Loss on Convertible Notes

12 Months Ended

Dec. 31, 2022

Loss on Convertible Notes [Abstract]

LOSS ON CONVERTIBLE NOTES

12 LOSS ON CONVERTIBLE NOTES

The loss on convertible notes consists of the following:

	December 31, 2022
Penalty on cash settlement of convertible note	$	247,063
Penalty on extension of maturity date of convertible notes		836,414
Fair value of warrants issued to convertible note holders on extension of maturity date		238,182
Fair value of derivative liability arising on the amendment of the exercise price of convertible notes and the full-rachet trigger on certain warrants issued to convertible note holders		2,360,658
Value of notes exchanged for certain warrants, net of the derivative liability value of $(43,608)		920,392
	$	4,602,709

Penalty on cash settlement of convertible note

On February 4, 2022, the Company cash settled the outstanding balance, including early settlement penalty thereon of $247,063, of a convertible note owing to Bellridge for gross proceeds of $1,235,313.

Penalty on extension of maturity date of convertible notes

The Company twice extended the maturity date of its indebtedness to each Cavalry and Mercer. On February 3, 2022, the Company agreed to extend the maturity date of the Notes to August 16, 2022. Additionally, on August 30, 2022, the Company entered agreements for an additional maturity date extension to November 16, 2022, in terms of these extensions, the Company incurred penalties which increased the principle outstanding of these convertible notes in the aggregate amount of $836,414.

Fair value of warrants issued to convertible note holders on extension of maturity date

In addition to the penalty on extension of maturity date on its indebtedness to each of Cavalry and Mercer, in consideration for the second extension on August 30, 2022, the Company agreed to issue to each of Cavalry and Mercer a new five-year warrant to purchase an additional 3,000,000 shares of common stock at an exercise price of $0.15 per share. The fair value of these warrants were determined as $238,182 on August 30, 2022, using a Black-Scholes valuation model.

Fair value of derivative liability arising on the amendment of the exercise price of convertible notes and the full-rachet trigger on certain warrants issued to convertible note holders

On December 30, 2022, the Company again extended the maturity dates of each of the Notes to Cavalry and Mercer to December 30, 2023. Each of Cavalry and Mercer entered into Note Amendment Letter Agreement with the Company (the “Note Amendment”) pursuant to which the parties agreed that the conversion price of the Notes was reduced from $0.15 to $0.0115 per share and in addition, resulted in the 3,000,000 shares of common stock underlying the Extension Warrants increasing to 39,130,435 shares, in terms of the full-rachet provisions in those warrant agreements. The change in the conversion price and the increase in the number of warrant shares to be issued at the revised exercise price of $0.0115per share, resulted in a derivative liability on December 30, 2022 of $2,340,580, determined by using a Black-Scholes valuation model.

In addition to this, certain other warrants outstanding had their conversion price reduced from $0.05 per share to $0.0115 per share in terms of their warrant agreements, resulting in an additional derivative liability on December 30, 2022 of $20,079, determined by using a Black-Scholes valuation model.

Value of notes exchanged for certain warrants, net of the derivative liability value of $(43,608)

On December 30, 2022, the Company also agreed to exchange the Original Warrants issued on February 16, 2021 to Cavalry and Mercer for 12-month non-convertible promissory notes in the amount of $482,000 each. This resulted in an additional charge of $964,000, less the fair value of the derivative liability of the Original warrants of $43,608, valued on December 30, 2022, using a Black-Scholes valuation model.