NOTE 9 - NOTES PAYABLE TO THIRD PARTIES

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

(9) NOTES PAYABLE TO THIRD PARTIES

(9) NOTES PAYABLE TO THIRD PARTIES

Notes Payable consist of:

						Look
Inception	Issue	Maturity		Interest	Conversion	Back	December 31 Balance
Amount	Date	Date	OID	Rate	Price	Period	2019	2018
a) Sale of Future Receivables
	various	various	-	-	-	-	$ 309,311	$ 154,770
b) Notes
$ 88,000			-	7%	-	-	-	24,985
$ 25,903	10/1/18	6/4/20	-	17%	-	-	3,372	20,121
$ 4,100	10/22/18	10/22/20	-	-	-	-	2,327	3,593
$ 14,800	6/5/18		-	-	-	-	10,219	13,490
$ 100,000	4/10/19	4/10/20	-	20%	-	-	114,630	-
							$ 130,548	$ 62,189
c) Convertible Notes - Variable Conversion Rate
$ 30,000	6/14/17	12/14/17	-	10%	35%	3 days	33,600	33,600
$ 35,000	7/11/18	4/15/19	-	12%	49%	15 days	-	35,932
$ 33,000	8/23/18	5/23/19	-	12%	49%	15 days	-	33,437
$ 138,000	12/3/18	9/15/19	-	12%	45%	20 days	-	139,270
$ 100,000	12/11/18	12/11/19	10%	12%	40%	20 days	-	100,548
$ 50,000	4/16/19	1/16/20	10%	12%	45%	20 days	330	-
$ 153,000	5/28/19	5/24/20	-	12%	45%	20 days	72,105	-
$ 118,750	6/24/19	3/17/20	-	12%	50%	25 days	123,868	-
$ 50,000	6/28/19	3/27/20	10%	12%	45%	20 days	49,427	-
$ 50,000	6/28/19	3/27/20	10%	12%	45%	20 days	57,652	-
$ 50,000	6/28/19	3/27/20	10%	12%	45%	20 days	57,779	-
$ 103,000	7/1/19	6/27/20	-	12%	45%	20 days	109,197	-

						Look
Inception	Issue	Maturity		Interest	Conversion	Back	December 31 Balance
Amount	Date	Date	OID	Rate	Price	Period	2019	2018
c) Convertible Notes - Variable Conversion Rate, continued
$ 108,000	7/5/19	6/30/20	11.11%	12%	45%	20 days	132,699	-
$ 103,000	7/10/19	7/10/20	10%	8%	45%	20 days	121,862	-
$ 75,000	8/7/19	5/7/20	-	12%	50%	10 days	73,600	-
$ 70,000	8/7/19	5/7/20	12%	12%	40%	20 days	77,172	-
$ 90,000	8/8/19	8/8/20	-	10%	43%	20 days	96,914	-
$ 135,000	8/12/19	7/10/20	11%	8%	45%	20 days	160,160	-
$ 53,000	10/31/19	8/15/20	-	12%	45%	20 days	53,709	-
$ 18,235	12/13/19	12/13/20	9%	10%	35%	25 days	18,394	-
Subtotal Convertible Notes - Variable Conversion Rate							1,238,468	342,787
Less unamortized discounts							(553,646)	(113,610)
Net Convertible Notes - Variable Conversion Rate							$ 684,822	$ 229,177
d) Convertible Notes - Fixed Conversion Rate
$ 87,522	7/3/18	12/31/20	-	12%	$ 0.0035	-	22,039	82,791
$ 54,445	7/10/18	12/31/21	-	8%	$ 0.0035	-	59,406	54,445
$ 33,504	8/10/18	12/31/21	-	12%	$ 0.0035	-	37,551	33,504
$ 80,044	8/7/19	12/31/21	-	12%	$ 0.0035	-	37,866	83,807
$ 100,000	4/10/19	4/10/20	-	20%	$ .05	-	114,630	-
Subtotal Convertible Notes - Fixed Conversion Rate							271,492	254,547
Less unamortized discounts							(76,465)	(199,848)
Net Convertible Notes - Variable Conversion Rate							$ 195,027	$ 54,699
e) Note of Wholly Owned Subsidiary
$ 375,000	3/5/15	12/5/15	-	18%	-	-	$ 438,220	$ 438,220

a) Future Receivables Sale Agreements

The Company, through Nixon Restaurant Group, Inc., J&F Restaurants, LLC, Illegal Burger, LLC, Illegal Burger Writer Square, LLC, Illegal Burger Capitol Hill, LLC and Illegal Burger CitiSet, LLC entered into several agreements at various times to obtain advances against future restaurant credit/debit card sales. The agreements provide for funding of various percentages of future qualified credit/debit merchant card receivables. Proceeds received from sales of future receivables during 2019 and 2018 totaled $415,000 and $140,000, respectively. At December 31, 2019 and 2018, the total payable balances inclusive of interest under the factoring agreements were $450,258 and $154,770, respectively.

b) One Year Notes

In February 2016, the Company entered into a one year note for $88,000 with a third party. The loan balance was $0 and $24,985 at December 31, 2019 and 2018, respectively.

In April 2019, the Company entered into a one year note for $100,000 with a third party. This note carries a 20% interest rate and is collateralized by a second mortgage on the founder and CEO’s residence. The loan balance, including interest, was $114,630 at December 31, 2019.

c) Convertible Notes - Variable Conversion

In the fourth quarter 2019, the Company entered into two convertible notes in exchange for $73,000 in cash with a principal amount of $73,000. Based on the variable conversion terms the beneficial conversion rights embedded in these convertible notes were recorded as a derivative liability in the amount of $73,000 with a related debt discount of $73,000.

In the third quarter 2019, the Company entered into six convertible notes in exchange for $567,000 in cash with a principal amount of $609,400. Based on the variable conversion terms the beneficial conversion rights embedded in these convertible notes were recorded as a derivative liability in the amount of $960,354 with a related debt discount of $609,400, and an immediate loss of $281,945.

In the third quarter 2019, the Company paid off three convertible notes in cash in the amount of $472,093.

In the second quarter 2019, the Company entered into nine convertible notes in exchange for $591,000 in cash with a principal amount of $669,000. Based on the variable conversion terms the beneficial conversion rights embedded in these convertible notes were recorded as a derivative liability in the amount of $891,345 with a related debt discount of $602,580, and an immediate loss of $291,355.

In the second quarter 2019, the Company paid off three convertible notes in cash in the amount of $504,812.

In the first quarter 2019, the Company entered into five convertible notes in exchange for $424,000 in cash. Based on the variable conversion terms the beneficial conversion rights embedded in these convertible notes were recorded as a derivative liability in the amount of $467,348 with a related debt discount of $432,166, and an immediate loss of $35,182.

In the first quarter 2019, the Company paid off two convertible notes in cash in the amount of $101,181.

In the fourth quarter 2018, the Company entered into two convertible notes in exchange for $238,000 in cash. Based on the variable conversion terms the beneficial conversion rights embedded in these convertible notes has been recorded as a derivative liability in the amount of $189,380, with a related debt discount of $138,000, and an immediate loss of $51,380. These notes were settled in 2019.

c) Convertible Notes - Variable Conversion, continued

In the third quarter 2018, the Company entered into two convertible notes in exchange for $68,000 in cash. Based on the variable conversion terms the beneficial conversion rights embedded in these convertible notes has been recorded as a derivative liability in the amount of $151,769, with a related debt discount of $68,000, and an immediate loss of $83,763. These notes were settled in 2019.

In the first quarter 2018, the Company entered into three convertible notes in exchange for $280,000 in cash. Based on the variable conversion terms the beneficial conversion rights embedded in these convertible notes has been recorded as a derivative liability in the amount of $306,000, with a related debt discount of $306,000. These notes were settled in 2018, and which included a penalty of $40,528.

d) Convertible Notes - Fixed Conversion

In the third quarter 2019, the Company entered into one convertible note in exchange for $108,000 in cash with a note amount of $120,000. Based on the conversion terms the beneficial conversion rights embedded in this convertible note was recorded as a debt discount in the amount of $28,800.

In the second quarter 2019, the Company entered into one convertible note in exchange for $100,000 in cash. This note matures in one year and carry a 20% interest rates. The note converts into shares of the Company’s common stock at a price of $0.04 per share of Common Stock from October 10, 2019 to maturity. At maturity it is convertible at $0.05 per share as long as Company’s Volume Weighted Average Price, (“VWAP”) for the ten trading days prior to the conversion notice is greater than $0.07 per share. If the VWAP is below $0.07, then the conversion formula is $0.05xVWAP/$0.07. Based on the conversion terms the beneficial conversion rights embedded in this convertible note was recorded as a debt discount in the amount of $56,250 and is being amortized over the life of the loan.

During the third quarter of 2018, two parties related to each other purchased, through assignment, three of the variable conversion price convertible notes then outstanding. These parties immediately amended the notes into four notes to replace the variable conversion rate with a fixed conversion rate of $0.0035 per share of the Company’s common stock. The maturity dates of the three notes were extended to December 31, 2020 and 2021. During 2019, $82,831 of these notes were converted into 23,665,964 shares of common stock. The aggregate remaining balance outstanding of these note at December 31, 2019 is $156,862.

During the fourth quarter of 2018, one of the parties that purchased one of the variable conversion price convertible notes assigned $50,000 of their note to a third party for $50,000 in cash. This new party immediately amended the assigned note portion to a fixed conversion rate of $0.01 per share of the Company’s common stock. The maturity date of this note was extended to December 31, 2021. During the second and third quarters of 2019 this note was converted into 5,000,000 shares of common stock, and the balance of this note is $0 at December 31, 2019.

In the fourth quarter 2018, the Company entered into a convertible note in exchange for $100,000 in cash. This note matures in two years and carries a 10% Original Issue Discount (OID). The note converts into shares of the Company’s common stock at a price of $0.05 per share. In the second quarter 2019, this note was paid in full in cash. The balance of this note is $0 at December 31, 2019.

e) Third Party Note Payable with Subsidiary

In March 2015, the Company entered into an agreement with a third party lender, who extended a $3,000,000 Senior Secured Note. Under the terms of this agreement a first draw was entered into in the amount of $375,000 as a Revolving Note. The lender retained $59,713 of this draw as fees. Under the terms of this Note, the Company was required to replace their credit card/debit card merchant processing to the lender. The lender retained 100% of the credit card/debit card transactions, and forwarded four wire transfers to the Company over a six week period. The credit card/debit card transactions for this six week period amounted

e) Third Party Note Payable with Subsidiary, continued

to $84,534. The lender remitted $42,379 of this amount to the Company. Of the $42,155 retained by the lender, $14,861 was applied as principal reduction, $7,088 was applied to interest expense and the remaining $20,206 was charged as fees. The Senior Secured Note also called for the payment of a $75,000 investment banking fee.

In May 2015, when it was determined that this repayment structure was not practical for a restaurant operation, the lender agreed to restructure the Revolving Note into a Replacement Promissory Note. This Replacement Promissory Note carries interest at a stated rate of 18% with a maturity of June 1, 2016. The lender charged the Company a $25,000 penalty to convert the Revolving Note into a Replacement Promissory Note. The Replacement Promissory Note called for interest only payments in June, July and August 2015. Starting in September the terms called for the payment of interest, principal starting at $33,649 increasing monthly to $38,474 in June 2016, as the interest on the then outstanding balance fell. In addition the Replacement Promissory Note called for the payment of a $106,000 Redemption Premium as part of the total monthly payment of $49,651. As a direct result of delays in opening the new Writer Square location, the lender agreed to interest only payments via ACH draft every Monday. In June 2015, the Company paid $1,080 per week, which was increased to $1,200 per week for July 1 through October 15, 2015. It was then increased to $1,500 per week from October 16, 2015 through the third week of March 2016, when it was increased to $2,000 per week.

At both December 31, 2019 and 2018 the principal balance of the loan was $322,220. The Company also accrued the $25,000 conversion penalty, the $75,000 investment banking fee and the $106,000 redemption premiums as accrued interest because the Replacement Promissory Note allows for prepayment but all these “fees” are due upon prepayment. In October 2018, the lender filed a claim demanding repayment of all amounts outstanding in the amount of $565,267. (See Note 16a)

f) Third Party Notes Payable

Certain third parties have advanced funds to WCVC to fund its ongoing operations. These advances have been formalized into demand notes payable, which, at September 30, 2017, amount to $54,039 and carry a 5% interest rate. WCVC has a $250,000 note payable which is due in April 2018 and carries a 5% interest rate. These liabilities have been incorporated into liabilities from discontinued operations.