CONVERTIBLE NOTE PAYABLE, NOTES PAYABLE & NOTES PAYABLE – RELATED PARTY

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

CONVERTIBLE NOTE PAYABLE, NOTES PAYABLE & NOTES PAYABLE – RELATED PARTY

5. CONVERTIBLE NOTE PAYABLE, NOTES PAYABLE & NOTES PAYABLE – RELATED PARTY

Convertible Notes Payable

In August 2023, the Company issued convertible notes payable of $105,263, discounted at 5%, or $5,263, resulting in net proceeds of $100,000. These notes were issued with the same terms as the notes payable and notes payable – related party. In a separate agreement, from the notes payable and notes payable – related party, the holders of these notes were granted the right to convert both the principal and interest earned into common shares of the Company at $0.015 per common share.

At September 30, 2023 and December 31, 2022, the Company had outstanding convertible notes payable of $105,263 and $nil, respectively. At September 30, 2023, the notes would convert to 7,017,545 common shares.

At September 30, 2023 the interest payable of $1,753 for these notes would convert to 116,842 common shares.

Notes Payable & Notes Payable – Related Party

At September 30, 2023 and December 31, 2022, the Company had outstanding notes payable of $1,276,485 and $1,250,169, respectively, and outstanding notes payable – related party of $4,224,927 and $4,195,979, respectively. The notes payable and notes payable – related party and accrued interest of 15% are due within 10 days of a demand notice of the holders. There has been no notice of default or demand issued by any holder.

During the nine months ended September 30, 2023, the Company issued additional notes payable of $55,264, discounted at 5%, or $2,764, resulting in net proceeds of $52,500 of which $27,500 was from a related party, Nicholas Gallagher, a shareholder and director of the Company, who holds the full balance of the notes payable – related party. During the nine months ended September 30, 2022, the Company received no additional tranches of the notes payable and $83,980 of notes payable - related party. The notes are due upon demand; therefore, all discounts have been immediately expensed to interest expense.

During the three and nine months ended September 30, 2023 the Company incurred finder fees totaling $360 and $1,185, of which $nil and $825 was to related party entities, respectively. During the three and nine months ended September 30, 2022 the Company incurred finder fees totaling $1,650 and $2,969, to related party entities. Interest of $208,056 and $617,824 was expensed during the three and nine-month periods ended September 30, 2023, respectively, of which $158,435 and $474,363 was to related parties, respectively, which is included in interest expense and finance costs. on the condensed consolidated statements of operations. Interest and finders fees are included in accounts payable and accrued liabilities, interest payable and interest payable – related party on the condensed consolidated balance sheet at September 30, 2023 and December 31, 2022. Interest of $196,442 and $585,261 was expensed during the three and nine-month periods ended September 30, 2022, respectively, of which $155,626 and $462,814 was to related parties, respectively, which is included in interest expense and finance costs on the condensed consolidated statements of operations.

Inter-Creditor Agreement

As a result of an Amended and Restated Loan, Security, and Intercreditor Agreement (the “Amended Agreement”) dated November 1, 2019 and a First Amendment dated August 25, 2021, for each holder of the notes payable, whether or not a related party:

1. The borrower and holder entered into a Deed of Trust whereunder the notes are secured by a security interest in all real property, claims, contracts, agreements, leases, permits and the like.

2. The Company entered into a written Guaranty (“Guaranty”) whereunder, among other conditions, the Company unconditionally guarantees and promises to pay to the order of each holder the principal sum and all interest payable on each note payable held by such holder when and as the same becomes due, whether at the stated maturity thereof, by acceleration, call for redemption, tender, or otherwise. The Company is not in default as no demand has been made for payment or delivery.

3. Mr. Gallagher, at his option, has the right to convert outstanding but unpaid and future interest on his note into shares of the Company’s common stock at $0.015 per share. At September 30, 2023, Mr. Gallagher’s interest would convert to 175,055,281 common shares.

4. All loans by Mr. Gallagher and any additional loans made by Mr. Gallagher are designated as Senior Notes and accounted for as Notes payable – related party and all loans by the other holders made prior to August 25, 2021 were designated as Junior Notes. Additionally, notes arising in the future to certain unrelated parties are also designated as Senior Notes. Senior Notes, which include principal and interest are entitled to be repaid in full before any of the Junior Notes are repaid.

5. The Company confirmed that the written Guaranty extends to the repayment of additional loans made by the holders.

6. The Company confirmed that repayment of additional loans will be and remain secured by the Deed of Trust.