The Company has four convertible notes payable to related parties that have a principal balance of $91,000 and $91,000 as of September 30, 2019 and December 31, 2018, respectively. These notes carry interest rates of 9% and have due dates ranging from 1/23/2014 - 4/8/2015. All four notes are currently in default and carry a default interest rate of 10%. These notes carry conversion prices ranging from $0.0072 - $0.0800 per share. The Company evaluated these convertible notes and determined that, for the embedded conversion option, there was a beneficial conversion value to record. The beneficial conversion feature was amortized over the life of the notes, one year, and was fully amortized at September 30, 2019 and December 31, 2018. No beneficial conversion feature expense was incurred during the nine month period ended September 30, 2019 and 2018.

 

The Company has nine non-convertible notes payable to related parties that have a principal balance of $328,423 and $343,700 as of September 30, 2019 and December 31, 2018, respectively. These notes carry interest rates ranging from 0% - 10% and have due dates ranging from 8/03/2012 - 11/28/2016. All nine notes are currently in default and carry a default interest rate of 10%.

 

The Company has twenty-four notes payable with detached free-standing warrants to related parties that have a principal balance of $280,119 and $271,144 as of September 30, 2019 and December 31, 2018, respectively. These notes carry interest rates ranging from 7% - 10% and have due dates ranging from 8/05/2015 - 03/30/2020. Twenty-two of the twenty-four notes, carrying a total principal balance of $270,369, are currently in default and carry a default interest rate of 10%. The exercise price for each note payable detached free-standing warrant ranges from $0.001 - $0.016. As of September 30, 2019 and December 31, 2018, these notes carried outstanding detached free-standing warrants of 15,103,261 and 23,953,003, respectively. The unamortized discount related to these warrants at September 30, 2019 and December 31, 2018 is $26,506 and $8,074, respectively. During the nine month period ended September 30, 2019 and 2018, stock warrants amortization expense recorded to interest expense was $36,103 and $33,138, respectively. The reason for the decrease in stock warrants expense was directly related to the timing of funds borrowed and the related amortization of its stock warrants. The relative fair market value of stock warrants granted during the nine month period ended September 30, 2019 and 2018 was $54,535 and $29,701, respectively. The fair market value of the outstanding stock warrants was calculated utilizing the Black-Sholes method using the following assumptions: risk free rates ranging between 1.83% - 2.53%, dividend yield of 0%, expected life of 5 years, volatility between 134% - 138%.

 

Total interest expense for related party notes was $65,919 and $60,198 for the nine month period ended September 30, 2019 and 2018, respectively.

 

 

 

The Company has seventeen convertible notes payable to non-related parties that have a principal balance of $203,136 and $143,136 as of September 30, 2019 and December 31, 2018, respectively. These notes carry interest rates ranging from 5% - 30% and have due dates ranging from 10/30/2012 - 5/23/2019. Fifteen of the seventeen notes, carrying a total principal balance of $143,136, are currently in default and carry a default interest rate of 10%. These notes carry conversion prices ranging from $0.0017- $0.3235688 per share. On March 1, 2019 and May 3, 2019, the Company entered into convertible note payable agreements that converts to its common stock at a variable conversion price. As further discussed in , the Company analyzed the conversion features of the note agreement for derivative accounting consideration under ASU 2017-11 (ASC 815-15 Derivatives and Hedging), and determined the embedded conversion features should be classified as a derivative because the exercise price of the convertible note is subject to a variable conversion rate. The Company evaluated these convertible notes and determined that an embedded conversion feature was recorded. Unamortized debt discount related to these notes was none and $5,920 as of September 30, 2019 and December 31, 2018, respectively. Debt discount amortization was $5,920 and $4,533 during the nine month period ended September 30, 2019 and 2018, respectively.

 

The Company has three non-convertible notes payable to non-related parties that have a principal balance of $21,438 and $21,438 as of September 30, 2019 and December 31, 2018, respectively. These notes carry interest rates ranging from 9% - 18% and have due dates ranging from 1/31/2013 - 11/28/2015. All three notes are currently in default and carry a default interest rate of 10%.

 

The Company has one note payable with detached free-standing warrants to a non-related party that has a principal balance of $5,000 and $5,000 as of September 30, 2019 and December 31, 2018, respectively. This note carries an interest rate of 10% and had a due date of 9/11/2014. This note is currently in default. The exercise price for the attached warrants is $0.019 for a total amount of 50,000 common shares. The detached free-standing warrants for this note payable were not exercised by the note holder and expired on May 16, 2019. As of September 30, 2019 and December 31, 2018, this note carried outstanding detached free-standing warrants of none and 50,000, respectively. There was no unamortized discount related to these warrants as of September 30, 2019 and December 31, 2018, and no stock warrants amortization expense was recorded to interest expense during the nine month period ended September 30, 2019 and 2018.

 

Total interest expense for non-related party notes was $44,643 and $37,128 for the nine month period ended September 30, 2019 and 2018, respectively.