| CONVERTIBLE NOTE PAYABLE |
NOTE 9 – CONVERTIBLE NOTE PAYABLE
The following is a summary of convertible notes payable
as of June 30, 2022:
| Schedule of Convertible Notes Payable | |
| |
| |
| |
| | | |
| | | |
| | |
| Note* | |
Issuance
Date | |
Maturity | |
Coupon | |
Face
Value | | |
Unamortized
Discount | | |
Carrying
Value | |
| Note 8 | |
8/04/2020 | |
12/31/2022 | |
8% | |
$ | 97,000 | | |
$ | – | | |
$ | 97,000 | |
| Note 9 | |
10/02/2020 | |
12/31/2022 | |
8% | |
| 205,000 | | |
| – | | |
| 205,000 | |
| Note 10 | |
10/15/2020 | |
12/31/2022 | |
8% | |
| 172,000 | | |
| – | | |
| 172,000 | |
| Note 11 | |
11/02/2020 | |
12/31/2022 | |
8% | |
| 69,000 | | |
| – | | |
| 69,000 | |
| Note 12 | |
11/12/2020 | |
12/31/2022 | |
8% | |
| 69,000 | | |
| – | | |
| 69,000 | |
| Note 14 | |
12/10/2020 | |
12/31/2022 | |
8% | |
| 80,000 | | |
| – | | |
| 80,000 | |
| Note 16 | |
1/14/2021 | |
12/31/2022 | |
8% | |
| 107,000 | | |
| – | | |
| 107,000 | |
| Note 17 | |
1/27/2021 | |
12/31/2022 | |
8% | |
| 60,000 | | |
| – | | |
| 60,000 | |
| Note 20 | |
4/30/2021 | |
12/31/2022 | |
8% | |
| 104,000 | | |
| – | | |
| 104,000 | |
| Note 21 | |
5/25/2021 | |
12/31/2022 | |
8% | |
| 104,000 | | |
| – | | |
| 104,000 | |
| Note 22 | |
6/24/2021 | |
12/31/2022 | |
8% | |
| 185,652 | | |
| – | | |
| 185,652 | |
| Note 24 | |
7/24/2021 | |
12/31/2022 | |
8% | |
| 265,000 | | |
| 6,839 | | |
| 258,161 | |
| Note 25 | |
8/04/2021 | |
12/31/2022 | |
8% | |
| 129,800 | | |
| 3,542 | | |
| 126,258 | |
| Note 26 | |
8/11/2021 | |
12/31/2022 | |
8% | |
| 151,500 | | |
| 4,001 | | |
| 147,499 | |
| Note 28 | |
8/20/2021 | |
12/31/2022 | |
8% | |
| 151,500 | | |
| 4,584 | | |
| 146,916 | |
| Note 29 | |
8/30/2021 | |
12/31/2022 | |
8% | |
| 140,650 | | |
| 6,914 | | |
| 133,736 | |
| Note 30 | |
9/02/2021 | |
12/31/2022 | |
8% | |
| 216,385 | | |
| 11,947 | | |
| 204,438 | |
| Note 31 | |
9/17/2021 | |
12/31/2022 | |
8% | |
| 270,480 | | |
| 12,919 | | |
| 257,561 | |
| Note 32 | |
9/30/2021 | |
12/31/2022 | |
8% | |
| 270,480 | | |
| 17,595 | | |
| 252,885 | |
| Note 34 | |
10/26/2021 | |
12/31/2022 | |
8% | |
| 270,480 | | |
| 22,985 | | |
| 247,495 | |
| Note 36 | |
11/03/2021 | |
12/31/2022 | |
8% | |
| 270,480 | | |
| 16,069 | | |
| 254,411 | |
| Note 37 | |
11/16/2021 | |
12/31/2022 | |
8% | |
| 324,576 | | |
| 63,398 | | |
| 261,178 | |
| Note 38 | |
11/30/2021 | |
12/31/2022 | |
8% | |
| 270,480 | | |
| 39,344 | | |
| 231,136 | |
| Note 39 | |
12/10/2021 | |
12/31/2022 | |
8% | |
| 601,000 | | |
| 88,760 | | |
| 512,240 | |
| Note 40 | |
12/15/2021 | |
12/31/2022 | |
8% | |
| 270,480 | | |
| 44,017 | | |
| 226,463 | |
| Note 41 | |
12/23/2021 | |
12/23/2022 | |
8% | |
| 54,100 | | |
| 9,667 | | |
| 44,433 | |
| Note 42 | |
1/04/2022 | |
1/04/2023 | |
8% | |
| 270,480 | | |
| 23,045 | | |
| 247,435 | |
| Note 43 | |
1/12/2022 | |
1/12/2023 | |
8% | |
| 300,000 | | |
| 221,695 | | |
| 78,305 | |
| Note 44 | |
1/19/2022 | |
1/19/2023 | |
8% | |
| 270,480 | | |
| 33,573 | | |
| 236,907 | |
| Note 45 | |
2/02/2022 | |
2/02/2023 | |
8% | |
| 270,480 | | |
| 26,502 | | |
| 243,978 | |
| Note 46 | |
2/03/2022 | |
2/03/2023 | |
8% | |
| 425,000 | | |
| 314,068 | | |
| 110,932 | |
| Note 47 | |
2/15/2022 | |
2/15/2023 | |
8% | |
| 270,480 | | |
| 20,293 | | |
| 250,187 | |
| Note 48 | |
2/24/2022 | |
2/24/2023 | |
8% | |
| 211,640 | | |
| 156,399 | | |
| 55,241 | |
| Note 49 | |
3/01/2022 | |
3/01/2023 | |
8% | |
| 120,000 | | |
| 94,147 | | |
| 25,853 | |
| Note 50 | |
3/01/2022 | |
3/01/2023 | |
8% | |
| 270,480 | | |
| 27,771 | | |
| 242,709 | |
| Note 51 | |
3/16/2022 | |
3/16/2023 | |
8% | |
| 270,480 | | |
| 26,476 | | |
| 244,004 | |
| Note 52 | |
3/22/2022 | |
3/22/2023 | |
8% | |
| 120,000 | | |
| 98,661 | | |
| 21,339 | |
| Note 53 | |
4/01/2022 | |
4/01/2023 | |
8% | |
| 135,240 | | |
| 12,936 | | |
| 122,304 | |
| Note 54 | |
4/01/2022 | |
4/01/2023 | |
8% | |
| 270,480 | | |
| 25,402 | | |
| 245,078 | |
| Note 55 | |
4/04/2022 | |
4/04/2023 | |
8% | |
| 92,040 | | |
| 78,530 | | |
| 13,510 | |
| Note 56 | |
4/15/2022 | |
4/15/2023 | |
8% | |
| 270,480 | | |
| 27,618 | | |
| 242,862 | |
| Note 57 | |
4/29/2022 | |
4/29/2023 | |
8% | |
| 270,480 | | |
| 21,093 | | |
| 249,387 | |
| Note 58 | |
5/05/2022 | |
5/05/2023 | |
8% | |
| 66,100 | | |
| 56,398 | | |
| 9,702 | |
| Note 59 | |
5/31/2022 | |
5/31/2023 | |
8% | |
| 160,000 | | |
| 140,616 | | |
| 19,384 | |
| Total | |
| |
| |
| |
$ | 8,974,383 | | |
$ | 1,757,804 | | |
$ | 7,216,579 | |
* Notes 1, 2, 3, 4, 5, 6 and 7 in the amounts
of $82,000, $208,000, $27,000, $62,000, $202,400, $78,000 and $85,800 respectively, were fully converted as of June 30, 2022.
* 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 27 in the amount of $88,400 was paid in
cash on April 4, 2022. The Company recognized a gain on extinguishment of debt in the amount of $71,799, related to the write off of the
derivative liability.
Between April 1, 2022, and June 30, 2022, the
Company issued to “accredited investors,” Convertible Promissory Notes aggregating a principal amount of $1,264,820. The Company
received an aggregate net proceeds of $1,167,230 after $90,590 in original note discount and $7,000 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.
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 three months ended June 30, 2022, is as follows:
| Schedule of amortization expense, interest expense and accrued interest on debt | |
| | | |
| | | |
| | | |
| | |
| Note | |
Interest Expense | | |
Accrued Interest | | |
Amortization of Debt Discount | | |
Unamortized | |
| Note 7 | |
$ | – | | |
$ | 11,420 | | |
$ | – | | |
$ | – | |
| Note 8 | |
| 10,991 | | |
| 36,746 | | |
| – | | |
| – | |
| Note 9 | |
| 9,200 | | |
| 43,797 | | |
| – | | |
| – | |
| Note 10 | |
| 7,719 | | |
| 35,644 | | |
| – | | |
| – | |
| Note 11 | |
| 3,096 | | |
| 13,687 | | |
| – | | |
| – | |
| Note 12 | |
| 3,096 | | |
| 13,346 | | |
| – | | |
| – | |
| Note 14 | |
| 3,590 | | |
| 14,369 | | |
| – | | |
| – | |
| Note 15 | |
| – | | |
| – | | |
| – | | |
| – | |
| Note 16 | |
| 3,746 | | |
| 16,317 | | |
| – | | |
| – | |
| Note 17 | |
| 2,693 | | |
| 9,357 | | |
| – | | |
| – | |
| Note 18 | |
| – | | |
| – | | |
| – | | |
| – | |
| Note 19 | |
| – | | |
| – | | |
| – | | |
| – | |
| Note 20 | |
| 2,074 | | |
| 9,710 | | |
| 339 | | |
| – | |
| Note 21 | |
| 2,074 | | |
| 9,141 | | |
| 1,039 | | |
| – | |
| Note 22 | |
| 3,703 | | |
| 15,096 | | |
| 16,440 | | |
| – | |
| Note 24 | |
| 5,285 | | |
| 19,632 | | |
| 19,476 | | |
| 6,839 | |
| Note 25 | |
| 2,589 | | |
| 9,388 | | |
| 10,057 | | |
| 3,542 | |
| Note 26 | |
| 3,022 | | |
| 10,725 | | |
| 11,379 | | |
| 4,001 | |
| Note 27 | |
| 78 | | |
| – | | |
| 12,288 | | |
| – | |
| Note 28 | |
| 3,022 | | |
| 10,427 | | |
| 12,936 | | |
| 4,584 | |
| Note 29 | |
| 2,805 | | |
| 9,372 | | |
| 9,739 | | |
| 6,914 | |
| Note 30 | |
| 4,316 | | |
| 14,275 | | |
| 16,695 | | |
| 11,947 | |
| Note 31 | |
| 5,395 | | |
| 17,844 | | |
| 18,231 | | |
| 12,919 | |
| Note 32 | |
| 5,395 | | |
| 16,184 | | |
| 16,450 | | |
| 17,595 | |
| Note 34 | |
| 5,395 | | |
| 15,058 | | |
| 15,947 | | |
| 22,985 | |
| Note 35 | |
| 200 | | |
| – | | |
| 34,584 | | |
| – | |
| Note 36 | |
| 5,395 | | |
| 14,169 | | |
| 11,422 | | |
| 16,069 | |
| Note 37 | |
| 6,474 | | |
| 16,078 | | |
| 31,928 | | |
| 63,398 | |
| Note 38 | |
| 5,395 | | |
| 12,568 | | |
| 20,803 | | |
| 39,344 | |
| Note 39 | |
| 11,987 | | |
| 27,926 | | |
| 46,833 | | |
| 88,760 | |
| Note 40 | |
| 5,395 | | |
| 11,679 | | |
| 22,893 | | |
| 44,017 | |
| Note 41 | |
| 1,079 | | |
| 2,241 | | |
| 4,165 | | |
| 9,667 | |
| Note 42 | |
| 5,395 | | |
| 10,493 | | |
| 9,265 | | |
| 23,045 | |
| Note 43 | |
| 5,984 | | |
| 11,178 | | |
| 34,271 | | |
| 221,695 | |
| Note 44 | |
| 5,395 | | |
| 9,604 | | |
| 13,081 | | |
| 33,573 | |
| Note 45 | |
| 5,395 | | |
| 8,774 | | |
| 10,548 | | |
| 26,502 | |
| Note 46 | |
| 8,477 | | |
| 13,693 | | |
| 48,550 | | |
| 314,068 | |
| Note 47 | |
| 5,395 | | |
| 8,003 | | |
| 8,224 | | |
| 20,293 | |
| Note 48 | |
| 4,221 | | |
| 5,845 | | |
| 24,177 | | |
| 156,399 | |
| Note 49 | |
| 2,393 | | |
| 3,182 | | |
| 11,315 | | |
| 94,147 | |
| Note 50 | |
| 5,395 | | |
| 7,173 | | |
| 9,663 | | |
| 27,771 | |
| Note 51 | |
| 5,395 | | |
| 6,284 | | |
| 9,246 | | |
| 26,476 | |
| Note 52 | |
| 2,393 | | |
| 2,630 | | |
| 9,339 | | |
| 98,661 | |
| Note 53 | |
| 2,668 | | |
| 2,668 | | |
| 4,031 | | |
| 12,936 | |
| Note 54 | |
| 5,335 | | |
| 5,335 | | |
| 7,926 | | |
| 25,402 | |
| Note 55 | |
| 1,755 | | |
| 1,755 | | |
| 4,306 | | |
| 78,530 | |
| Note 56 | |
| 4,506 | | |
| 4,506 | | |
| 5,176 | | |
| 27,618 | |
| Note 57 | |
| 3,676 | | |
| 3,676 | | |
| 4,028 | | |
| 21,093 | |
| Note 58 | |
| 811 | | |
| 811 | | |
| 3,092 | | |
| 56,398 | |
| Note 59 | |
| 1,052 | | |
| 1,052 | | |
| 3,384 | | |
| 140,616 | |
| Total | |
$ | 200,850 | | |
$ | 542,858 | | |
$ | 553,266 | | |
$ | 1,757,804 | |
Debt conversions
The following table illustrates the debt converted
and the associated gain or loss:
| Schedule of Debt Conversions | |
| |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| Note | |
Conversion Date | |
Shares
issued in conversion | |
Fair value
of shares | |
Face Value | |
Accrued
Interest | |
Total Debt | |
Derivative
liability | |
Net (gain)
/ loss | |
| Note 7 | |
April 14, 2022 | |
35,873,156 | |
$ | 82,508 | |
$ | 40,000 | |
$ | 6,707 | |
$ | 46,707 | |
$ | 45,869 | |
$ | (10,068 | ) |
| Note 35 | |
April 28, 2022 | |
20,000,000 | |
| 32,000 | |
| 20,000 | |
| – | |
| 20,000 | |
| 20,685 | |
| (8,685 | ) |
| Note 35 | |
May 5, 2022 | |
37,631,579 | |
| 48,921 | |
| 26,800 | |
| 1,800 | |
| 28,600 | |
| 33,022 | |
| (12,701 | ) |
| Note 8 | |
May 10, 2022 | |
42,813,737 | |
| 51,377 | |
| 26,000 | |
| 3,670 | |
| 29,670 | |
| 26,202 | |
| (4,495 | ) |
| Note 8 | |
May 25, 2022 | |
47,230,793 | |
| 28,338 | |
| 13,000 | |
| 1,877 | |
| 14,877 | |
| 10,638 | |
| 2,823 | |
| Note 8 | |
June 6, 2022 | |
64,261,540 | |
| 64,262 | |
| 20,000 | |
| 2,941 | |
| 22,941 | |
| 41,730 | |
| (409 | ) |
| | |
| |
247,810,805 | |
$ | 307,406 | |
$ | 145,800 | |
$ | 16,995 | |
$ | 162,795 | |
$ | 178,146 | |
$ | (33,535 | ) |
During the three months ended June 30, 2022, the
Company repaid Note 27 in cash. The principal balance was $88,400 and the accrued interest was $4,476. The prepayment fee was $15,495.
The Company repaid $108,371. As of the repayment dates, the derivative liability related to Notes was $73,673. As a result, the Company
recorded a gain of extinguishment in the amount of $73,673.
Between the gain on extinguishment of $33,535
related to the conversions above and the gain on extinguishment related to the repayment, the total gain was $107,208.
|