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CONVERTIBLE NOTES
9 Months Ended
Sep. 30, 2022
CONVERTIBLE NOTES  
7. CONVERTIBLE NOTES

7. CONVERTIBLE NOTES

 

Convertible notes on September 30, 2022, and December 31, 2021, consists of the following:

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Convertible Notes - originated in April 2018

 

$95,000

 

 

$95,000

 

Convertible Notes - originated in June 2018

 

 

166,000

 

 

 

166,000

 

Convertible Notes - originated in October 2018

 

 

50,000

 

 

 

50,000

 

Convertible Notes - issued fiscal year 2021

 

 

-

 

 

 

105,450

 

Convertible Notes - issued fiscal year 2022

 

 

119,750

 

 

 

-

 

Total convertible notes payable

 

 

430,750

 

 

 

416,450

 

 

 

 

 

 

 

 

 

 

Less: Unamortized debt discount

 

 

(6,862)

 

 

(13,333)

Total convertible notes

 

 

423,888

 

 

 

403,117

 

 

 

 

 

 

 

 

 

 

Less: current portion of convertible notes

 

 

423,888

 

 

 

403,117

 

Long-term convertible notes

 

$-

 

 

$-

 

For the nine months ended September 30, 2022, and 2021, the interest expense on convertible notes was $37,903 and $41,847, respectively. As of September 30, 2022, and December 31, 2021, the accrued interest was $91,320 and $63,100, respectively.

 

The Company recognized amortization expense related to the debt discount of $161,221 and $98,481 for the nine months ended September 30, 2022, and 2021, respectively, which is included in interest expense in the statements of operation.

 

Conversion

 

During the nine months ended September 30, 2022, the Company converted notes with principal amounts of $158,450 and accrued interest of $9,683 into 82,116,084 shares of common stock. The corresponding derivative liability at the date of conversion of $180,912 was credited to additional paid in capital.

 

Convertible Notes - Issued during the year ended December 31, 2018

 

During the year ended December 31, 2018, the Company issued a total principal amount of $426,000 convertible notes for cash proceeds of $426,000. The convertible notes were also provided with a total of 107,000 common shares valued at $22,210. The terms of convertible notes are summarized as follows:

 

 

·

Term two years;

 

 

 

 

·

Annual interest rates 12%;

 

 

 

 

·

Convertible at the option of the holders at any time

 

 

 

 

·

Conversion prices are based on 50% discount to market value for the common stock based on a 4-week weekly average of the closing price.

 

Convertible Notes - Issued during the year ended December 31, 2021

 

During the year ended December 31, 2021, the Company issued a total principal amount of $277,500 in convertible note for cash proceeds of $257,000. The terms of convertible note are summarized as follows:

 

 

·

Term one year;

 

 

 

 

·

Annual interest rates 10%;

 

 

 

 

·

Convertible at 180 days from issuance

 

 

 

 

·

Conversion prices are based on 39% discount to the lowest trading price during the 20-trading day period ending on the latest complete training day prior to the conversion date.

 

Convertible Notes - Issued during the year ended December 31, 2022

 

During the nine months ended September 30, 2022, the Company issued a total principal amount of $172,750 in convertible notes for cash proceeds of $160,000. The terms of convertible notes are summarized as follows:

 

 

·

Term one year;

 

 

 

 

·

Annual interest rates 10%;

 

 

 

 

·

Convertible at 180 days from issuance

 

 

 

 

·

Conversion prices are based on 39% discount to the lowest trading price during the 20-trading day period ending on the latest complete training day prior to the conversion date.

The Company valued the conversion feature using the Black-Scholes pricing model. The fair value of the derivative liability for all the notes that became convertible, including the notes issued in prior years, during the nine months ended September 30, 2022, amounted to $186,933, and $142,000 of the value assigned to the derivative liability was recognized as a debt discount to the notes while the balance of $44,933 was recognized as a “day 1” derivative loss.