CONVERTIBLE NOTES AND DERIVATIVE LIABILITIES

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

CONVERTIBLE NOTES AND DERIVATIVE LIABILITIES

NOTE 7. CONVERTIBLE NOTES AND DERIVATIVE LIABILITIES

The following tables set forth the components of the Company’s, convertible debentures as of March 31, 2022, and December 31, 2021:

	March 31, 2022			December 31, 2021
Principal value of convertible notes	$	1,243,750		$	943,017
Note discount		(293,985	)		(167,569	)
Total convertible notes, net current	$	949,765		$	775,448

During the 3 months ended March 31, 2022, and March 31, 2021, the Company received proceeds from convertible notes of $476,250 and $53,500, respectively.

December 31, 2021 Activity

During the year ended December 31, 2021, the Company received proceeds from convertible notes of $530,833.

During the year ended December 31, 2021 the Company recorded $76,196 in interest expense on its convertible notes and amortized $883,670 of note discount which was charged to interest expense. As of December 31, 2021, there was $48,488 in accrued interest on these notes, and $167,569 in unamortized note discount related to these notes. As of the date of this Report, there was one note for $100,000 that was past due its maturity date. The Company has not received any notice of default on these notes and continues to accrue interest on these notes past the maturity date.

During the year ended December 31, 2021, the Company issued 51,681,766 common shares upon the conversion of $1,303,316 in convertible notes and recorded a loss on conversion of $1,452,629.

March 31, 2022 Activity

During the three months ended March 31, 2022, the Company received proceeds from convertible notes of $476,250.

During the three months ended March 31, 2022, the Company recorded $22,787 in interest expense on its convertible notes and amortized $109,970.73 of note discount which was charged to interest expense. As of March 31, 2022, there was $65,131 in accrued interest on these notes, and $293,985 in unamortized note discount relating to these notes. As of the date of this Report, there were eight notes amounting to $698,017 that was past due its maturity date. The Company has not received any notice of default on these notes and continues to accrue interest on these notes past the maturity date.

During the three months ended March 31, 2022, the Company issued 28,186,741 common shares upon the conversion of $248,767 in convertible notes and recorded a loss on conversion of $246,994.

Derivative liability

As of March 31, 2022 and December 31, 2021, derivative liabilities were valued using a probability-weighted average Black-Scholes-Merton pricing model with the following assumptions:

	March 31, 2022		December 31, 2021
Exercise Price		$  0.00671 – 0.0110		$  0.1342 – 0.0345
Stock Price		$  0.017		$  0.013 – 0.05
Risk-free interest rate		0.04%		0.04% – 0.09%
Expected volatility		194.2%		128.50 – 227.10%
Expected life (in years)		1.00		1.00
Expected dividend yield		0%		0%
Fair Value:		$  1,092,526		$  507,494

The risk-free interest rate was based on rates established by the Federal Reserve Bank. The Company uses the historical volatility of its common stock to estimate the future volatility for its common stock. The expected life of the conversion feature of the notes was based on the remaining term of the notes. The expected dividend yield was based on the fact that the Company has not customarily paid dividends in the past and does not expect to pay dividends in the future.

During the period ended March 31, 2022, the Company recognized a loss of $585,033 as “Other Expense” on its Consolidated Statements of Operations, which represented the net change in the value of the derivative liability.