Quarterly report pursuant to Section 13 or 15(d)

DEBT

v3.21.1
DEBT
3 Months Ended
Mar. 31, 2021
Debt Disclosure [Abstract]  
Debt Disclosure [Text Block]

NOTE 5: DEBT


Notes Payable


As of March 31, 2021 and December 31, 2020, 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 ASC 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 May 2019, the Company issued a convertible note payable in the amount of $262,500, due in one year from the date of issuance, with 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. During April 2020, the note became convertible at the option of the holder and between May and July 2020 the Company issued a total of 16,355,821 shares of common stock for the conversion of $175,000 in note principal and accrued interest.


As of March 31, 2021 and December 31, 2020, the balance on the convertible note payable was $51,194 and $48,938, respectively. The fair value of the discount conversion feature on the remaining principal balance was $19,135 as of March 31, 2021 and is included in the note principal balance. During the three months ended March 31, 2021 and 2020, the Company recognized $0 and $3,116 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. During April 2020, the note became convertible at the option of the holder and during August and September 2020, the Company issued a total of 7,616,146 shares of common stock for the conversion of $50,000 in note principal.


As of March 31, 2021 and December 31, 2020, the balance on the convertible note payable was $182,360 and $174,168, respectively. The fair value of the discount conversion feature on the remaining principal balance was $71,022 as of March 31, 2021 and is included in the note principal balance. During the three months ended March 31, 2021 and 2020, the Company recognized $0 and $1,870 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 was due one year from the date of issuance, had an original issuance discount of $45,000, accrued interest at the rate of 10% per annum, was unsecured and was 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 and between July and November 2020, the note holder elected to convert $241,000 of principal and $18,379 in accrued interest for 41,696,169 shares of the Company’s common stock. During February 2021, the note holder elected to convert the remaining principal of $95,000 and accrued interest totaling $11,733 into 12,585,961 shares of the Company’s common stock. As of March 31, 2021 and December 31, 2020, the balance on the convertible note payable was $0 and $142,273, respectively. During the three months ended March 31, 2021 and 2020, the Company recognized $0 and $11,219 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 $78,725 as of March 31, 2021. As of March 31, 2021 and December 31, 2020, the balance on the convertible note payable was $216,725 and $209,194, respectively. During the three months ended March 31, 2021 and 2020, the Company recognized $222 and $518 in debt discount amortization expense, respectively.


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. During March 2021, the note holder elected to convert principal of $75,000 into 11,895,321 shares of the Company’s common stock.


The fair value of the discount conversion feature on the remaining principal balance was $210,242 as of March 31, 2021. As of March 31, 2021 and December 31, 2020, the balance on the convertible note payable was $575,242 and $666,724, respectively. During the three months ended March 31, 2021 and 2020, the Company recognized $5,918 and $8,877 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. During October 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 $139,766 as of March 31, 2021. As of March 31, 2021 and December 31, 2020, the balance on the convertible note payable was $387,266 and $371,018, respectively. During the three months ended March 31, 2021, the Company recognized $5,548 in debt discount amortization expense.


During December 2020, the Company issued a convertible note payable in the amount of $112,000. The convertible note payable is due one year from the date of issuance, has an original issuance discount of $12,000, incurred debt issuance costs of $2,000, accrues interest at the rate of 5% per annum, is unsecured and is convertible immediately into shares of the Company’s common stock at $0.005 per share. As a result of the conversion price being lower than the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature of $98,000 upon issuance.


As of March 31, 2021 and December 31, 2020, the balance on the convertible note payable was $112,000 and $112,000, respectively. During the three months ended March 31, 2021, the Company recognized $27,794 in debt discount amortization expense.


During the three months ended March 31, 2021, the Company recognized $29,528 in fair value gains as a result of the conversion options on the above mentioned convertible debt.