RELATED PARTIES

The Company has seven convertible notes payable to related parties that have a principal balance of $161,000 and $91,000 as of December 31, 2019 and December 31, 2018, respectively. These notes carry interest rates ranging from of 7% to 10% and have due dates ranging from 1/23/2014 - 4/8/2015. Three of the seven notes are due on demand and four of the 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, 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 December 31, 2019 and December 31, 2018. No beneficial conversion feature expense related to these notes was incurred during the year ended December 31, 2019 and 2018. On March 1, 2019, May 3, 2019 and October 26, 2019, the Company entered into convertible note payable agreements that converts to its common stock at a variable conversion price. As discussed in Note 5 – Derivative Liability, the Company analyzed the conversion features of the seven note agreements for derivative accounting consideration under ASU 2017-11 (ASC 815-15 Derivatives and Hedging), and determined the embedded conversion features for three 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 three convertible notes and determined that its embedded conversion feature carried a debt discount that should be fully amortized upon grant. The Company fully amortized this debt discount and recorded it as amortization of debt discount – interest expense in the amount of $64,800. The Company had no such amortization expenses at December 31, 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 December 31, 2019 and December 31, 2018, respectively. These notes carry interest rates  of 10% and have due dates ranging from 8/03/2012 - 7/23/2016. 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 December 31, 2019 and December 31, 2018, respectively. These notes carry an interest rate of 7% and have due dates ranging from 10/05/2017 - 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 $0.0040 - $0.0046. As of December 31, 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 December 31, 2019 and December 31, 2018 is $8,656 and $8,074, respectively. During the year ended December 31, 2019 and 2018, debt discount amortization expense recorded as interest expense related to these stock warrants was $37,072 and $33,138, respectively. The reason for the increase 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 the related stock warrants granted during the year ended December 31, 2019 and 2018 was $38,998 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% - 2.40%, dividend yield of 0%, expected life of .38 - 5 years, daily volatility between 134% - 135%.

Total interest expense for related party notes was $91,845 and $80,753 for the year ended December 31, 2019 and 2018, respectively.

Related party notes consisted of the following:

NON- RELATED PARTIES

The Company has fifteen convertible notes payable to non-related parties that have a principal balance of $143,136 and $143,136 as of December 31, 2019 and December 31, 2018, respectively. These notes carry interest rates ranging from 5% - 30% and have due dates ranging from 2/08/2012 - 5/23/2019. All fifteen notes are currently in default. These notes carry conversion prices ranging from $0.0017- $0.3235688 per share. 

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 December 31, 2019 and December 31, 2018, respectively. These notes carry interest rates ranging from  9% - 18% and have due dates ranging from 1/31/2013 - 11/11/2015. All three notes are currently in default.

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 December 31, 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 was not exercised by the note holder and expired on May 16, 2019. As of December 31, 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 December 31, 2019 and December 31, 2018, and no stock warrant amortization expense was recorded to interest expense during the year ended December 31, 2019 and 2018.

Total interest expense for non-related party notes was $56,546 and $50,235 for the year ended December 31, 2019 and 2018, respectively.

Non- related party notes consisted of the following: