v3.22.2.2
CONVERTIBLE NOTE PAYABLE
 12 Months Ended
Mar. 31, 2022
Debt Disclosure [Abstract]  
CONVERTIBLE NOTE PAYABLE

NOTE 9 – CONVERTIBLE NOTE PAYABLE

 

The following is a summary of convertible notes payable as of March 31, 2022:   

                                               
 
Note*   Issuance Date     Maturity     Coupon     Face Value    

Unamortized

Discount

     Carrying Value  
Note 7     3/10/2020       4/18/2022       8%      $ 47,800      $ –      $ 47,800  
Note 8     8/4/2020       4/18/2022       8%       156,000       –       156,000  
Note 9     10/2/2020       4/18/2022       8%       205,000       –       205,000  
Note 10     10/15/2020       4/18/2022       8%       172,000       –       172,000  
Note 11     11/2/2020       4/18/2022       8%       69,000       –       69,000  
Note 12     11/12/2020       4/18/2022       8%       69,000       –       69,000  
Note 14     12/10/2020       4/18/2022       8%       80,000       –       80,000  
Note 16     1/14/2021       4/18/2022       8%       107,000       –       107,000  
Note 17     1/27/2021       4/18/2022       8%       60,000       –       60,000  
Note 20     4/30/2021       4/30/2022       8%       104,000       339       103,661  
Note 21     5/25/2021       5/25/2022       8%       104,000       1,039       102,961  
Note 22     6/24/2021       6/24/2022       8%       185,652       16,440       169,212  
Note 24     7/24/2021       7/24/2022       8%       265,000       26,315       238,685  
Note 25     8/04/2021       8/4/2022       8%       129,800       13,599       116,201  
Note 26     8/11/2021       8/11/2022       8%       151,500       15,380       136,120  
Note 27     8/16/2021       8/16/2022       8%       88,400       12,288       76,112  
Note 28     8/20/2021       8/20/2022       8%       151,500       17,520       133,980  
Note 29     8/30/2021       8/30/2022       8%       140,650       16,652       123,998  

 

Note 30     9/02/2021       9/02/2022       8%       216,385       28,641       187,744  
Note 31     9/17/2021       9/17/2022       8%       270,480       31,151       239,329  
Note 32     9/30/2021       9/30/2022       8%       270,480       34,045       236,435  
Note 34     10/26/2021       10/26/2022       8%       270,480       38,932       231,548  
Note 35     10/30/2021       10/30/2022       8%       46,800       34,584       12,216  
Note 36     11/03/2021       11/03/2022       8%       270,480       27,491       242,989  
Note 37     11/16/2021       11/16/2022       8%       324,576       95,326       229,250  
Note 38     11/30/2021       11/30/2022       8%       270,480       60,147       210,333  
Note 39     12/10/2021       12/10/2022       8%       601,000       135,594       465,406  
Note 40     12/15/2021       12/15/2022       8%       270,480       66,910       203,570  
Note 41     12/23/2021       12/23/2022       8%       54,100       13,832       40,268  
Note 42     1/4/2022       1/4/2023       8%       270,480       32,311       238,169  
Note 43     1/12/2022       1/12/2023       8%       300,000       255,936       44,064  
Note 44     1/19/2022       1/19/2023       8%       270,480       46,654       223,826  
Note 45     2/02/2022       2/02/2023       8%       270,480       37,049       233,431  
Note 46     2/03/2022       2/03/2023       8%       425,000       362,619       62,381  
Note 47     2/15/2022       2/15/2023       8%       270,480       28,517       241,963  
Note 48     2/24/2022       2/24/2023       8%       211,640       180,545       31,095  
Note 49     3/01/2022       3/01/2023       8%       120,000       105,462       14,538  
Note 50     3/01/2022       3/01/2023       8%       270,480       37,434       233,046  
Note 51     3/16/2022       3/16/2023       8%       270,480       35,721       234,759  
Note 52     3/22/2022       3/22/2023       8%       120,000       108,000       12,000  
 Total                           $ 7,951,563     $ 1,916,473     $ 6,035,090  

 

* Notes 1, 2, 3, 4, 5 and 6 in the amounts of $82,000, $208,000, $27,000, $62,000, $202,400 and $78,000, respectively, were fully converted as of March 31, 2022.

 

* On October 18, 2021, the maturity dates of each of Notes 7, 8, 9, 10, 11, 12, 14, 16, and 17 were extended to April 18, 2022 and the lender waived all penalty interest for non-payment.

 

* On July 7, 2022, the maturity date of each of Notes 8, 9, 10, 11, 12, 14, 16, 17, 20, 21, 22, 24, 25, 26, 27, 28, 29, 30, 31, 32, 34, 36, 37, 38, & 40 were extended to December 31, 2022, and the lender waived all penalty interest for non-payment.

 

*Note 23 in the amount of $180,400 was paid in cash on November 23, 2021. The Company recognized a gain on extinguishment of debt in the amount of $32,544, related to the write off of the derivative liability.

 

*Note 33 in the amount of $86,900 was paid in cash on February 7, 2022. The Company recognized a gain on extinguishment of debt in the amount of $74,059

 

Between April 1, 2021, and March 31, 2022, the Company issued to “accredited investors,” Convertible Promissory Notes aggregating a principal amount of $7,253,063. The Company received an aggregate net proceeds of $6,419,958 after $689,498 in original note discount and $40,250 in legal fees. The Company has agreed to pay interest on the unpaid principal balance at the rate of eight percent (8%) per annum from the dates on which Notes are issued until the same becomes due and payable, whether at maturity or upon acceleration, 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. The notes have varying conversion rates. After the six-month anniversary, the conversion price is equal to 63%-70% of the average of the three lowest trading prices of the Company’s common stock. Five of 40 notes outstanding have a fixed conversion rate of $0.002.

 

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  

 

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.

 

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, 2022, is as follows: 

                               
Note   Interest Expense     Accrued Interest     Amortization of Debt Discount     Unamortized  
Note 5     17,913       –       –       –  
Note 6     9,821       –       –       –  
Note 7     15,529       21,504       –       –  
Note 8     28,987       30,867       22,400       –  
Note 9     26,510       34,597       68,000       –  
Note 10     21,630       27,925       45,911       –  
Note 11     8,337       10,590       21,287       –  
Note 12     8,148       10,250       13,892       –  
Note 14     8,833       10,779       24,738       –  
Note 15     12       –       43,660       –  
Note 16     11,113       12,570       31,364       –  
Note 17     6,190       6,664       21,437       –  
Note 18     1,180       –       38,608       –  
Note 19     2,027       –       55,870       –  

 

Note 20     7,636       7,636       3,661       339  
Note 21     7,066       7,066       5,041       1,039  
Note 22     11,393       11,393       41,089       16,440  
Note 23     8,019       –       8,928       –  
Note 24     14,346       14,347       45,050       26,315  
Note 25     6,799       6,799       23,111       13,599  
Note 26     7,704       7,704       26,234       15,380  
Note 27     4,398       4,398       19,316       12,288  
Note 28     7,405       7,405       29,196       17,520  
Note 29     6,566       6,566       20,054       16,652  
Note 30     9,960       9,960       33,843       28,641  
Note 31     12,449       12,450       37,679       31,151  
Note 32     10,790       10,790       29,760       34,045  
Note 33     3,314       –       78,210       –  
Note 34     9,663       9,664       24,329       38,932  
Note 35     1,600       1,600       7,535       34,584  
Note 36     8,774       8,774       17,908       27,491  
Note 37     9,604       9,604       36,584       95,326  
Note 38     7,173       7,173       24,855       60,147  
Note 39     15,939       15,939       58,366       135,594  
Note 40     6,284       6,284       26,965       66,910  
Note 41     1,162       1,162       3,775       13,832  
Note 42     5,098       5,098       5,983       32,311  
Note 43     5,195       5,195       44,034       255,936  
Note 44     4,209       4,209       8,317       46,654  
Note 45     3,379       3,379       6,777       37,049  
Note 46     5,216       5,216       62,381       362,619  
Note 47     2,608       2,608       5,332       28,517  
Note 48     1,624       1,624       31,065       180,545  
Note 49     789       789       3,663       105,462  
Note 50     1,779       1,779       3,135       37,434  
Note 51     889       889       3,004       35,721  
Note 52     237       237       12,000       108,000  
Total   $ 375,298     $ 363,483     $ 1,174,347     $ 1,916,473  

 

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

Total

Debt

 Derivative liability Net (gain) / loss
Note 5 October 5, 2021 44,293,306   199,320   100,000   13,479 $ 113,479   87,568   (1,727)
Note 5 October 19, 2021 37,306,982   182,058   102,400   15,318   117,718   102,328   (37,988)
Note 6 December 28, 2021 33,658,688   90,878   40,000   5,944   45,944   45,268   (334)
Note 7 February 2, 2022 27,717,906   80,382   38,000   5,947   43,947   36,550   (115)
Note 6 March 3, 2022 29,114,880   101,902   38,000   6,022   44,022   56,924   956
    172,091,762  $ 654,540  $ 318,400  $ 46,710  $ 365,110  $ 328,638  $ (39,208)

 

During the year ended March 31, 2022, the Company repaid Notes 15, 18, 19, 23 & 33 in cash. The principal balance was $437,200 and the accrued interest was $18,059. The prepayment fee was $85,474. The Company repaid $540,733. As of the repayment dates, the derivative liability related to Notes was $243,300. As a result, the Company recorded a gain of extinguishment in the amount of $243,300.

 

Between the gain on extinguishment of $39,208 related the conversions above and the gain on extinguishment related to the repayment, the net gain was $282,508.