NOTE 3 – CONVERTIBLE NOTES PAYABLE, INCLUDING RELATED PARTY

Convertible notes payable at December 31, 2017 and December 31, 2016 consist of the following:

	2017			2016
Convertible notes to stockholder due on various dates through August 24, 2016; interest at 4%; convertible in shares of common stock at 90% of the Company's stock price at date of conversion. (in default at December 31, 2016)	$	59,599		$	59,599
Convertible note to investor due on September 22, 2017; interest at 10%; included an original issue discount of $7,245; convertible in shares of common stock at 50% of the Company's stock price at date of conversion.		10,146			56,750
Convertible note to investor due on July 3, 2017; interest at 10%; convertible in shares of common stock at 50% of the Company's stock price at date of conversion.		12,739			58,745
Convertible note to investor due on January 11, 2017; interest at 12%; convertible in shares of common stock at 50% of the Company's stock price at date of conversion.		44,430			-
Convertible note to investor due on January 12, 2017; interest at 6%; convertible in shares of common stock at 55% of the Company's stock price at date of conversion.		24,733			-
Convertible note to investor due on February 15, 2017; interest at 12%; convertible in shares of common stock at 58% of the Company's stock price at date of conversion.		23,590			-
Convertible note to investor due on February 20, 2017; interest at 10%; convertible in shares of common stock at 50% of the Company's stock price at date of conversion.		56,750			-
Convertible note to investor due on March 15, 2018; interest at 12%; convertible in shares of common stock at 58% of the Company's stock price at date of conversion.		23,000			-
Convertible note to investor due on May 17, 2018; interest at 12%; convertible in shares of common stock at 51% of the Company's stock price at date of conversion.		20,000			-
Convertible note to investor due on August 10, 2018; interest at 12%; convertible in shares of common stock at 51% of the Company's stock price at date of conversion.		53,000			-
		327,987			175,094
Less debt discount		(66,217	)		(80,796	)
Convertible notes, net of discount	$	261,770		$	94,298

Convertible notes payable - related party	$	59,599		$	59,599
Less debt discount		0			0
Convertible notes - related party, net of discount	$	59,599		$	59,599

Convertible notes payable - unrelated parties	$	268,388		$	115,495
Less debt discount		(66,217	)		(80,796	)
Convertible notes - unrelated parties, net of discount	$	202,171		$	34,699

During the years ended December 31, 2017, the Company issued convertible notes in the aggregate principal amount of $368,750, with original issue discounts of $19,250. Due to the variable conversion price associated with these convertible notes, the Company has determined that the conversion feature is considered derivative liabilities. The embedded conversion feature was initially calculated to be $885,707, which is recorded as a derivative liability as of the date of issuance. The derivative liability was first recorded as a debt discount up to the face amount of the convertible notes of $368,750, with the remainder being charge as a financing cost during the period. The debt discount is being amortized over the terms of the convertible notes.

During the year ended December 31, 2016, the Company issued convertible notes in the aggregate principal amount of $267,511. Due to the variable conversion price associated with these convertible notes, the Company has determined that the conversion feature is considered derivative liabilities. The embedded conversion feature was initially calculated to be $459,316, which is recorded as a derivative liability as of the date of issuance. In addition, for one of the convertible notes the Company also issued 26 warrants with an exercise price of $950 subject to change if securities are issued at a price per share below the exercise price. This provision results in the warrant being a derivative liability initially calculated to be $26,900. The derivative liability was first recorded as a debt discount up to the face amount of the convertible notes of $267,511, with the remainder being charge as a financing cost during the period. The debt discount is being amortized over the terms of the convertible notes.

The Company recognized interest expense of $383,329 and $206,602, respectively, during the years ended December 31, 2017 and 2016 related to the amortization of the debt discount.

A rollfoward of the convertible notes payable from December 31, 2015 to December 31, 2017 is below:

Convertible notes payable, December 31, 2015	$	31,325
Issued for cash		143,288
Issued for original issue discount		16,023
Conversion of accounts payable to convertible note		50,861
Conversion into common stock		(86,290	)
Debt discount related to new convertible notes		(267,511	)
Amortization of debt discounts during the period		206,602
Convertible notes payable, December 31, 2016		94,298
Issued for cash		349,500
Issued for original issue discount		19,250
Penalties added to convertible notes payable balance		63,241
Conversion into common stock		(279,098	)
Debt discount related to new convertible notes		(368,750	)
Amortization of debt discounts during the period		383,329
Convertible notes payable, December 31, 2017	$	261,770