CONVERTIBLE NOTE PAYABLE

9 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

CONVERTIBLE NOTE PAYABLE

NOTE 10 – CONVERTIBLE NOTE PAYABLE

The following is a summary of convertible notes payable:  

	December 31, 2022			March 31, 2022
Face value	$	8,946,968		$	7,951,563
Unamortized discount		(478,997	)		(1,916,473	)
Carrying value	$	8,467,971		$	6,035,090

Between April 1, 2022, and December 31, 2022, the Company issued to “accredited investors,” Convertible Promissory Notes aggregating a principal amount of $1,588,598. The Company received an aggregate net proceeds of $1,434,450 after $122,998 in original note discount and $31,150 legal fees. The Company has agreed to pay interest on the unpaid principal balance at the rates ranging from eight percent (8%) per annum to twelve percent (12%) 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 notes have varying conversion rates. The outstanding principal amount of the Notes is convertible into the Company’s common stock at a contractual conversion rate depending on the Note terms, number of months held and conversion prices exercised by other Convertible Promissory Note holders.

On October 1, 2022, the Notes having maturity dates prior to March 1, 2023 were extended to July 31, 2023, and the lender waived all penalty interest for non-payment.

During the nine months ended December 31, 2023 a Note 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.

The Company was notified during the three months ended December 31, 2022, of a note in default. The default provision of the note provided the note holder a penalty fee of $118,818. The penalty was recorded to interest expense. The note was subsequently, fully converted into shares of common stock. The Company has not received notice of default from any of the other note holders.

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 the Notes based on an effective interest rate. Amortization expense and interest expense for the nine months ended December 31, 2022, is as follows:  

	December 31, 2022		December 31, 2021
Interest Expense	$	620,905	$	91,752
Amortization of debt discount	$	2,185,141	$	221,228

Debt conversions

During the nine months ended December 31, 2022, the Company repaid a Note 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.

During the nine months ended December 31, 2022, $615,812 of principal balance and $38,536 of accrued interest associated with Notes was converted into 3,366,581,899 shares of common stock having a fair value of $1,240,425. The derivative liability related to the notes converted was $544,881. As a result, the Company recorded a loss on extinguishment of debt of $30,196 and legal fees of $11,000.

Between the loss on extinguishment of debt related to the conversions above and the gain on extinguishment related to the repayment, the total gain was $43,477.