v3.22.0.1
CONVERTIBLE NOTE PAYABLE
 9 Months Ended
Dec. 31, 2021
Debt Disclosure [Abstract]  
CONVERTIBLE NOTE PAYABLE

NOTE 9 – CONVERTIBLE NOTE PAYABLE

 

The following is a summary of convertible notes payable as of December 31, 2021:  

Schedule of convertible notes payable                              
Note*  Issuance Date   Maturity   Coupon   Face Value   Unamortized Discount   Carrying Value 
Note 6   2/19/2020    4/18/2022    8%    45,800    –    45,800 
Note 7   3/10/2020    4/18/2022    8%    85,800    –    85,800 
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    3,648    103,352 
Note 17   1/27/2021    4/18/2022    8%    60,000    2,595    57,405 
Note 20   4/30/2021    4/30/2022    8%    104,000    1,351    102,649 
Note 21   5/25/2021    5/25/2022    8%    104,000    2,578    101,422 
Note 22   6/24/2021    6/24/2022    8%    185,652    31,424    154,228 
Note 24   7/24/2021    7/24/2022    8%    265,000    44,322    220,678 
Note 25   8/04/2021    8/4/2022    8%    129,800    22,854    106,946 
Note 26   8/11/2021    8/11/2022    8%    151,500    25,881    125,619 
Note 27   8/16/2021    8/16/2022    8%    88,400    20,369    68,031 
Note 28   8/20/2021    8/20/2022    8%    151,500    29,317    122,183 
Note 29   8/30/2021    8/30/2022    8%    140,650    25,682    114,968 
Note 30   9/02/2021    9/02/2022    8%    216,385    43,972    172,413 
Note 31   9/17/2021    9/17/2022    8%    270,480    48,092    222,388 
Note 32   9/30/2021    9/30/2022    8%    270,480    49,425    221,055 
Note 33   10/07/2021    10/7/2022    8%    86,900    71,447    15,453 
Note 34   10/26/2021    10/26/2022    8%    270,480    53,852    216,628 
Note 35   10/30/2021    10/30/2022    8%    46,800    39,931    6,869 
Note 36   11/03/2021    11/03/2022    8%    270,480    38,400    232,080 
Note 37   11/16/2021    11/16/2022    8%    324,576    123,669    200,907 
Note 38   11/30/2021    11/30/2022    8%    270,480    79,078    191,402 
Note 39   12/10/2021    12/10/2022    8%    601,000    178,145    422,855 
Note 40   12/15/2021    12/15/2022    8%    270,480    87,489    182,991 
Note 41   12/23/2021    12/23/2022    8%    54,100    17,605    36,495 
 Total                 $5,322,743   $1,041,126   $4,281,617 

 

* Notes 1, 2, 3, 4 and 5 in the amounts of $82,000, $208,000, $27,000, $62,000 and $202,400, respectively, were fully converted as of December 31, 2021.

 

* On October 18, 2021, the maturity dates of each of Notes 6, 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.

 

*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.

 

Between April 1, 2021, and December 31, 2021, the Company issued to “accredited investors,” Convertible Promissory Notes aggregating a principal amount of $4,453,543. The Company received an aggregate net proceeds of $3,949,765 after $481,278 in original note discount and $22,500 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. 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.

 

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 nine months ended December 31, 2021 is as follows: 

                    
Note  Interest Expense   Accrued Interest   Amortization of Debt Discount   Unamortized 
Note 6  $2,078   $9,723   $–   $– 
Note 7   7,785    22,675    –    – 
Note 8   4,343    17,575    –    – 
Note 9   4,044    20,400    –    – 
Note 10   3,468    16,663    7,463    – 
Note 11   1,391    6,412    3,542    – 
Note 12   1,391    6,261    2,181    – 
Note 14   1,613    6,768    7,067    – 
Note 16   2,158    8,232    10,215    3,648 
Note 17   1,210    4,445    7,130    2,595 
Note 20   2,097    5,585    1,002    1,351 
Note 21   2,097    5,015    1,516    2,578 
Note 22   3,744    7,731    13,657    31,424 
Note 24   5,344    9,119    16,648    44,322 
Note 25   2,617    4,239    8,518    22,854 
Note 26   3,055    4,715    9,691    25,881 
Note 27   1,783    2,654    7,223    20,369 
Note 28   3,055    4,416    10,758    29,317 
Note 29   2,836    3,792    8,372    25,682 
Note 30   4,363    5,691    14,079    43,972 
Note 31   5,454    6,883    15,742    48,092 
Note 32   5,454    5,454    14,380    49,425 
Note 33   1,600    1,600    6,763    71,447 
Note 34   4,328    4,328    9,409    53,852 
Note 35   677    677    2,189    39,931 
Note 36   3,695    3,695    6,999    38,400 
Note 37   3,201    3,201    8,559    123,669 
Note 38   1,838    1,838    5,924    79,078 
Note 39   4,084    4,084    15,815    178,145 
Note 40   949    949    6,386    87,489 
Note 41   –    –    –    17,605 
Total  $91,752   $204,820   $221,228   $1,041,126