Quarterly report pursuant to Section 13 or 15(d)

DEBT

v3.20.2
DEBT
9 Months Ended
Sep. 30, 2020
Debt Disclosure [Abstract]  
Debt Disclosure [Text Block]

NOTE 5: DEBT


Accounts Payable


In January 2020, following mediation with a vendor of an outstanding balance, the Company successfully won the case and the balance of $131,539 was waived. The company had previously recognized the $131,539 balance in accounts payable, which was reversed in 2020 and recognized as a gain on debt settlement.


Notes Payable


As of September 30, 2020, and December 31, 2019, the Company had outstanding notes payable to former affiliates of the Company of $413,185 and $413,185, respectively. The notes payable are unsecured, bear no interest and are due on demand.


Convertible Debt


In accordance with Accounting Series Codification 480, Distinguishing Liabilities from Equity, the Company evaluates its hybrid convertible debt instruments with unconditional obligations allowing settlement by issuing a variable number of its equity shares to determine proper classification and accounting. The Company classifies the following hybrid convertible debt instruments as a liability upon being convertible at the option of the holders due to the conversion terms being based on fixed monetary amounts known at inception, in this case, settlement with a variable number of the Company’s equity shares. As such, conversion option and are carried as a liability at fair value at each balance sheet date with a re-measurement reported as a change in fair value of share-settled debt in other (income) expense in the accompanying condensed statements of operations.


During October 2018, the Company borrowed $345,000, net of original debt discount of $45,000 under a note payable bearing interest at 7% per annum, unsecured and was originally due January 18, 2019. Between January 2019 and March 2020, the due date on the note was extended multiple times in exchange for a total of $85,000 debt extension fee added to the principal of the note, the addition of a conversion feature and $20,000 in extension fees. The conversion feature allowed the holder to convert the principal and accrued interest into shares of the Company’s common stock at a discount of 70% of the lowest trading price for the Company’s common stock during the twenty trading days immediately preceding the conversion. During May 2020, the remaining note principal of $135,000 note and accrued interest totaling $32,881 were converted into 6,432,216 shares of common stock. During the nine months ended September 30, 2020 and 2019, the Company recognized $0 and $8,804 in in debt discount amortization expense, respectively.


During February 2019, the Company issued a convertible note payable in the amount of $315,000. The convertible note payable was due one year from the date of issuance, has an original issuance discount of $15,000, accrues interest at the rate of 6% per annum, is unsecured and was convertible at any time into shares of the Company’s common stock at a discount of 65% of the lowest trading price for the Company’s common stock during the ten trading days immediately preceding the conversion. Between February 2019 and June 2020, the Company extended the note conversion feature multiple times through April 15, 2020, paying two payments of $25,000 each, with a total of $30,000 applied to principal, $20,000 to debt extension fees, and incurring prepayment penalties added to principal of $7,500. During April 2020, the note became convertible at the option of the holder. During July 2020, the Company issued a total of 11,700,908 shares of common stock for the conversion of $95,000 in note principal.


The fair value of the discount conversion feature on the remaining principal balance was $43,260 as of September 30, 2020. As of September 30, 2020 and December 31, 2019, the balance on the convertible note payable was $71,589 and $145,829, respectively. During the nine months ended September 30, 2020 and 2019, the Company recognized $8,671 and $2,548 in debt discount amortization expense, respectively.


During May 2019, the Company issued a convertible note payable in the amount of $262,500. The convertible note payable is due one year from the date of issuance, has an original issuance discount of $12,500, accrues interest at the rate of 6% per annum, is unsecured and is convertible after 180 days into shares of the Company’s common stock at a discount of 65% of the lowest trading price for the Company’s common stock during the ten trading days immediately preceding the conversion. Between May 2019 and June 2020, the Company extended the note conversion feature multiple times through April 15, 2020, paying payments totaling $187,500, with a total of $140,000 applied to principal, $10,000 to interest, $37,500 to debt extension fees and incurring prepayment penalties added to principal of $35,000. Between May and June 2020, the Company issued a total of 12,509,667 shares of common stock for the conversion of $150,000 in note principal. On May 27, 2020, the Company incurred a 25% late fee of $39,375, which was added to the principal balance. During April 2020, the note became convertible at the option of the holder. The fair value of the discount conversion feature on the remaining principal balance was $31,024 as of September 30, 2020.


As of September 30, 2020, and December 31, 2019, the balance on the convertible note payable was $63,083 and $202,500, respectively. During the nine months ended September 30, 2020 and 2019, the Company recognized $4,863 and $4,486 in debt discount amortization expense, respectively.


During August 2019, the Company issued a convertible note payable in the amount of $157,500. The convertible note payable is due one year from the date of issuance, has an original issuance discount of $7,500, accrues interest at the rate of 6% per annum, is unsecured and is convertible after 180 days into shares of the Company’s common stock at a discount of 65% of the lowest trading price for the Company’s common stock during the ten trading days immediately preceding the conversion.


Between January and March 2020, the Company extended the note conversion feature through April 15, 2020, paying $37,500, with $30,000 applied to principal, $7,500 to debt extension fees and incurring prepayment penalties added to principal of $7,500. During April 2020, the note became convertible at the option of the holder. The fair value of the discount conversion feature on the remaining principal balance was $115,850 as of September 30, 2020. On August 10, 2020, the Company incurred a 25% late fee of $33,837, which was added to the principal balance.


As of September 30, 2020, and December 31, 2019, the balance on the convertible note payable was $227,187 and $135,000, respectively. During the nine months ended September 30, 2020 and 2019, the Company recognized $4,459 and $1,151 in debt discount amortization expense, respectively.


During September 2019, the Company issued two convertible notes payable totaling $270,000, or $135,000 each. The convertible notes payable were due one year from the date of issuance, each had an original issuance discount of $11,500, accrued interest at the rate of 6% per annum, unsecured and were convertible after 180 days into shares of the Company’s common stock at a discount of 65% of the lowest trading price for the Company’s common stock during the ten trading days immediately preceding the conversion.


During April 2020, the notes became convertible at the option of the holder. Between May and June 2020, the Company repaid $12,500 in principal in cash and the holders elected to convert the remaining principal of $257,000 and $12,050 in accrued interest for 18,002,387 shares of the Company’s common stock. As of September 30, 2020, and December 31, 2019, the balance on the convertible notes payable was $0 and $270,000, respectively. During the nine months ended September 30, 2020 and 2019, the Company recognized $16,888 and $0 in debt discount amortization expense, respectively.


During November 2019, the Company issued a convertible note payable in the amount of $336,000. The convertible note payable is due one year from the date of issuance, has an original issuance discount of $45,000, accrues interest at the rate of 10% per annum, is unsecured and is convertible after 180 days into shares of the Company’s common stock at a discount of 65% of the lowest trading price for the Company’s common stock during the ten trading days immediately preceding the conversion. During May 2020, the note became convertible at the option of the holder. Between July and September 2020, the note holder elected to convert $201,000 of principal and $14,642 in accrued interest for 32,662,941 shares of the Company’s common stock.


The fair value of the discount conversion feature on the remaining principal balance was $129,986 as of September 30, 2020. As of September 30, 2020, and December 31, 2019, the balance on the convertible note payable was $264,986 and $336,000, respectively. During the nine months ended September 30, 2020, the Company recognized $33,781 in debt discount amortization expense.


During December 2019, the Company issued a convertible note payable in the amount of $220,000. The convertible note payable is due one year from the date of issuance, has an original issuance discount of $26,000, accrues interest at the rate of 7% per annum, is unsecured and is convertible after 180 days into shares of the Company’s common stock at a discount of 65% of the lowest trading price for the Company’s common stock during the ten trading days immediately preceding the conversion. During June 2020, the note became convertible at the option of the holder. Between July and September 2020, the note holder elected to convert $169,923 of principal for 22,600,000 shares of the Company’s common stock.


The fair value of the discount conversion feature on the remaining principal balance was $57,314 as of September 30, 2020. As of September 30, 2020 and December 31, 2019, the balance on the convertible note payable was $107,391 and $220,000, respectively. During the nine months ended September 30, 2020, the Company recognized $19,518 in debt discount amortization expense.


During January 2020, the Company issued a convertible note payable in the amount of $138,000. The convertible note payable is due one year from the date of issuance, has an original issuance discount of $3,000, accrues interest at the rate of 8% per annum, is unsecured and is convertible after 180 days into shares of the Company’s common stock at a discount of 65% of the lowest trading price for the Company’s common stock during the ten trading days immediately preceding the conversion. During July 2020, the note became convertible at the option of the holder.


The fair value of the discount conversion feature on the remaining principal balance was $134,401 as of September 30, 2020. As of September 30, 2020, the balance on the convertible note payable was $272,401. During the nine months ended September 30, 2020, the Company recognized $2,022 in debt discount amortization expense.


During February 2020, the Company issued a convertible note payable in the amount of $440,000. The convertible note payable is due one year from the date of issuance, has an original issuance discount of $40,000, accrues interest at the rate of 5% per annum, is unsecured and is convertible after 180 days into shares of the Company’s common stock at a discount of 65% of the lowest trading price for the Company’s common stock during the ten trading days immediately preceding the conversion. During August 2020, the note became convertible at the option of the holder.


The fair value of the discount conversion feature on the remaining principal balance was $422,714 as of September 30, 2020. As of September 30, 2020, the balance on the convertible note payable was $862,713. During the nine months ended September 30, 2020, the Company recognized $38,959 in debt discount amortization expense.


During April 2020, the Company issued a convertible note payable in the amount of $247,500. The convertible note payable is due one year from the date of issuance, has an original issuance discount of $22,500, accrues interest at the rate of 5% per annum, is unsecured and is convertible after 180 days into shares of the Company’s common stock at a discount of 65% of the lowest trading price for the Company’s common stock during the ten trading days immediately preceding the conversion. 


As of September 30, 2020, the balance on the convertible note payable was $247,500. During the nine months ended September 30, 2020, the Company recognized $10,418 in debt discount amortization expense.


During the three months ended September 30, 2020, the Company paid $20,000 as a debt financing fee on the above financings.


During the nine months ended September 30, 2020, the Company recognized $934,548 in fair value losses as a result of the conversion options on the above mentioned convertible debt.