NOTE 5 - CONVERTIBLE PROMISSORY NOTES / RELATED AND NON-RELATED PARTIES

6 Months Ended

Jun. 30, 2022

Notes

NOTE 5 - CONVERTIBLE PROMISSORY NOTES / RELATED AND NON-RELATED PARTIES

NOTE 5 – CONVERTIBLE PROMISSORY NOTES

The Company has a collateralized convertible debt obligation with an unaffiliated entity outstanding at June 30, 2022 and December 31, 2021 as follows:

Note (A)	Principal(1)	Less Debt Discount	Plus Premium	Net Note Balance	Accrued Interest
June 30, 2022	$ 290,000	$ -	$ -	$ 290,000	$ 228,781
December 31, 2021	$ 290,000	$ -	$ -	$ 290,000	$ 190,781

(1)Collateralized by the Company’s assets, including accounts receivable, cash and equivalents, inventory, property, equipment, intangibles.  At June 30, 2022 and December 31, 2021, the Company’s assets consisted of cash and equivalents of $297 and $186, respectively, inventory of $80,404, and intangible assets of $275,000, for total carrying value of $355,701 and $355,590, respectively. 

(A)On September 24, 2018 (the “Date of Issuance”) the Company issued a convertible promissory note (the “Note”) with a face value of $300,000, maturing on September 24, 2019, and a stated interest of 10% to a third-party investor. The note is convertible into a variable number of the Company's common stock, based on a conversion rate of 50% of the lowest trading price for the 25 days prior to conversion. This note is currently in default (Note 7). 

Along with the Note, on the Date of Issuance the Company issued 42,857 Common Stock Purchase Warrants (the “Warrants”), exercisable immediately at a fixed exercise price of $3.50 with an expiration date of September 24, 2023. The note proceeds of $300,000 were allocated between the fair value of the promissory note ($300,000) and the Warrants ($86,750), resulting in a debt discount of $67,292.  As the warrants were exercisable immediately, this debt discount was amortized in its entirety to interest expense on the Date of Issuance.

During the year ended December 31, 2019, the Company paid $10,000 towards principal on the Note, and $12,350 of accrued interest and $250 in conversion fees ($12,600 total) was converted into 30,000 shares of common stock.