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CONVERTIBLE NOTES PAYABLE

9 Months Ended

Nov. 30, 2019

11. CONVERTIBLE NOTES PAYABLE

Convertible notes payable consisted of the following:

					Balance	Balance
		Interest	Conversion		November 30,	February 28,
Issued	Maturity	Rate	Rate per Share		2019	2019
February 28, 2011	February 26, 2013 *	7%	$0.015		$—	$32,600
January 31, 2013	February 28, 2017 *	10%	$0.010	⁽³⁾	119,091	119,091
May 31, 2013	November 30, 2016 *	10%	$0.010	⁽³⁾	261,595	261,595
August 31, 2014	November 30, 2016 *	10%	$0.002	⁽³⁾	355,652	355,652
November 30, 2014	November 30, 2016 *	10%	$0.002	⁽³⁾	103,950	103,950
February 28, 2015	February 28, 2017 *	10%	$0.001	⁽³⁾	63,357	63,357
May 31, 2015	August 31, 2017*	10%	$1.000	⁽³⁾	65,383	65,383
August 31, 2015	August 31, 2017*	10%	$0.300	⁽³⁾	91,629	91,629
November 30, 2015	November 30, 2018*	10%	$0.300	⁽³⁾	269,791	269,791
February 29, 2016	February 28, 2019*	10%	60% discount	⁽²⁾	95,245	95,245
May 31, 2016	May 31, 2019*	10%	$0.003	⁽³⁾	35,100	35,100
July 18, 2016	July 18, 2017*	10%	$0.003	⁽³⁾	3,500	3,500
December 31, 2016	December 31, 2020	8%	35% discount	⁽²⁾	65,000	65,000
January 15, 2017	January 15, 2021	8%	35% discount	⁽²⁾	50,000	50,000
January 15, 2017	January 15, 2021	8%	35% discount	⁽²⁾	100,000	100,000
January 16, 2017	January 16, 2021	8%	35% discount	⁽²⁾	150,000	150,000
March 8, 2017	March 8, 2020	10%	40% discount	⁽²⁾	100,000	100,000
March 9, 2017	March 9, 2021	8%	35% discount	⁽²⁾	50,000	50,000
April 19, 2017	April 19, 2018*	15%	50% discount	⁽²⁾	—	96,250
April 26, 2017	April 26, 2018*	0%	$0.001		68	68
May 1, 2017	May 1, 2021	8%	35% discount	⁽²⁾	50,000	50,000
May 4, 2017	May 4, 2018*	8%	40% discount	⁽²⁾	22,610	131,450
May 15, 2017	May 15, 2018*	0%	$0.001		1,280	1,280
May 17, 2017	May 17, 2020	10%	40% discount	⁽¹⁾	85,000	85,000
June 7, 2017	June 7, 2018*	8%	40% discount	⁽²⁾	156,764	180,964
June 16, 2017	June 16, 2018*	0%	$0.001		750	750
July 6, 2017	July 6, 2018*	8%	40% discount	⁽²⁾	200,000	200,000
August 8, 2017	August 8, 2018*	8%	40% discount	⁽²⁾	125,000	125,000
July 28, 2017	July 28, 2018*	15%	40% discount	⁽²⁾	47,913	—
August 29, 2017	August 29, 2018*	15%	50% discount	⁽²⁾	147,500	147,500
October 4, 2017	May 4, 2018*	8%	40% discount	⁽²⁾	150,000	150,000
October 16, 2017	October 16, 2018*	15%	50% discount	⁽²⁾	175,093	204,067
November 22, 2017	November 22, 2018*	15%	50% discount	⁽²⁾	550,275	500,250
December 28, 2017	December 28, 2017*	10%	40% discount	⁽²⁾	28,150	28,150
December 29, 2017	December 29, 2018*	15%	50% discount	⁽²⁾	363,000	330,000
January 9, 2018	January 9, 2019*	8%	40% discount	⁽²⁾⁽¹⁾	79,508	79,508
January 30, 2018	January 30, 2019*	15%	50% discount	⁽²⁾⁽¹⁾	330,000	300,000
February 21, 2018	February 21, 2019*	15%	50% discount	⁽²⁾⁽¹⁾	330,000	300,000
March 14, 2018	March 14, 2019*	10%	40% discount	⁽²⁾	50,000	50,000
June 7, 2017	June 9, 2019*	8%	40% discount	⁽²⁾	200,000	200,000
April 9, 2018	April 9, 2019*	15%	50% discount	⁽²⁾	60,500	55,000
March 21, 2017	March 21, 2018*	8%	40% discount	⁽²⁾	40,000	40,000
April 20, 2018	April 20, 2019*	8%	40% discount	⁽²⁾	97,659	65,106
May 2, 2018	December 2, 2018*	10%	40% discount	⁽²⁾	70,682	70,682
May 4, 2018	May 4, 2019*	12%	50% discount	⁽²⁾	123,750	123,750
May 14, 2018	December 14, 2018*	10%	50% discount	⁽²⁾	33,542	33,542
May 23, 2018	May 23, 2019*	10%	50% discount	⁽²⁾	110,000	110,000
June 6, 2018	June 6, 2019*	15%	50% discount	⁽²⁾	282,949	282,949
June 19, 2018	March 19, 2019*	15%	50% discount	⁽²⁾	43,125	87,274
July 6, 2017	June 9, 2019*	8%	40% discount	⁽²⁾	200,000	200,000
August 1, 2018	August 1, 2019*	15%	50% discount	⁽²⁾	35,750	32,500
August 23, 2018	August 23, 2019*	8%	45% discount	⁽²⁾	70,123	77,435
September 13, 2018	June 30, 2019*	12%	45% discount	⁽²⁾	9,200	79,500
September 17, 2018	March 17, 2019*	10%	50% discount	⁽²⁾	4,945	4,945
September 20, 2018	September 20, 2019*	15%	50% discount	⁽²⁾	38,885	39,350
September 24, 2018	June 24, 2019*	8%	40% discount	⁽²⁾	44,000	44,000
August 8, 2017	June 9, 2019*	8%	40% discount	⁽²⁾	125,000	125,000
November 8, 2018	August 15, 2019*	12%	45% discount	⁽²⁾	79,500	79,500
November 26, 2018	May 26, 2019*	10%	50% discount	⁽²⁾	44,799	44,798
August 29. 2019	August 29. 2020	8%	40% discount	⁽²⁾	26,250	—
					6,612,863	6,767,461

Less: current portion of convertible notes payable					(6,047,863)	(6,202,461)
Less: discount on noncurrent convertible notes payable					(170,948)	(302,105)
Noncurrent convertible notes payable, net of discount					$394,052	$262,895

Current portion of convertible notes payable					$6,047,863	$6,202,461
Less: discount on current portion of convertible notes payable					(31,034)	(718,015)
Current portion of convertible notes payable, net of discount					$6,016,829	$5,484,446

__________


*	The indicated notes were in default as of August 31, 2019. Default interest rate 24%

(1)	The note is convertible beginning six months after the date of issuance.

(2)	The notes are convertible at a discount (as indicated) to the average market price and are accounted for and evaluated under ASC 480 as discussed in Note 3.

(3)	The conversion price is not subject to adjustment from forward or reverse stock splits.

During the three months ended November 30, 2019 and 2018, the Company incurred original issue discounts of $1,250 and $16,250, respectively, and derivative discounts of $25,000 and $385,891, respectively, related to new convertible notes payable issued in those periods. These amounts are included in discounts on convertible notes payable and are being amortized to interest expense over the life of the convertible notes payable. During the three months ended November 30, 2019 and 2018, the Company recognized interest expense related to the amortization of debt discount of $56,171 and $1,296,997, respectively. The Company recorded penalty interest of $175,463 during the three months ended November 30, 2019.

During the nine months ended November 30, 2019 and 2018, the Company incurred original issue discounts of $1,250 and $79,103, respectively, and derivative discounts of $26,250 and $1,309,900, respectively, related to new convertible notes payable. These amounts are included in discounts on convertible notes payable and are being amortized to interest expense over the life of the convertible notes payable. During the nine months ended November 30, 2019 and 2018, the Company recognized interest expense related to the amortization of debt discount of $739,334 and 3,428,164, respectively. The Company recorded penalty interest of $207,116 and $221,055 during the nine months ended November 30, 2019 and November 30, 2018, respectively.

All the notes above are unsecured. As of November 30, 2019, the Company had total accrued interest payable of $1,955,492, of which $1,826,286 is classified as current and $120,906 is classified as noncurrent.

The Company determined that the embedded conversion features in the convertibles notes described below should be accounted for as derivative liabilities as a result of their variable conversion rates.

During the nine months ended November 30, 2019, the Company also had the following convertible note activity:


●	On September 5, 2019, the Company received $25,000 of proceeds from an investor for a promissory note with a principal amount of $26,250, including an original issue discounts of $1,250 and maturing August 29, 2020. The promissory note is convertible into common shares of the Company at a conversion price equal to 60% of the lowest trading price of the Company’s common stock for the last 20 trading days prior to conversion, and has an 8% per annum interest rate.

●	The Company wrote off a note payable for $32,600 and related interest of $97,139. The note has matured in February 2013, the company cannot contact the lender and the note is legally prescribed. A gain on settlement of debt of $129,739 was recorded..

●	The company recorded default penalties totaling $207,116 as increases to various notes, with a corresponding charge to interest.

●	During the nine months ended November 30, 2019, holders of certain convertible notes payable elected to convert a total of $373,062 of principal and $119,046 accrued interest, and $500 of fees into 3,651,425,069 shares of common stock. No gain or loss was recognized on conversions as they occurred within the terms of the agreement that provided for conversion.