Quarterly report pursuant to Section 13 or 15(d)

DEBT

v3.20.2
DEBT
6 Months Ended
Jun. 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 June 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 six months ended June 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 March 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. The note resulting in an $89,377 addition to the principal balance of the note for the fair value of the discount conversion feature as of June 30, 2020.


As of June 30, 2020, and December 31, 2019, the balance on the convertible note payable was $212,705 and $145,829, respectively. During the six months ended June 30, 2020 and 2019, the Company recognized $7,479 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 March 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. During April 2020, the note became convertible at the option of the holder, resulting in a $77,276 addition to the principal balance of the note for the fair value of the discount conversion feature as of June 30, 2020. During June 2020, the holder elected to convert $50,000 in note principal for 2,197,802 shares of the Company’s common stock.


As of June 30, 2020, and December 31, 2019, the balance on the convertible note payable was $184,776 and $202,500, respectively. During the six months ended June 30, 2020 and 2019, the Company recognized $4,863 and $1,336 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, resulting in an $81,935 addition to the principal balance of the note for the fair value of the discount conversion feature as of June 30, 2020.


As of June 30, 2020, and December 31, 2019, the balance on the convertible note payable was $216,935 and $135,000, respectively. During the six months ended June 30, 2020, the Company recognized $3,740 in debt discount amortization expense.


During September 2019, the Company issued two convertible notes payable totaling $270,000, or $135,000 each. The convertible notes payable are due one year from the date of issuance, each have an original issuance discount of $11,500, accrue interest at the rate of 6% per annum, are unsecured and are 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. During April 2020, the notes became convertible at the option of the holder, resulting in $68,685 in additions to the principal balances of the notes for the fair value of the discount conversion feature as of June 30, 2020. Between May and June 2020, the holders elected to convert a total of $157,000 in note principal and $4,000 in accrued interest for 5,197,867 shares of the Company’s common stock.


As of June 30, 2020, and December 31, 2019, the balance on the convertible notes payable was $169,185. During the six months ended June 30, 2020, the Company recognized $11,468 in debt discount amortization expense.


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, resulting in a $192,414 addition to the principal balance of the note for the fair value of the discount conversion feature as of June 30, 2020.


As of June 30, 2020, and December 31, 2019, the balance on the convertible note payable was $528,414 and $336,000, respectively. During the six months ended June 30, 2020, the Company recognized $22,438 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, resulting in an $118,005 addition to the principal balance of the note for the fair value of the discount conversion feature as of June 30, 2020.


As of June 30, 2020, and December 31, 2019, the balance on the convertible note payable was $338,005 and $220,000, respectively. During the six months ended June 30, 2020, the Company recognized $12,968 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. 


As of June 30, 2020, the balance on the convertible note payable was $138,000. During the six months ended June 30, 2020, the Company recognized $1,266 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. 


As of June 30, 2020, the balance on the convertible note payable was $440,000. During the six months ended June 30, 2020, the Company recognized $23,836 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 June 30, 2020, the balance on the convertible note payable was $247,500. During the six months ended June 30, 2020, the Company recognized $475 in debt discount amortization expense.


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


During the six months ended June 30, 2020, the Company recognized $627,692 in fair value losses as a result of the conversion options on the above mentioned convertible debt.