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Convertible Notes
3 Months Ended
Oct. 31, 2019
Debt Disclosure [Abstract]  
Convertible Notes

NOTE 7 – CONVERTIBLE NOTES

 

On August 1, 2018, the Company, entered into a Securities Purchase Agreement (the Securities Purchase Agreement”) with an investor, pursuant to which the Company sold to the Investor a convertible promissory note in the principal amount of $110,000 (the “August 2018 Note”), for an aggregate purchase price of $100,000. The Company received $100,000 cash and recorded $10,000 as issuance cost. The August 2018 Note matures on May 1, 2019, bears interest rate of 10% per year payable on maturity date in cash or shares of common stock at the Company’s option (subject to certain conditions), and is convertible into shares of the Company’s common stock at the conversion price equal to the lower of (i) the closing sale price of the common stock on the principal market on the trading day immediately preceding the closing date, and (ii) 55% of either the lowest sale price for the common stock during the 20 consecutive trading days including and immediately preceding the conversion date. This note became convertible on issuance date and the variable conversion feature was accounted for as a derivative liability in accordance with ASC 815. The Company recorded an increase in the principal of $15,000 since the conversion price is less than $0.01. The August 2018 Note has an outstanding balance as of October 31, 2019 of $79,399, is in default and subject to annual interest of 24%.

 

On September 23, 2019, the Company entered into a convertible promissory note with KinerjaPay Corp. for an aggregate purchase price of $20,000. The Note matures on March 23, 2020, bears interest rate of 10% per year payable on maturity date in cash or shares of common stock at the Company’s option (subject to certain conditions), and is convertible into shares of common stock at the conversion rate equal to 50% multiplied by the Market Price. “Market Price” means the average of the lowest Trading Price (as defined below) for the Common Stock during the thirty (30) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means, for any security as of any date, the closing bid price on the OTCQB, OTCQX, Pink Sheets electronic quotation system or applicable trading market (the “OTC”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. Bloomberg) or, if the OTC is not the principal trading market for such security, the closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no closing bid price of such security is available in any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in the “pink sheets”. The variable conversion feature was accounted for as a derivative liability under ASC 815, resulting in the recognition of a discount of $20,000 on the issuance date. The balance of principal on the September 23, 2019 note as of October 31, 2019 is $20,000.

 

On February 25, 2019, the Company signed a convertible promissory note with Crown Bridge Partners, LLC for a principal sum of $165,000 to be requested in installments. The first installment of $28,500 was received for the principal of $33,000 on March 1st, 2019. The note is subject to interest rate of 8% and matures in February 2020. The holder of the note shall have the right to convert the notes at any time, the note bears interest rate of 8% per year payable on maturity date in cash or shares of common stock at the Company’s option (subject to certain conditions), and is convertible into shares of the Company’s common stock at the conversion price which equals 50% multiplied by the lowest one trading price for the common stock during the 25 day trading day period ending on the last complete trading day prior to the conversion date. The note is convertible on issuance date and the variable conversion feature with a fair value of $56,216 was accounted for as a derivative liability in accordance with ASC 815 with a corresponding charge of $28,500 to debt discount and $27,716 to day one loss on derivative. On February 25, 2019, the Company also issued Crown Bridge Partners LLC a Common Stock Purchase Warrant for 18,857,142 shares of common stock. The warrants have an exercise price of $0.0035 per share and expiration date of February 25, 2024. These warrants were tainted by the variable notes and the fair value of $47,063 was accounted for as a derivative liability in accordance with ASC 815. The outstanding balance of the principal on the note as of July 31, 2019 and October 31, 2019, is $33,000 and $26,225, respectively.

 

In the three months ended October 31, 2019 and 2018, the Company recorded amortization of debt discount in the amount of $11,290 and $27,148, respectively. Unamortized discount as of October 31, 2019 amounted to $26,873.