NOTE 9 –CONVERTIBLE NOTES PAYABLE

Convertible notes payable as of March 31, 2018 and December 31, 2017 are comprised of the following:

	March 31,			December 31,
	2018			2017
				(audited)
$550k Note - July 2016	$	578,686		$	550,000
$50k Note - July 2016		75,811			50,000
$111k Note - May 2017		119,815			111,000
$53k Note - July 2017		---			53,000
$35k Note - September 2017		---			35,000
$55k Note - September 2017		---			55,000
$53k Note #2 - October 2017		53,000			53,000
$171.5k Note - October 2017		171,500			171,500
$57.8k Note - January 2018		57,750			---
$112.8k Note - February 2018		112,750			---
$83k Note - February 2018		83,000			---
$105k Note - March 2018		105,000			---
		1,357,312			1,078,500

Less: unamortized discount		(426,325	)		(266,642	)

Convertible notes payable, net of original issue discount and debt discount	$	930,987		$	811,858

Convertible Notes Payable ($550,000) – July 2016

On July 7, 2016, the Company entered into a 6% fixed convertible secured promissory note with an investor with a face value of $550,000 (the “$550k Note”). The $550k Note is convertible into shares of the Company’s common stock at the discretion of the note holder at a fixed price of $0.08 per share, and is secured by all of the Company’s assets. The Company received $500,000 net proceeds from the note after a $50,000 original issue discount. The $550k Note was originally scheduled to mature on April 11, 2017, but the maturity date was extended to July 7, 2018. The discount from the original issue discount, warrants and embedded conversion feature (“ECF”) associated with the $550k Note was amortized over the original life of the note. Amortization expense related to these discounts in the three months ended March 31, 2018 and 2017 was $-0- and $72,044, respectively. As of March 31, 2018, the unamortized discount was $-0- and the $550k Note was convertible into 6,875,000 of the Company’s common shares. The $550k Note is carried at fair value due to an extinguishment and reissuance recorded in 2017 and is revalued at each period end, with changes to fair value recorded to the statement of operations under “Change in Fair Value of Debt.”

During the three months ended March 31, 2018 and 2017, the Company made no repayments on the $550k Note. During the three months ended March 31, 2018 and 2017, the Company recorded interest expense on the $550k Note totaling $8,137 and $8,137, respectively.

Convertible Notes Payable ($50,000) – July 2016

On July 7, 2016, the Company entered into a 10% fixed convertible commitment fee promissory note with an investor with a face value of $50,000 maturing on July 11, 2017 (the “$50k Note”). The $50k note was issued as a commitment fee payable to the Investment Agreement investor in exchange for the investor’s commitment to enter into the Investment Agreement, subject to registration of the shares underlying the Investment Agreement. The $50k Note is convertible into shares of the Company’s common stock at the discretion of the note holder at a fixed price of $0.10 per share. As of September 30, 2017, the $50k Note was convertible into 500,000 of the Company’s common shares. The $50k Note is carried at fair value due to an extinguishment and reissuance recorded in 2017 and is revalued at each period end, with changes to fair value recorded to the statement of operations under “Change in Fair Value of Debt.”

During the three months ended March 31, 2018 and 2017, the Company made no repayments on the $50k Note. During the three months ended March 31, 2018 and 2017, the Company recorded interest expense on the $50k Note totaling $1,233 and $1,233, respectively.

Convertible Notes Payable ($111,000) – May 2017

On May 22, 2017, the Company entered into a 10% fixed convertible secured promissory note with an investor with a face value of $111,000 (the “$111k Note”). The $111k Note is convertible into shares of the Company’s common stock at the discretion of the note holder at a fixed price of $0.35 per share, and is secured by all of the Company’s assets. The Company received $100,000 net proceeds from the note after an $11,000 original issue discount. At inception, the investors were also granted a five-year warrant to purchase 133,333 shares of the Company’s common stock at an exercise price of $0.75 per share.

On March 28, 2018, in exchange for a five-year warrant to purchase 125,000 shares of HLYK common stock at an exercise price of $0.05 per share, the holder of the $111k Note agreed to extend the maturity date from the original date of January 22, 2018 until July 11, 2018. The fair value of the warrants using Black/Scholes was $10,199 with the following assumptions: risk-free interest rate of 2.59%, expected life of 5 years, volatility of 578.45%, and expected dividend yield of zero. The issuance of the warrants in exchange for the maturity extension was treated as an extinguishment and reissuance of existing debt pursuant to the guidance of ASC 470-50. Accordingly, the $111k Note is carried at fair value and is revalued at each period end, with changes to fair value recorded to the statement of operations under “Change in Fair Value of Debt.”

Amortization expense related to discounts on the $111k Note in the three months ended March 31, 2018 and 2017 was $11,011 and $-0-, respectively. As of March 31, 2018, the unamortized discount was $6,119. As of March 31, 2018, the $550k note was convertible into 317,143 of the Company’s common shares.

During the three months ended March 31, 2018 and 2017, the Company made no repayments on the $111k Note. During the three months ended March 31, 2018 and 2017, the Company recorded interest expense on the $111k Note totaling $4,078 and $-0-, respectively.

Convertible Notes Payable ($53,000) – July 2017

On July 10, 2017, the Company entered into a securities purchase agreement for the sale of a $53,000 convertible note (the “$53k Note”) to PULG. The $53k Note included a $3,000 original issue discount, for net proceeds of $50,000. The $53k Note has an interest rate of 10% and a default interest rate of 22%. The $53k Note may be converted into common stock of the Company by the holder at any time following 180 days after the issuance date, subject to a 4.99% beneficial ownership limitation, at a conversion price per share equal to a 39% discount to the average of the three (3) lowest closing bid prices during the fifteen (15) trading days prior to the conversion date. Upon an event of default caused by the Company’s failure to deliver shares upon a conversion pursuant to the terms of the Note, 300% of the outstanding principal and any interest due amount shall be immediately due. Upon an event of default caused by the Company’s breach of any other events of default specified in the $53k Note, 150% of the outstanding principal and any interest due amount shall be immediately due.

The discount resulting from the original issue discount and embedded conversion feature was being amortized over the life of the $53k Note. Amortization expense related to the discount in three months ended March 31, 2018 and 2017 was $1,520 and $-0-. On January 8, 2018, the Company prepaid the balance on the $53k Note, including accrued interest, for a one-time cash payment of $74,922. The Company recognized a gain on debt extinguishment in the three months ended March 31, 2017 in connection with the repayment, as follows:

Cash repayment	$	74,922
Less face value of convertible note payable retired		(53,000	)
Less carrying value of derivative financial instruments arising from ECF		(53,893	)
Less accrued interest		(2,644	)
Plus carrying value of discount at extinguishment		18,427

Gain on extinguishment of debt	$	(16,188	)

Convertible Notes Payable ($35,000) – September 2017

On September 7, 2017, the Company entered into a securities purchase agreement for the sale of a $35,000 convertible note (the “$35k Note”) to PULG. The $35k Note included a $3,000 original issue discount, for net proceeds of $32,000. The $35k Note has an interest rate of 10% and a default interest rate of 20%. The $35k Note may be converted into common stock of the Company by the holder at any time following 180 days after the issuance date, subject to a 4.99% beneficial ownership limitation, at a conversion price per share equal to a 39% discount to the average of the three (3) lowest closing bid prices during the fifteen (15) trading days prior to the conversion date. Upon an event of default caused by the Company’s failure to deliver shares upon a conversion pursuant to the terms of the $35k Note, 300% of the outstanding principal and any interest due amount shall be immediately due. Upon an event of default caused by the Company’s breach of any other events of default specified in the $35k Note, 150% of the outstanding principal and any interest due amount shall be immediately due.

The discount resulting from the original issue discount and embedded conversion feature was being amortized over the life of the $35k Note. Amortization expense related to the discount in three months ended March 31, 2018 and 2017 was $614 and $-0-. On March 5, 2018, the Company prepaid the balance on the $35k Note, including accrued interest, for a one-time cash payment of $49,502. The Company recognized a gain on debt extinguishment in the three months ended March 31, 2017 in connection with the repayment, as follows:

Cash repayment	$	49,502
Less face value of convertible note payable retired		(35,000	)
Less carrying value of derivative financial instruments arising from ECF		(37,269	)
Less accrued interest		(1,716	)
Plus carrying value of discount at extinguishment		12,705

Gain on extinguishment of debt	$	(11,778	)

Convertible Notes Payable ($55,000) – September 2017

On September 11, 2017, the Company entered into a securities purchase agreement for the sale of a $55,000 convertible note (the “$55k Note”) to Crown Bridge Partners LLC. The $55k Note included a $7,500 original issue discount, for net proceeds of $47,500. The 55k Note has an interest rate of 10% and a default interest rate of 12%. The $55k Note may be converted into common stock of the Company by the holder at any time after the issuance date, subject to a 4.99% beneficial ownership limitation, at a conversion price per share equal to 60% multiplied by the lowest one (1) trading price for the Common Stock during the twenty (20) trading day period ending on the last complete trading day prior to the date of conversion. If, at any time while the $55k Note is outstanding, the conversion price pursuant to this formula is equal to or lower than $0.10, then an additional ten percent (10%) discount shall be factored into the conversion price until the $55k Note is no longer outstanding. In the event that shares of the Company’s Common Stock are not deliverable via DWAC following the conversion of any amount hereunder, an additional ten percent (10%) discount shall be factored into the Variable Conversion Price until the $55k Note is no longer outstanding.

The discount resulting from the original issue discount and embedded conversion feature was being amortized over the life of the $55k Note. Amortization expense related to the discount in three months ended March 31, 2018 and 2017 was $1,085 and $-0-. On March 13, 2018, the Company prepaid the balance on the $55k Note, including accrued interest, for a one-time cash payment of $85,258. The Company recognized a gain on debt extinguishment in the three months ended March 31, 2017 in connection with the repayment, as follows:

Cash repayment	$	85,258
Less face value of convertible note payable retired		(55,000	)
Less carrying value of derivative financial instruments arising from ECF		(69,687	)
Less accrued interest		(2,759	)
Plus carrying value of discount at extinguishment		27,425

Gain on extinguishment of debt	$	(14,763	)

Convertible Notes Payable ($53,000) – October 2017

On October 23, 2017, the Company entered into a securities purchase agreement for the sale of a $53,000 convertible note (the “$53k Note II”) to PULG. The $53k Note II included a $3,000 original issue discount, for net proceeds of $50,000. The $53k Note II has an interest rate of 10% and a default interest rate of 20% and matures on July 30, 2018. The $53k Note II may be converted into common stock of the Company by the holder at any time after the issuance date, subject to a 4.99% beneficial ownership limitation, at a conversion price per share equal to 39% discount to the average of the three (3) lowest closing bid prices during the fifteen (15) trading days prior to the conversion date. Upon an event of default caused by the Company’s failure to deliver shares upon a conversion pursuant to the terms of the Note, 300% of the outstanding principal and any interest due amount shall be immediately due. Upon an event of default caused by the Company’s breach of any other events of default specified in the Note, 150% of the outstanding principal and any interest due amount shall be immediately due.

The discounts resulting from the original issue discount and embedded conversion feature are being amortized over the life of the $53k Note II. Amortization expense related to these discounts in the three months ended March 31, 2018 and 2017 was $17,036 and $-0-, respectively. As of March 31, 2018, the unamortized discount was $22,904 and the $53k Note II was convertible into 1,059,576 of the Company’s common shares.

During the three months ended March 31, 2018 and 2017, the Company made no repayments on the $53k Note II. During the three months ended March 31, 2018 and 2017, the Company recorded interest expense on the $53k Note II totaling $1,307 and $-0-, respectively.

On October 27, 2017, the Company entered into a securities purchase agreement for the sale of a $171,500 convertible note (the “$171.5k Note”) to an individual lender. The $171.5k Note included a $21,500 original issue discount, for net proceeds of $150,000. The $171.5k Note has an interest rate of 10% and a default interest rate of 22% and matures on October 26, 2018. The $171.5k Note may be converted into common stock of the Company by the holder at any time following 180 days after the issuance date, subject to a 4.99% beneficial ownership limitation, at a conversion price per share equal to a 35% discount to the lowest closing bid price during the twenty (20) trading days prior to the conversion date. Upon an event of default caused by the Company’s failure to deliver shares upon a conversion pursuant to the terms of the $171.5k Note, 300% of the outstanding principal and any interest due amount shall be immediately due. Upon an event of default caused by the Company’s breach of any other events of default specified in the $171.5k Note, 150% of the outstanding principal and any interest due amount shall be immediately due.

The discounts resulting from the original issue discount and embedded conversion feature are being amortized over the life of the $171.5k Note. Amortization expense related to these discounts in the three months ended March 31, 2018 and 2017 was $42,404 and $-0-, respectively. As of March 31, 2018, the unamortized discount was $98,471. As of March 31, 2018, the $171.5k Note was convertible into 3,217,636 of the Company’s common shares.

During the three months ended March 31, 2018 and 2017, the Company made no repayments on the $171.5k Note. During the three months ended March 31, 2018 and 2017, the Company recorded interest expense on the $171.5k Note totaling $4,229 and $-0-, respectively.

Convertible Notes Payable ($57,750) – January 2018

On January 2, 2018, the Company entered into a securities purchase agreement for the sale of a $57,750 convertible note (the “$58k Note”). The transaction closed on January 3, 2018. The $58k Note included a $5,250 original issue discount and $2,500 fee for net proceeds of $50,000. The $58k Note has an interest rate of 10% and a default interest rate of 18% and matures on January 2, 2019. The $58k Note may be converted into common stock of the Company by the holder at any time after the issuance date, subject to a 4.99% beneficial ownership limitation, at a conversion price per share equal to 40% discount to the lowest bid or trading price of the Company’s common stock during the twenty (20) trading days prior to the conversion date. Upon an event of default caused by the Company’s failure to deliver shares upon a conversion pursuant to the terms of the Note, 200% of the outstanding principal and any interest due amount shall be immediately due. Upon an event of default caused by the Company’s breach of any other events of default specified in the Note, 150% of the outstanding principal and any interest due amount shall be immediately due.

The fair value of the ECF of the $58k Note was calculated using the Black-Scholes pricing model at $82,652, with the following assumptions: risk-free interest rate of 1.83%, expected life of 1 year, volatility of 264.29%, and expected dividend yield of zero. Because the fair value of the ECF exceeded the net proceeds from the $58k Note, a charge was recorded to “Financing cost” for the excess of the fair value of the fair value of the ECF of $82,652 over the net proceeds from the note of $50,000, for a net charge of $32,652. The ECF qualifies for derivative accounting and bifurcation under ASC 815, “Derivatives and Hedging.” The final allocation of the proceeds at inception was as follows:

Embedded conversion feature	$	82,652
Original issue discount and fees		7,750
Financing cost		(32,652	)
Convertible note		---

Notes payable and bank loans, long-term portion	$	57,750

The discounts resulting from the original issue discount, warrants and embedded conversion feature are being amortized over the life of the $58k Note. Amortization expense related to these discounts in the three months ended March 31, 2018 and 2017 was $13,923 and $-0-, respectively. As of March 31, 2018, the unamortized discount was $43,827 and the $58k Note was convertible into 1,173,780 of the Company’s common shares.

During the three months ended March 31, 2018 and 2017, the Company made no repayments on the $58k Note. During the three months ended March 31, 2018 and 2017, the Company recorded interest expense on the $58k Note totaling $1,392 and $-0-, respectively.

Convertible Notes Payable ($112,750) – February 2018

On February 2, 2018, the Company entered into a securities purchase agreement for the sale of a $112,750 convertible note (the “$113k Note”). The transaction closed on February 8, 2018. The $113k Note included $12,750 fees for net proceeds of $100,000. The $113k Note has an interest rate of 10% and a default interest rate of 24% and matures on February 2, 2019. The $113k Note may be converted into common stock of the Company by the holder at any time after the issuance date, subject to a 4.99% beneficial ownership limitation, at a conversion price per share equal to 40% discount to the lowest bid or trading price of the Company’s common stock during the twenty (20) trading days prior to the conversion date. Upon an event of default caused by the Company’s failure to deliver shares upon a conversion pursuant to the terms of the Note, 200% of the outstanding principal and any interest due amount shall be immediately due. Upon an event of default caused by the Company’s breach of any other events of default specified in the Note, 150% of the outstanding principal and any interest due amount shall be immediately due.

The fair value of the ECF of the $113k Note was calculated using the Black-Scholes pricing model at $161,527, with the following assumptions: risk-free interest rate of 1.88%, expected life of 1 year, volatility of 264.93%, and expected dividend yield of zero. Because the fair value of the ECF exceeded the net proceeds from the $113k Note, a charge was recorded to “Financing cost” for the excess of the fair value of the fair value of the ECF of $161,527 over the net proceeds from the note of $100,000, for a net charge of $61,527. The ECF qualifies for derivative accounting and bifurcation under ASC 815, “Derivatives and Hedging.” The final allocation of the proceeds at inception was as follows:

Embedded conversion feature	$	161,527
Original issue discount and fees		12,750
Financing cost		(61,527	)
Convertible note		---

Notes payable and bank loans, long-term portion	$	112,750

The discounts resulting from the original issue discount, warrants and embedded conversion feature are being amortized over the life of the $113k Note. Amortization expense related to these discounts in the three months ended March 31, 2018 and 2017 was $17,608 and $-0-, respectively. As of March 31, 2018, the unamortized discount was $95,142 and the $113k Note was convertible into 2,291,667 of the Company’s common shares.

During the three months ended March 31, 2018 and 2017, the Company made no repayments on the $113k Note. During the three months ended March 31, 2018 and 2017, the Company recorded interest expense on the $113k Note totaling $1,761 and $-0-, respectively.

Convertible Notes Payable ($83,000) – February 2018

On February 13, 2018, the Company entered into a securities purchase agreement for the sale of a $83,000 convertible note (the “$83k Note”). The transaction closed on February 21, 2018. The $83k Note included $8,000 fees for net proceeds of $75,000. The $83k Note has an interest rate of 10% and a default interest rate of 24% and matures on February 13, 2019. The $113k Note may be converted into common stock of the Company by the holder at any time after the issuance date, subject to a 4.99% beneficial ownership limitation, at a conversion price per share equal to 40% discount to the lowest bid or trading price of the Company’s common stock during the twenty (20) trading days prior to the conversion date. Upon an event of default, 200% of the outstanding principal and any interest due amount shall be immediately due.

The fair value of the ECF of the $83k Note was calculated using the Black-Scholes pricing model at $119,512, with the following assumptions: risk-free interest rate of 1.95%, expected life of 1 year, volatility of 268.44%, and expected dividend yield of zero. Because the fair value of the ECF exceeded the net proceeds from the $83k Note, a charge was recorded to “Financing cost” for the excess of the fair value of the fair value of the ECF of $119,512 over the net proceeds from the note of $75,000, for a net charge of $44,512. The ECF qualifies for derivative accounting and bifurcation under ASC 815, “Derivatives and Hedging.” The final allocation of the proceeds at inception was as follows:

Embedded conversion feature	$	119,512
Original issue discount and fees		8,000
Financing cost		(44,512	)
Convertible note		---

Notes payable and bank loans, long-term portion	$	83,000

The discounts resulting from the original issue discount, warrants and embedded conversion feature are being amortized over the life of the $83k Note. Amortization expense related to these discounts in the three months ended March 31, 2018 and 2017 was $10,460 and $-0-, respectively. As of March 31, 2018, the unamortized discount was $72,540 and the $83k Note was convertible into 1,686,992 of the Company’s common shares.

During the three months ended March 31, 2018 and 2017, the Company made no repayments on the $83k Note. During the three months ended March 31, 2018 and 2017, the Company recorded interest expense on the $83k Note totaling $1,046 and $-0-, respectively.

Convertible Notes Payable ($105,000) – March 2018

On March 5, 2018, the Company entered into a securities purchase agreement for the sale of a $105,000 convertible note (the “$105k Note”). The transaction closed on March 12, 2018. The $105k Note included $5,000 fees for net proceeds of $100,000. The $105k Note has an interest rate of 10% and a default interest rate of 24% and matures on March 5, 2019. The $113k Note may be converted into common stock of the Company by the holder at any time after the issuance date, subject to a 9.9% beneficial ownership limitation, at a conversion price per share equal to 40% discount to the lowest bid or trading price of the Company’s common stock during the twenty (20) trading days prior to the conversion date. Upon an event of default, 110-150% of the outstanding principal and any interest due amount shall be immediately due, depending on the nature of the breach.

The fair value of the ECF of the $105k Note was calculated using the Black-Scholes pricing model at $153,371, with the following assumptions: risk-free interest rate of 2.06%, expected life of 1 year, volatility of 278.96%, and expected dividend yield of zero. Because the fair value of the ECF exceeded the net proceeds from the $105k Note, a charge was recorded to “Financing cost” for the excess of the fair value of the fair value of the ECF of $153,371 over the net proceeds from the note of $100,000, for a net charge of $53,371. The ECF qualifies for derivative accounting and bifurcation under ASC 815, “Derivatives and Hedging.” The final allocation of the proceeds at inception was as follows:

Embedded conversion feature	$	153,371
Original issue discount and fees		5,000
Financing cost		(53,371	)
Convertible note		---

Notes payable and bank loans, long-term portion	$	105,000

The discounts resulting from the original issue discount, warrants and embedded conversion feature are being amortized over the life of the $105k Note. Amortization expense related to these discounts in the three months ended March 31, 2018 and 2017 was $7,479 and $-0-, respectively. As of March 31, 2018, the unamortized discount was $97,521 and the $105k Note was convertible into 2,134,146 of the Company’s common shares.

During the three months ended March 31, 2018 and 2017, the Company made no repayments on the $105k Note. During the three months ended March 31, 2018 and 2017, the Company recorded interest expense on the $105k Note totaling $748 and $-0-, respectively.