	(34,540)
Cash at the beginning of the period	19,934	42,052
Cash at the end of the period	710	7,512
Non-cash transactions
Conversion of debt to common shares	6,770	4,400
Conversion of accrued interest to common shares	1,820	962
Conversion of derivative liabilities to common shares	18,615	8,531
Debt discount due to derivative	$ 88,307	$ 106,092

XML

THE COMPANY

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

NOTE 1 - THE COMPANY

Freeze Tag, Inc. (the “Company”) is a leading creator of mobile social games that are fun and engaging for all ages. Based on a free-to-play business model that has propelled games like Candy Crush Saga to worldwide success, the Company employs state-of-the-art data analytics and proprietary technology to dynamically optimize the gaming experience for revenue generation. Players can download and enjoy the Company’s games for free, or they can purchase virtual items and additional features within the game to increase the fun factor. The Company’s games encourage players to compete and engage with their friends on major social networks such as Facebook and Twitter.

XML

GOING CONCERN

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

NOTE 2 - GOING CONCERN

As shown in the accompanying financial statements, the Company had net income of $58,557 for the three months ended March 31, 2017 and incurred a net loss of $350,562 for the three months ended March 31, 2016. The Company has generally incurred net losses since its inception and, as of March 31, 2017, the Company’s accumulated deficit was $11,055,372. During the three months ended March 31, 2017 and the year ended December 3l, 2016, the Company experienced negative cash flows from operations largely due to its continued investment spending for product development of game titles for smartphones and tablets that are expected to benefit future periods. Those facts, along with our lack of access to a significant bank credit facility, create an uncertainty about the Company’s ability to continue as a going concern. Accordingly, the Company is currently evaluating its alternatives to secure financing sufficient to support the operating requirements of its current business plan, as well as continuing to execute its business strategy of distributing game titles to digital distribution outlets, including mobile gaming app stores, online PC and Mac gaming portals, and opportunities for new devices such as tablet (mobile internet device) applications, mobile gaming platforms and international licensing opportunities.

The Company’s ability to continue as a going concern is dependent upon its success in securing sufficient financing and in successfully executing its plans to return to positive cash flows during fiscal 2017. The Company’s financial statements do not include any adjustments that might be necessary if it were unable to continue as a going concern.

XML

ACCRUED EXPENSES

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Note 3 - ACCRUED EXPENSES

Accrued liabilities consisted of the following at:

	March 31, 2017		December 31, 2016
Accrued vacation	$	70,268	$	66,194
Accrued royalties		410,686		410,533
Technology payable		18,000		18,000
Other		548		746
	$	499,502	$	495,473

Accrued royalties consist of amounts owed to other parties with whom the Company has revenue-sharing agreements or from whom it licenses certain trademarks or copyrights.

Unearned royalties consist of royalties received from licensees, which have not yet been earned. Unearned royalties were $127,198 and $127,201 at March 31, 2017 and December 31, 2016, respectively.

As of March 31, 2017 and December 31, 2016, the Company had technology payable of $18,000 resulting from a technology transfer agreement with an unrelated party entered into in June 2011, payable in 24 installments of $1,500 without interest.

XML

DEBT

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

NOTE 4 - DEBT

Notes Payable

On February 1, 2016, the Company entered into a Game Marketing Agreement with an investor whereby the investor agreed, at its option, to loan up to $250,000 (the “Marketing Fund”) to the Company to exclusively fund user acquisition efforts for the game Kitty Pawp (the “Game”). The investor will receive 50% of Net Receipts (as defined in the agreement) from the Game until the Marketing Fund is fully recouped. Once the Marketing Fund is recouped, the investor will receive 50% of Net Receipts from the Game until the investor receives a 50% return on the Marketing Funds advanced.

The Company has recorded Marketing Fund advances as notes payable in the accompanying condensed balance sheets. Upon receiving a Marketing Fund advance, the Company accrues the 50% return as interest expense and includes the obligation in accrued interest payable in the accompanying condensed balance sheets. As of March 31, 2017 and December 31, 2016, total advances recorded as notes payable were $58,096 and accrued interest payable included a total of $22,046 of the 50% guaranteed return.

Convertible Notes Payable – Related Party

Convertible notes payable, related party consisted of the following at:

	March 31, 2017		December 31, 2016
Convertible note payable to the Holland Family Trust, maturing on December 31, 2017, with interest at 10%	$	222,572	$	222,572
Convertible note payable to Craig Holland, maturing on December 31, 2017, with interest at 10%		813,602		813,602
Convertible note payable to Craig Holland, maturing on December 31, 2017, with interest at 10%		186,450		186,450
Convertible note payable to Mick Donahoo, maturing on December 31, 2017, with interest at 10%		186,450		186,450
Convertible note payable to Craig Holland, maturing on December 31, 2017, with interest at 10%		6,925		6,925
Convertible note payable to Mick Donahoo, maturing on December 31, 2017, with interest at 10%		31,042		31,042
Total	$	1,447,041	$	1,447,041

The “Holland Family Trust Convertible Note” is convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the date of conversion. “Fixed Conversion Price” shall mean $0.00005.

The Company evaluated the Holland Family Trust Convertible Note and determined that the shares issuable pursuant to the conversion option were determinate due to the Fixed Conversion Price and, as such, does not constitute a derivative liability as the Company has obtained authorization from a majority of shareholders such that should conversion occur at the Fixed Conversion Price the appropriate number of shares will be available or issuable for settlement to occur. The note payable is convertible into common stock at the discretion of the Holland Family Trust. Furthermore, at any time, the Company may pay the balance of the unconverted note payable in cash.

As of September 30, 2014, $72,107 of accrued interest was added to the note principal and $813,602 of the note was transferred to Craig Holland. A new convertible note for $222,572 was issued to the Holland Family Trust with the same terms as the previous note, with the exception of the maturity date, which was extended to December 31, 2017. As of March 31, 2017 and December 31, 2016, accrued interest related to the Holland Family Trust Convertible Note was $55,613 and $50,124, respectively.

On September 30, 2014, $813,602 principal balance (including interest) of the Holland Family Trust Convertible Note was transferred to Craig Holland (the “Holland Transferred Convertible Note”). The Holland Transferred Convertible Note retains the same terms as the original Holland Family Trust Convertible Note with the exception of the maturity date, which was extended to December 31, 2017. As of March 31, 2017 and December 31, 2016, accrued interest related to the Holland Transferred Convertible Note was $283,289 and $183,228, respectively.

On December 31, 2013, the Company converted $186,450 of accrued salaries due to Craig Holland into a convertible note (the “Holland Accrued Salary Note”) and converted $186,450 of accrued salaries due to Mick Donahoo into a convertible note (the “Donahoo Accrued Salary Note”). The Holland Accrued Salary Note and the Donahoo Accrued Salary Note are convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. “Fixed Conversion Price” shall mean $0.00005. The maturity date of the note has been extended to December 31, 2017.

The Company evaluated the Holland Accrued Salary Note and the Donahoo Accrued Salary Note and determined that the shares issuable pursuant to the conversion option were determinate due to the Fixed Conversion Price and, as such, the conversion feature does not constitute a derivative liability as the Company has obtained authorization from a majority of shareholders such that should conversion occur at the Fixed Conversion Price the appropriate number of shares will be available or issuable for settlement to occur. As of March 31, 2017 and December 31, 2016, there was $60,532 and $55,935, respectively, of accrued interest related to each of the notes.

On December 31, 2013, the Company converted a note payable to Mick Donahoo of $55,250 and accrued interest of $15,399 into a new convertible related party note in the amount of $70,649 (the “Mick Donahoo Convertible Note”).

On December 31, 2013, the Company converted a note payable to Craig Holland of $35,100 and accrued interest of $11,432 into a new convertible related party note in the amount of $46,532 (the “Craig Holland Convertible Note”).

The Mick Donahoo Convertible Note and the Craig Holland Convertible Note are convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. “Fixed Conversion Price” shall mean $0.00005. The maturity date of the notes has been extended to December 31, 2017.

The Company evaluated the Mick Donahoo Convertible Note and the Craig Holland Convertible Note and determined that the shares issuable pursuant to the conversion option were determinate due to the Fixed Conversion Price and, as such, does not constitute a derivative liability as the Company has obtained authorization from a majority of shareholders such that should conversion occur at the Fixed Conversion Price the appropriate number of shares will be available or issuable for settlement to occur. The agreements modified the debt to make it convertible into common stock of the Company. As of March 31, 2017 and December 31, 2016, there was accrued interest payable related to these notes totaling $9,879 and $8,943, respectively.

On October 23, 2014, Craig Holland converted $35,000 principal and $2,836 accrued interest into 39,829,849 shares of the Company’s common stock.

On October 23, 2014, Mick Donahoo converted $35,000 principal and $2,836 accrued interest into 39,829,849 shares of the Company’s common stock.

On October 8, 2015, Craig Holland converted $4,607 principal and $2,028 accrued interest into 12,637,860 shares of the Company's common stock.

On October 8, 2015, Mick Donahoo converted $4,607 principal and $2,028 accrued interest into 12,637,860 shares of the Company's common stock.

Effective October 15, 2015, the Company entered into an Amendment to Convertible Promissory Note with each of Craig Holland and Mick Donahoo with respect to the Craig Holland Convertible Note and the Mick Donahoo Convertible Note. The parties agreed to modify the terms of the notes such that in the event the lender issues a valid conversion notice and the conversion notice results in a conversion price less than the then-par value of the Company's common stock, the conversion will be effected at par value with additional principal amounts added to the note equal to the value of the common shares that were not able to be issued due to the conversion price being less than the par value of the Company's common stock. As the amendment did not alter the shares received by converting the notes, no additional value was recorded by the Company as a result of these amendments.

Total accrued interest payable for the related party convertible notes was $389,845 and $354,165 as of March 31, 2017 and December 31, 2016, respectively.

Convertible Notes Payable – Non-Related Party

Convertible notes payable – non-related party consisted of the following at:

	March 31, 2017		December 31, 2016
Convertible note payable to Robert Cowdell, maturing on December 31, 2017, with interest at 10%	$	61,443	$	61,443
Tranche #2 from 12/20/2013 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than December 20, 2018, with interest at 10%		14,966		14,966
Tranche #3 from 12/20/2013 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than December 20, 2018, with interest at 10%		50,000		50,000
Tranche #4 from 12/20/2013 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than December 20, 2018, with interest at 10%		50,000		50,000
Tranche #5 from 12/20/2013 $500,000 convertible  note payable to an accredited investor, payable on demand, but due no later than December 20, 2018, with interest at 10%		50,000		50,000
Tranche #6 from 12/20/2013 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than December 20, 2018, with interest at 10%		50,000		50,000
Tranche #1 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		26,957		33,727
Tranche #2 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		50,000		50,000
Tranche #3 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		50,000		50,000
Tranche #4 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		50,000		50,000
Tranche #5 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		50,000		50,000
Tranche #6 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		100,000		100,000
Tranche #7 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		50,000		50,000
Tranche #8 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		70,000		70,000

Tranche #9 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%	30,000	30,000
Tranche #1 from 2/11/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than February 11, 2020, with interest at 10%	30,000	30,000
Tranche #2 from 2/11/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than February 11, 2020, with interest at 10%	40,000	40,000
Tranche #3 from 2/11/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than February 11, 2020, with interest at 10%	110,000	110,000
Tranche #4 from 2/11/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than February 11, 2020, with interest at 10%	88,000	88,000
Tranche #5 from 2/11/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than February 11, 2020, with interest at 10%	90,000	90,000
Tranche #6 from 2/11/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than February 11, 2020, with interest at 10%	90,000	90,000
Tranche #1 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%	65,000	65,000
Tranche #2 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%	65,000	65,000
Tranche #3 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%	60,000	60,000
Tranche #4 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%	50,000	50,000
Tranche #5 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%	50,000	50,000
Tranche #6 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%	55,000	55,000
Tranche #7 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%	25,000	25,000
Tranche #8 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%	55,000	55,000

Tranche #9 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%		50,000			50,000
Tranche #1 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		60,000			60,000
Tranche #2 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		45,000			45,000
Tranche #3 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		55,000			55,000
Tranche #4 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		27,000			27,000
Tranche #5 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		10,000			10,000
Tranche #6 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		48,000			48,000
Tranche #7 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		24,000			24,000
Tranche #8 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		50,000			50,000
Tranche #9 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		50,000			50,000
Tranche #10 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		50,000			50,000
Tranche #11 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		45,000			45,000
Tranche #12 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		45,000			45,000
Tranche #13 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		45,000			-
Tranche #1 from 2/8/17 $500,000 convertible note payable to an accredited investor, maturing on February 8, 2018, with interest at 10%		55,000			-
Tranche #2 from 2/8/17 $500,000 convertible note payable to an accredited investor, maturing on February 8, 2018, with interest at 10%		60,000			-
Total		2,345,366			2,192,136
Less discount		(210,772	)		(239,402	)
Net	$	2,134,594		$	1,952,734

On December 31, 2013, the Company converted $55,429 of convertible debt and $6,014 in accrued interest due to Robert Cowdell (the “Convertible Cowdell Note”) into a convertible note. The Convertible Cowdell Note is convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. “Fixed Conversion Price” shall mean $0.00005. The maturity date of the note has been extended to December 31, 2017. The Convertible Cowdell Note had accrued interest of $19,948 and $18,433 as of March 31, 2017 and December 31, 2016, respectively.

The Company evaluated the Convertible Cowdell Note and determined that the shares issuable pursuant to the conversion option were determinate due to the Fixed Conversion Price and, as such, does not constitute a derivative liability as the Company has obtained authorization from a majority of shareholders such that should conversion occur at the Fixed Conversion Price the appropriate number of shares will be available or issuable for settlement to occur. The agreement modified the debt to make it convertible into common stock of the Company.

The $500,000 principal amount convertible note dated December 20, 2013 to an accredited investor (“Accredited Investor #1”) with an outstanding balance of $214,966 at March 31, 2017 was funded in $50,000 tranches in January, February, March, April and May 2014. The note is convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. “Fixed Conversion Price” shall mean $0.00005. The note also includes conversion price reset features that are triggered when the Company issues certain new equity instruments; as a result, this feature caused the Company to consider this feature a derivative liability. The maturity date of the note initially was one year from the date of funding, but was subsequently extended and changed to be such that the note amount is payable upon demand (with ten days written notice) by the accredited investor, but in no event later than December 20, 2018.

The $500,000 principal amount convertible note dated June 25, 2014 to an accredited investor (“Accredited Investor #2”) with an outstanding balance of $476,957 at March 31, 2017 was funded in $50,000 tranches in June, July, August, September, October, and December 2014, and tranches of $100,000 in November 2014, $70,000 in January 2015, and $30,000 in February 2015. The note is convertible into Company common stock at the greater of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. “Fixed Conversion Price” shall mean $0.00005. The note also includes conversion price reset features that are triggered when the Company issues certain new equity instruments; as a result, this feature caused the Company to consider this feature a derivative liability. The maturity date of the note initially was one year from the date of funding, with the maturity date subsequently extended to June 25, 2017.

The $500,000 principal amount convertible note dated February 11, 2015 to Accredited Investor #2 with an outstanding balance of $448,000 at March 31, 2017 was funded by tranches of $30,000 in February 2015, $40,000 in February 2015, $110,000 in March 2015, $88,000 in April 2015, $90,000 in May and June 2015. The note is convertible into Company common stock at the lesser of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three (3) lowest trade prices on three (3) separate trading days of Common Stock recorded after the original Effective Date of the note. “Fixed Conversion Price” shall mean $0.003. The note also includes conversion price reset features that are triggered when the Company issues certain new equity instruments; as a result, this feature caused the Company to consider this feature a derivative liability. The maturity date of the note initially was nine months from the date of funding, but was subsequently extended and changed to be such that the note amount is payable upon demand (with ten days written notice) by the accredited investor, but in no event later than February 11, 2020.

The $500,000 principal amount convertible note dated July 28, 2015 to Accredited Investor #2 with an outstanding balance of $475,000 at March 31, 2017 was funded by tranches of $65,000 in July and August 2015, $60,000 in September 2015, $50,000 in October and November 2015, $55,000 in December 2015, $25,000 in January 2016, $55,000 in February 2016, and $50,000 in March 2016. The note is convertible into Company common stock at the lesser of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three (3) lowest trade prices on three (3) separate trading days of Common Stock recorded after the original Effective Date of the note. “Fixed Conversion Price” shall mean $0.003. The note also includes conversion price reset features that are triggered when the Company issues certain new equity instruments; as a result, this feature caused the Company to consider this feature a derivative liability. The maturity date of the note initially was nine months from the date of funding, but was subsequently extended and changed to be such that the note amount is payable upon demand (with ten days written notice) by the accredited investor, but in no event later than July 28, 2020.

The $600,000 principal amount convertible note, dated April 7, 2016 and amended on January 18, 2017, to Accredited Investor #2 with an outstanding balance of $554,000 at March 31, 2017 was funded by tranches of $60,000 in April 2016, $45,000 in May 2016, $55,000, $27,000 and $10,000 in June 2016, $48,000 and $24,000 in July 2016, $50,000 in August 2016, $50,000 in September 2016, $50,000 in October 2016 and $45,000 in November and December 2016 and $45,000 in July 2017. The note is convertible into Company common stock at the lesser of (i) the Variable Conversion Price and (ii) the Fixed Conversion Price. The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three (3) lowest trade prices on three (3) separate trading days of Common Stock recorded after the original Effective Date of the note. “Fixed Conversion Price” shall mean $0.003. The note also includes conversion price reset features that are triggered when the Company issues certain new equity instruments; as a result, this feature caused the Company to consider this feature a derivative liability. The maturity date of the note was extended and changed to be such that the note amount is payable upon demand (with ten days written notice) by the accredited investor, but in no event later than April 7, 2021.

The $500,000 principal amount convertible note, dated February 8, 2017 to Accredited Investor #2 with an outstanding balance of $115,000 at March 31, 2017, was funded by tranches of $55,000 in February 2017 and $60,000 in April 2017. The note is convertible into Company common stock at the lesser of (a) $0.0003 per share, (b) 50% of the average three (3) lowest trade prices on three (3) separate trading days of Common Stock recorded after the original Effective Date of the note or (c) the lowest effective price per share granted to any person or entity after the Effective Date of the note. “Fixed Conversion Price” shall mean $0.003. Because of these and other variable features of the note, the Company considers the conversion feature to be a derivative liability. The maturity date of the note February 8, 2017.

The January 2014 derivative was valued as of January 6, 2014 at $44,493, of which all was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The January 2014 note had accrued interest of $5,258 and $4,025 as of March 31, 2017 and December 31, 2016, respectively.

The February 2014 derivative was valued as of February 18, 2014 at $44,556, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The February 2014 note had accrued interest of $15,562 and $14,329 as of March 31, 2017 and December 31, 2016, respectively.

The March 2014 derivative was valued as of March 26, 2014 at $77,884, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at March 31, 2017. The March 2014 note had accrued interest of $15,068 and $13,836 as of March 31, 2017 and December 31, 2016, respectively.

The April 2014 derivative was valued as of April 25, 2014 at $90,605, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at March 31, 2017. The April 2014 note had accrued interest of $14,658 and $13,425 as of March 31, 2017 and December 31, 2016, respectively.

The May 2014 derivative was valued as of May 21, 2014 at $95,029, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at March 31, 2017. The May 2014 note had accrued interest of $13,437 and $13,068 as of March 31, 2017 and December 31, 2016, respectively.

The June 2014 derivative was valued as of June 25, 2014 at $83,184, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at March 31, 2017. The June 2014 note had accrued interest of $7,431 and $8,470 as of March 31, 2017 and December 31, 2016, respectively.

The July 2014 derivative was valued as of July 15, 2014 at $73,999, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at March 31, 2017. The July 2014 note had accrued interest of $13,534 and $12,301 as of March 31, 2017 and December 31, 2016, respectively.

The August 2014 derivative was valued as of August 19, 2014 at $64,104, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at March 31, 2017. The August 2014 note had accrued interest of $13,068 and $11,836 as of March 31, 2017 and December 31, 2016, respectively.

The September 2014 derivative was valued as of September 17, 2014 at $62,915, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at March 31, 2017. The September 2014 note had accrued interest of $12,671 and $11,438 as of March 31, 2017 and December 31, 2016, respectively.

The October 2014 derivative was valued as of October 13, 2014 at $63,347, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at March 31, 2017. The October 2014 note had accrued interest of $12,301 and $11,068 as of March 31, 2017 and December 31, 2016, respectively.

The November 2014 derivative was valued as of November 7, 2014 at $99,757, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The November 2014 note had accrued interest of $24,110 and $21,644 as of March 31, 2017 and December 31, 2016, respectively.

The December 2014 derivative was valued as of December 17, 2014 at $58,456, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at March 31, 2017. The December 2014 note had accrued interest of $11,411 and $10,178 as of March 31, 2017 and December 31, 2016, respectively.

The January 2015 derivative was valued as of January 14, 2015 at $29,360, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The January 2015 note had accrued interest of $15,477 and $13,751 as of March 31, 2017 and December 31, 2016, respectively.

The first February 2015 derivative was valued as of February 10, 2015 at $23,984, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The first February 2015 note had accrued interest of $6,411 and $5,671 as of March 31, 2017 and December 31, 2016, respectively.

The second February 2015 derivative was valued as of February 11, 2015 at $18,003, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The second February 2015 note had accrued interest of $6,409 and $5,669 as of March 31, 2017 and December 31, 2016, respectively.

The third February 2015 derivative was valued as of February 25, 2015 at $19,494, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The third February 2015 note had accrued interest of $12,575 and $11,096 as of March 31, 2017 and December 31, 2016, respectively.

The March 2015 derivative was valued as of March 10, 2015 at $31,885, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The March 2015 note had accrued interest of $22,663 and $19,951 as of March 31, 2017 and December 31, 2016, respectively.

The April 2015 derivative was valued as of April 17, 2015 at $31,397, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The April 2015 note had accrued interest of $17,214 and $15,044 as of March 31, 2017 and December 31, 2016, respectively.

The May 2015 derivative was valued as of May 22, 2015 at $36,550, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The May 2015 note had accrued interest of $16,742 and $14,523 as of March 31, 2017 and December 31, 2016, respectively.

The June 2015 derivative was valued as of June 23, 2015 at $41,878, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The June 2015 note had accrued interest of $15,953 and $13,734 as of March 31, 2017 and December 31, 2016, respectively.

The July 2015 derivative was valued as of July 28, 2015 at $38,600, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The July 2015 note had accrued interest of $10,899 and $9,296 as of March 31, 2017 and December 31, 2016, respectively.

The August 2015 derivative was valued as of August 21, 2015 at $37,269, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The August 2015 note had accrued interest of $10,471 and $8,869 as of March 31, 2017 and December 31, 2016, respectively.

The September 2015 derivative was valued as of September 24, 2015 at $37,820, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The September 2015 note had accrued interest of $9,866 and $8,263 as of March 31, 2017 and December 31, 2016, respectively.

The October 2015 derivative was valued as of October 23, 2015 at $35,290, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The October 2015 note had accrued interest of $7,192 and $5,959 as of March 31, 2017 and December 31, 2016, respectively.

The November 2015 derivative was valued as of November 30, 2015 at $36,448, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The November 2015 note had accrued interest of $6,671 and $5,438 as of March 31, 2017 and December 31, 2016, respectively.

The December 2015 derivative was valued as of December 21, 2015 at $37,163, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The December 2015 note had accrued interest of $7,022 and $5,666 as of March 31, 2017 and December 31, 2016, respectively.

The January 2016 derivative was valued as of January 22, 2016 at $30,855, of which $25,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. The debt discount was fully amortized to interest expense at March 31, 2017. The January 2016 note had accrued interest of $2,973 and $2,357 as of March 31, 2017 and December 31, 2016, respectively.

The February 2016 derivative was valued as of February 8, 2016 at $37,835, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The February 2016 note had accrued interest of $6,270 and $4,914 as of March 31, 2017 and December 31, 2016, respectively.

The March 2016 derivative was valued as of March 7, 2016 at $37,402, which was recorded as a debt discount. The debt discount was fully amortized to interest expense at March 31, 2017. The March 2016 note had accrued interest of $5,318 and $4,085 as of March 31, 2017 and December 31, 2016, respectively.

The April 2016 derivative was valued as of April 7, 2016 at $53,978, which was recorded as a debt discount. During the three months ended March 31, 2017, $13,310 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $1,035. The April 2016 note had accrued interest of $5,873 and $4,393 as of March 31, 2017 and December 31, 2016, respectively.

The May 2016 derivative was valued as of May 10, 2016 at $47,249, of which $45,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2017, $11,096 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $4,931. The May 2016 note had accrued interest of $4,011 and $2,902 as of March 31, 2017 and December 31, 2016, respectively.

The first June 2016 derivative was valued as of June 6, 2016 at $48,678, which was recorded as a debt discount. During the three months ended March 31, 2017, $12,003 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $8,935. The first June 2016 note had accrued interest of $4,497 and $3,142 as of March 31, 2017 and December 31, 2016, respectively.

The second June 2016 derivative was valued as of June 9, 2016 at $35,935, of which $27,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2017, $6,658 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $5,178. The second June 2016 note had accrued interest of $2,178 and $1,512 as of March 31, 2017 and December 31, 2016, respectively.

The third June 2016 derivative was valued as of June 30, 2016 at $14,630, of which $10,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2017, $2,466 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $2,493. The third June 2016 note had accrued interest of $752 and $506 as of March 31, 2017 and December 31, 2016, respectively.

The first July 2016 derivative was valued as of July 13, 2016 at $46,259, which was recorded as a debt discount. During the three months ended March 31, 2017, $11,406 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $13,181. The first July 2016 note had accrued interest of $3,439 and $2,256 as of March 31, 2017 and December 31, 2016, respectively.

The second July 2016 derivative was valued as of July 21, 2016 at $32,140, of which $24,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2017, $5,918 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $7,364. The second July 2016 note had accrued interest of $1,667 and $1,075 as of March 31, 2017 and December 31, 2016, respectively.

The August 2016 derivative was valued as of August 15, 2016 at $20,723, which was recorded as a debt discount. During the three months ended March 31, 2017, $5,110 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $7,778. The August 2016 note had accrued interest of $3,132 and $1,899 as of March 31, 2017 and December 31, 2016, respectively.

The September 2016 derivative was valued as of September 13, 2016 at $21,612, which was recorded as a debt discount. During the three months ended March 31, 2017, $5,329 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $9,829. The September 2016 note had accrued interest of $2,736 and $1,503 as of March 31, 2017 December 31, 2016, respectively.

The October 2016 derivative was valued as of October 11, 2016 at $52,130, of which $50,000 was recorded as a debt discount with the remaining amount that exceeded the face value of the note expensed. During the three months ended March 31, 2017, $12,329 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $26,575. The October 2016 note had accrued interest of $2,353 and $1,120 as of March 31, 2017 and December 31, 2016, respectively.

The November 2016 derivative was valued as of November 15, 2016 at $43,444, which was recorded as a debt discount. During the three months ended March 31, 2017, $10,712 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $27,257. The November 2016 note had accrued interest of $1,687 and $578 as of March 31, 2017 and December 31, 2016, respectively.

The December 2016 derivative was valued as of December 13, 2016 at $29,988, which was recorded as a debt discount. During the three months ended March 31, 2017, $7,394 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $21,115. The December 2016 note had accrued interest of $1,343 and $234 as of March 31, 2017 and December 31, 2016, respectively.

The January 2017 derivative was valued as of January 11, 2017 at $38,071, which was recorded as a debt discount. During the three months ended March 31, 2017, $8,240 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $29,831. The January 2017 note had accrued interest of $984 as of March 31, 2017.

The February 2017 derivative was valued as of February 8, 2017 at $24,398, which was recorded as a debt discount. During the three months ended March 31, 2017, $3,409 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $20,989. The February 2017 note had accrued interest of $766 as of March 31, 2017.

The March 2017 derivative was valued as of March 9, 2017 at $25,838, which was recorded as a debt discount. During the three months ended March 31, 2017, $1,557 was amortized from the debt discount. The debt discount had a balance at March 31, 2017 of $24,281. The March 2017 note had accrued interest of $377 as of March 31, 2017.

Total accrued interest payable for the non-related party convertible notes was $416,424 and $361,503 as of March 31, 2017 and December 31, 2016, respectively.

The Company recorded total interest expense, including debt discount and beneficial conversion feature amortization, for all debt of $209,358 and $214,674 for the three months ended March 31, 2017 and 2016, respectively.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

NOTE 5 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company adopted FASB ASC 820 on October 1, 2008. Under this FASB, 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 (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.

The Company has various financial instruments that must be measured under the new fair value standard including: cash and debt. The Company currently does not have non-financial assets or non-financial liabilities that are required to be measured at fair value on a recurring basis. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. The fair value of the Company’s cash is based on quoted prices and therefore classified as Level 1.

Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

Cash, accounts receivable, capitalized production costs, prepaid royalties, prepaid expenses, accounts payable, accrued compensation, accrued royalties, accrued interest, accrued expenses, unearned royalties, notes payable – related party and technology payables reported on the balance sheet are estimated by management to approximate fair market value due to their short term nature.

The following tables provide a summary of the fair values of assets and liabilities measured on a non-recurring basis as of March 31, 2017 and December 31, 2016:

March 31, 2017	Total		Level 1		Level 2		Level 3		Gains (Losses)
Derivative liabilities	$	1,556,264	$	-	$	-	$	1,556,264	$	448,045

December 31, 2016	Total		Level 1		Level 2		Level 3		Gains (Losses)
Derivative liabilities	$	1,934,617	$	-	$	-	$	1,934,617	$	(616,286	)

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DERIVATIVE FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

NOTE 6 - DERIVATIVE FINANCIAL INSTRUMENTS

As discussed in Note 4, the Company issued convertible notes payable to non-related parties that contain anti-dilutive, or down round, price protection and other variable features. Pursuant to ASC 815-15, Embedded Derivatives, and ASC 815-40, Contracts in Entity’s Own Equity, the Company recorded a derivative liability for the price protection provisions issued within the convertible debt transactions.

The fair values of the Company’s derivative liabilities are estimated at the issuance date and are revalued at each subsequent reporting date using a multinomial lattice model simulation discussed below. At March 31, 2017 and December 31, 2016, the Company recorded current derivative liabilities of $1,556,264 and $1,934,617, respectively. The net change in fair value of the derivative liabilities resulted in gains of $448,045 and $54,979 for the three months ended March 31, 2017 and 2016, respectively, which are reported as other income in the condensed statements of operations.

The following table presents details of the Company’s derivative liabilities for the three months ended March 31, 2017:

Balance, December 31, 2016	$	1,934,617
Increases in derivative value due to new issuances of notes		88,307
Derivative adjustment due to debt conversion		(18,615	)
Change in fair value of derivative liabilities		(448,045	)
Balance, March 31, 2017	$	1,556,264

The Company calculated the fair value of the compound embedded derivatives using a multinomial lattice model simulation. The model is based on a probability weighted discounted cash flow model using projections of the various potential outcomes.

Key inputs and assumptions used in valuing the Company’s derivative liabilities are as follows for issuances of notes:

· Stock prices on all measurement dates were based on the fair market value

· Down round protection is based on the subsequent issuance of common stock at prices less than the conversion feature

· The probability of future financing was estimated at 100%

· Computed volatility ranging from 336% to 420%

See Note 5 for a discussion of fair value measurements.

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STOCKHOLDERS' DEFICIT

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

NOTE 7 - STOCKHOLDERS' DEFICIT

Stock Issuances

The Company is authorized to issue up to 2,000,000,000 shares of its $0.00001 par value common stock, and up to 10,000,000 shares of its $.001 par value preferred stock.

As of March 31, 2017 and December 31, 2016, the Company had common stock payable of $16,800 resulting from a technology transfer agreement with an unrelated party that obligated the Company to issue a total of 96,000 shares of its common stock, payable in 8 quarterly installments of 12,000 shares.

During the three months ended March 31, 2017, the Company issued a total of 171,799,671 shares of its common stock to an accredited investor in conversion of $6,770 principal and $1,820 accrued interest payable at a conversion price of $0.00045 per share and settled $18,615 of derivative liabilities. As a result of the debt conversion and derivative settlement, common stock was increased by $1,718 and additional paid-in capital was increased by $25,487.

2006 Stock Option Plan

The Company’s 2006 Stock Option Plan adopted by our Board of Directors in March of 2006 terminated in the year ended December 31, 2016. As of March 31, 2017, there were 560,000 stock options outstanding under the 2006 Stock Option Plan.

The Company did not grant any stock options or warrants during the three months ended March 31, 2017, and did not record any stock-based compensation expense during the three months ended March 31, 2017 and 2016.

A summary of the status of the options and warrants issued by the Company as of March 31, 2017, and changes during the three months then ended is presented below:

			Weighted Average
	Shares		Exercise Price
Outstanding, December 31, 2016		560,000	$	0.10
Granted		-		-
Canceled / Expired		-		-
Exercised		-		-
Outstanding, March 31, 2017		560,000	$	0.10

The outstanding options expire on various dates beginning May 2020 through August 2020.

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LOSS PER COMMON SHARE

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

NOTE 8 - LOSS PER COMMON SHARE

The computation of basic earnings per common share is based on the weighted average number of shares outstanding during the period. The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the period plus the weighted average common stock equivalents which would arise from the exercise of stock options, warrants and rights outstanding using the treasury stock method and the average market price per share during the period.

For the three months ended March 31, 2017, potential dilutive securities included 1,296,864,615 shares issuable for convertible debt, using the treasury stock method. For the three months ended March 31, 2016, the diluted weighted average number of shares is the same as the basic weighted average number of shares as the conversion of debt, options and warrants would be anti-dilutive.

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RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

NOTE 9 - RELATED PARTY TRANSACTIONS

The Company had convertible notes payable to related parties totaling $1,447,041 as of March 31, 2017 and December 31, 2016. See Note 4 for a detailed disclosure of this related party debt, including interest rates, terms of conversion and other repayment terms. Accrued interest payable to related parties was $389,845 and $354,165 as of March 31, 2017 and December 31, 2016, respectively.

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RECENT ACCOUNTING PRONOUNCEMENTS

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

NOTE 10 - RECENT ACCOUNTING PRONOUNCEMENTS

In January 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-4, “Intangibles – Goodwill and Other (Topic 350): “Simplifying the Test for Goodwill Impairment.” This update simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Instead, under the amendments in this update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity should apply the amendments in this update on a prospective basis. An entity is required to disclose the nature of and reason for the change in accounting principle upon transition. That disclosure should be provided in the first annual period and in the interim period within the first annual period when the entity initially adopts the amendments in this update. A public business entity that is an SEC filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company is currently unable to determine the impact on its financial statements of the adoption of this new accounting pronouncement.

In January 2017, the FASB issued ASU No. 2017-1, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” The amendments in this update clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The amendments of this ASU are effective for public business entities for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The amendments in this Update are to be applied prospectively on or after the effective date. The Company is currently unable to determine the impact on its financial statements of the adoption of this new accounting pronouncement.

Although there are several other new accounting pronouncements issued or proposed by the FASB, which the Company has adopted or will adopt, as applicable, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its financial position or results of operations.

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

NOTE 11 - SUBSEQUENT EVENTS

Subsequent to March 31, 2017, the Company issued a total of 124,438,109 shares of common stock in the conversion of convertible notes payable principal totaling $4,855 and accrued interest payable totaling $1,367.

On April 12, 2017, the Company received additional proceeds of $55,000 from the February 8, 2017 Convertible Promissory Note to an Accredited Investor. The note bears interest at 10% per annum and matures 12 months from its effective date.

On May 9, 2017, the Company received additional proceeds of $55,000 from the February 8, 2017 Convertible Promissory Note to an Accredited Investor. The note bears interest at 10% per annum and matures 12 months from its effective date.

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ACCRUED EXPENSES (Tables)

3 Months Ended

Mar. 31, 2017

Accrued Expenses Tables

Accrued Expenses

	March 31, 2017		December 31, 2016
Accrued vacation	$	70,268	$	66,194
Accrued royalties		410,686		410,533
Technology payable		18,000		18,000
Other		548		746
	$	499,502	$	495,473

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DEBT (Tables)

3 Months Ended

Mar. 31, 2017

Debt Tables

Convertible notes payable related party

Convertible notes payable, related party consisted of the following at:

	March 31, 2017		December 31, 2016
Convertible note payable to the Holland Family Trust, maturing on December 31, 2017, with interest at 10%	$	222,572	$	222,572
Convertible note payable to Craig Holland, maturing on December 31, 2017, with interest at 10%		813,602		813,602
Convertible note payable to Craig Holland, maturing on December 31, 2017, with interest at 10%		186,450		186,450
Convertible note payable to Mick Donahoo, maturing on December 31, 2017, with interest at 10%		186,450		186,450
Convertible note payable to Craig Holland, maturing on December 31, 2017, with interest at 10%		6,925		6,925
Convertible note payable to Mick Donahoo, maturing on December 31, 2017, with interest at 10%		31,042		31,042
Total	$	1,447,041	$	1,447,041

Convertible notes payable non - related party

Convertible notes payable – non-related party consisted of the following at:

	March 31, 2017		December 31, 2016
Convertible note payable to Robert Cowdell, maturing on December 31, 2017, with interest at 10%	$	61,443	$	61,443
Tranche #2 from 12/20/2013 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than December 20, 2018, with interest at 10%		14,966		14,966
Tranche #3 from 12/20/2013 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than December 20, 2018, with interest at 10%		50,000		50,000
Tranche #4 from 12/20/2013 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than December 20, 2018, with interest at 10%		50,000		50,000
Tranche #5 from 12/20/2013 $500,000 convertible  note payable to an accredited investor, payable on demand, but due no later than December 20, 2018, with interest at 10%		50,000		50,000
Tranche #6 from 12/20/2013 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than December 20, 2018, with interest at 10%		50,000		50,000
Tranche #1 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		26,957		33,727
Tranche #2 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		50,000		50,000
Tranche #3 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		50,000		50,000
Tranche #4 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		50,000		50,000
Tranche #5 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		50,000		50,000
Tranche #6 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		100,000		100,000
Tranche #7 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		50,000		50,000
Tranche #8 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%		70,000		70,000

Tranche #9 from 6/25/14 $500,000 convertible note payable to an accredited investor, maturing on June 25, 2017, with interest at 10%	30,000	30,000
Tranche #1 from 2/11/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than February 11, 2020, with interest at 10%	30,000	30,000
Tranche #2 from 2/11/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than February 11, 2020, with interest at 10%	40,000	40,000
Tranche #3 from 2/11/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than February 11, 2020, with interest at 10%	110,000	110,000
Tranche #4 from 2/11/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than February 11, 2020, with interest at 10%	88,000	88,000
Tranche #5 from 2/11/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than February 11, 2020, with interest at 10%	90,000	90,000
Tranche #6 from 2/11/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than February 11, 2020, with interest at 10%	90,000	90,000
Tranche #1 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%	65,000	65,000
Tranche #2 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%	65,000	65,000
Tranche #3 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%	60,000	60,000
Tranche #4 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%	50,000	50,000
Tranche #5 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%	50,000	50,000
Tranche #6 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%	55,000	55,000
Tranche #7 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%	25,000	25,000
Tranche #8 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%	55,000	55,000

Tranche #9 from 7/28/15 $500,000 convertible note payable to an accredited investor, payable on demand, but due no later than July 28, 2020, with interest at 10%		50,000			50,000
Tranche #1 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		60,000			60,000
Tranche #2 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		45,000			45,000
Tranche #3 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		55,000			55,000
Tranche #4 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		27,000			27,000
Tranche #5 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		10,000			10,000
Tranche #6 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		48,000			48,000
Tranche #7 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		24,000			24,000
Tranche #8 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		50,000			50,000
Tranche #9 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		50,000			50,000
Tranche #10 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		50,000			50,000
Tranche #11 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		45,000			45,000
Tranche #12 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		45,000			45,000
Tranche #13 from 4/7/16 $600,000 convertible note payable to an accredited investor, payable on demand, but due no later than April 7, 2021, with interest at 10%		45,000			-
Tranche #1 from 2/8/17 $500,000 convertible note payable to an accredited investor, maturing on February 8, 2018, with interest at 10%		55,000			-
Tranche #2 from 2/8/17 $500,000 convertible note payable to an accredited investor, maturing on February 8, 2018, with interest at 10%		60,000			-
Total		2,345,366			2,192,136
Less discount		(210,772	)		(239,402	)
Net	$	2,134,594		$	1,952,734

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2017

Fair Value Of Financial Instruments Tables

Fair Values of Assets and Liabilities Measured

The following tables provide a summary of the fair values of assets and liabilities measured on a non-recurring basis as of March 31, 2017 and December 31, 2016:

March 31, 2017	Total		Level 1		Level 2		Level 3		Gains (Losses)
Derivative liabilities	$	1,556,264	$	-	$	-	$	1,556,264	$	448,045

December 31, 2016	Total		Level 1		Level 2		Level 3		Gains (Losses)
Derivative liabilities	$	1,934,617	$	-	$	-	$	1,934,617	$	(616,286	)

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DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2017

Derivative Financial Instruments Tables

Fair values of derivative liabilities

Balance, December 31, 2016	$	1,934,617
Increases in derivative value due to new issuances of notes		88,307
Derivative adjustment due to debt conversion		(18,615	)
Change in fair value of derivative liabilities		(448,045	)
Balance, March 31, 2017	$	1,556,264

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STOCKHOLDERS DEFICIT (Tables)

3 Months Ended

Mar. 31, 2017

Stockholders Deficit Tables

Schedule of status of warrants and options issued

			Weighted Average
	Shares		Exercise Price
Outstanding, December 31, 2016		560,000	$	0.10
Granted		-		-
Canceled / Expired		-		-
Exercised		-		-
Outstanding, March 31, 2017		560,000	$	0.10

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GOING CONCERN (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Going Concern Details Narrative
Net Income	$ 58,557	$ (350,562)
Accumulated deficit	$ (11,055,372)		$ (11,113,929)

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ACCRUED EXPENSES (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Accrued Expenses Details
Accrued vacation	$ 70,268	$ 66,194
Accrued royalties	410,686	410,533
Technology payable	18,000	18,000
Other	548	746
Total Accrued Liabilities	$ 499,502	$ 495,473

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ACCRUED EXPENSES (Details Narrative)	Mar. 31, 2017 USD ($) Installments	Dec. 31, 2016 USD ($)
Accrued Expenses Details Narrative
Unearned royalties	$ 127,198	$ 127,201
Technology payable	$ 18,000	$ 18,000
Number of installments | Installments	24
Installment amount	$ 1,500

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DEBT (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Convertible Notes Payable, related party	$ 1,447,041	$ 1,447,041
Holland Family Trust, maturing on December 31, 2017
Convertible Notes Payable, related party	$ 222,572	$ 222,572
Interest rate	10.00%	10.00%
Craig Holland, maturing on December 31, 2017
Convertible Notes Payable, related party	$ 813,602	$ 813,602
Interest rate	10.00%	10.00%
Craig Holland, maturing on December 31, 2017 one
Convertible Notes Payable, related party	$ 186,450	$ 186,450
Interest rate	10.00%	10.00%
Mick Donahoo, maturing on December 31, 2017
Convertible Notes Payable, related party	$ 186,450	$ 186,450
Interest rate	10.00%	10.00%
Craig Holland, maturing on December 31, 2017, Two
Convertible Notes Payable, related party	$ 6,925	$ 6,925
Interest rate	10.00%	10.00%
Mick Donahoo, maturing on December 31, 2017, One
Convertible Notes Payable, related party	$ 31,042	$ 31,042
Interest rate	10.00%	10.00%

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DEBT (Details 1) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Convertible Notes Payable non related party, gross	$ 2,345,366	$ 2,192,136
Less Discounts	(210,772)	(239,402)
Convertible Notes Payable non related party, net	2,134,594	1,952,734
Robert Cowdell, maturing on December 31, 2017
Convertible Notes Payable non related party, gross	$ 61,443	$ 61,443
Interest rate	10.00%	10.00%
An accredited investor, maturing on December 20, 2018
Convertible Notes Payable non related party, gross	$ 14,966	$ 14,966
Interest rate	10.00%	10.00%
An accredited investor, maturing on December 20, 2018 One
Convertible Notes Payable non related party, gross	$ 50,000	$ 50,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on December 20, 2018 Two
Convertible Notes Payable non related party, gross	$ 50,000	$ 50,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on December 20, 2018 Three
Convertible Notes Payable non related party, gross	$ 50,000	$ 50,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on December 20, 2018 Four
Convertible Notes Payable non related party, gross	$ 50,000	$ 50,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on June 25, 2017
Convertible Notes Payable non related party, gross	$ 26,957	$ 33,727
Interest rate	10.00%	10.00%
An accredited investor, maturing on June 25, 2017 One
Convertible Notes Payable non related party, gross	$ 50,000	$ 50,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on June 25, 2017 Two
Convertible Notes Payable non related party, gross	$ 50,000	$ 50,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on June 25, 2017 Three
Convertible Notes Payable non related party, gross	$ 50,000	$ 50,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on June 25, 2017 Four
Convertible Notes Payable non related party, gross	$ 50,000	$ 50,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on June 25, 2017 Five
Convertible Notes Payable non related party, gross	$ 100,000	$ 100,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on June 25, 2017 Six
Convertible Notes Payable non related party, gross	$ 50,000	$ 50,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on June 25, 2017 Seven
Convertible Notes Payable non related party, gross	$ 70,000	$ 70,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on June 25, 2017 Eight
Convertible Notes Payable non related party, gross	$ 30,000	$ 30,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on February 11, 2020
Convertible Notes Payable non related party, gross	$ 30,000	$ 30,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on February 11, 2020 One
Convertible Notes Payable non related party, gross	$ 40,000	$ 40,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on February 11, 2020 Two
Convertible Notes Payable non related party, gross	$ 110,000	$ 110,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on February 11, 2020 Three
Convertible Notes Payable non related party, gross	$ 88,000	$ 88,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on February 11, 2020 Four
Convertible Notes Payable non related party, gross	$ 90,000	$ 90,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on February 11, 2020 Five
Convertible Notes Payable non related party, gross	$ 90,000	$ 90,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on July 28, 2020
Convertible Notes Payable non related party, gross	$ 65,000	$ 65,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on July 28, 2020 One
Convertible Notes Payable non related party, gross	$ 65,000	$ 65,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on July 28, 2020 Two
Convertible Notes Payable non related party, gross	$ 60,000	$ 60,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on July 28, 2020 Three
Convertible Notes Payable non related party, gross	$ 50,000	$ 50,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on July 28, 2020 Four
Convertible Notes Payable non related party, gross	$ 50,000	$ 50,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on July 28, 2020 Five
Convertible Notes Payable non related party, gross	$ 55,000	$ 55,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on July 28, 2020 Six
Convertible Notes Payable non related party, gross	$ 25,000	$ 25,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on July 28, 2020 Seven
Convertible Notes Payable non related party, gross	$ 55,000	$ 55,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on July 28, 2020 Eight
Convertible Notes Payable non related party, gross	$ 50,000	$ 50,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on April 7, 2021
Convertible Notes Payable non related party, gross	$ 60,000	$ 60,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on April 7, 2021 One
Convertible Notes Payable non related party, gross	$ 45,000	$ 45,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on April 7, 2021 Two
Convertible Notes Payable non related party, gross	$ 55,000	$ 55,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on April 7, 2021 Three
Convertible Notes Payable non related party, gross	$ 27,000	$ 27,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on April 7, 2021 Four
Convertible Notes Payable non related party, gross	$ 10,000	$ 10,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on April 7, 2021 Five
Convertible Notes Payable non related party, gross	$ 48,000	$ 48,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on April 7, 2021 Six
Convertible Notes Payable non related party, gross	$ 24,000	$ 24,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on April 7, 2021 Seven
Convertible Notes Payable non related party, gross	$ 50,000	$ 50,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on April 7, 2021 Eight
Convertible Notes Payable non related party, gross	$ 50,000	$ 50,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on April 7, 2021 Nine
Convertible Notes Payable non related party, gross	$ 50,000	$ 50,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on April 7, 2021 Ten
Convertible Notes Payable non related party, gross	$ 45,000	$ 45,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on April 7, 2021 Eleven
Convertible Notes Payable non related party, gross	$ 45,000	$ 45,000
Interest rate	10.00%	10.00%
An accredited investor, maturing on April 7, 2021 Twelve
Convertible Notes Payable non related party, gross	$ 45,000
Interest rate	10.00%
An accredited investor, maturing on February 8, 2018
Convertible Notes Payable non related party, gross	$ 55,000
Interest rate	10.00%
An accredited investor, maturing on February 8, 2018 One
Convertible Notes Payable non related party, gross	$ 60,000
Interest rate	10.00%

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DEBT (Details Narrative) - USD ($)

1 Months Ended

3 Months Ended

12 Months Ended

Feb. 01, 2016

Oct. 08, 2015

Oct. 23, 2014

Mar. 31, 2017

Mar. 31, 2016

Dec. 31, 2013

Jul. 31, 2017

Apr. 30, 2017

Feb. 28, 2017

Dec. 31, 2016

Nov. 30, 2016

Oct. 31, 2016

Sep. 30, 2016

Aug. 31, 2016

Jul. 31, 2016

Jun. 30, 2016

May 31, 2016

Apr. 30, 2016

Feb. 29, 2016

Jan. 31, 2016

Dec. 31, 2015

Nov. 30, 2015

Oct. 31, 2015

Sep. 30, 2015

Aug. 31, 2015

Jul. 31, 2015

Jun. 30, 2015

May 31, 2015

Apr. 30, 2015

Mar. 31, 2015

Feb. 28, 2015

Jan. 31, 2015

Dec. 31, 2014

Nov. 30, 2014

Oct. 31, 2014

Sep. 30, 2014

Aug. 31, 2014

Jul. 31, 2014

Jun. 30, 2014

May 31, 2014

Apr. 30, 2014

Mar. 31, 2014

Feb. 28, 2014

Jan. 31, 2014

Notes payable

$ 58,096

Accrued interest payable with 50% guaranteed return

22,046

Accrued interest

389,845

354,165

Convertible Notes Payable, related party

1,447,041

1,447,041

Convertible debt

2,134,594

1,952,734

Accrued interest payable for non-related party convertible notes

416,424

361,503

Amortized Debt discount

116,937

$ 122,213

Interest expense, net

209,358

214,674

Holland Family Trust, maturing on December 31, 2017

Convertible Notes Payable, related party

222,572

Tranches [Member]

Total outstanding balances

$ 55,000

$ 60,000

$ 65,000

$ 30,000

$ 50,000

$ 50,000

Tranches One [Member]

Total outstanding balances

$ 60,000

$ 45,000

$ 65,000

40,000

$ 50,000

$ 50,000

Tranches Two [Member]

Total outstanding balances

$ 55,000

$ 60,000

$ 110,000

$ 50,000

$ 50,000

Tranches Three [Member]

Total outstanding balances

27,000

$ 50,000

$ 88,000

$ 50,000

$ 50,000

Tranches Four [Member]

Total outstanding balances

$ 10,000

$ 50,000

$ 90,000

$ 50,000

$ 50,000

Tranches Five [Member]

Total outstanding balances

$ 48,000

$ 55,000

$ 90,000

$ 50,000

Tranches Six [Member]

Total outstanding balances

$ 24,000

$ 25,000

$ 100,000

Tranches Seven [Member]

Total outstanding balances

$ 50,000

$ 55,000

$ 70,000

Tranches Eight [Member]

Total outstanding balances

$ 50,000

$ 50,000

$ 30,000

Tranches Nine [Member]

Total outstanding balances

$ 50,000

Tranches Ten [Member]

Total outstanding balances

$ 45,000

Tranches Eleven [Member]

Total outstanding balances

45,000

Tranches Twelve [Member]

Total outstanding balances

$ 45,000

Convertible Cowdell Note [Member]

Accrued interest

19,948

$ 6,014

18,433

Term of conversion feature

“Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. “Fixed Conversion Price” shall mean $0.00005.

Maturity date

Dec. 31, 2017

Convertible debt

$ 55,429

Mick Donahoo [Member]

Notes payable

55,250

Accrued interest

15,399

Convertible Notes Payable, related party

70,649

Accrued salaries

186,450

Debt conversion orignal amount

$ 4,607

$ 35,000

Debt conversion accrued interest

$ 2,028

$ 2,836

Debt conversion common stock shares

12,637,860

39,829,849

Craig Holland [Member]

Notes payable

35,100

813,602

Accrued interest

11,432

72,107

Convertible Notes Payable, related party

$ 46,532

Debt conversion orignal amount

$ 4,607

$ 35,000

Debt conversion accrued interest

$ 2,028

$ 2,836

Debt conversion common stock shares

12,637,860

39,829,849

Holland and Donahoo Accrued Salary Note [Member]

Accrued interest

60,532

55,935

Term of conversion feature

“Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. “Fixed Conversion Price” shall mean $0.00005.

Maturity date

Dec. 31, 2017

Holland Transferred [Member]

Accrued interest

283,289

183,228

Holland Family Trust [Member]

Notes payable

$ 813,602

Accrued interest

$ 55,613

50,124

Term of conversion feature

“Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. “Fixed Conversion Price” shall mean $0.00005.

Game Marketing Agreement [Member]

Line of Credit Facility Maximum

$ 250,000

Terms of agreement, Description

The investor will receive 50% of Net Receipts (as defined in the agreement) from the Game until the Marketing Fund is fully recouped. Once the Marketing Fund is recouped, the investor will receive 50% of Net Receipts from the Game until the investor receives a 50% return on the Marketing Funds advanced.

February 2017 [Member]

Total outstanding balances

$ 115,000

Term of conversion feature

The note is convertible into Company common stock at the lesser of (a) $0.0003 per share, (b) 50% of the average three (3) lowest trade prices on three (3) separate trading days of Common Stock recorded after the original Effective Date of the note or (c) the lowest effective price per share granted to any person or entity after the Effective Date of the note. ?Fixed Conversion Price? shall mean $0.003.

Maturity date

Feb. 08, 2017

Convertible Notes Payable, related party

$ 500,000

April 2016 [Member]

Total outstanding balances

$ 554,000

Term of conversion feature

Variable Conversion Price and (ii) the Fixed Conversion Price. The ?Variable Conversion Price? shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). ?Market Price? means the average of the three (3) lowest trade prices on three (3) separate trading days of Common Stock recorded after the original Effective Date of the note. ?Fixed Conversion Price? shall mean $0.003.

Maturity date

Apr. 07, 2021

Convertible Notes Payable, related party

$ 600,000

June 2014 [Member]

Total outstanding balances

$ 476,957

Term of conversion feature

“Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. “Fixed Conversion Price” shall mean $0.00005

Maturity date

Jun. 25, 2017

Convertible Notes Payable, related party

$ 500,000

December 2013 [Member]

Total outstanding balances

$ 214,966

Term of conversion feature

“Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three lowest trading prices for the Company’s common stock during the twenty-five (25) trading-day period ending on the latest complete trading day prior to the Conversion Date. “Fixed Conversion Price” shall mean $0.00005.

Maturity date

Dec. 20, 2018

Convertible Notes Payable, related party

$ 500,000

February 2015 [Member]

Total outstanding balances

$ 448,000

Term of conversion feature

Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three (3) lowest trade prices on three (3) separate trading days of Common Stock recorded after the original Effective Date of the note. “Fixed Conversion Price” shall mean $0.003.

Maturity date

Feb. 11, 2020

Convertible Notes Payable, related party

$ 500,000

June 2016 derivative Two [Member]

Accrued interest

752

506

Total outstanding balances

2,493

Debt discount

10,000

Amortized Debt discount

2,466

Derivative

14,630

June 2016 derivative One [Member]

Accrued interest

2,178

1,512

Total outstanding balances

5,178

Debt discount

27,000

Amortized Debt discount

6,658

Derivative

35,935

June 2016 derivative [Member]

Accrued interest

4,497

3,142

Total outstanding balances

8,935

Debt discount

48,678

Amortized Debt discount

12,003

Derivative

48,678

May 2016 derivative [Member]

Accrued interest

4,011

2,902

Total outstanding balances

4,931

Debt discount

45,000

Amortized Debt discount

11,096

Derivative

47,249

April 2016 derivative [Member]

Accrued interest

5,873

4,393

Total outstanding balances

1,035

Debt discount

53,978

Amortized Debt discount

13,310

Derivative

53,978

March 2016 derivative [Member]

Accrued interest

5,318

4,085

Debt discount

37,402

Derivative

37,402

February 2016 derivative [Member]

Accrued interest

6,270

4,914

Debt discount

37,835

Derivative

37,835

January 2016 derivative [Member]

Accrued interest

2,973

2,357

Debt discount

25,000

Derivative

30,855

February 2014 derivative [Member]

Accrued interest

15,562

14,329

Debt discount

44,556

Derivative

44,556

January 2014 derivative [Member]

Accrued interest

5,258

4,025

Debt discount

44,493

Derivative

44,493

July 2015 [Member]

Total outstanding balances

$ 475,000

Term of conversion feature

The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (representing a discount rate of 50%). “Market Price” means the average of the three (3) lowest trade prices on three (3) separate trading days of Common Stock recorded after the original Effective Date of the note. “Fixed Conversion Price” shall mean $0.003.

Maturity date

Jul. 28, 2020

Convertible Notes Payable, related party

$ 500,000

March 2014 derivative [Member]

Accrued interest

15,068

13,836

Debt discount

50,000

Derivative

77,884

April 2014 derivative [Member]

Accrued interest

14,658

13,425

Debt discount

50,000

Derivative

90,605

May 2014 derivative [Member]

Accrued interest

13,437

13,068

Debt discount

50,000

Derivative

95,029

June 2014 derivative [Member]

Accrued interest

7,431

8,470

Debt discount

50,000

Derivative

83,184

July 2014 derivative [Member]

Accrued interest

13,534

12,301

Debt discount

50,000

Derivative

73,999

August 2014 derivative [Member]

Accrued interest

13,068

11,836

Debt discount

50,000

Derivative

64,104

September 2014 derivative [Member]

Accrued interest

12,671

11,438

Debt discount

50,000

Derivative

62,915

October 2014 derivative [Member]

Accrued interest

12,301

11,068

Debt discount

50,000

Derivative

63,347

November 2014 derivative [Member]

Accrued interest

24,110

21,644

Debt discount

99,757

Derivative

99,757

December 2014 derivative [Member]

Accrued interest

11,411

10,178

Debt discount

50,000

Derivative

58,456

January 2015 derivative [Member]

Accrued interest

15,477

13,751

Debt discount

29,360

Derivative

29,360

February 2015 derivative [Member]

Accrued interest

6,411

5,671

Debt discount

23,984

Derivative

23,984

February 2015 One derivative [Member]

Accrued interest

6,409

5,669

Debt discount

18,003

Derivative

18,003

February 2015 Two derivative [Member]

Accrued interest

12,575

11,096

Debt discount

19,494

Derivative

19,494

March 2015 derivative [Member]

Accrued interest

22,663

19,951

Debt discount

31,885

Derivative

31,885

April 2015 derivative [Member]

Accrued interest

17,214

15,044

Debt discount

31,397

Derivative

31,397

May 2015 derivative [Member]

Accrued interest

16,742

14,523

Debt discount

36,550

Derivative

36,550

June 2015 derivative [Member]

Accrued interest

15,953

13,734

Debt discount

41,878

Derivative

41,878

July 2015 derivative [Member]

Accrued interest

10,899

9,296

Debt discount

38,600

Derivative

38,600

August 2015 derivative [Member]

Accrued interest

10,471

8,869

Debt discount

37,269

Derivative

37,269

September 2015 derivative [Member]

Accrued interest

9,866

8,263

Debt discount

37,820

Derivative

37,820

October 2015 derivative [Member]

Accrued interest

7,192

5,959

Debt discount

35,290

Derivative

35,290

November 2015 derivative [Member]

Accrued interest

6,671

5,438

Debt discount

36,448

Derivative

36,448

December 2015 derivative [Member]

Accrued interest

7,022

5,666

Debt discount

37,163

Derivative

37,163

July 2016 One derivative [Member]

Accrued interest

1,667

1,075

Total outstanding balances

7,364

Debt discount

24,000

Amortized Debt discount

5,918

Derivative

32,140

July 2016 derivative [Member]

Accrued interest

2,256

Amortized Debt discount

11,406

July 2016 derivative [Member]

Accrued interest

3,439

Total outstanding balances

13,181

Debt discount

46,259

Derivative

46,259

August 2016 derivative [Member]

Accrued interest

3,132

1,899

Total outstanding balances

7,778

Debt discount

20,723

Amortized Debt discount

5,110

Derivative

20,723

September 2016 derivative [Member]

Accrued interest

2,736

1,503

Total outstanding balances

9,829

Debt discount

21,612

Amortized Debt discount

5,329

Derivative

21,612

October 2016 derivative [Member]

Accrued interest

2,353

1,120

Total outstanding balances

26,575

Debt discount

50,000

Amortized Debt discount

12,329

Derivative

52,130

November 2016 derivative [Member]

Accrued interest

1,687

578

Total outstanding balances

27,257

Debt discount

43,444

Amortized Debt discount

10,712

Derivative

43,444

December 2016 Derivative [Member]

Accrued interest

1,343

234

Total outstanding balances

21,115

Debt discount

29,988

Amortized Debt discount

7,394

Derivative

29,988

January 2017 Derivative [Member]

Accrued interest

984

Total outstanding balances

29,831

Debt discount

38,071

Amortized Debt discount

8,240

Derivative

38,071

February 2017 Derivative [Member]

Accrued interest

766

Total outstanding balances

20,989

Debt discount

24,398

Amortized Debt discount

3,409

Derivative

24,398

March 2017 Derivative [Member]

Accrued interest

377

Total outstanding balances

24,281

Debt discount

25,838

Amortized Debt discount

1,557

Derivative

25,838

Mick Donahoo Convertible Note [Member]

Accrued interest

9,879

8,943

Craig Holland Convertible Note [Member]

Accrued interest

$ 9,879

$ 8,943

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Derivative liabilities	$ 1,556,264		$ 1,934,617
Gains (Losses)	448,045	$ (616,286)
Level 1 [Member]
Derivative liabilities
Level 2 [Member]
Derivative liabilities
Level 3 [Member]
Derivative liabilities	$ 1,556,264		$ 1,934,617

XML

DERIVATIVE FINANCIAL INSTRUMENTS (Details)	3 Months Ended
	Mar. 31, 2017 USD ($)
Derivative Financial Instruments Details
Beginning Balance	$ 1,934,617
Increases in derivative value due to new issuances of notes	88,307
Derivative adjustment due to debt conversion	(18,615)
Change in fair value of derivative liabilities	(448,045)
Ending Balance	$ 1,556,264

XML

DERIVATIVE FINANCIAL INSTRUMENTS (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Current derivative liabilities	$ 1,556,264		$ 1,934,617
Gain (loss) on change in derivative liabilities	$ 448,045	$ 54,979
Estimated probability of future financing	100.00%
Minimum [Member]
Computed volatility	336.00%
Maximum [Member]
Computed volatility	420.00%

XML

STOCKHOLDERS’ DEFICIT (Details)	3 Months Ended
	Mar. 31, 2017 $ / shares shares
Number of Shares
Beginning Balance | shares	560,000
Grant | shares
Canceled / Expired | shares
Exercised | shares
Ending Balance | shares	560,000
Weighted Average Exercise Price
Beginning Balance | $ / shares	$ 0.10
Grant | $ / shares
Canceled / Expired | $ / shares
Exercised | $ / shares
Ending Balance | $ / shares	$ 0.10

XML

STOCKHOLDERS’ DEFICIT (Details Narrative)	3 Months Ended
	Mar. 31, 2017 USD ($) Installments $ / shares shares	Dec. 31, 2016 USD ($) $ / shares shares
Common stock, par value | $ / shares	$ 0.00001	$ 0.00001
Common stock, authorized shares | shares	2,000,000,000	2,000,000,000
Preferred stock, par value | $ / shares	$ 0.001	$ 0.001
Preferred stock, authorized shares | shares	10,000,000	10,000,000
Stock payables	$ 16,800	$ 16,800
Share issued | shares	96,000
Shares per installments | shares	12,000
Number of installments | Installments	8
Frequency of installments	Quarterly
Derivative adjustment due to debt conversion	$ (18,615)
Increase in common stock value	1,718
Increased in additional paid in capital	$ 25,487
2006 Stock Option Plan [Member]
Stock options outstanding | shares	560,000
Common Stock
Principal conversion	$ 6,770
Issuance of common stock for conversion of debt, Shares | shares	171,799,671
Conversion of accrued interest payable	$ 1,820
Conversion prices | $ / shares	$ 0.00045
Derivative adjustment due to debt conversion	$ (18,615)

XML

LOSS PER COMMON SHARE (Details Narrative)	3 Months Ended
	Mar. 31, 2017 shares
Notes to Financial Statements
Potential dilutive securities	1,296,864,615

XML

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Related Party Transactions Details Narrative
Convertible Note Payable - Related Party	$ 1,447,041	$ 1,447,041
Accrued interest payable - related party	$ 389,845	$ 354,165

XML

SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] - USD ($)			1 Months Ended
	May 09, 2017	Apr. 12, 2017	Apr. 30, 2017
Shares issued upon conversion of debt			124,438,109
Debt conversion, Principal amount			$ 4,855
Debt conversion, Accrued interest			$ 1,367
February 8, 2017 Convertible Promissory Note [Member] | An accredited investor
Additional proceeds from convertible debt	$ 55,000	$ 55,000
Interest rate	10.00%	10.00%
Maturity term	12 months	12 months