As of December 31, 2017, there were $509,000 convertible notes outstanding and $71,000 accrued interest and unamortized debt discount of $47,000.

During the year ended December 31, 2018, the Company issued convertible promissory notes in the aggregate of $1,955,000 for cash proceeds of $1,778,000, net of original issue discount (OID) of $177,000. The notes do not bear any interest; however, the implied interest rate used was 10% since the notes were issued 10% less than its face value, are unsecured, mature in twelve months from issuance and convertible at $0.05 to $0.08 per share. In addition, the Company also granted these note holders warrants to purchase 18,238,688 shares of the Company’ common stock. The warrants are fully vested, exercisable at $0.05 to $0.08 per share and expire one year from the date of issuance. As a result, the Company recorded a note discount of $1,778,000 to account for the relative fair value of the warrants, the notes’ beneficial conversion feature (BCF) and OID. The note discounts were amortized over the life of the notes or were amortized in full upon the conversion of the corresponding notes to common stock. During 2018, a total of $579,000 of notes payable were converted into 9,299,125 shares of common stock, and note discount amortization of $902,000 was recorded as interest expense. As of December 31, 2018, total outstanding notes payable amounted to $1,886,000 which are due through December 2019 and unamortized note discount of $1,100,000.

During the year ended December 31, 2018, the Company accrued interest of $53,000 related to certain past due notes payable. As of December 31, 2018, total accrued interest amounted to $123,000 which was included as part of convertible notes payable in the accompanying consolidated balance sheet.

During the year ended December 31, 2019, the Company issued similar convertible promissory notes in the aggregate of $1,498,000 for cash proceeds of $1,362,000, net of OID of $136,000. The notes do not bear any interest; however, the implied interest rate used was 10% since the notes were issued 10% less than its face value, are unsecured, mature in twelve months from issuance and convertible at $0.05 to $0.15 per share. In addition, the Company also granted these note holders warrants to purchase 10,913,420 shares of the Company’ common stock. The warrants are fully vested, exercisable at $0.05 to $0.15 per share and expire one year from the date of issuance. As a result, the Company recorded a note discount of $1,362,000 to account for the relative fair value of the warrants, the notes’ BCF and OID. The note discounts are being amortized over the life of the notes or were amortized in full upon the conversion of the corresponding notes to common stock. During 2019, a total of $2,373,000 of notes and accrued interest payable were converted into 42,570,331 shares of common stock, and note discount amortization of $2,446,000 was recorded as interest expense. As of December 31, 2019, total outstanding notes payable amounted to $1,019,000 which are due through December 2020 and unamortized note discount of $153,000.

During the year ended December 31, 2019, the Company accrued interest of $69,000 related to certain past due notes payable. As of December 31, 2019 total accrued interest amounted to $184,000 which was included as part of convertible notes payable in the accompanying consolidated balance sheet. As of December 31, 2019 and the date of this report, thirteen notes payable with an aggregate balance of $730,000 are past due. In addition, subsequent to December 31, 2019, three notes payable with an aggregate balance of $50,000 became past due. The Company is currently in negotiations with these note holders to settle these past due notes payable.

As of December 31, 2019, these notes payable are convertible to approximately 12,914,110 shares of common stock at conversion rates ranging from $0.05 to $0.48 per share.