| DEBTS |
6.
DEBTS
Debts
consist of the following at June 30, 2022 and December 31, 2021:
SCHEDULE
OF DEBT
| | |
June 30,
2022 | | |
December 31, 2021 | |
| Notes payable – Unrelated third parties (Net of discount of $32,325 and $0, respectively) (2) | |
$ | 1,336,807 | | |
$ | 1,135,257 | |
| Convertible notes payable – Unrelated third parties (Net of discount of $206,942 and $283,429, respectively) (3) | |
| 4,261,241 | | |
| 3,751,760 | |
| Convertible notes payable, at fair value (4) | |
| 2,501,221 | | |
| 2,855,709 | |
| Other advances from an unrelated third party (5) | |
| 225,000 | | |
| 225,000 | |
| SBA notes payable(6) | |
| 149,900 | | |
| 149,900 | |
| Ending balances | |
| 8,474,169 | | |
| 8,117,626 | |
| Less: Long-term portion-Notes payable-Unrelated third parties | |
| (15,076 | ) | |
| - | |
| Less: Long-term portion-Convertible Notes payable-Unrelated third parties | |
| (51,057 | ) | |
| (369,401 | ) |
| Less: Long-term portion- SBA notes payable | |
| (147,779 | ) | |
| (147,779 | ) |
| Current portion | |
$ | 8,260,257 | | |
$ | 7,600,446 | |
| (1) |
During
2010 we borrowed $200,000 from one of our directors. Under the terms of the loan agreement, this loan was expected to be repaid in
nine months to a year from the date of the loan along with interest calculated at 10% for the first month plus 12% after 30 days
from funding. We are in default regarding this loan. The loan is under personal guarantee by Mr. Deitsch. We repaid the principal
balance in full as of December 31, 2016. We repaid $40,000 of the accrued interest in cash during the first and second quarters of
2021, and $10,000 of accrued interest in common stocks during the fourth quarter of 2021. During the first and second quarter of
2022, we repaid $15,000 of accrued interest. At June 30, 2022 and December 31, 2021, we owed this director accrued interest of $141,236
and $147,768, respectively. The interest expense for the three-months ended June 30, 2022 and 2021 was $4,189 and $4,432, respectively,
and for the six-months ended June 30, 2022 and 2021 was $8,468 and $9,377, respectively. |
| |
|
| (2) |
At
June 30, 2022 and December 31, 2021, the balance of $1,336,807 and $1,135,257 net of discount of $32,325 and $0, respectively, consisted
of the following loans: |
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● |
In
August 2016, we issued two Promissory Notes for a total of $200,000 ($100,000 each) to a company owned by a former director of the
Company. The Notes carry interest at 12% annually and were originally due on the date that was six-months from the execution and
funding of the note. The principal balance of $101,818 and accrued interest of $21,023 were settled on February 15, 2019 for $104,000
with scheduled payments through May 1, 2020. During the first quarter of 2020, the settlement was further amended to $88,500. We
recorded a gain on settlement of debt in other income for $15,500 during the first quarter of 2020. The settlement balance of $88,500
was repaid in full during November 2020. At June 30, 2022 and December 31, 2021, we owed principal balance of $91,156, and accrued
interest of $57,280 and $51,856, respectively. The remaining principal balance of $91,156 and accrued interest of $57,280 is being
disputed in court and negotiation for settlement. (See Note 12). |
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● |
On
August 2, 2011 under a settlement agreement with Liquid Packaging Resources, Inc. (“LPR”), we agreed to pay LPR a total
of $350,000 in monthly installments of $50,000 beginning August 15, 2011 and ending on February 15, 2012. We signed the first amendment
to the settlement agreement where we agreed to pay $175,000, which was the balance outstanding at December 31, 2011(this includes
a $25,000 penalty for non-payment). We repaid $25,000 during the three months ended March 31, 2012. We did not make all of the payments
under such amendment and as a result pursuant to the original settlement agreement, LPR had the right to sell 142,858 shares (5,714,326
shares pre reverse stock split) of our free trading stock held in escrow by their attorney and receive cash settlements for a total
amount of $450,000 (the initial $350,000 plus total default penalties of $100,000). LPR sold the note to Southridge Partners, LLP
(“Southridge”) for consideration of $281,772 in June 2012. In August 2013 the debt of $281,772 reverted back to LPR. |
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● |
At
December 31, 2012, we owed University Centre West Ltd. approximately $55,410 for rent, which was assigned and sold to Southridge,
and it is currently outstanding and carries no interest. |
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● |
In
April 2016, we issued a promissory note to an unrelated third party in the amount of $10,000 bearing interest at 10% annually. The
note was due in one year from the execution and funding of the note. The note is in default and negotiation of settlement. At June
30, 2022 and December 31, 2021, the accrued interest is $6,286 and $5,783. |
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● |
In
May 2016, the Company issued a promissory note to an unrelated third party in the amount of $75,000 bearing monthly interest at a
rate of 2%. The note was due in six months from the execution and funding of the note. During April 2017, we accepted the offer of
a settlement to issue 5,000,000 common shares as a repayment of $25,000. The note is in default and in negotiation of settlement.
At June 30, 2022 and December 31, 2021, the outstanding principal balance is $50,000 and accrued interest is $80,367 and $74,334. |
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● |
In
June 2016, the Company issued a promissory note to an unrelated third party in the amount of $50,000 bearing monthly interest at
a rate of 2%. The note was due in six months from the execution and funding of the note. The note is in default and negotiation of
settlement. At June 30, 2022 and December 31, 2021, the outstanding principal balance is $50,000 and accrued interest is $73,567
and $67,534, respectively. |
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● |
A
promissory note originally issued to an unrelated third party in August 2016 was restated in September 2019 in the amount of $333,543
bearing monthly interest at a rate of 2.0% and was due September 2020. In connection with this restated note, we issued 20,000,000
shares of our common stock. During September 2020, we issued a total of 10,000,000 restricted shares due to the default on repayments.
The shares were valued at fair value of $6,000. The common stock was valued at $5,895 and recorded as a debt discount that was amortized
over the life of the note. Amortization for this debt discount was fully amortized at December 31, 2020. The Note is in default and
negotiation of settlement. At June 30, 2022 and December 31, 2021, the principal balance is $333,543, and the accrued interest is
$227,921 and $187,673, respectively. |
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● |
On
September 26, 2016, we issued a promissory note to an unrelated third party in the amount of $75,000 bearing interest at 10% annually.
The note was due in one year from the execution and funding of the note. In March 2018, $15,000 of the principal balance of the note
was assigned to an unrelated third party and is in negotiation of settlement. In January 2019, the remaining principal balance of
$60,000 and accrued interest of $15,900 was restated in the form of a Convertible Note (See Note 6(4)). At June 30, 2022 and December
31, 2021, the principal balance outstanding is $15,000, and the accrued interest is $1,371. |
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● |
In
October 2016, we issued a promissory note to an unrelated third party in the amount of $50,000 bearing monthly interest at a rate
of 2%. The note was due in six months from the execution and funding of the note. The note is in default and in negotiation of settlement.
At June 30, 2022 and December 31, 2021, the accrued interest is $69,867 and $63,834, respectively. |
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● |
In
June 2017, we issued a promissory note to an unrelated third party in the amount of $12,500 bearing interest at 10% annually. The
note was due in one year from the execution and funding of the note. The note is in default and in negotiation of settlement. At
June 30, 2022 and December 31, 2021, the accrued interest is $6,379 and $5,750, respectively. |
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● |
During
July 2017, we received a loan for a total of $200,000 from an unrelated third party. The loan was repaid through scheduled payments
through August 2017 along with interest on average 15% annum. During June 2018, the loan was settled with two unrelated third parties
for $130,401 and $40,000, respectively, with the monthly scheduled repayments of approximately $5,000 and $2,000 per month to each
unrelated party through July 2020. The Company repaid a total of $34,976, $42,698, and $44,478 during 2018, 2019 and 2020, respectively.
Additionally, repayment of $14,376 was made during the first quarter of 2021. At June 30, 2022 and December 31, 2021, the principal
balance is $33,874. The portion of settlement of $130,401 was repaid in full as of March 31, 2021. The remaining balance of $33,874
is in default and negotiation of settlement. |
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|
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● |
In
July 2017, we issued a promissory note to an unrelated third party in the amount of $50,000 with original issue discount of $10,000.
The note was due in six months from the execution and funding of the note. The note is in default and in negotiation of settlement.
At June 30, 2022 and December 31, 2021, the principal balance of the note is $50,000. |
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● |
In
November 2017, we issued a promissory note to an unrelated third party in the amount of $120,000 with original issuance discount
of $20,000. During March 2020, $50,000 of the Note was settled for 125,000,000 shares with a fair value of $87,500. We recorded a
loss on settlement in other expense for $37,500 in March 2020. An additional 36,000,000 shares were issued to satisfy the default
provision of the original note and 10,000,000 shares were issued along with the restatement. The total fair value of issued stock
was $32,200. The remaining balance of $70,000 was restated with additional issuance discount of $14,000 due in September 2020. We
repaid $10,000 during the first quarter of 2022. The $74,000 is in default and negotiation of further settlement. At June 30, 2022
and December 31, 2021, the principal balance of the loan is $74,000. |
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● |
In
November 2017, we issued a promissory note to an unrelated third party in the amount of $18,000 with original issuance discount of
$3,000. The note is in default and in negotiation of settlement. The note was due in six months from the execution and funding of
the note. At June 30, 2022 and December 31, 2021, the principal balance of the note is $18,000 and the accrued interest is $2,000. |
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● |
During
January 2022, the Company received a loan for $199,000 from a non-related party. The loan is expected to be repaid through scheduled
payments through July 2023 along with interest on average 63.76% annum. The Company has recorded loan costs in the amount of $4,975 for
the loan origination fees paid at inception date. The total loan cost is amortized over the term of the loan. The amortization of loan
cost for the three and six months ended June 30, 2022 is $850 and $1,450, respectively. The loan is under personal guarantee by Mr. Deitsch.
We repaid $39,534 during the first and second quarter of 2022. At June 30, 2022, the principal balance, net of debt discount of $3,525,
is $155,941. |
|
● |
During
June 2022, the Company entered a Purchase and Sale of Future Receipts Agreement with a non-related party. This third party purchased
$87,000 of the merchant sales for $60,000. In exchange for the purchased amount, the Company agreed to authorize the buyer to debit
the amount from the Company’s bank account according to the remittance frequency, until the buyer has received the purchase
amount of $87,000. The Company has recorded a total debt discount of $29,685 for the loan origination fees and loan issuance cost.
The total debt discount was amortized over the term of the loan. Amortization for the debt discount for the three and six months
ended June 30, 2022 was $885. We repaid $2,589 during the second quarter of 2022. At June 30, 2022, the principal balance, net of
debt discount of $28,800, is $55,611.
|
| (3) |
At
June 30, 2022 and December 31, 2021, the balance of $4,261,241 and $3,751,760 net of discount of $206,942 and $283,429, respectively,
consisted of the following convertible loans: |
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● |
In
October 2017, we issued a promissory note to an unrelated third party in the amount of $60,000 with original issuance discount of
$10,000 and a conversion option. The note was due in six months from the execution and funding of the note. The loan is in default
and in negotiation of settlement. At June 30, 2022 and December 31, 2021, the principal balance of the note is $60,000. |
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● |
During
January through December 2018, we issued convertible notes payable to the 20 unrelated third parties for a total of $618,250 with
original issue discount of $62,950. The notes were due in six months from the execution and funding of each note. The notes are convertible
into shares of Company’s common stock at a conversion price ranging from $0.0003 to $0.001 per share. The total discount of
$255,655 and original issuance discount of $62,950 have been fully amortized during 2019 for $28,421. |
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During
February 2019, we issued convertible notes payable of $55,000 with original issuance discount of $5,000. The notes were due in six
months from the execution and funding of each note. The notes are convertible into shares of Company’s common stock at a conversion
price of $0.0005 per share. During August and October 2020, the convertible promissory notes for a total of $55,000 was amended to
add additional original issuance discount (OID) for a total of $9,200. In connection with the issuance of amended convertible notes,
the Company granted the total of 128,400 warrants at an exercise price of $0.001 per share. The warrants were valued using the Black-Scholes
method and recorded as a debt discount. 92,100,000 and $36,300,000 of the warrants were amended to expire in August 2022 and October
2022, respectively. Due to the fact that the number of shares of common stock issuable could
exceed the Company’s authorized share limit, the warrants issued with debt are treated as derivative liabilities requiring fair
value adjustment at each reporting date. The warrants were
valued at their fair value of $65,600 and $195,178 on June 30, 2022 and December 31, 2021 (See Note 8). |
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|
During
May 2019, we restated two convertible notes payable with additional original issue discount of $6,400. The two restated notes were
due in August 2019 and are in default. |
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During
February, November and December 2019, we issued three convertible promissory notes to the unrelated third party for $174,500 with
original issuance discount of $14,500. The notes were due six months from the execution and funding of the notes. The Noteholder
had the right to convert the note into shares of Common Stock at a fixed conversion price ranging from $0.0002 to $0.000275. The
Notes are in default and negotiation of settlement. |
During
2019, repayments of $13,500 were made in cash to three of the Notes. Six of the Notes for a total of $87,100 were repaid in stocks as
the part of settlement of issuances of 800,000,000 shares of common stocks during December 2019.
At
December 31, 2019, the principal balance of the notes, net of discount of $17,370 was $736,180. The remaining debt discount of $17,370
has been fully amortized during the fiscal year 2020. Two of the above mentioned convertible notes payable were settled in March and
April, 2021. One of the above mentioned convertible notes payable was repaid in cash for $10,000.
During
the year ended December 31, 2020, we issued convertible notes payable of $555,600
with original issuance discount of $53,600.
$287,400
of these notes were due in a year, and $268,200
of the Notes are due in six months from the execution
and funding of each note. The notes are convertible into shares of Company’s common stock at a conversion price ranging from $0.0002
to 0.0008
per share. During July 2020, we issued a total
of 1,000,000
restricted shares to a Note holder due to the
default on repayments of the promissory note of $22,000
originated in December 2019. The shares were
valued at fair value of $700.
In addition, in connection with the issuance of two of the above mentioned convertible notes of $57,500
with original issuance discount of $7,500
due in one year, the Company granted the 71,875,000
warrants at an exercise price of $0.002
per share that expire one year from the date
of issuance. The two Notes of $57,500
were further amended to due August 2022. The
warrants are valued using the Black-Scholes method and recorded as a debt discount. No warrants have been exercised. The debt discounts
associated with the warrants and OID for $50,000
and $7,500,
respectively, are amortized over the life of the notes. Due to the fact that the number of shares of common stock issuable could exceed
the Company’s authorized share limit, the warrants issued with debt are treated as derivative liabilities requiring fair value
adjustment at each reporting date. The warrants were valued at their fair value of $24,676
and $106,032
using the Black-Scholes method on June 30, 2022
and December 31, 2021 (See Note 8).
At
December 31, 2020, the principal balance of the notes, net of discount of $101,448 is $1,276,902. The total discount amortization on
all notes was $83,720.
During
the first quarter of 2021, we issued convertible promissory notes to the unrelated third parties for a total of $717,667 with original
issuance discount of $93,609. During the second quarter of 2021, we issued convertible promissory notes to the unrelated third parties
for a total of $864,225 with original issuance discount of $112,725. During the third quarter of 2021, we issued convertible promissory
notes to the unrelated third parties for a total of $539,351 with original issuance discount of $70,350. During the fourth quarter of
2021, we issued convertible promissory notes to the unrelated third parties for a total of $358,800 with original issuance discount of
$46,800. The Noteholders have the right to convert the note into shares of Common Stock at a conversion price ranging from $0.0003 to
$0.002 per share. The notes are due one year from the execution and funding of the notes. On January 1, 2022, $228,563 of the Notes issued
during January to April 2021 were amended to extend the due date to August 29, 2022.
During
December 2021, in connection with the issuance of three of the above mentioned convertible notes of $172,500
with original issuance discount of $22,500
due in one year, the Company granted the 246,428,571
warrants at an exercise price of $0.002
per share that expire one year from the date
of issuance. The warrants are valued using the Black-Scholes method and recorded as a debt discount. No warrants have been exercised.
The debt discounts associated with the warrants and OID for $150,000
and $22,500,
respectively, are amortized over the life of the notes. Due to the fact that the number of shares of common stock issuable could exceed
the Company’s authorized share limit, the warrants issued with debt are treated as derivative liabilities requiring fair value
adjustment at each reporting date. The warrants were valued at their fair value of $164,135
and $409,374
using the Black-Scholes method on June 30, 2022
and December 31, 2021, respectively (See Note 8).
During
March 2021, the remaining balance of promissory note of $30,000 originally issued in September 2018 was sold to an unrelated third party
in the form of a convertible note at a fixed conversion price of $0.01 per share (See Note 6(2)). The new note carries interest at 12%
with scheduled monthly payments of $1,000 beginning in April 2021 through March 2024. Repayment of $7,323 has been made through December
31, 2021. Repayment of $4,757 was made during the first and second quarter of 2022. The principal balance as of June 30, 2022 and December
31, 2021 is $17,920 and $22,677, and the interest expense for the three-months ended June 30, 2022 and 2021 is $586 and $1,158, respectively.
The interest expense for the six-months ended June 30, 2022 and 2021 is $1,243 and $1,158, respectively.
During
March 2021, in connection with the settlement of the $6,000 of the Note of $11,000 originated in November 2018, we issued 11,000,000
shares of common stocks in satisfaction of $6,000 of the Note with a fair value of $104,500 and made a repayment of $5,000 in cash. The
settlement resulted in a loss on settlement of debt for $98,500. During April 2021, in connection with this settlement of the remaining
balance of $8,500 of the Note of $12,000 originated in December 2018, we issued 2,000,000 shares of common stocks in satisfaction of
$4,000 of the Note with a fair value of $15,200 and made a repayment of $4,500 in cash. The settlement resulted in a loss on settlement
of debt for $11,200.
During
August 2021, the promissory note of $166,926 was restated in the form of a convertible note at a fixed conversion price of $0.002 per
share. The restated balance is $183,619 with an original issuance discount of $16,693 and was due February 2022. During February 2022,
we issued 20,866,250 shares of common stock to satisfy the principal balance of $16,693 with fair value of $54,252 (See Note 7). The
settlement of balance of $16,693 resulted in a loss on settlement of debt for $37,559 in other expense. The remaining balance of $166,926
was further restated in the form of a convertible note at a fixed conversion price of $0.002 per share due August 2022.
During
the first quarter of 2022, we issued convertible promissory notes to the unrelated third parties for a total of $172,500 with original
issuance discount of $22,500. The Noteholders have the right to convert the note into shares of Common Stock at a conversion price ranging
from $0.0005 to $0.0008 per share. The notes are due one year from the execution and funding of the notes.
During
the second quarter of 2022, we issued convertible promissory notes to the unrelated third parties for a total of $379,500 with original
issuance discount of $49,500. The Noteholders have the right to convert the note into shares of Common Stock at a conversion price ranging
from $0.0006 to $0.0008 per share. The notes are due one year from the execution and funding of the notes.
During
January and May 2022, in connection with the issuance of one of the above mentioned convertible notes of $115,000
with original issuance discount of $15,000
due in one year, the Company granted the 164,285,714
warrants at an exercise price of $0.002
per share that expire one year from the date
of issuance. The warrants are valued using the Black-Scholes method and recorded as a debt discount. No warrants have been exercised.
The debt discounts associated with the warrants and OID for $100,000
and $15,000,
respectively, are amortized over the life of the notes. Due to the fact that the number of shares of common stock issuable could exceed
the Company’s authorized share limit, the warrants issued with debt are treated as derivative liabilities requiring fair value
adjustment at each reporting date. The warrants were valued at their fair value of $122,258
using the Black-Scholes method on June 30, 2022
(See Note 8).
During
June 2022, we repaid a convertible notes payable originated in May 2021 in cash for $5,750. During May 2022, in connection with the settlement
of a total of $108,500 of the Notes originated in 2020 and 2021 with one noteholder, we issued 222,500,000 shares of common stocks in
satisfaction of $108,500 of the Notes with a fair value of $222,500 (See Note 7). The settlement resulted in a loss on settlement of
debt for $114,000.
At
the date of this report, $2,886,929 of the above-mentioned convertible notes payable are in default and in negotiation of settlement.
The
total discount amortization on all notes for the three and six months ended June 30, 2021 was $132,171 and
$265,181,
respectively. The total discount amortization on all notes for the three and six months ended June 30, 2021 was $58,330 and
$122,469,
respectively. At June 30, 2022, the principal balance of the notes, net of discount of $206,942 is
$4,261,241.
At December 31, 2021, the principal balance of the notes, net of discount of $283,430 is
$3,751,760.
| (4) |
At
June 30, 2022 and December 31, 2021, the balance of $2,501,221 and $2,855,709, respectively, consisted of the following convertible
loans: |
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● |
The
remaining balance of $20,000 of a Convertible Note of $120,000 originated in March 2016 is in default and negotiation of settlement.
The conversion price is equal to 55% of the average of the three lowest volume weighted average prices for the three consecutive
trading days immediately prior to but not including the conversion date. At June 30, 2022 and December 31, 2021, the convertible
notes payable with principal balance of $20,000 plus accrued interest of $23,194 and $21,183, respectively, at fair value, were recorded
at $66,265 and $84,768, respectively. |
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● |
During
May 2017, we issued a Convertible Debenture in the amount of $64,000 to an unrelated third party. The note was due on May 4, 2018.
The Note holder has the right to convert the note into shares of Common Stock at a sixty percent (60%) of the lowest trading price
of our restricted common stock for the twenty trading days preceding the conversion date. We have accrued interest at default interest
rate of 20% after the note’s maturity date. After prior conversions, at June 30, 2022 and December 31, 2021, the remaining
principal of $12,629 plus accrued interest of $16,097 and $14,834, respectively, at fair value, were recorded at $71,815 and $70,418,
respectively. The remaining principal balance of the Note is in default. |
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● |
During
February through August 2018, we issued seven convertible promissory notes to an unrelated third party due one year from the execution
dates. During October 2020, the Note holder sold the remaining debt principal value as of October 22, 2020 of $509,301 and accrued
interest of $234,417 for $250,000 to a non-related party. The new note of $250,000 carries interest at 8%. The Noteholder has the
right to convert the note into shares of our restricted common stock at sixty percent of the lowest trading price of our restricted
common stock for the twenty-five prior trading days including the conversion date. In connection with the issuance of the convertible
note payable, we recorded a day-one derivative loss of $286,969. We have increased the outstanding principal due by 10% and accrued
interest at default interest rate of 24% after the note’s maturity date. At June 30, 2022 and December 31, 2021, the convertible
note payable with principal balance of $275,000 plus accrued interest of $65,386 and $32,657, respectively, at fair value, were recorded
at $1,021,159 and $946,639. |
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● |
During
July 2018, we issued a convertible debenture in the amount of $50,000 to an unrelated third party. The note carries interest at 8%
and was due in July 2019, unless previously converted into shares of restricted common stock. We have accrued interest at default
interest rate of 24% after the note’s maturity date. The Note holder has the right to convert the note into shares of Common
Stock at fifty five percent of the average three lowest trading price of our restricted common stock for the fifteen trading days
including the date of receipt of conversion notice. In connection with the issuance of the convertible note payable, we recorded
a day-one derivative loss of $46,734. At June 30, 2022 and December 31, 2021, the convertible note payable with principal balance
of $50,000 plus accrued interest of $39,408 and $33,490, at fair value, was recorded at $231,007 and $202,491, respectively. |
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● |
During
August 2018, we issued a convertible debenture in the amount of $20,000 to an unrelated third party. The note carries interest at
8% and was due in August 2019, unless previously converted into shares of restricted common stock. We have accrued interest at default
interest rate of 24% after the note’s maturity date. The Note holder has the right to convert the note into shares of Common
Stock at fifty five percent of the average three lowest trading price of our restricted common stock for the fifteen trading days
including the date of receipt of conversion notice. In connection with the issuance of the convertible note payable, we recorded
a day-one derivative loss of $17,829. At June 30, 2022 and December 31, 2021, the convertible note payable with principal balance
of $20,000 plus accrued interest of $15,290 and $12,923, at fair value, was recorded at $91,180 and $79,815, respectively. |
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● |
During
January 2019, the principal balance of $60,000 from a promissory note of $75,000 originated in September 2016 (See Note 6(2)) and
accrued interest of $15,900 was restated in the form of a Convertible Note. The new note of $75,900 was due in one year from the
restatement of the note. The Noteholder has the right to convert the note into shares of Common Stock at 50% discount to the average
trading price of the three lowest closing stock prices for the twenty days prior to the notice of conversion. In connection with
the issuance of the convertible note payable, we recorded a day-one derivative loss of $75,900. During November 2020, the Note holder
assigned $20,000 of the $75,900 convertible note restated in January 2019 to a third party. The third party subsequently received
a total of 100,000,000 shares of our restricted common stock in satisfaction the $20,000 of the Note with a fair value of $140,000.
At June 30, 2022 and December 31, 2021, the convertible note payable of $55,900, at fair value, was recorded at $158,874 and $156,000.
The note was due January 2021. The Note is in default and negotiation of settlement. |
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During
February 2019, we issued a convertible promissory note to an unrelated third party in the amount up to $1,000,000 paid upon tranches.
The note is due two years from the execution and funding of the note per tranche. The Noteholder has the right to convert the note
into shares of Common Stock at a conversion price of the lower of $0.0005 or 50% discount to the average trading price of the three
lowest closing stock prices for the twenty days prior to the notice of conversion. The eight total tranches of the Note in the amount
of $372,374 and $20,199 have been funded during 2019 and 2020, respectively. An additional three tranches of the Note for a total
of $132,000 have been funded, and repayment of $40,480 has been made during the year ended December 31, 2021. Repayment of $20,000
was made during the first quarter of 2022. In connection with issuance of the convertible note, the Noteholder agreed to eliminate
two outstanding Notes of $27,000 and the accrued interest of $11,412 that were held by the Noteholder’s defunct entities. In
connection with the issuance of the convertible note payable tranches during the year ended December 31, 2021, we recorded a day-one
derivative loss of $2,042,612. During May and June 2019, the Note holder made conversions of a total of 750,000,000 shares of stock
satisfying the principal balance of $100,000 for a fair value of $275,000. During January 2020 through February 2020, the Note holder
received a total of 500,000,000 shares of our restricted common stock in satisfaction the $175,000 of the Note with a fair value
of $425,000. During February through June 2021, the Note holder received a total of 240,350,000 shares of our restricted common stock
in satisfaction the $120,175 of the Note with a fair value of $2,344,399. During February 2022, the Noteholder received 12,000,000
shares of our restricted common stock in satisfaction the $6,000 of the Note with a fair value of $36,000 (See Note 7). The remaining
balance of $62,917 is due September 2023. At June 30, 2022 and December 31, 2021, the convertible note payable with principal balance
of $62,917 and $88,917, at fair value, was recorded at $178,817 and $355,668. |
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During
June 2019, we issued a convertible promissory note to an unrelated third party for $240,000 with original issuance discount of $40,000.
The note was due one year from the execution and funding of the notes. In connection with the issuance of this note, we issued 16,000,000
shares of our restricted common stock. The common stock was valued at $4,688 and recorded as a debt discount that was amortized over
the life of the note. The Noteholder has the right to convert the note into shares of Common Stock at a conversion price of the lower
of $0.0005 or 50% discount to the average trading price of the three lowest closing stock prices for the twenty days prior to the
notice of conversion. In connection with the issuance of the convertible note payable, we recorded a day-one derivative loss of $240,000.
At June 30, 2022 and December 31, 2021, the convertible note payable with principal balance of $240,000, at fair value, was recorded
at $628,105 and $960,000. The Note is in default and negotiation of settlement. |
| (5) |
At
June 30, 2022 and December 31, 2021, the balance of $225,000 consisted of the advances received from a third party during the periods
from May 2019 through May 2020 in connection with a Joint Venture proposal. The deposits were considered as payments towards the
purchase of equity in the joint venture. The joint venture is currently on hold pending the outcome of the lawsuit with the Securities
and Exchange Commission (see Note 12). |
| |
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| (6) |
During
May 2020, we entered into a two-year loan agreement with the U. S. Small Business Administration for a Payroll Protection Program
(PPP) loan, for $64,895 with an annual interest rate of one percent (1%), with a term of twenty-four (24) months, whereby a portion
of the loan proceeds have been used for certain labor costs, office rent costs and utilities, which may be subject to a loan forgiveness,
pursuant to the terms of the SBA/PPP program. We used the proceeds primarily for payroll costs. The entire loan was forgiven in November
2021.
During
April and June 2020, the Company executed the standard loan documents required for securing a loan from the SBA under its Economic
Injury Disaster Loan assistance program (the “EIDL Loan”) considering the impact of the COVID-19 pandemic on the Company’s
business. Pursuant to the Loan Authorization and Agreement (the “SBA Loan Agreement”), the principal amount of the EIDL
Loan was $150,000, with proceeds to be used for working capital purposes. Interest accrues at the rate of 3.75% per annum. Installment
payments, including principal and interest, are due 30 months from the date of the SBA Loan Agreement in the amount of $731. The
balance of principal and interest is payable over a 360-month period from the date of the SBA Loan Agreement. In connection therewith,
the Company received a $5,000 advance, which does not have to be repaid. We recorded it as other income in April 2020. The SBA requires
that the Company collateralize the loan to the maximum extent up to the loan amount. If business fixed assets do not “fully
secure” the loan the lender may include trading assets (using 10% of current book value for the calculation), and must take
available equity in the personal real estate (residential and investment) of the principals as collateral. The accrued interest as
of June 30, 2022 and December 31, 2021 for the EIDL loans are $11,719 and $8,906, respectively. |
SCHEDULE OF FUTURE MINIMUM PRINCIPAL PAYMENT
| Years | |
Amount | |
| 2022(2 months remaining) | |
$ | 525 | |
| 2023 | |
| 3,222 | |
| 2024 | |
| 3,345 | |
| 2025 | |
| 3,472 | |
| 2026 | |
| 3,605 | |
| Thereafter | |
| 135,731 | |
| | |
| 149,900 | |
| Less: Long-term portion - SBA notes payable | |
| (147,779 | ) |
| Current portion | |
$ | 2,121 | |
|