Quarterly report pursuant to Section 13 or 15(d)

DEBT

v3.21.2
DEBT
9 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
Debt Disclosure [Text Block]

NOTE 5: DEBT

 

Notes Payable

 

As of September 30, 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. As of September 30, 2021 and December 31, 2020, the balance on the convertible note payable was $72,159 and $48,938, respectively. The fair value of the discount conversion feature on the remaining principal balance was $40,100 as of September 30, 2021 and is included in the note principal balance. During the nine months ended September 30, 2021 and 2020, the Company recognized $0 and $4,863 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. As of September 30, 2021 and December 31, 2020, the balance on the convertible note payable was $259,389 and $174,168, respectively. The fair value of the discount conversion feature on the remaining principal balance was $148,052 as of September 30, 2021 and is included in the note principal balance. During the nine months ended September 30, 2021 and 2020, the Company recognized $0 and $4,459 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 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 September 30, 2021 and December 31, 2020, the balance on the convertible note payable was $0 and $142,273, respectively. During the nine months ended September 30, 2021 and 2020, the Company recognized $0 and $33,781 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.

 

As of September 30, 2021 and December 31, 2020, the balance on the convertible note payable was $295,388 and $209,194, respectively. The fair value of the discount conversion feature on the remaining principal balance was $157,388 as of September 30, 2021. During the nine months ended September 30, 2021 and 2020, the Company recognized $222 and $2,022 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 the nine months ended September 30, 2021, the note holder elected to convert principal of $346,642 into 69,124,933 shares of the Company’s common stock.

 

The fair value of the discount conversion feature on the remaining principal balance was $130,477 as of September 30, 2021. As of September 30, 2021 and December 31, 2020, the balance on the convertible note payable was $223,835 and $666,724, respectively. During the nine months ended September 30, 2021 and 2020, the Company recognized $5,918 and $38,959 in debt discount amortization expense, respectively.

 

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 $279,490 as of September 30, 2021. As of September 30, 2021 and December 31, 2020, the balance on the convertible note payable was $526,990 and $371,018, respectively. During the nine months ended September 30, 2021 and 2020, the Company recognized $6,411 and $10,418 in debt discount amortization expense, respectively.

 

During December 2020, the Company issued a convertible note payable in the amount of $112,000. The convertible note payable was due one year from the date of issuance, had an original issuance discount of $12,000, incurred debt issuance costs of $2,000, accrued interest at the rate of 5% per annum, was unsecured and 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.

 

During June 2021, as discussed above, the Related Party Note Holder purchased the convertible promissory note and accrued interest for a total of $115,000 and agreed to replace it with a non-convertible promissory note. The principal and accrued interest at the time of conversion totaled $117,585, resulting in a gain of $2,585 on note conversion. As of September 30, 2021 and December 31, 2020, the balance on the convertible note payable was $0 and $112,000, respectively. During the nine months ended September 30, 2021, the Company recognized $111,901 in debt discount amortization expense.

 

During the nine months ended September 30, 2021 and 2020, the Company recognized $207,089 and $934,548 in fair value losses, respectively, as a result of the conversion options on the above mentioned convertible debt.