v3.21.2

9. Convertible Note Payable | 12 Months Ended
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Mar. 31, 2021
Debt Disclosure [Abstract] |
Convertible Note Payable | NOTE 9 – CONVERTIBLE NOTE PAYABLE The following is a summary of convertible notes payable as of March 31, 2021:
Note* |  | Inception Date |  | Maturity |  | Coupon |  |  | Face Value |  |  | Unamortized Discount |  |  | Carrying Value |
Note 5 |  | 1/27/2020 |  | 1/27/2021 |  |  | 8% |  |  | $ | 202,400 |  |  | $ | – |  |  | $ | 202,400 |
Note 6 |  | 2/19/2020 |  | 2/19/2021 |  |  | 8% |  |  |  | 85,800 |  |  |  | – |  |  |  | 85,800 |
Note 7 |  | 3/10/2020 |  | 3/10/2021 |  |  | 8% |  |  |  | 85,800 |  |  |  | – |  |  |  | 85,800 |
Note 8 |  | 8/4/2020 |  | 8/4/2021 |  |  | 8% |  |  |  | 156,000 |  |  |  | 22,400 |  |  |  | 133,600 |
Note 9 |  | 10/2/2020 |  | 10/2/2021 |  |  | 8% |  |  |  | 205,000 |  |  |  | 68,000 |  |  |  | 137,000 |
Note 10 |  | 10/15/2020 |  | 10/15/2021 |  |  | 8% |  |  |  | 172,000 |  |  |  | 45,911 |  |  |  | 126,089 |
Note 11 |  | 11/2/2020 |  | 11/2/2021 |  |  | 8% |  |  |  | 69,000 |  |  |  | 21,287 |  |  |  | 47,713 |
Note 12 |  | 11/12/2020 |  | 11/12/2021 |  |  | 8% |  |  |  | 69,000 |  |  |  | 13,892 |  |  |  | 55,108 |
Note 14 |  | 12/10/2020 |  | 12/10/2021 |  |  | 8% |  |  |  | 80,000 |  |  |  | 24,738 |  |  |  | 55,262 |
Note 15 |  | 12/29/2020 |  | 12/29/2021 |  |  | 8% |  |  |  | 55,650 |  |  |  | 43,660 |  |  |  | 11,990 |
Note 16 |  | 1/14/2021 |  | 1/14/2022 |  |  | 8% |  |  |  | 107,000 |  |  |  | 31,364 |  |  |  | 75,636 |
Note 17 |  | 1/27/2021 |  | 1/27/2021 |  |  | 8% |  |  |  | 60,000 |  |  |  | 21,437 |  |  |  | 38,563 |
Note 18 |  | 2/3/2021 |  | 2/3/2022 |  |  | 8% |  |  |  | 45,250 |  |  |  | 38,608 |  |  |  | 6,642 |
Note 19 |  | 2/12/2021 |  | 2/12/2022 |  |  | 8% |  |  |  | 69,000 |  |  |  | 55,870 |  |  |  | 13,130 |
|  |  |  |  |  |  |  |  |  | $ | 1,461,900 |  |  | $ | 387,167 |  |  | $ | 1,074,733 |
* Notes 1, 2, 3 and 4 in the amounts of $82,000, $208,000, $27,000 and $62,000, respectively, were fully converted as of March 31, 2021. Between October 4, 2019 and February 12, 2021, the Company issued to accredited investors, Convertible Promissory Notes aggregating a principal amount of $1,949,400. The Company received an aggregate net proceeds of $1,850,500 after $91,900 in original note discount. The Company has agreed to pay interest on the unpaid principal balance at the rate of eight percent (8%) per annum from the date on which Notes are issued until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company shall have the right to prepay the Notes, provided it makes a payment as set forth in the agreements. The outstanding principal amount of the Notes is convertible into the Company’s common stock at the lender’s option at $0.01 per share for the first six months of the term of the Notes. After the six-month anniversary, the conversion price is equal to 63% of the average of the three lowest trading prices of the Company’s common stock. Accounting Considerations The Company has accounted for the Notes as a financing transaction, wherein the net proceeds that were received were allocated to the financial instrument issued. Prior to making the accounting allocation, the Company evaluated the agreement under ASC 815 Derivatives and Hedging (“ASC 815”). ASC 815 generally requires the analysis embedded terms and features that have characteristics of derivatives to be evaluated for bifurcation and separate accounting in instances where their economic risks and characteristics are not clearly and closely related to the risks of the host contract. The material embedded derivative features consisted of the embedded conversion option and default puts. The conversion option and default puts bear risks of equity which were not clearly and closely related to the host debt agreement and required bifurcation. The contracts do not permit the Company to settle in registered shares and the contracts also contain make-whole provisions both of which preclude equity classification. Current accounting principles that are also provided in ASC 815 do not permit an issuer to account separately for individual derivative terms and features that require bifurcation and liability classification. Rather, such terms and features must be and were bundled together and fair valued as a single, compound embedded derivative. Based on the previous conclusions, the Company allocated the cash proceeds first to the derivative components at its fair value with the residual allocated to the host debt contract, as follows:
|  | Notes 1-19 |
Compound embedded derivative |  | $ | 910,762 |
Convertible notes payable |  |  | 1,091,717 |
Day one derivative expense |  |  | (151,978 | )
Legal fees |  |  | 7,000 |
Original issue discount |  |  | 91,900 |
Face value |  | $ | 1,949,400 |
The net proceeds were allocated to the compound embedded derivative and original issue discount. The notes will be amortized up to its face value over the life of Notes based on an effective interest rate. Amortization expense and interest expense for the year ended March 31, 2021 is as follows:
Note |  | Interest Expense |  |  | Accrued Interest |  |  | Amortization of Debt Discount |  |  | Unamortized |
Note 1 |  | $ | 2,216 |  |  | $ | – |  |  | $ | 11,869 |  |  | $ | – |
Note 2 |  |  | 8,821 |  |  |  | – |  |  |  | 53,298 |  |  |  | – |
Note 3 |  |  | 4,430 |  |  |  | – |  |  |  | 13,021 |  |  |  | – |
Note 4 |  |  | 4,294 |  |  |  | – |  |  |  | 11,688 |  |  |  | – |
Note 5 |  |  | 18,468 |  |  |  | 21,401 |  |  |  | 31,334 |  |  |  | – |
Note 6 |  |  | 7,249 |  |  |  | 7,950 |  |  |  | 17,095 |  |  |  | – |
Note 7 |  |  | 6,770 |  |  |  | 7,129 |  |  |  | 20,636 |  |  |  | – |
Note 8 |  |  | 8,172 |  |  |  | 8,172 |  |  |  | 26,063 |  |  |  | 22,400 |
Note 9 |  |  | 8,088 |  |  |  | 8,088 |  |  |  | 45,444 |  |  |  | 68,000 |
Note 10 |  |  | 6,296 |  |  |  | 6,296 |  |  |  | 25,081 |  |  |  | 45,911 |
Note 11 |  |  | 2,253 |  |  |  | 2,253 |  |  |  | 11,052 |  |  |  | 21,287 |
Note 12 |  |  | 2,102 |  |  |  | 2,102 |  |  |  | 8,175 |  |  |  | 13,892 |
Note 13 |  |  | 3,170 |  |  |  | – |  |  |  | 107,500 |  |  |  | – |
Note 14 |  |  | 1,946 |  |  |  | 1,946 |  |  |  | 9,332 |  |  |  | 24,738 |
Note 15 |  |  | 1,464 |  |  |  | 1,464 |  |  |  | 6,424 |  |  |  | 43,660 |
Note 16 |  |  | 1,782 |  |  |  | 1,782 |  |  |  | 5,070 |  |  |  | 31,364 |
Note 17 |  |  | 828 |  |  |  | 828 |  |  |  | 3,263 |  |  |  | 21,437 |
Note 18 |  |  | 555 |  |  |  | 555 |  |  |  | 2,117 |  |  |  | 38,608 |
Note 19 |  |  | 711 |  |  |  | 711 |  |  |  | 3,708 |  |  |  | 55,870 |
|  | $ | 89,615 |  |  | $ | 70,677 |  |  | $ | 412,170 |  |  | $ | 387,167 |
As of March 31, 2021, Note 5, Note 6, and Note 7 are considered in default. Upon an event of default, the interest accrues at 18%. Additionally, upon non-payment at maturity, the principal increases by 10%. The principal on Note 5 increased by $18,400, Note 6 increased by $7,800 and Note 7 increased by $7,800. Debt conversions The following table illustrates the debt converted and the associated gain or loss:
Note |  | Conversion Date |  | Shares issued in conversion |  | Fair value of shares |  | Face Value |  | Accrued Interest |  | Fees |  | Total Debt |  | Derivative liability |  | Net (gain)/ loss |
WLES LP LLC | May 8, 2020 |  |  | 12,000,000 |  | $ | 48,281 |  | $ | 30,000 |  | $ | – |  | $ | – |  | $ | 30,000 |  | $ | – |  | $ | 18,281 |
Note 1 |  |  | July 30, 2020 |  |  | 4,292,918 |  |  | 12,449 |  |  | 7,000 |  |  | 341 |  |  | – |  |  | 7,341 |  |  | – |  |  | 5,108 |
Note 1 |  |  | July 30, 2020 |  |  | 5,071,886 |  |  | 16,737 |  |  | 7,500 |  |  | 488 |  |  | – |  |  | 7,988 |  |  | 8,570 |  |  | 179 |
Note 1 |  |  | August 20, 2020 |  |  | 8,468,394 |  |  | 155,818 |  |  | 12,500 |  |  | 871 |  |  | 500 |  |  | 13,871 |  |  | 138,147 |  |  | 3,800 |
Note 1 |  |  | September 9, 2020 |  |  | 12,123,426 |  |  | 261,866 |  |  | 55,000 |  |  | 4,075 |  |  | 500 |  |  | 59,575 |  |  | 142,490 |  |  | 59,801 |
Note 2 |  |  | October 1, 2020 |  |  | 33,934,756 |  |  | 210,395 |  |  | 108,000 |  |  | 7,196 |  |  | 250 |  |  | 115,446 |  |  | 80,674 |  |  | 14,275 |
Note 2 |  |  | October 15, 2020 |  |  | 14,521,245 |  |  | 81,319 |  |  | 45,000 |  |  | 3,136 |  |  | 350 |  |  | 48,486 |  |  | 39,128 |  |  | (6,295 | )
Note 2 |  |  | November 25, 2020 |  |  | 15,120,622 |  |  | 78,627 |  |  | 35,000 |  |  | 2,754 |  |  | 350 |  |  | 38,104 |  |  | 44,183 |  |  | (3,660 | )
Note 2 |  |  | December 22, 2020 |  |  | 8,330,328 |  |  | 39,153 |  |  | 20,000 |  |  | 1,691 |  |  | – |  |  | 21,691 |  |  | 19,806 |  |  | (2,344 | )
Note 3 |  |  | January 19, 2021 |  |  | 15,087,285 |  |  | 69,402 |  |  | 35,000 |  |  | 3,145 |  |  | 350 |  |  | 38,495 |  |  | 32,195 |  |  | (1,288 | )
Note 3 |  |  | February 4, 2021 |  |  | 11,659,246 |  |  | 59,462 |  |  | 27,000 |  |  | 2,521 |  |  | 350 |  |  | 29,871 |  |  | 30,603 |  |  | (1,012 | )
Note 4 |  |  | February 10, 2021 |  |  | 26,279,805 |  |  | 394,198 |  |  | 62,000 |  |  | 5,531 |  |  | 350 |  |  | 67,881 |  |  | 323,556 |  |  | 2,760 |
|  |  |  |  |  | 166,889,911 |  | $ | 1,427,707 |  | $ | 444,000 |  | $ | 31,749 |  | $ | 3,000 |  | $ | 478,749 |  | $ | 859,352 |  | $ | 89,605 |
During the year ended March 31, 2021, the Company repaid Note 13 in cash. The principal balance was $107,500 and the accrued interest was $3,170. The prepayment fee was $16,125. The Company repaid $126,795. As of the repayment date, the derivative liability related to Note 13 was $126,892. As a result, the Company recorded a gain on loss of extinguishment in the amount of $126,892. Between the loss on extinguishment of $71,324 related the conversion and the gain on loss of extinguishment related to the repayment, the net gain was $55,568.

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- Definition The entire disclosure for long-term debt. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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