Notes payable

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Notes payable

Note 4 - Notes payable

As of December 31, 2022 and December 31, 2021, the notes payable activity was as follows:

	As of December 31,
	2022			2021
Notes payable at beginning of period	$	7,256,930		$	6,835,196
Notes payable issued		465,000			950,000
Settlements on note payable		(163,826	)		(117,770	)
Repayments of notes payable in cash		(14,000	)		(16,900	)
Less amounts converted to stock		(380,272	)		(393,596	)
Notes payable at end of period		7,163,832			7,256,930
Less debt discount		(10,587	)		(75,800	)
	$	7,153,245		$	7,181,130
Notes payable issued to former related party	$	112,100		$	126,100
Notes payable issued to non-related party	$	7,041,145		$	7,055,030

The maturity dates on the notes are as follows:

Twelve months ending,	Non-related parties		Former Related party		Total
Past due	$	6,626,145	$	112,100	$	6,738,245
December 31, 2023		415,000		-		415,000
Total	$	7,041,145	$	112,100	$	7,153,245

Activity during the year ended December 31, 2022

Fixed rates convertible notes

During the year ended December 31, 2022, the Company issued seven (7) fixed rate promissory notes totaling $465,000 in principal, for funding of $465,000 with original terms of nine to twelve months and interest rates of 15% and 18%. The holder of the promissory notes can convert the outstanding unpaid principal and accrued interest at a fixed conversion rate, subject to standard anti-dilution features, immediately to six-month after issuance date. These fixed rate promissory notes include a prepayment feature at a premium of 15% and a make good provision, which guarantees the holder additional shares if the holder does not realize a 15% or 18% return on the resale of the common shares.

As of December 31, 2022, the Company has twenty (20) fixed-rate promissory notes with an outstanding balance of $1,819,728, of which $1,404,728 are past maturity. As of December 31, 2022, the Company has a total of sixteen (16) fixed rate notes for total principal amount of $1,465,000 includes a make good shares provision. Such provision will require the Company to issue additional shares to ensure that the investor can realize a profit of 15% or 18% reselling the conversion shares. The Company accrued approximately $225,000 related to the make-good provision as the amount is probable and can be reasonably estimated pursuant to ASC 450 Contingencies. Such amount was presented as other expense in the consolidated statements of operations and accounts payable and accrued expenses in the consolidated balance sheet as of December 31, 2022.

During year ended December 31, 2022, the Company converted $136,728 in accrued interest and $380,272 in principal balance into 25,850,000 shares of common stock.

Certain fixed-rate notes include a prepayment provision, which entitles the holder to a 15% or 18% premium upon cash redemption by the Company. The prepayment penalty approximates $62,800 as of December 31, 2022, but the Company determined that such liability was not probable as of December 31, 2022, pursuant to ASC 450 Contingencies.

Variable-rate notes

The gross amount of all convertible notes with variable conversion rates outstanding as of December 31, 2022, is $4,607,100, which are all past maturity. There was no conversion of notes into the Company’s common stock during the year ended December 31, 2022.

During the year ended December 31, 2022, the Company settled one variable note with a principal of $163,826 and $45,475 in accrued interest for no consideration.

Activity during the year ended December 31, 2021

During the year ended December 31, 2021, the Company issued eight (8) fixed rate promissory notes totaling $950,000 for funding of $950,000 with original terms of twelve months and interest rates of 15%. The holders of the promissory notes can convert the outstanding unpaid principal and accrued interest at a fixed conversion rate, subject to standard anti-dilution features. As of December 31, 2021, the fixed-rate notes had an outstanding balance of $1,735,000, of which $785,000 are past maturity. As of December 31, 2021, the Company has 13 fixed rate promissory notes with unrelated parties for total amount of $1,735,000. Nine of these fixed rates promissory notes for total balance of $1,000,000 carry a make whole provision requiring the Company to issue additional shares of its common stock if the underlying investor is not able to realize a profit of 15% against the conversion price of such shares after customary and reasonable expenses.

During the year ended December 31, 2021, the Company amended the terms of two of its promissory notes to accelerate the conversion feature and amend the conversion price of the instruments. The Company recorded the modification in accordance with ASC 470-50 Debt-Modifications and Extinguishments and recorded $58,407 as loss from debt extinguishment in the consolidated statements of operations.

During the year ended December 31, 2021, the Company settled one of its promissory notes by issuing 1,515,152 restricted shares of the Company’s common stock with a fifteen percent (15%) make-whole provision. The Company recorded a gain on debt extinguishment of approximately $128,000.

During the year ended December 31, 2021, the Company converted $393,597 in principal and $100,152 in accrued but unpaid interest into 27,461,307 shares of common stock.

The gross amount of all convertible notes with variable conversion rates outstanding as of December 31, 2021, is $4,770,926, of which $4,770,926 are past maturity.

Former related-party notes

Notes payable to a former related party in the aggregate amount of $112,100 was outstanding at December 31, 2022, which are past maturity date. The notes bear interest between 10% and 12% per annum. During the year ended December 31, 2022, the Company paid total principal of $14,000 to this former related party. As of December 31, 2022, the Company had notes payable to related parties amounting to $112,100. Refer to Note 7– Related Party Transactions.

Notes payable to a former related party in the aggregate amount of $126,100 was outstanding at December 31, 2021, which are past maturity date. The notes bear interest between 10% and 12% per annum. During the year ended December 31, 2021, the Company paid total principal of $16,900 to this former related party.

Other notes

In October 2013, July 2014, October 2014 and August 2015, the Company initiated a series of private placements for up to $500,000, each, of financing by the issuance of notes payable at a minimum of $25,000, one unit. The notes bear interest at 10% per annum and were due and payable with accrued interest one year from issuance. During the years ended December 31, 2022, and 2021, the Company did not issue notes in connection with these private placements and did not repay any of these notes. As of December 31, 2022, and 2021, notes payable outstanding under these private placements are $624,903, all of which are past maturity.

Notes payable totaling $2,110,450 are secured by the intellectual property acquired from RGN including patents obtained in the acquisition.

Acquisition Payable

In connection with the Company’s acquisition of IPR in 2012, IPR recorded a $155,000 long-term acquisition payable for costs that were not paid at closing. This payable is non-interest bearing and IPR agreed to make payments up to 25% of the proceeds from any private placement or gross profits earned by IPR until the obligation is satisfied. The percentage of the proceeds to be paid is at the sole discretion of IPR’s Chief Executive Officer and the ex-Chief Executive Officer of the Company based on the liquidity of the Company.

There was no activity during the year ended December 31, 2022. During the year ended December 31, 2021, the Company issued 2,505,834 as extinguishment for $75,175 in principal and interest. The balance of the acquisition payable is $79,825, as of December 31, 2022 and 2021.

Effective Interest Rate

During the years ended December 31, 2022, and 2021, the Company’s effective interest rate was 18% and 12% respectively.