Note 7 - Notes and Loans Payable

3 Months Ended

Mar. 31, 2018

NOTE 7 – Notes and Loans Payable

Notes and loans payable consist of:
	March 31, 2018	December 31, 2017

Convertible notes payable to lender dated from March 15, 2016 (as amended June 2, 2016) to November 15, 2017, interest at rates ranging from 12% to 14.99% per annum, due from April 6, 2017 to May 15, 2018, partially converted at March 22, 2017 and the remaining notes convertible into Common Stock at a Conversion Price equal to the lesser of (i) $0.01 per share or (ii) 50% of the lowest Closing Bid Price of the Common Stock for the 30 Trading Days preceding the Conversion Date – net of unamortized debt discount of $373 and $1,815, respectively	38,127		36,685

Convertible notes payable to lender dated February 1, 2016 (as amended December 21, 2016) and December 21, 2016, interest at 12% per annum, due February 1, 2017 and May 20, 2017, convertible into Common Stock at a Conversion Price equal to the lesser of (i) $0.01 per share or (ii) 50% of the lowest Closing Bid Price of the Common Stock for the 30 Trading Days preceding the Conversion Date – net of unamortized debt discount of $0 and $0, respectively	65,000		65,000

Convertible notes payable to Pasquale and Rosemary Ferro dated from May 2, 2017 to January 8, 2018, interest at 12% per annum, due from September 16, 2017 to May 7, 2018, convertible into Common Stock at a Conversion Price equal to the lesser of (i) $0.01 per share or (ii) 50% of the lowest Closing Bid Price of the Common Stock for the 30 Trading Days preceding the Conversion Date – net of unamortized debt discount of $8,755 and $19,613, respectively	94,745		73,887

Convertible note payable to lender dated August 8, 2017 interest at 12% per annum, due August 8, 2018, convertible into Common Stock at a Conversion Price equal to the lesser of (i) $0.01 per share or (ii) 50% of the lowest Closing Bid Price of the Common Stock for the 30 Trading Days preceding the Conversion Date – net of unamortized debt discount of $8,904 and $15,068, respectively	16,096		9,932

Note payable to brother of Marco Alfonsi, Chief Executive Officer of the Company, interest at 10% per annum, due August 22, 2016 (now past due)	5,000		5,000

Note payable to Carl Dilley, a director of the Company, interest at 12.99% per annum, due February 1, 2021	15,000		-

Loan payable to Mckenzie Webster Limited (“MWL”), an entity controlled by the former Chairman of the Board of Directors of the Company, non-interest bearing, due on demand	3,000		3,000
Total	$ 236,968		$ 193,504

The derivative liability of the convertible notes payable consists of:

	March 31, 2018				December 31, 2017
	Face Value		Derivative Liability		Face Value		Derivative Liability


Convertible notes payable to lender dated from March 15, 2016 (as amended June 2, 2016) to November 15, 2017, due from April 6, 2017 to May 15, 2018		38,500	$	61,776		38,500		248,597

Convertible notes payable to lender dated February 1, 2016 (as amended December 21, 2016) and December 21, 2016, due February 1, 2017 and May 20, 2017		65,000		104,000		65,000		418,889

Convertible notes payable to Pasquale and Rosemary Ferro dated from May 2, 2017 to January 8, 2018, due from September 16, 2017 to May 7, 2018		103,500		170,298		93,500		611,886

Convertible notes payable to lender dated August 8, 2017, due August 8, 2018		25,000		49,357		25,000		171,765

Totals	$	232,000	$	385,431	$	222,000	$	1,451,137

The above convertible notes contain a variable conversion feature based on the future trading price of the Company common stock. Therefore, the number of shares of common stock issuable upon conversion of the notes is indeterminate. Accordingly, we have recorded the fair value of the embedded conversion features as a derivative liability at the respective issuance dates (or amendment dates) of the notes ($53,507 total for the three months ended March 31, 2018) and charged the applicable amounts to debt discounts ($10,000 total for the three months ended March 31, 2018) and the remainder to other expense ($43,507 total for the three months ended March 31, 2018). The increase (decrease) in the fair value of the derivative liability from the respective issuance dates (or amendment dates) of the notes to the measurement date ($1,119,213 total decrease for the three months ended March 31, 2018) is charged (credited) to other expense (income). The fair value of the derivative liability of the notes is measured at the respective issuance dates and quarterly thereafter using the Black Scholes option pricing model. Assumptions used for the calculations of the derivative liability of the notes at March 31, 2018 include (1) stock price of $0.026 per share, (2) exercise price of $0.01 per share, (3) terms ranging from 0 days to 130 days, (4) expected volatility of 269% and (5) risk free interest rates ranging from 0.00% to 1.82%.