Note E – Convertible Notes Payable
Convertible Notes Payable
We have uncollateralized convertible debt obligations with
unaffiliated investors outstanding at June 30, 2019 and December
31, 2018 as follows:
|
|
June 30,
2019
|
D
ecember 31,
2018
|
|
Note
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
$
75,000
|
$
(11,249
)
|
$
10,598
|
$
74,349
|
$
750
|
$
75,000
|
$
(33,599
)
|
$
56,250
|
$
97,651
|
$
1,134
|
|
(b)
|
-
|
-
|
-
|
-
|
-
|
50,000
|
-
|
-
|
50,000
|
2,713
|
|
(c)
|
85,000
|
(1,875
)
|
11,345
|
94,470
|
6,877
|
125,000
|
(11,250
)
|
68,072
|
181,822
|
4,500
|
|
(d)
|
-
|
-
|
-
|
-
|
-
|
63,000
|
(4,980
)
|
34,308
|
92,328
|
2,016
|
|
(e)
|
-
|
-
|
-
|
-
|
-
|
65,000
|
(5,214
)
|
35,561
|
95,347
|
2,582
|
|
(f)
|
-
|
-
|
-
|
-
|
-
|
125,000
|
(12,003
)
|
58,829
|
171,826
|
5,417
|
|
(g)
|
-
|
-
|
-
|
-
|
-
|
150,000
|
(13,978
)
|
70,023
|
206,045
|
6,700
|
|
(h)
|
-
|
-
|
-
|
-
|
-
|
50,000
|
(5,597
)
|
35,401
|
79,804
|
1,111
|
|
(i)
|
273,000
|
(16,192
)
|
62,281
|
319,090
|
3,1121
|
273,000
|
(37,942
)
|
145,942
|
381,000
|
2,791
|
|
(j)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
(k)
|
75,000
|
(10,118
)
|
96,751
|
161,633
|
2,574
|
-
|
-
|
-
|
-
|
-
|
|
(l)
|
78,000
|
(2,119
)
|
90,395
|
166,276
|
3,692
|
-
|
-
|
-
|
-
|
-
|
|
(m)
|
65,000
|
(5,214
)
|
64,648
|
124,434
|
2,582
|
-
|
-
|
-
|
-
|
-
|
|
(n)
|
50,000
|
(12,416
)
|
65,866
|
103450
|
-
|
-
|
-
|
-
|
-
|
-
|
|
(o)
|
100,000
|
(312
)
|
87,708
|
187,396
|
3,750
|
-
|
-
|
-
|
-
|
-
|
|
(p)
|
50,000
|
(4,382
)
|
48,333
|
93,951
|
1,778
|
-
|
-
|
-
|
-
|
-
|
|
(q)
|
68,000
|
(2,304
)
|
38,825
|
104,521
|
2,788
|
-
|
-
|
-
|
-
|
-
|
|
(r)
|
610,000
|
(37,042
)
|
917,294
|
1,490,252
|
16,165
|
-
|
-
|
-
|
-
|
-
|
|
(s)
|
88,000
|
(9,014
)
|
48,074
|
127,060
|
1,589
|
|
|
|
|
|
|
(t)
|
63,000
|
(2,907
)
|
48,361
|
108,454
|
1,281
|
|
|
|
|
|
|
(u)
|
282,000
|
(31,931
)
|
144,358
|
394,427
|
4,159
|
|
|
|
|
|
|
(v)
|
40,000
|
(7,038
)
|
23,200
|
56,162
|
567
|
|
|
|
|
|
|
(w)
|
69,300
|
(11,490
)
|
44,432
|
102,242
|
745
|
|
|
|
|
|
|
(x)
|
170,000
|
(15,300
)
|
102,000
|
256,700
|
1,700
|
|
|
|
|
|
|
(y)
|
200,000
|
(15,285
)
|
201,918
|
386,633
|
278
|
|
|
|
|
|
|
Totals
|
$
2,441,300
|
$
(196,188
)
|
$
2,106,386
|
$
4,351,498
|
$
54,387
|
$
976,000
|
$
(124,563
)
|
$
504,386
|
$
1,355,823
|
$
28,964
|
(a) On
May 15, 2018, the Company entered into an uncollateralized note
payable with an unaffiliated investor in the amount of
$75,000. The note carries an interest rate of 12% and matures
on November 15, 2019. The note and accrued interest, or any portion
thereof, are convertible at the option of the lender, into the
Company's common stock at a rate of 60% of the lowest market
trading price per share during the 20 days preceding
conversion. At the note’s inception, there was an
original issue discount of $3,750 a transaction fee of $2,000, and
a finder’s fee of $5,500, which in the aggregate resulted in
a total discount of $11,250 to be amortized to interest expense
over the life of the note, and net proceeds received by the Company
of $63,750. Additionally, the note’s variable conversion rate
component requires that the note be valued at its stock redemption
value (i.e., “if-converted” value) pursuant to ASC 480,
Distinguishing Liabilities from
Equity,
with the excess over the note’s undiscounted
face value being deemed a premium to be added to the principal
balance and amortized to additional paid-in capital over the life
of the note. As such, the Company recorded a premium on the note of
$150,000 as a reduction to additional paid-in capital based on a
discounted “if-converted” rate of $.51 per share (60%
of the $.85 lowest trading price during the 20 days preceding the
note’s issuance), which computed to 126,000 shares of
“if-converted” common stock with a redemption value of
$192,780 due to $1.53 per share fair market value of the
Company’s stock on the note’s date of issuance. Debt
discount amortization is recorded as interest expense, while debt
premium amortization is recorded as an increase to additional
paid-in capital. On April 24, 2019, the maturity date on the note
was extended until May 15, 2019 and the redemption date was
extended to November 15, 2019 in exchange for a $38,188 cash
payment. Debt discount and premium amortizations for the three
months ended June 30, 2019 totaled $11,175 and $22,826,
respectively, while interest expense was $2,250.
(b) On
June 11, 2018, we issued a fixed price convertible note payable in
the amount of $50,000 as a commitment fee to Tangiers in order to
provide a long-term funding facility for our operations. The note
bears interest at 10% per year, is due and payable on January 11,
2019, and is convertible into shares of our common stock at a fixed
rate of $1.44 per share. Under the investment agreement, Tangiers
has agreed to provide us with up to $5,000,000 of funding during a
three-year period. This investment agreement is pending approval of
our S-1 filing. This commitment fee is deemed an offering cost,
along with an associated beneficial conversion feature of $14,236,
for total offering costs of $64,236 being reported as a non-current
asset to be amortized to additional paid-in capital pro-rata in
conjunction with each future long-term funding tranche received
from Tangiers. On June 7, 2019, this note was paid in
full.
(c)
On August 2, 2018 the Company issued a convertible promissory note
with a face value of $125,000, maturing on August 2, 2019, and a
stated interest of 9% to a third-party investor. The note is
convertible at any time after 6 months of the funding of the note
into a variable number of the Company's common stock, based on a
conversion rate of 60% of the lowest trading price for the 20 days
prior to conversion. The note was funded on August 6, 2018, when
the Company received proceeds of $106,250, after disbursements for
the lender's transaction costs, fees and expenses which in
aggregate resulted in a total discount of $18,750 to be amortized
to interest expense over the life of the note. Additionally, the
note’s variable conversion rate component requires that the
note be valued at its stock redemption value (i.e.,
“if-converted” value) pursuant to ASC 480,
Distinguishing Liabilities from Equity, with the excess over the
note’s undiscounted face value being deemed a premium to be
added to the principal balance and amortized to additional paid-in
capital over the life of the note. As such, the Company recorded a
premium on the note of $113,454 as a reduction to additional
paid-in capital based on a discounted “if-converted”
rate of $0.42 per share (60% of the lowest trading price during the
20 days preceding the note's issuance), which computed to 502,008
shares of “if-converted” common stock with a redemption
value of $238,454 due to $0.475 per share fair market value of the
Company's stock on the note's date of issuance. Debt discount
amortization is recorded as interest expense, while debt premium
amortization is recorded as an increase to additional paid-in
capital. Debt discount and premium amortizations for the three
months ended June 30, 2019, totaled $4,687 and $28,363,
respectively, while interest expense was $2,250. On April 3, 2019
the investor converted $25,000 in principal and $1,479 of accrued
interest into 126,092 shares of common stock at a price of $.21 per
share. On June 28, 2019, the investor converted $15,000 in
principal and $1,206 in accrued interest into 192,925 shares of
common stock at a price of $.084 per share.
(d)
On August 2, 2018 the Company issued a convertible promissory note
with a face value of $63,000, maturing on August 2, 2019, and a
stated interest of 8% to a third-party investor. The note is
convertible at any time after 6 months of the funding of the note
into a variable number of the Company's common stock, based on a
conversion rate of 60% of the lowest trading price for the 20 days
prior to conversion. The note was funded on August 6, 2018, when
the company received proceeds of $54,700, after disbursements for
the lender's transaction costs, fees and expenses which in
aggregate resulted in a total discount of $8,300 to be amortized to
interest expense over the life of the note. Additionally, the
note’s variable conversion rate component requires that the
note be valued at its stock redemption value (i.e.,
“if-converted” value) pursuant to ASC 480,
Distinguishing Liabilities from Equity, with the excess over the
note’s undiscounted face value being deemed a premium to be
added to the principal balance and amortized to additional paid-in
capital over the life of the note. As such, the Company recorded a
premium on the note of $57,181 as a reduction to additional paid-in
capital based on a discounted “if-converted” rate of
$0.42 per share (60% of the lowest trading price during the 20 days
preceding the note's issuance), which computed to 253,012 shares of
“if-converted” common stock with a redemption value of
$120,181 due to $0.475 per share fair market value of the Company's
stock on the note's date of issuance. Debt discount amortization is
recorded as interest expense, while debt premium amortization is
recorded as an increase to additional paid-in capital. This note
(including accrued interest) was paid in full on March 25,
2019.
(e) On
August 2, 2018 the Company issued a convertible promissory note
with a face value of $65,000, maturing on August 2, 2019, and a
stated interest of 10% to a third-party investor. The note is
convertible at any time after 6 months of the funding of the note
into a variable number of the Company's common stock, based on a
conversion rate of 60% of the lowest trading price for the 20 days
prior to conversion. The note was funded on August 7, 2018, when
the Company received proceeds of $56,350, after disbursements for
the lender's transaction costs, fees and expenses which in
aggregate resulted in a total discount of $8,650 to be amortized to
interest expense over the life of the note. Additionally, the
note’s variable conversion rate component requires that the
note be valued at its stock redemption value (i.e.,
“if-converted” value) pursuant to ASC 480,
Distinguishing Liabilities from Equity, with the excess over the
note’s undiscounted face value being deemed a premium to be
added to the principal balance and amortized to additional paid-in
capital over the life of the note. As such, the Company recorded a
premium on the note of $58,996 as a reduction to additional paid-in
capital based on a discounted “if-converted” rate of
$0.42 per share (60% of the lowest trading price during the 20 days
preceding the note's issuance), which computed to 261,044 shares of
“if-converted” common stock with a redemption value of
$123,996 due to $0.475 per share fair market value of the Company's
stock on the note's date of issuance. Debt discount amortization is
recorded as interest expense, while debt premium amortization is
recorded as an increase to additional paid-in capital. This note
(including accrued interest) was paid in full on February 1,
2019.
(f) On
August 2, 2018 the Company issued a convertible promissory note
with a face value of $125,000, maturing on May 2, 2019, and a
stated interest of 12% to a third-party investor. The note is
convertible at any time after 6 months of the funding of the note
into a variable number of the Company's common stock, based on a
conversion rate of 60% of the lowest trading price for the 20 days
prior to conversion. The note was funded on August 20, 2018, when
the Company received proceeds of $101,850, after disbursements for
the lender's transaction costs, fees and expenses which in
aggregate resulted in a total discount of $23,150 to be amortized
to interest expense over the life of the note. Additionally, the
note’s variable conversion rate component requires that the
note be valued at its stock redemption value (i.e.,
“if-converted” value) pursuant to ASC 480,
Distinguishing Liabilities from Equity, with the excess over the
note’s undiscounted face value being deemed a premium to be
added to the principal balance and amortized to additional paid-in
capital over the life of the note. As such, the Company recorded a
premium on the note of $113,454 as a reduction to additional
paid-in capital based on a discounted “if-converted”
rate of $0.42 per share (60% of the lowest trading price during the
20 days preceding the note's issuance), which computed to 502,008
shares of “if-converted” common stock with a redemption
value of $238,454 due to $0.475 per share fair market value of the
Company's stock on the note's date of issuance. Debt discount
amortization is recorded as interest expense, while debt premium
amortization is recorded as an increase to additional paid-in
capital. This note (including accrued interest) was paid in full on
February 22, 2019.
(g) On
August 9, 2018 the Company issued a convertible promissory note
with a face value of $150,000, maturing on May 9, 2019, and a
stated interest of 12% to a third-party investor. The note is
convertible at any time after 6 months of the funding of the note
into a variable number of the Company's common stock, based on a
conversion rate of 60% of the average of 2 lowest trading prices
for the 20 days prior to conversion. The note was funded on August
16, 2018, when the Company received proceeds of $122,250, after
disbursements for the lender's transaction costs, fees and expenses
which in aggregate resulted in a total discount of $27,750 to be
amortized to interest expense over the life of the note.
Additionally, the note’s variable conversion rate component
requires that the note be valued at its stock redemption value
(i.e., “if-converted” value) pursuant to ASC 480,
Distinguishing Liabilities from Equity, with the excess over the
note’s undiscounted face value being deemed a premium to be
added to the principal balance and amortized to additional paid-in
capital over the life of the note. As such, the Company recorded a
premium on the note of $139,017 as a reduction to additional
paid-in capital based on a discounted “if-converted”
rate of $0.43 per share (60% of the average of 2 lowest trading day
prices during the 20 days preceding the note's issuance), which
computed to 578,034 shares of “if-converted” common
stock with a redemption value of $289,017 due to $0.50 per share
fair market value of the Company's stock on the note's date of
issuance. Debt discount amortization is recorded as interest
expense, while debt premium amortization is recorded as an increase
to additional paid-in capital. This note (including accrued
interest) was paid in full on April 5, 2019. The remaining debt
discount and debt premium was fully amortized at the time of the
payoff in the amount of $4,728 and $23,684, respectively, while
interest expense was $95,061 of which $94,529 was for pre-payment
penalties.
(h) On
September 17, 2018 the Company issued a convertible promissory note
with a face value of $50,000, maturing on September 17, 2019, and a
stated interest of 8% to a third-party investor. The note is
convertible at any time after 6 months of the funding of the note
into a variable number of the Company's common stock, based on a
conversion rate of 61% of the lowest trading price for the 20 days
prior to conversion. The note was funded on September 20, 2018,
when the Company received proceeds of $42,250, after disbursements
for the lender's transaction costs, fees and expenses which in
aggregate resulted in a total discount of $7,750 to be amortized to
interest expense over the life of the note. Additionally, the
note’s variable conversion rate component requires that the
note be valued at its stock redemption value (i.e.,
“if-converted” value) pursuant to ASC 480,
Distinguishing Liabilities from Equity, with the excess over the
note’s undiscounted face value being deemed a premium to be
added to the principal balance and amortized to additional paid-in
capital over the life of the note. As such, the Company recorded a
premium on the note of $49,016 as a reduction to additional paid-in
capital based on a discounted “if-converted” rate of
$0.50 per share (61% of the lowest trading price during the 20 days
preceding the note's issuance), which computed to 163,934 shares of
“if-converted” common stock with a redemption value of
$99,016 due to $0.604 per share fair market value of the Company's
stock on the note's date of issuance. Debt discount amortization is
recorded as interest expense, while debt premium amortization is
recorded as an increase to additional paid-in capital. This note
(including accrued interest) was paid in full on May15, 2019. The
remaining debt discount and debt premium was fully amortized at the
time of the payoff in the amount of $3,660 and $23,146,
respectively, while interest expense was $25,056 of which $25,000
was for pre-payment penalties.
(i) On
November 14, 2018 the Company issued a convertible promissory note
with a face value of $273,000, maturing on November 14, 2019, and a
stated interest of 8% to a third-party investor. The note is
convertible at any time after 6 months of the funding of the note
into a variable number of the Company's common stock, based on a
conversion rate of 62% of the lowest trading price for the 20 days
prior to conversion. The note was funded on November 14, 2018, when
the Company received proceeds of $250,000, after disbursements for
the lender's transaction costs, fees and expenses which in
aggregate resulted in a total discount of $43,000 to be amortized
to interest expense over the life of the note. Additionally, the
note’s variable conversion rate component requires that the
note be valued at its stock redemption value (i.e.,
“if-converted” value) pursuant to ASC 480,
Distinguishing Liabilities from Equity, with the excess over the
note’s undiscounted face value being deemed a premium to be
added to the principal balance and amortized to additional paid-in
capital over the life of the note. As such, the Company recorded a
premium on the note of $167,323 as a reduction to additional
paid-in capital based on a discounted “if-converted”
rate of $0.40 per share (62% of the lowest trading price during the
20 days preceding the note's issuance), which computed to 668,004
shares of “if-converted” common stock with a redemption
value of $440,323 due to $0.64 per share fair market value of the
Company's stock on the note's date of issuance. Debt discount
amortization is recorded as interest expense, while debt premium
amortization is recorded as an increase to additional paid-in
capital. Debt discount and premium amortizations for the three
months ended June 30, 2019, totaled $10,875 and $41,831,
respectively, while interest expense was $5,460. On May 8, 2019,
exchange for $120,181 in cash, the investor extended the maturity
date of the note to March 15, 2020. This payment consisted of
$109,582 in extension fees that were classified as an interest
expense.
(j) On
January 3, 2019 the Company issued a convertible promissory note
with a face value of $105,000, maturing on January 3, 2020, and a
stated interest of 10% to a third-party investor. The note is
convertible at any time after 6 months of the funding of the note
into a variable number of the Company's common stock, based on a
conversion rate of 60% of the lowest trading price for the 20 days
prior to conversion. The note was funded on January 7, 2019, when
the Company received proceeds of $91,500, after disbursements for
the lender's transaction costs, fees and expenses which in
aggregate resulted in a total discount of $13,500 to be amortized
to interest expense over the life of the note. Additionally, the
note’s variable conversion rate component requires that the
note be valued at its stock redemption value (i.e.,
“if-converted” value) pursuant to ASC 480,
Distinguishing Liabilities from Equity, with the excess over the
note’s undiscounted face value being deemed a premium to be
added to the principal balance and amortized to additional paid-in
capital over the life of the note. As such, the Company recorded a
premium on the note of $270,000 as a reduction to additional
paid-in capital based on a discounted “if-converted”
rate of $0.14 per share (60 % of the lowest trading price during
the 20 days preceding the note's issuance), which computed to
1,250,000 shares of 'if-converted' common stock with a redemption
value of $375,000 due to $0.30 per share fair market value of the
Company's stock on the note's date of issuance. Debt discount
amortization is recorded as interest expense, while debt premium
amortization is recorded as an increase to additional paid-in
capital. This note (including accrued interest) was paid in full on
June 26, 2019. The remaining debt discount and debt premium was
fully amortized at the time of the payoff in the amount of $10,387
and $207,750, respectively, while interest expense was $46,425for
the three month period ended June 30, 2019, of which $43,975 was
for pre-payment penalties.
(k) On
January 17, 2019 the Company issued a convertible promissory note
with a face value of $75,000, maturing on January 17, 2020, and a
stated interest of 10% to a third-party investor. The note is
convertible at any time after 6 months of the funding of the note
into a variable number of the Company's common stock, based on a
conversion rate of 60% of the lowest trading price for the 25 days
prior to conversion. The note was funded on January 25, 2019, when
the Company received proceeds of $59,500, after disbursements for
the lender's transaction costs, fees and expenses which in
aggregate resulted in a total discount of $15,500 to be amortized
to interest expense over the life of the note. Additionally, the
note’s variable conversion rate component requires that the
note be valued at its stock redemption value (i.e.,
“if-converted” value) pursuant to ASC 480,
Distinguishing Liabilities from Equity, with the excess over the
note’s undiscounted face value being deemed a premium to be
added to the principal balance and amortized to additional paid-in
capital over the life of the note. As such, the Company recorded a
premium on the note of $148,214 as a reduction to additional
paid-in capital based on a discounted “if-converted”
rate of $0.14 per share (60% of the lowest trading price during the
25 days preceding the note's issuance), which computed to 892,857
shares of 'if-converted' common stock with a redemption value of
$223,214 due to $0.25 per share fair market value of the Company's
stock on the note's date of issuance. Debt discount amortization is
recorded as interest expense, while debt premium amortization is
recorded as an increase to additional paid-in capital. Debt
discount and premium amortizations for the three months ended June
30, 2019, totaled $3,875 and $37,053, respectively, while interest
expense was $1,845.
(l) On
February 5, 2019 the Company issued a convertible promissory note
with a face value of $78,000, maturing on February 5, 2020, and a
stated interest of 12 % to a third-party investor. The note is
convertible at any time after 6 months of the funding of the note
into a variable number of the Company's common stock, based on a
conversion rate of 58% of the average of 2 lowest trading prices
for the 15 days prior to conversion. The note was funded on
February 8, 2019, when the Company received proceeds of $74,500,
after disbursements for the lender's transaction costs, fees and
expenses which in aggregate resulted in a total discount of $3,500
to be amortized to interest expense over the life of the note.
Additionally, the note’s variable conversion rate component
requires that the note be valued at its stock redemption value
(i.e., “if-converted” value) pursuant to ASC 480,
Distinguishing Liabilities from Equity, with the excess over the
note’s undiscounted face value being deemed a premium to be
added to the principal balance and amortized to additional paid-in
capital over the life of the note. As such, the Company recorded a
premium on the note of $149,276 as a reduction to additional
paid-in capital based on a discounted “if-converted”
rate of $0.15 per share (58% of $0.25 - the average of 2 lowest
trading day prices during the 15 days preceding the note's
issuance), which computed to 537,931 shares of 'if-converted'
common stock with a redemption value of $227,276 due to $0.42 per
share fair market value of the Company's stock on the note's date
of issuance. Debt discount amortization is recorded as interest
expense, while debt premium amortization is recorded as an increase
to additional paid-in capital. Debt discount and premium
amortizations for the three months ended June 30, 2019, totaled
$875 and $37,319, respectively, while interest expense was
$2,340.
(m) On
February 6, 2019 the Company issued a convertible promissory note
with a face value of $65,000, maturing on February 6, 2020, and a
stated interest of 10% to a third-party investor. The note is
convertible at any time after 6 months of the funding of the note
into a variable number of the Company's common stock, based on a
conversion rate of 60% of the lowest trading price for the 20 days
prior to conversion. The note was funded on February 7, 2019, when
the Company received proceeds of $56,350, after disbursements for
the lender's transaction costs, fees and expenses which in
aggregate resulted in a total discount of $8,650 to be amortized to
interest expense over the life of the note. Additionally, the
note’s variable conversion rate component requires that the
note be valued at its stock redemption value (i.e.,
“if-converted” value) pursuant to ASC 480,
Distinguishing Liabilities from Equity, with the excess over the
note’s undiscounted face value being deemed a premium to be
added to the principal balance and amortized to additional paid-in
capital over the life of the note. As such, the Company recorded a
premium on the note of $107,250 as a reduction to additional
paid-in capital based on a discounted “if-converted”
rate of $0.25 per share (60% of the lowest trading price during the
20 days preceding the note's issuance), which computed to 433,333
shares of 'if-converted' common stock with a redemption value of
$172,250 due to $0.398 per share fair market value of the Company's
stock on the note's date of issuance. Debt discount amortization is
recorded as interest expense, while debt premium amortization is
recorded as an increase to additional paid-in capital. Debt
discount and premium amortizations for the three months ended June
30, 2019, totaled $2,162 and $26,812, respectively, while interest
expense was $1,625.
(n) On February 13, 2019 the Company issued a convertible
promissory note with a face value of $50,000, maturing on February
13, 2022, and a stated interest of 0% to a third-party investor.
The note is convertible at any time after 6 months of the funding
of the note into a variable number of the Company's common stock,
based on a conversion rate of 60% of the lowest trading price for
the 20 days prior to conversion. The note was funded on February
21, 2019, when the Company received proceeds of $35,900, after
disbursements for the lender's transaction costs, fees and expenses
which in aggregate resulted in a total discount of $14,100 to be
amortized to interest expense over the life of the note.
Additionally, the note’s variable conversion rate component
requires that the note be valued at its stock redemption value
(i.e., “if-converted” value) pursuant to ASC 480,
Distinguishing Liabilities from Equity, with the excess over the
note’s undiscounted face value being deemed a premium to be
added to the principal balance and amortized to additional paid-in
capital over the life of the note. As such, the Company recorded a
premium on the note of $74,800 as a reduction to additional paid-in
capital based on a discounted “if-converted” rate of
$0.25 per share (60% of the lowest trading price during the 20 days
preceding the note's issuance), which computed to 333,333 shares of
'if-converted' common stock with a redemption value of $124,800 due
to $0.374 per share fair market value of the Company's stock on the
note's date of issuance. Debt discount amortization is recorded as
interest expense, while debt premium amortization is recorded as an
increase to additional paid-in capital.
Debt discount and
premium amortizations for the three months ended June 30, 2019,
totaled $1,175 and $6,233, respectively, while interest expense was
$0.
(o) On February 14, 2019 the Company issued a convertible
promissory note with a face value of $100,000, maturing on February
14, 2020, and a stated interest of 10% to a third-party investor.
The note is convertible at any time after 6 months of the funding
of the note into a variable number of the Company's common stock,
based on a conversion rate of 60% of the lowest trading price for
the 20 days prior to conversion. The note was funded on February
15, 2019, when the Company received proceeds of $99,500, after
disbursements for the lender's transaction costs, fees and expenses
which in aggregate resulted in a total discount of $500 to be
amortized to interest expense over the life of the note.
Additionally, the note’s variable conversion rate component
requires that the note be valued at its stock redemption value
(i.e., “if-converted” value) pursuant to ASC 480,
Distinguishing Liabilities from Equity, with the excess over the
note’s undiscounted face value being deemed a premium to be
added to the principal balance and amortized to additional paid-in
capital over the life of the note. As such, the Company recorded a
premium on the note of $140,333 as a reduction to additional
paid-in capital based on a discounted “if-converted”
rate of $0.25 per share (60% of the lowest trading price during the
20 days preceding the note's issuance), which computed to 666,666
shares of 'if-converted' common stock with a redemption value of
$240,333 due to $0.361 per share fair market value of the Company's
stock on the note's date of issuance. Debt discount amortization is
recorded as interest expense, while debt premium amortization is
recorded as an increase to additional paid-in capital.
Debt
discount and premium amortizations for the three months ended June
30, 2019, totaled $125 and $35,083, respectively, while interest
expense was $2,500.
(p) On February 19, 2019 the Company issued a convertible
promissory note with a face value of $50,000, maturing on February
19, 2020, and a stated interest of 10% to a third-party investor.
The note is convertible at any time after 6 months of the funding
of the note into a variable number of the Company's common stock,
based on a conversion rate of 60% of the lowest trading price for
the 20 days prior to conversion. The note was funded on February
22, 2019, when the Company received proceeds of $43,200, after
disbursements for the lender's transaction costs, fees and expenses
which in aggregate resulted in a total discount of $6,800 to be
amortized to interest expense over the life of the note.
Additionally, the note’s variable conversion rate component
requires that the note be valued at its stock redemption value
(i.e., “if-converted” value) pursuant to ASC 480,
Distinguishing Liabilities from Equity, with the excess over the
note’s undiscounted face value being deemed a premium to be
added to the principal balance and amortized to additional paid-in
capital over the life of the note. As such, the Company recorded a
premium on the note of $75,000 as a reduction to additional paid-in
capital based on a discounted “if-converted” rate of
$0.30 per share (60% of the lowest trading price during the 20 days
preceding the note's issuance), which computed to 277,777 shares of
'if-converted' common stock with a redemption value of $125,000 due
to $0.450 per share fair market value of the Company's stock on the
note's date of issuance. Debt discount amortization is recorded as
interest expense, while debt premium amortization is recorded as an
increase to additional paid-in capital.
Debt discount and premium amortizations for the
three months ended June 30, 2019, totaled $1,700 and $18,750,
respectively, while interest expense was
$1,250.
(q) On February 25, 2019, the Company issued a convertible
promissory note with a face value of $68,000, maturing on February
25, 2020, and a stated interest of 12% to a third-party investor.
The note is convertible at any time after 6 months of the funding
of the note into a variable number of the Company's common stock,
based on a conversion rate of 60% of the average of 2 lowest
trading prices for the 15 days prior to conversion. The note was
funded on February 27, 2019, when the Company received proceeds of
$64,500, after disbursements for the lender's transaction costs,
fees and expenses which in aggregate resulted in a total discount
of $3,500 to be amortized to interest expense over the life of the
note. Additionally, the note’s variable conversion rate
component requires that the note be valued at its stock redemption
value (i.e., “if-converted” value) pursuant to ASC 480,
Distinguishing Liabilities from Equity, with the excess over the
note’s undiscounted face value being deemed a premium to be
added to the principal balance and amortized to additional paid-in
capital over the life of the note. As such, the Company recorded a
premium on the note of $58,974 as a reduction to additional paid-in
capital based on a discounted “if-converted” rate of
$0.33 per share (60% of the average of 2 lowest trading day prices
during the 15 days preceding the note's issuance), which computed
to 343,174 shares of 'if-converted' common stock with a redemption
value of $126,974 due to $0.370 per share fair market value of the
Company's stock on the note's date of issuance. Debt discount
amortization is recorded as interest expense, while debt premium
amortization is recorded as an increase to additional paid-in
capital. Debt discount and premium amortizations for the three
months ended June 30, 2019, totaled $875 and $14,744, respectively,
while interest expense was $2,040.
(r) On March 14, 2019 the Company issued a convertible promissory
note with a face value of $610,000, maturing on March 14, 2020, and
a stated interest of 9% to a third-party investor. The note is
convertible at any time after 6 months of the funding of the note
into a variable number of shares the Company's common stock, based
on a conversion rate of 60% of the lowest trading price for the 20
days prior to conversion. The note was funded on March 14, 2019,
when the Company received proceeds of $557,500, after disbursements
for the lender's transaction costs, fees and expenses which in
aggregate resulted in a total discount of $52,500 to be amortized
to interest expense over the life of the note. Additionally, the
note’s variable conversion rate component requires that the
note be valued at its stock redemption value (i.e.,
“if-converted” value) pursuant to ASC 480,
Distinguishing Liabilities from Equity, with the excess over the
note’s undiscounted face value being deemed a premium to be
added to the principal balance and amortized to additional paid-in
capital over the life of the note. As such, the Company recorded a
premium on the note of $1,300,101 as a reduction to additional
paid-in capital based on a discounted “if-converted”
rate of $0.20 per share (60% of $0.33 - the lowest trading price
during the 20 days preceding the note's issuance), which computed
to 3,080,808 shares of 'if-converted' common stock with a
redemption value of $1,910,101 due to $0.620 per share fair market
value of the Company's stock on the note's date of issuance. Debt
discount amortization is recorded as interest expense, while debt
premium amortization is recorded as an increase to additional
paid-in capital. Debt discount and premium amortizations for the
three months ended June 30, 2019, totaled $13,125 and $325,025,
respectively, while interest expense was $13,725.
(s) On April 24, 2019 the Company issued a convertible promissory
note (the “Note”) with a face value of $88,000,
maturing on April 24, 2020, and a stated interest of 10.00 % to a
third-party investor. The note is convertible at any time after 6
months of the funding of the note into a variable number of the
Company's common stock, based on a conversion rate of 60.00 % of
the lowest trading price for the 20 days prior to conversion. The
note was funded on April 25, 2019, when the Company received
proceeds of $77,000, after disbursements for the lender's
transaction costs, fees and expenses which in aggregate resulted in
a total discount of $11,000 to be amortized to interest expense
over the life of the note. Additionally, the note’s variable
conversion rate component requires that the note be valued at its
stock redemption value (i.e., “if-converted” value)
pursuant to ASC 480, Distinguishing Liabilities from Equity, with
the excess over the note’s undiscounted face value being
deemed a premium to be added to the principal balance and amortized
to additional paid-in capital over the life of the note. As such,
the Company recorded a premium on the note of $58,666 as a
reduction to additional paid-in capital based on a discounted
“if-converted” rate of $0.24 per share (60 % of $0.40 -
the lowest trading price during the 20 days preceding the note's
issuance), which computed to 366,666 shares of 'if-converted'
common stock with a redemption value of $146,666 due to $0.400 per
share fair market value of the Company's stock on the note's date
of issuance. Debt discount amortization is recorded as interest
expense, while debt premium amortization is recorded as an increase
to additional paid-in capital. Debt discount and premium
amortizations for the period ended June 30, 2019, totaled $1,986
and $10,593, respectively, while interest expense was
$1,589.
(t) On April 26, 2019 the Company issued a convertible promissory
note (the “Note”) with a face value of $63,000,
maturing on April 26, 2020, and a stated interest of 12.00 % to a
third-party investor. The note is convertible at any time after 6
months of the funding of the note into a variable number of the
Company's common stock, based on a conversion rate of 60.00 % of
the average of 2 lowest trading prices for the 15 days prior to
conversion. The note was funded on April 29, 2019, when the Company
received proceeds of $59,500, after disbursements for the lender's
transaction costs, fees and expenses which in aggregate resulted in
a total discount of $3,500 to be amortized to interest expense over
the life of the note. Additionally, the note’s variable
conversion rate component requires that the note be valued at its
stock redemption value (i.e., “if-converted” value)
pursuant to ASC 480, Distinguishing Liabilities from Equity, with
the excess over the note’s undiscounted face value being
deemed a premium to be added to the principal balance and amortized
to additional paid-in capital over the life of the note. As such,
the Company recorded a premium on the note of $58,227 as a
reduction to additional paid-in capital based on a discounted
“if-converted” rate of $0.23 per share (60 % of $0.39 -
the average of 2 lowest trading day prices during the 15 days
preceding the note's issuance), which computed to 272,727 shares of
'if-converted' common stock with a redemption value of $121,227 due
to $0.445 per share fair market value of the Company's stock on the
note's date of issuance. Debt discount amortization is recorded as
interest expense, while debt premium amortization is recorded as an
increase to additional paid-in capital. Debt discount and premium
amortizations for the period ended June 30, 2019, totaled $593 and
$9,866, respectively, while interest expense was
$1,281
(u) On May 1, 2019 the Company issued a convertible promissory note
(the “Note”) with a face value of $282,000, maturing on
November 01, 2019, and a stated interest of 9.00 % to a third-party
investor. The note is convertible at any time after 6 months of the
funding of the note into a variable number of the Company's common
stock, based on a conversion rate of 60.00 % of the average of 2
lowest trading prices for the 20 days prior to conversion. The note
was funded on May 1, 2019, when the Company received proceeds of
$234,500, after disbursements for the lender's transaction costs,
fees and expenses which in aggregate resulted in a total discount
of $47,500 to be amortized to interest expense over the life of the
note. Additionally, the note’s variable conversion rate
component requires that the note be valued at its stock redemption
value (i.e., “if-converted” value) pursuant to ASC 480,
Distinguishing Liabilities from Equity, with the excess over the
note’s undiscounted face value being deemed a premium to be
added to the principal balance and amortized to additional paid-in
capital over the life of the note. As such, the Company recorded a
premium on the note of $214,748 as a reduction to additional
paid-in capital based on a discounted “if-converted”
rate of $0.22 per share (60 % of $0.37 - the average of 2 lowest
trading day prices during the 20 days preceding the note's
issuance), which computed to 1,273,712 shares of 'if-converted'
common stock with a redemption value of $496,748 due to $0.39 per
share fair market value of the Company's stock on the note's date
of issuance.
Additionally, the
Company issued 361,538 shares of common stock (“Returnable
Shares) to the lender as a commitment fee. The Returnable Shares
must be returned to the Company if the note is fully repaid and
satisfied prior to 180 days from the issue date. As such, the
Returnable Shares were valued at $0.38 fair market value on their
date of issuance, and their total value of $137,384 has been
recorded as a prepaid expense (see Note F). Debt discount
amortization is recorded as interest expense, while debt premium
amortization is recorded as an increase to additional paid-in
capital. Debt discount and premium amortizations for the period
ended June 30, 2019, totaled $15,569 and $70,390, respectively,
while interest expense was $4,160.
(v) On May 7, 2019 the Company issued a convertible promissory note
(the “Note”) with a face value of $40,000, maturing on
May 07, 2020, and a stated interest of 10% to a third-party
investor. The note is convertible at any time after 6 months of the
funding of the note into a variable number of the Company's common
stock, based on a conversion rate of 60.00 % of the lowest trading
price for the 25 days prior to conversion. The note was funded on
May 9, 2019, when the Company received proceeds of $31,800, after
disbursements for the lender's transaction costs, fees and expenses
which in aggregate resulted in a total discount of $8,200 to be
amortized to interest expense over the life of the note.
Additionally, the note’s variable conversion rate component
requires that the note be valued at its stock redemption value
(i.e., “if-converted” value) pursuant to ASC 480,
Distinguishing Liabilities from Equity, with the excess over the
note’s undiscounted face value being deemed a premium to be
added to the principal balance and amortized to additional paid-in
capital over the life of the note. As such, the Company recorded a
premium on the note of $27,029 as a reduction to additional paid-in
capital based on a discounted “if-converted” rate of
$0.22 per share (60 % of $0.37 - the lowest trading price during
the 25 days preceding the note's issuance), which computed to
181,159 shares of 'if-converted' common stock with a redemption
value of $67,029 due to $0.370 per share fair market value of the
Company's stock on the note's date of issuance. Debt discount
amortization is recorded as interest expense, while debt premium
amortization is recorded as an increase to additional paid-in
capital. Debt discount and premium amortizations for the period
ended June 30, 2019, totaled $1,162 and $3,829, respectively, while
interest expense was $567.
(w) On May 16, 2019 the Company issued a convertible promissory
note (the “Note”) with a face value of $69,300,
maturing on May 16, 2020, and a stated interest of 9% to a
third-party investor. The note is convertible at any time after 6
months of the funding of the note into a variable number of the
Company's common stock, based on a conversion rate of 60% of the
lowest trading price for the 20 days prior to conversion. The note
was funded on May 17, 2019, when the Company received proceeds of
$56,500, after disbursements for the lender's transaction costs,
fees and expenses which in aggregate resulted in a total discount
of $12,800 to be amortized to interest expense over the life of the
note. Additionally, the note’s variable conversion rate
component requires that the note be valued at its stock redemption
value (i.e., “if-converted” value) pursuant to ASC 480,
Distinguishing Liabilities from Equity, with the excess over the
note’s undiscounted face value being deemed a premium to be
added to the principal balance and amortized to additional paid-in
capital over the life of the note. As such, the Company recorded a
premium on the note of $49,500 as a reduction to additional paid-in
capital based on a discounted “if-converted” rate of
$0.21 per share (60 % of $0.35 - the lowest trading price during
the 20 days preceding the note's issuance), which computed to
330,000 shares of 'if-converted' common stock with a redemption
value of $118,800 due to $0.360 per share fair market value of the
Company's stock on the note's date of issuance. Debt discount
amortization is recorded as interest expense, while debt premium
amortization is recorded as an increase to additional paid-in
capital. Debt discount and premium amortizations for the period
ended June 30, 2019, totaled $1,310 and $5,068, respectively, while
interest expense was $745.
(x) On May 23, 2019 the Company issued a convertible promissory
note (the “Note”) with a face value of $170,000,
maturing on May 23, 2020, and a stated interest of 10% to a
third-party investor. The note is convertible at any time after 6
months of the funding of the note into a variable number of the
Company's common stock, based on a conversion rate of 60.00 % of
the lowest trading price for the 20 days prior to conversion. The
note was funded on May 24, 2019, when the Company received proceeds
of $153,000, after disbursements for the lender's transaction
costs, fees and expenses which in aggregate resulted in a total
discount of $17,000 to be amortized to interest expense over the
life of the note. Additionally, the note’s variable
conversion rate component requires that the note be valued at its
stock redemption value (i.e., “if-converted” value)
pursuant to ASC 480, Distinguishing Liabilities from Equity, with
the excess over the note’s undiscounted face value being
deemed a premium to be added to the principal balance and amortized
to additional paid-in capital over the life of the note. As such,
the Company recorded a premium on the note of $113,333 as a
reduction to additional paid-in capital based on a discounted
“if-converted” rate of $0.19 per share (60 % of $0.32 -
the lowest trading price during the 20 days preceding the note's
issuance), which computed to 885,416 shares of 'if-converted'
common stock with a redemption value of $283,333 due to $0.320 per
share fair market value of the Company's stock on the note's date
of issuance. Debt discount amortization is recorded as interest
expense, while debt premium amortization is recorded as an increase
to additional paid-in capital. Debt discount and premium
amortizations for the period ended June 30, 2019, totaled $1,700
and $11,333, respectively, while interest expense was
$1,700.
(y) On June 25, 2019 the Company issued a convertible promissory
note (the “Note”) with a face value of $200,000,
maturing on June 25, 2020, and a stated interest of 10.00 % to a
third-party investor. The note is convertible at any time after 6
months of the funding of the note into a variable number of the
Company's common stock, based on a conversion rate of 60.00 % of
the lowest trading price for the 20 days prior to conversion. The
note was funded on June 25, 2019, when the Company received
proceeds of $184,500, after disbursements for the lender's
transaction costs, fees and expenses which in aggregate resulted in
a total discount of $15,500 to be amortized to interest expense
over the life of the note. Additionally, the note’s variable
conversion rate component requires that the note be valued at its
stock redemption value (i.e., “if-converted” value)
pursuant to ASC 480, Distinguishing Liabilities from Equity, with
the excess over the note’s undiscounted face value being
deemed a premium to be added to the principal balance and amortized
to additional paid-in capital over the life of the note. As such,
the Company recorded a premium on the
note of $204,762 as a reduction to additional paid-in capital based
on a discounted “if-converted” rate of $0.08 per share
(60 % of $0.14 - the lowest trading price during the 20 days
preceding the note's issuance), which computed to 2,380,952 shares
of 'if-converted' common stock with a redemption value of $404,762
due to $0.170 per share fair market value of the Company's stock on
the note's date of issuance. Debt discount amortization is recorded
as interest expense, while debt premium amortization is recorded as
an increase to additional paid-in capital. Debt discount and
premium amortizations for the period ended June 30, 2019, totaled
$215 and $2,844, respectively, while interest expense was
$278.
Note F – Stockholders' Equity
Common Stock
We are authorized to issue 2,000,000,000 shares of our $.0001 par
value common stock, of which 17,393,374 and 16,712,819 shares were
issued and outstanding at June 30, 2019 and December 31, 2018
respectively.
Common stock issued during the three months ended June 30,
2019;
On
April 3, 2019 the holder of convertible note (c) converted $25,000
in principal and $1,480 of accrued interest into 126,092 shares of
common stock at a price of $.21 per share. On June 28, 2019, the
same investor converted $15,000 in principal and $1,205 in accrued
interest into 192,925 shares of common stock at a price of $.084
per share.
The Company issued 361,538 shares of common stock
(“Returnable Shares) to the holder of convertible note (u)
(see Note C) as a commitment fee at a price of $.38 per share. The
Returnable Shares must be returned to the Company if the note is
fully repaid and satisfied prior to 180 days from the issue
date.
All other issuance of common stock have been previously
disclosed.
Warrants
During August and September 2016, we sold 33,058 shares of our
common stock, with warrants to purchase an additional 545,454
shares of our common stock, to a group of private investors for
$100,000. The warrants were issued prior to the reverse
merger (Note A) and were subsequently still deemed issued and
outstanding. The Series A and B warrants have expired, while the
Series C warrants expire on June 30, 2019. The warrants were
originally exercisable at prices between $0.55 and $2.20 share at
any time between June 30, 2017 and June 30, 2019. Each series
of warrants was valued using the Black-Scholes Options Pricing
Model resulting in total warrant value of $85,833. The remaining
proceeds of $14,167 were allocated to the common stock.
Black-Scholes data inputs used to value the warrants are as
follows:
|
|
|
|
|
|
|
|
|
|
Series A
(expired)
|
$
.275
|
$
.55
|
.75
|
.54
%
|
$
.1168
|
181,818
|
$
21,249
|
|
Series B
(expired)
|
$
.275
|
$
.1.10
|
1.75
|
.69
%
|
$
.1639
|
181,818
|
$
29,817
|
|
Series C
(expired)
|
$
.275
|
$
2.20
|
1.75
|
.85
%
|
$
.1912
|
181,818
|
$
34,767
|
|
Total
|
|
|
|
|
|
|
$
85,833
|
During May and June 2018, various Series B warrant holders elected
to exercise their warrants prior to their June 30, 2018 expiration.
As such, the Company issued 19,636 shares of common stock at $1.10
per share for $21,600. The Series C warrants expired on June 30,
2019. There are currently no outstanding warrants.
The
following table represents the warrant activity for the periods
presented;
|
|
|
|
|
|
|
Balance, December
31, 2017
|
545,454
|
|
Granted
|
(19,636
)
|
|
(Exercised)
|
(162,182
)
|
|
(Forfeited/expired)
|
(181,818
)
|
|
Balance, December
31, 2018
|
181,818
|
|
Granted
|
-
|
|
(Exercised)
|
-
|
|
(Forfeited/expired)
|
(181,818
)
|
|
Balance, June 30,
2019
|
-
|
Preferred Stock
Our Articles of Incorporation provide that we may issue up to
10,000,000 shares of various series of preferred
stock. Subject to the requirements of the Colorado
Business Corporation Act, the Board of Directors may issue the
preferred stock in series with rights and preferences as the Board
of Directors may determine appropriate, without shareholder
approval. As of June 30, 2019, and December 31, 2018,
4,500,000 Series B Preferred shares had been authorized for
issuance, and 240,000 Series B preferred shares were issued and
outstanding. These 240,000 Series B shares are
convertible into 10,909 common shares.
Note G– Material Agreements
1.
On
May 26, 2019 the Company entered into an agreement with Aska
Electronics Co., Ltd of China. Aska is a manufacturer of Bluetooth
headphones, sport earbuds and associated listening devices and
provides its products as an OEM and as an ODM for projects
worldwide.
Under the Agreement:
●
Aska
will provide its design and manufacturing services for the
Company’s customers.
●
the
Company will provide branding, sales and distribution services for
existing and newly developed products that Aska manufactures for
sale in the North American market;
●
the
Company will pay a sales commission to Aska equal to 98% of the
revenues received from the sales to Aska’s existing clients
in North America in which revenue from those clients was
approximately $13, 922,000 (unaudited), and
●
Aska
will receive 700,000 shares of the Company’s Series I
preferred stock, Each Preferred Share is convertible into one share
of the Company’s common stock.
The Company, upon no less than thirty days written notice, may
redeem the Preferred Shares at a price of $2.00 per share. The
Preferred shares will automatically convert into shares of the
Company’s common stock if the Company’s common stock
closes at a price of $2.20 or more during any 30 consecutive
trading days and if the average trading volume of the
Company’s common stock during such 30 consecutive trading
days is at least 10,000 shares per day.
A “leak out provision” was established such that Aska
may not sell more than 100,000 shares per month.
As of the date of this report the Company has not generated any
revenue related to this transaction and no shares have been
issued.
2.
The Company signed
a Strategic Partnership and Manufacturing Aagreement with
manufacturer and exporter Shenzhen Ferex Electrical Co., Ltd of
China to manufacture and supply electrical components and systems
at the end of 2018. The Company began offering design, engineering
and manufacturing services to its customers in the beginning of
2019. Currently, the Company has a manufacturing contract to
provide these services with AfterMaster Audio Labs regarding two
new products, subject to certain financing requirements. As of the
date of this filing the Company has not generated any revenue
related to this transaction and no shares have been
issued.
Note H – Subsequent Events
On July
10, 2019 the Company issued a convertible promissory note (the
“Note”) with a face value of $63,000, maturing on July
10, 2020, and a stated interest of 8% to a third-party investor.
The note is convertible at any time after 6 months of the funding
of the note into a variable number of the company's common stock,
based on a conversion rate of 60% of the lowest trading price for
the 20 days prior to conversion. The note was funded on July 10,
2019, when the company received proceeds of $59,500, after
disbursements for the lender's transaction costs, fees and expenses
which in aggregate resulted in a total discount of $3,500 to be
amortized to interest expense over the life of the note.
Additionally, the note’s variable conversion rate component
requires that the note be valued at its stock redemption value
(i.e., “if-converted” value) pursuant to ASC 480,
Distinguishing Liabilities from Equity, with the excess over the
note’s undiscounted face value being deemed a premium to be
added to the principal balance and amortized to additional paid-in
capital over the life of the note. As such, the Company recorded a
premium on the note of $42,000 as a reduction to additional paid-in
capital based on a discounted “if-converted” rate of
$0.08 per share (60 % of $0.13 - the lowest trading price during
the 20 days preceding the note's issuance), which computed to
801,526 shares of 'if converted' common stock with a redemption
value of $105,000 due to $0.131 per share fair market value of the
Company's stock on the note's date of issuance. Debt discount
amortization is recorded as interest expense, while debt premium
amortization is recorded as an increase to additional paid-in
capital.
On July
15, 2019 the Company issued a convertible promissory note (the
“Note”) with a face value of $75,000, maturing on July
15, 2020, and a stated interest of 12.00 % to a third-party
investor. The note is convertible at any time after 6 months of the
funding of the note into a variable number of the company's common
stock, based on a conversion rate of 60.00 % of the lowest trading
price for the 20 days prior to conversion. The note was funded on
July 15, 2019, when the company received proceeds of $67,000, after
disbursements for the lender's transaction costs, fees and expenses
which in aggregate resulted in a total discount of $8,000 to be
amortized to interest expense over the life of the note.
Additionally, the note’s variable conversion rate component
requires that the note be valued at its stock redemption value
(i.e., “if-converted” value) pursuant to ASC 480,
Distinguishing Liabilities from Equity, with the excess over the
note’s undiscounted face value being deemed a premium to be
added to the principal balance and amortized to additional paid-in
capital over the life of the note. As such, the Company recorded a
premium on the note of $60,496 as a reduction to additional paid-in
capital based on a discounted “if-converted” rate of
$0.08 per share (60 % of $0.13 - the lowest trading price during
the 20 days preceding the note's issuance), which computed to
954,198 shares of 'if converted' common stock with a redemption
value of $135,496 due to $0.142 per share fair market value of the
Company's stock on the note's date of issuance. Debt discount
amortization is recorded as interest expense, while debt premium
amortization is recorded as an increase to additional paid-in
capital.
On July
19, 2019 the Company issued a convertible promissory note (the
“Note”) with a face value of $69,300, maturing on July
19, 2020, and a stated interest of 9.00 % to a third-party
investor. The note is convertible at any time after 6 months of the
funding of the note into a variable number of the company's common
stock, based on a conversion rate of 60.00 % of the lowest trading
price for the 20 days prior to conversion. The note was funded on
July 19, 2019, when the company received proceeds of $59,500, after
disbursements for the lender's transaction costs, fees and expenses
which in aggregate resulted in a total discount of $9,800 to be
amortized to interest expense over the life of the note.
Additionally, the note’s variable conversion rate component
requires that the note be valued at its stock redemption value
(i.e., “if-converted” value) pursuant to ASC 480,
Distinguishing Liabilities from Equity, with the excess over the
note’s undiscounted face value being deemed a premium to be
added to the principal balance and amortized to additional paid-in
capital over the life of the note. As such, the Company recorded a
premium on the note of $46,200 as a reduction to additional paid-in
capital based on a discounted “if-converted” rate of
$0.07 per share (60 % of $0.12 - the lowest trading price during
the 20 days preceding the note's issuance), which computed to
962,500 shares of 'if converted' common stock with a redemption
value of $115,500 due to $0.120 per share fair market value of the
Company's stock on the note's date of issuance. Debt discount
amortization is recorded as interest expense, while debt premium
amortization is recorded as an increase to additional paid-in
capital.
On
August 07, 2019 the Company issued a convertible promissory note
(the “Note”) with a face value of $88,000, maturing on
August 07, 2020, and a stated interest of 12.00 % to a third-party
investor. The note is convertible at any time after 0 months of the
funding of the note into a variable number of the company's common
stock, based on a conversion rate of 100 % of the average of 2
lowest trading prices for the 15 days prior to conversion. The note
was funded on August 08, 2019, when the company received proceeds
of $84,500, after disbursements for the lender's transaction costs,
fees and expenses which in aggregate resulted in a total discount
of $3,500 to be amortized to interest expense over the life of the
note. Additionally, the note’s variable conversion rate
component requires that the note be valued at its stock redemption
value (i.e., “if-converted” value) pursuant to ASC 480,
Distinguishing Liabilities from Equity, with the excess over the
note’s undiscounted face value being deemed a premium to be
added to the principal balance and amortized to additional paid-in
capital over the life of the note. As such, the Company recorded a
premium on the note of $25,406 as a reduction to additional paid-in
capital based on a discounted “if-converted” rate of
$0.06 per share (100 % of $0.06 - the average of 2 lowest trading
day prices during the 15 days preceding the note's issuance), which
computed to 1,419,354 shares of 'if-converted' common stock with a
redemption value of $113,406 due to $0.080 per share fair market
value of the Company's stock on the note's date of issuance. Debt
discount amortization is recorded as interest expense, while debt
premium amortization is recorded as an increase to additional
paid-in capital.
On August 5, 2019, we repaid Convertible Note (m) in the principal
amount of $65,000, plus $3,205 in accrued interest and $27,283 in
prepayment penalties.
On August 7, 2019, we repaid Convertible Note (l) in the principal
amount of $78,000, plus $3,205 in accrued interest and $34,366 in
prepayment penalties.
The Company has evaluated subsequent events through the date the
financial statements were issued and filed with the Securities and
Exchange Commission. The Company has determined that there are no
such events that warrant disclosure or recognition in the financial
statements, other than those disclosed above.