NOTE 5. PROMISSORY AND CONVERTIBLE NOTES

6 Months Ended

Jun. 30, 2022

Notes

NOTE 5. PROMISSORY AND CONVERTIBLE NOTES

NOTE 5 – PROMISSORY AND CONVERTIBLE NOTES

During the six months ended June 30, 2022 and 2021, the Company issued convertible promissory notes in the principal amount of $325,000 and $0, respectively. In addition, the debt discount related to this note was $250,000. In accordance with the terms of the agreement, During the six months ended June 30, 2022, the Company received notice to convert two loans for an aggregate of $82,500 in principal and $1,145 in interest, into 83,645 shares of common stock (see Note 6).  As a result, the company As of June 30, 2022 and December 31, 2021 the Company had outstanding to various lenders as convertible promissory notes an aggregate amount of $1,250,000 and $1,007,500, respectively. In aggregate, as of June 30, 2022 the principal amount includes $163,500 of original issue discount, $18,000 in cash financing fees, $49,750 in non-cash financing fees (see note 6) and 1,305,000 warrants with an exercise price of $1.50 per share. All notes are due to mature 24 months from their respective effective date and mature beginning on August 27, 2023 through January 21, 2024 Additionally, the notes effective interest rate of the notes is 8% and are convertible into share of common stock at $1.00 per share.

The following tables reflects a summary of the outstanding principal and interest by each lender and their respective maturity date as of June 30, 2022 and December 31, 2021:

		June 30, 2022			December 31, 2021
	Maturity Date	Total Outstanding***	Principal	Interest	Total Outstanding***	Principal	Interest
Lender A	8/27/2023	$             534,472	$       500,000	$    34,472	$              513,883	$       500,000	$ 13,883
Lender B	9/27/2023	58,523.31	55,000	3,523	56,268.91	55,000	1,269
Lender C	10/27/2023	232,074	220,000	12,074	223,134	220,000	3,134
Lender D	11/9/2023	-	-	-	27,813	27,500	313
Lender E	10/21/2023	-	-	-	55,856	55,000	856
Lender F	12/27/2023	156,146	150,000	6,146	150,132	150,000	132
Lender G	1/21/2024	336,397	325,000	11,397	-	-	-
		$       1,317,613	$  1,250,000	$   67,613	$         1,027,087	$  1,007,500	$ 19,587
		*** - Total Outstanding = Principal + Interest as of June 30, 2022 and December 31, 2021

During the six months ended June 30, 2022 and 2021, the Company recorded an aggregate debt discount of $325,000 and $0, respectively, under the terms of convertible promissory note agreement. The total $325,000 debt discount was allocated between the original issue discount related to cash financing fees of $75,000, as well as $250,000 recorded as an offset to additional paid-in capital in connection with the beneficial conversion feature and warrants (see Note 6). The beneficial conversion feature was valued at $68,347 and the warrants were valued at $181,653, in the aggregate.

During the six months ended June 30, 2022 and 2021, the Company recorded amortization expense in the amount of $375,774 and $0, respectively, as amortization of debt discount of which $314,131 was recorded as amortization expense in relation to the warrants and

conversion feature, $45,217 was recorded as interest expense in relation to the original issue discount and, $16,426 financing fees in the consolidated statements of operations. As of June 30, 2022, the Company had an unamortized debt discount balance of $883,101 with a weighted amortization period of 1.47 years.