CONVERTIBLE NOTE PAYABLE

3 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

CONVERTIBLE NOTE PAYABLE

NOTE 9 – CONVERTIBLE NOTE PAYABLE

The following is a summary of convertible notes payable as of June 30, 2022: 

Note*	Issuance Date	Maturity	Coupon	Face Value		Unamortized Discount		Carrying Value
Note 8	8/04/2020	12/31/2022	8%	$	97,000	$	–	$	97,000
Note 9	10/02/2020	12/31/2022	8%		205,000		–		205,000
Note 10	10/15/2020	12/31/2022	8%		172,000		–		172,000
Note 11	11/02/2020	12/31/2022	8%		69,000		–		69,000
Note 12	11/12/2020	12/31/2022	8%		69,000		–		69,000
Note 14	12/10/2020	12/31/2022	8%		80,000		–		80,000
Note 16	1/14/2021	12/31/2022	8%		107,000		–		107,000
Note 17	1/27/2021	12/31/2022	8%		60,000		–		60,000
Note 20	4/30/2021	12/31/2022	8%		104,000		–		104,000
Note 21	5/25/2021	12/31/2022	8%		104,000		–		104,000
Note 22	6/24/2021	12/31/2022	8%		185,652		–		185,652
Note 24	7/24/2021	12/31/2022	8%		265,000		6,839		258,161
Note 25	8/04/2021	12/31/2022	8%		129,800		3,542		126,258
Note 26	8/11/2021	12/31/2022	8%		151,500		4,001		147,499
Note 28	8/20/2021	12/31/2022	8%		151,500		4,584		146,916
Note 29	8/30/2021	12/31/2022	8%		140,650		6,914		133,736
Note 30	9/02/2021	12/31/2022	8%		216,385		11,947		204,438
Note 31	9/17/2021	12/31/2022	8%		270,480		12,919		257,561
Note 32	9/30/2021	12/31/2022	8%		270,480		17,595		252,885
Note 34	10/26/2021	12/31/2022	8%		270,480		22,985		247,495
Note 36	11/03/2021	12/31/2022	8%		270,480		16,069		254,411
Note 37	11/16/2021	12/31/2022	8%		324,576		63,398		261,178
Note 38	11/30/2021	12/31/2022	8%		270,480		39,344		231,136
Note 39	12/10/2021	12/31/2022	8%		601,000		88,760		512,240
Note 40	12/15/2021	12/31/2022	8%		270,480		44,017		226,463
Note 41	12/23/2021	12/23/2022	8%		54,100		9,667		44,433
Note 42	1/04/2022	1/04/2023	8%		270,480		23,045		247,435
Note 43	1/12/2022	1/12/2023	8%		300,000		221,695		78,305
Note 44	1/19/2022	1/19/2023	8%		270,480		33,573		236,907
Note 45	2/02/2022	2/02/2023	8%		270,480		26,502		243,978
Note 46	2/03/2022	2/03/2023	8%		425,000		314,068		110,932
Note 47	2/15/2022	2/15/2023	8%		270,480		20,293		250,187
Note 48	2/24/2022	2/24/2023	8%		211,640		156,399		55,241
Note 49	3/01/2022	3/01/2023	8%		120,000		94,147		25,853
Note 50	3/01/2022	3/01/2023	8%		270,480		27,771		242,709
Note 51	3/16/2022	3/16/2023	8%		270,480		26,476		244,004
Note 52	3/22/2022	3/22/2023	8%		120,000		98,661		21,339
Note 53	4/01/2022	4/01/2023	8%		135,240		12,936		122,304
Note 54	4/01/2022	4/01/2023	8%		270,480		25,402		245,078
Note 55	4/04/2022	4/04/2023	8%		92,040		78,530		13,510
Note 56	4/15/2022	4/15/2023	8%		270,480		27,618		242,862
Note 57	4/29/2022	4/29/2023	8%		270,480		21,093		249,387
Note 58	5/05/2022	5/05/2023	8%		66,100		56,398		9,702
Note 59	5/31/2022	5/31/2023	8%		160,000		140,616		19,384
Total				$	8,974,383	$	1,757,804	$	7,216,579

* Notes 1, 2, 3, 4, 5, 6 and 7 in the amounts of $82,000, $208,000, $27,000, $62,000, $202,400, $78,000 and $85,800 respectively, were fully converted as of June 30, 2022.

* On July 7, 2022, the maturity date of each of Notes 8, 9, 10, 11, 12, 14, 16, 17, 20, 21, 22, 24, 25, 26, 27, 28, 29, 30, 31, 32, 34, 36, 37, 38, & 40 were extended to December 31, 2022, and the lender waived all penalty interest for non-payment.

*Note 27 in the amount of $88,400 was paid in cash on April 4, 2022. The Company recognized a gain on extinguishment of debt in the amount of $71,799, related to the write off of the derivative liability.

Between April 1, 2022, and June 30, 2022, the Company issued to “accredited investors,” Convertible Promissory Notes aggregating a principal amount of $1,264,820. The Company received an aggregate net proceeds of $1,167,230 after $90,590 in original note discount and $7,000 legal fees. The Company has agreed to pay interest on the unpaid principal balance at the rate of eight percent (8%) per annum from the dates on which Notes are issued until the same becomes due and payable, whether at maturity or upon acceleration, prepayment or otherwise. The Company shall have the right to prepay the Notes, provided it makes a payment as set forth in the agreements.

The outstanding principal amount of the Notes is convertible into the Company’s common stock at the lender’s option at $0.01 per share for the first six months of the term of the Notes. The notes have varying conversion rates. After the six-month anniversary, the conversion price is equal to 63%-70% of the average of the three lowest trading prices of the Company’s common stock. Five of 40 notes outstanding have a fixed conversion rate of $0.002.

Accounting Considerations

The Company has accounted for the Notes as a financing transaction, wherein the net proceeds that were received were allocated to the financial instrument issued. Prior to making the accounting allocation, the Company evaluated the agreement under ASC 815 Derivatives and Hedging (“ASC 815”). ASC 815 generally requires the analysis embedded terms and features that have characteristics of derivatives to be evaluated for bifurcation and separate accounting in instances where their economic risks and characteristics are not clearly and closely related to the risks of the host contract. The material embedded derivative features consisted of the embedded conversion option and default puts. The conversion option and default puts bear risks of equity which were not clearly and closely related to the host debt agreement and required bifurcation. The contracts do not permit the Company to settle in registered shares and the contracts also contain make-whole provisions both of which preclude equity classification. Current accounting principles that are also provided in ASC 815 do not permit an issuer to account separately for individual derivative terms and features that require bifurcation and liability classification. Rather, such terms and features must be and were bundled together and fair valued as a single, compound embedded derivative.

The net proceeds were allocated to the compound embedded derivative and original issue discount. The notes will be amortized up to its face value over the life of Notes based on an effective interest rate. Amortization expense and interest expense for the three months ended June 30, 2022, is as follows: 

Note	Interest Expense		Accrued Interest		Amortization of Debt Discount		Unamortized
Note 7	$	–	$	11,420	$	–	$	–
Note 8		10,991		36,746		–		–
Note 9		9,200		43,797		–		–
Note 10		7,719		35,644		–		–
Note 11		3,096		13,687		–		–
Note 12		3,096		13,346		–		–
Note 14		3,590		14,369		–		–
Note 15		–		–		–		–
Note 16		3,746		16,317		–		–
Note 17		2,693		9,357		–		–
Note 18		–		–		–		–
Note 19		–		–		–		–
Note 20		2,074		9,710		339		–
Note 21		2,074		9,141		1,039		–
Note 22		3,703		15,096		16,440		–
Note 24		5,285		19,632		19,476		6,839
Note 25		2,589		9,388		10,057		3,542
Note 26		3,022		10,725		11,379		4,001
Note 27		78		–		12,288		–
Note 28		3,022		10,427		12,936		4,584
Note 29		2,805		9,372		9,739		6,914
Note 30		4,316		14,275		16,695		11,947
Note 31		5,395		17,844		18,231		12,919
Note 32		5,395		16,184		16,450		17,595
Note 34		5,395		15,058		15,947		22,985
Note 35		200		–		34,584		–
Note 36		5,395		14,169		11,422		16,069
Note 37		6,474		16,078		31,928		63,398
Note 38		5,395		12,568		20,803		39,344
Note 39		11,987		27,926		46,833		88,760
Note 40		5,395		11,679		22,893		44,017
Note 41		1,079		2,241		4,165		9,667
Note 42		5,395		10,493		9,265		23,045
Note 43		5,984		11,178		34,271		221,695
Note 44		5,395		9,604		13,081		33,573
Note 45		5,395		8,774		10,548		26,502
Note 46		8,477		13,693		48,550		314,068
Note 47		5,395		8,003		8,224		20,293
Note 48		4,221		5,845		24,177		156,399
Note 49		2,393		3,182		11,315		94,147
Note 50		5,395		7,173		9,663		27,771
Note 51		5,395		6,284		9,246		26,476
Note 52		2,393		2,630		9,339		98,661
Note 53		2,668		2,668		4,031		12,936
Note 54		5,335		5,335		7,926		25,402
Note 55		1,755		1,755		4,306		78,530
Note 56		4,506		4,506		5,176		27,618
Note 57		3,676		3,676		4,028		21,093
Note 58		811		811		3,092		56,398
Note 59		1,052		1,052		3,384		140,616
Total	$	200,850	$	542,858	$	553,266	$	1,757,804

Debt conversions 

The following table illustrates the debt converted and the associated gain or loss: 

Note	Conversion Date	Shares issued in conversion	Fair value of shares		Face Value		Accrued Interest		Total Debt		Derivative liability		Net (gain) / loss
Note 7	April 14, 2022	35,873,156	$	82,508	$	40,000	$	6,707	$	46,707	$	45,869	$	(10,068	)
Note 35	April 28, 2022	20,000,000		32,000		20,000		–		20,000		20,685		(8,685	)
Note 35	May 5, 2022	37,631,579		48,921		26,800		1,800		28,600		33,022		(12,701	)
Note 8	May 10, 2022	42,813,737		51,377		26,000		3,670		29,670		26,202		(4,495	)
Note 8	May 25, 2022	47,230,793		28,338		13,000		1,877		14,877		10,638		2,823
Note 8	June 6, 2022	64,261,540		64,262		20,000		2,941		22,941		41,730		(409	)
		247,810,805	$	307,406	$	145,800	$	16,995	$	162,795	$	178,146	$	(33,535	)

During the three months ended June 30, 2022, the Company repaid Note 27 in cash. The principal balance was $88,400 and the accrued interest was $4,476. The prepayment fee was $15,495. The Company repaid $108,371. As of the repayment dates, the derivative liability related to Notes was $73,673. As a result, the Company recorded a gain of extinguishment in the amount of $73,673.

Between the gain on extinguishment of $33,535 related to the conversions above and the gain on extinguishment related to the repayment, the total gain was $107,208.