v3.22.2.2
CONVERTIBLE NOTE PAYABLE
 6 Months Ended
Sep. 30, 2022
Debt Disclosure [Abstract]  
CONVERTIBLE NOTE PAYABLE

NOTE 9 – CONVERTIBLE NOTE PAYABLE

 

The following is a summary of convertible notes payable as of September 30, 2022: 

                                     
Note*  

Issuance

Date

   Maturity   Coupon  

Face

Value

     Unamortized
Discount		    

Carrying

Value

  
Note 8   8/04/2020   12/31/2022   8%   $ 77,000     $ –     $ 77,000  
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       –       265,000  
Note 25   8/04/2021   12/31/2022   8%     129,800       –       129,800  
Note 26   8/11/2021   12/31/2022   8%     151,500       –       151,500  
Note 28   8/20/2021   12/31/2022   8%     151,500       –       151,500  
Note 29   8/30/2021   12/31/2022   8%     140,650       –       140,650  
Note 30   9/02/2021   12/31/2022   8%     216,385       –       216,385  
Note 31   9/17/2021   12/31/2022   8%     270,480       –       270,480  
Note 32   9/30/2021   12/31/2022   8%     270,480       –       270,480  
Note 34   10/26/2021   12/31/2022   8%     270,480       4,546       265,934  
Note 36   11/03/2021   12/31/2022   8%     270,480       4,257       266,223  
Note 37   11/16/2021   12/31/2022   8%     324,576       17,105       307,471  
Note 38   11/30/2021   12/31/2022   8%     270,480       14,254       256,226  
Note 39   12/10/2021   12/31/2022   8%     601,000       37,836       563,164  
Note 40   12/15/2021   12/31/2022   8%     270,480       19,597       250,883  
Note 41   12/23/2021   12/23/2022   8%     54,100       4,061       50,039  
Note 42   1/04/2022   1/04/2023   8%     270,480       10,091       260,389  
Note 43   1/12/2022   1/12/2023   8%     300,000       85,618       214,382  
Note 44   1/19/2022   1/19/2023   8%     270,480       16,743       253,737  
Note 45   2/02/2022   2/02/2023   8%     270,480       15,029       255,451  
Note 46   2/03/2022   2/03/2023   8%     425,000       146,903       278,097  
Note 47   2/15/2022   2/15/2023   8%     270,480       12,812       257,668  
Note 48   2/24/2022   2/24/2023   8%     211,640       85,310       126,330  
Note 49   3/01/2022   3/01/2023   8%     120,000       45,487       74,513  
Note 50   3/01/2022   3/01/2023   8%     270,480       16,911       253,569  
Note 51   3/16/2022   3/16/2023   8%     270,480       17,732       252,748  
Note 52   3/22/2022   3/22/2023   8%     120,000       56,920       63,080  
Note 53   4/01/2022   4/01/2023   8%     135,240       8,513       126,727  
Note 54   4/01/2022   4/01/2023   8%     270,480       16,721       253,759  
Note 55   4/04/2022   4/04/2023   8%     92,040       42,240       49,800  
Note 56   4/15/2022   4/15/2023   8%     270,480       17,710       252,770  
Note 57   4/29/2022   4/29/2023   8%     270,480       14,529       255,951  
Note 58   5/05/2022   5/05/2023   8%     66,100       35,385       30,715  
Note 59   5/31/2022   5/31/2023   8%     160,000       95,901       64,099  
Note 60   8/11/2022   8/11/2023   8%     57,778       49,869       7,909  
Total               $ 9,012,161     $ 892,080     $ 8,120,081  

 

* 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 September 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 September 30, 2022, the Company issued to “accredited investors,” Convertible Promissory Notes aggregating a principal amount of $1,322,707. The Company received an aggregate net proceeds of $1,213,989 after $101,718 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 six months ended September 30, 2022, is as follows: 

                  
Note   Interest Expense   Accrued Interest   Amortization of Debt Discount   Unamortized 
                  
Note 8   $12,531   $38,286   $–   $– 
Note 9    13,300    47,897    –    – 
Note 10    11,159    39,084    –    – 
Note 11    4,476    15,067    –    – 
Note 12    4,476    14,726    –    – 
Note 14    5,190    15,969    –    – 
Note 16    5,886    18,457    –    – 
Note 17    3,893    10,557    –    – 
Note 20    4,154    11,790    339    – 
Note 21    4,154    11,221    1,039    – 
Note 22    7,416    18,809    16,440    – 
Note 24    10,585    24,932    26,315    – 
Note 25    5,185    11,984    13,599    – 
Note 26    6,052    13,755    15,380    – 
Note 27    78    –    12,288    – 
Note 28    6,052    13,457    17,520    – 
Note 29    5,618    12,185    16,653    – 
Note 30    8,644    18,603    28,642    – 
Note 31    10,805    23,254    31,150    – 
Note 32    10,805    21,594    34,045    – 
Note 34    10,805    20,468    34,386    4,546 
Note 35    200    –    34,584    – 
Note 36    10,805    19,578    23,234    4,257 
Note 37    12,966    22,569    78,221    17,105 
Note 38    10,805    17,978    45,893    14,254 
Note 39    24,007    39,946    97,757    37,836 
Note 40    10,805    17,088    47,313    19,597 
Note 41    2,161    3,323    9,771    4,061 
Note 42    10,805    15,903    22,219    10,091 
Note 43    11,984    17,178    170,348    85,618 
Note 44    10,805    15,013    29,911    16,743 
Note 45    10,805    14,184    22,021    15,029 
Note 46    16,977    22,193    215,715    146,903 
Note 47    10,805    13,413    15,705    12,812 
Note 48    8,454    10,078    95,266    85,310 
Note 49    4,793    5,582    59,975    45,487 
Note 50    10,805    12,583    20,523    16,911 
Note 51    10,805    11,694    17,990    17,732 
Note 52    4,793    5,030    51,080    56,920 
Note 53    5,373    5,373    8,454    8,513 
Note 54    10,745    10,745    16,607    16,721 
Note 55    3,596    3,596    40,596    42,240 
Note 56    9,915    9,915    15,084    17,710 
Note 57    9,085    9,085    10,592    14,529 
Note 58    2,133    2,133    24,105    35,385 
Note 59    4,252    4,252    48,099    95,901 
Note 60    949    949    7,909    49,869 
Total   $380,892   $711,476   $1,476,768   $892,080 

 

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 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)
Note 8  August 4, 2022  73,803,873   36,901    20,000    3,247    23,247    25,710    (12,056)
     321,614,678  $344,307   $165,800   $20,242   $186,042    203,856    (45,591)

 

During the six months ended September 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 $45,591 related to the conversions above and the gain on extinguishment related to the repayment, the total gain was $119,264.