Notes
to Condensed Consolidated Financial Statements
(Unaudited)
June
30, 2021
NOTE
1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Quad
M Solutions, Inc (“the Company”), f/k/a Mineral Mountain Milling and Mining Company, was incorporated under the laws of the
State of Idaho on August 4, 1932 for the purpose of mining and exploring for non-ferrous and precious metals, primarily silver, lead
and copper. Until April 16, 2019, the Company had two wholly owned subsidiaries, Nomadic Gold Mines, Inc., an Alaska corporation, and
Lander Gold Mines, Inc., a Wyoming corporation (the “MMMM Mining Subsidiaries”).
On
March 22, 2019 the Company entered into two separate Share Exchange Agreements (“SEAs”) pursuant to which it agreed to acquire
100% of the capital stock of two newly-organized, privately-held third party entities, NuAxess 2, Inc., a Delaware corporation (‘NuAxess”),
and PR345, Inc., a Texas corporation n/k/a OpenAxess, Inc. (“OpenAxess”). In consideration for the separate SEAs, the Company
agreed upon the closing of the SEA to issue 400,000 shares of Series C Preferred Stock to the control shareholders of NuAxess and PR345,
n/k/a OpenAxess and issued 400,000 shares of Series D Preferred Stock to the minority, non-control shareholders of the NuAxess and PR345,
n/k/a OpenAxess.
The
closing of the two SEAs occurred on April 16, 2019, at which date NuAxess and PR345, n/k/a as OpenAxess became wholly owned subsidiaries
of the Company. In addition, on April 16, 2019, the Company sold 75% of its equity interests in the MMMM Mining Subsidiaries to Aurum,
LLC, a newly organized Nevada corporation (“Aurum”) formed and controlled by Sheldon Karasik, the Company’s former
CEO, Chairman and a principal shareholder, pursuant to the terms of a Share Exchange and Assignment Agreement (the “MBO Agreement”)
for nominal consideration of $10, and the assumption by Aurum of all of the liabilities of the MMMM Mining Subsidiaries. In addition,
as a condition to the closing of the SEAs, NuAxess and/or PR345 shall make a payment of $100,000 into an account designated by Aurum
as working capital for the operations of the MMMM Mining Subsidiaries. The $100,000 was funded by an institutional investor in consideration
for the issuance of 18,182 shares of Series E Convertible Preferred Stock. See Notes 6 and 8 below.
Reference
is made to Recent Developments-Former MMMM Mining Subsidiaries under Note 3 – Former Mining Operations, and Note 6 –
Share Exchange and Assignment Agreement, below. The purpose of entering into the MBO Agreement was to transfer all control of the Company’s
former wholly-owned MMMM Mining Subsidiaries to Aurum with the Company retaining a 25% equity interest in the MMMM Mining Subsidiaries.
Effective on September 15, 2019, the Company divested 6% of its equity interest in the MMMM Mining Subsidiaries to an unaffiliated third
party for nominal consideration in the amount of $2000, represented by a note payable, reducing its equity interest from 25% to 19%.
Other than its minority equity interest, the Company has no control nor any involvement in the management or operations of the former
MMMM Mining Subsidiaries.
On
May 13, 2019, the Company filed a Definitive Information Statement on Schedule 14C for the purpose of implementing corporate actions
to: (i) increase the authorized shares of common stock, par value $0.001 (“Common Stock”) from 100 million shares to 900
million shares (the “Authorized Common Stock Share Increase”); and (ii) change the name of the Company from Mineral Mountain
Mining & Milling Company to Quad M Solutions, Inc. (the “Name Change”).
On
June 7, 2019, the Company filed Articles of Amendment to its Articles of Incorporation with the Secretary of State of the State of Idaho
effecting the Name Change. On June 14, 2019 the Company filed Articles of Amendment to its Articles of Incorporation with the Secretary
of State of the State of Idaho effecting the Authorized Common Stock Share Increase. In addition, on July 19, 2019, the Company obtained
the requisite approval from FINRA for the Name Change.
The
foregoing unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting
principles in the United States of America for complete financial statements. These unaudited interim financial statements should be
read in conjunction with the Company’s audited financial statements for the year ended September 30, 2020. In the opinion of management,
the unaudited interim financial statements furnished herein includes all adjustments, all of which are of a normal recurring nature,
necessary for a fair statement of the results for the interim period presented. Operating results for the nine-month period ended June
30, 2021 are not necessarily indicative of the results that may be expected for the year ending September 30, 2021.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This
summary of significant accounting policies of Quad M Solutions, Inc and its two wholly owned subsidiaries, NuAxess and Open Axess, is
presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations
of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting
principles generally accepted in the United States and have been consistently applied in the preparation of the financial statements.
Fair
Value of Financial Instruments
The
Company’s financial instruments as defined by ASC 825-10-50, include cash, receivables, accounts payable and accrued expenses.
All instruments are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates
fair value at September 30, 2020 and June 30, 2021.
The
standards under ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting
principles, and expands disclosures about fair value measurements. FASB ASC 820 establishes a three-tier fair value hierarchy which prioritizes
the inputs used in measuring fair value as follows:
Level
1. Observable inputs such as quoted prices in active markets;
Level
2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level
3. Unobservable inputs in which there is little of no market data, which require the reporting entity to develop its own assumptions.
The
Company has convertible debt of $116,000 measured at fair value at June 30, 2021.
SCHEDULE OF DERIVATIVE LIABILITY
|
|
|
June 30, 2021
|
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
|
|
Significant Other Observable Inputs
(Level 2)
|
|
|
Significant Unobservable Inputs
(Level 3)
|
|
|
Derivative liability
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
258,949
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
258,949
|
|
The
Company has convertible debt of $818,962 measured at fair value at September 30, 2020.
Going
Concern
As
shown in the accompanying financial statements, the Company has incurred cumulative operating losses since inception. As of June 30,
2021, the Company has limited financial resources with which to achieve its objectives and attain profitability and positive cash flows
from operations. As shown in the accompanying balance sheets and statements of operations, the Company has an accumulated deficit of
$22,596,056. The Company’s working capital deficit is $6,538,538
Achievement
of the Company’s objectives will depend on its ability to obtain additional financing, to generate revenue from current and planned
business operations, and to effectively operating and capital costs.
The
Company plans to fund the operations of its two wholly owned subsidiaries, NuAxess and PR345, by potential sales of its common stock
and/or by issuing debt securities to institutional investors. However, there is no assurance that the Company will be able to achieve
these objectives, therefore substantial doubt about its ability to continue as a going concern exists.
Provision
for Taxes
Income
taxes are provided based upon the liability method of accounting pursuant to ASC 740-10-25 Income Taxes – Recognition. Under
the approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis
of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred
tax assets if management does not believe the Company has met the “more likely than not” standard imposed by ASC 740-10-25-5
to allow recognition of such an asset. See Note 8.
Revenue
Recognition
Sales
revenues are generally recognized in accordance with the SAB 104 Public Company Guidance, when an agreement exists and price is determinable,
the services are rendered, net of discounts, returns and allowance and collectability is reasonably assured. We are often entitled to
bill our customers and receive payment from our customers in advance of recognizing the revenue. In the instances in which we have received
payment from our customers in advance of recognizing revenue, we include the amounts in deferred or unearned revenue on our consolidated
balance sheet.
Prior
Period Reclassifications
Certain
prior period amounts have been reclassified to conform to current period presentation in this Report.
NOTE
3 – FORMER MINING OPERATIONS
On
April 24, 2019, the Company filed a Form 8-K reporting that on April 16, 2019, the Company entered into a Share Exchange and Assignment
Agreement (the “MBO Agreement”) between the Company and Aurum, LLC, a newly organized Nevada corporation formed by Sheldon
Karasik, the Company’s former CEO, Chairman and principal shareholder for the purpose of entering into the MBO Agreement. Pursuant
to the MBO Agreement, the Company sold, transferred and assigned to Aurum 75% of the capital stock of the MMMM Mining Subsidiaries for
cash consideration of $10 plus the assumption by Aurum of all liabilities of the MMMM Mining Subsidiaries. The Company retained a 25%
equity interest in the MMMM Mining Subsidiaries. Effective on September 15, 2019, the Company divested 6% of its equity interest in the
MMMM Mining Subsidiaries to an unaffiliated third party for nominal consideration in the amount of $2000, represented by a note payable
reducing its equity interest from 25% to 19%. Other than its minority 19% equity interest, the Company has no control nor any involvement
in the management or operations of the former MMMM Mining Subsidiaries nor are the financial results of the former MMMM Mining Subsidiaries
included in the accompanying interim financial statements.
NOTE
4 – ACQUISITION OF WHOLLY OWNED SUBSIDIARIES
On
April 24, 2019, the Company filed a Form 8-K reporting that effective on April 16, 2019, the Company completed the closing of the two
separate Share Exchange Agreements with unaffiliated third parties, dated March 22, 2019, pursuant to which the Company acquired 100%
of the capital stock of NuAxess 2, Inc., a Delaware corporation, and PR345, Inc. n/k/a OpenAxess, Inc., a Texas corporation. Pursuant
to these Agreements, the Company acquired all of the capital stock of NuAxess and PR345 in exchange for the issuance to the shareholders
of NuAxess and PR345 shares of newly authorized Series C and D Convertible Preferred Stock, par value $0.10 per share (the “Series
C and Series D Preferred”). Pursuant to the respective Certificates of Designation, as amended, applicable to the Series C and
Series D Preferred, the holders of said shares are subject to, among other provisions, beneficial ownership limitations which provide
that none of the holders of Series C and Series D Preferred nor any affiliates can exercise their conversion rights if, as a result of
such conversions, a holder (including any affiliates) would own in excess of 4.99% of the Company’s outstanding shares. The Share
Exchange Agreement transactions were valued at $80,000 and, as a result, a loss on acquisition in the amount of $76,900 was recorded
NOTE
5 – SHARE EXCHANGE AND ASSIGNMENT AGREEMENT
On
April 16, 2019, the Company entered into a Share Exchange and Assignment Agreement (the “MBO Agreement”) with Aurum, LLC
(“Aurum”), a newly formed Nevada corporation organized by Sheldon Karasik, the Company’s former CEO, Chairman and a
principal shareholder for the purpose of acquiring 75% of the capital stock of the MMMM Mining Subsidiaries from the Company for cash
consideration of $10 plus the assumption by Aurum of all of the liabilities of the Mining Subsidiaries. On the date of closing of the
MBO Agreement, the Company made a payment of $100,000 to Aurum, which proceeds were to be used by Aurum to fund the operations of the
MMMM Mining Subsidiaries. The $100,000 was funded by an institutional investor in consideration for the issuance of 18,182 shares of
Series E Convertible Preferred Stock.
The
MBO Agreement also required the Company to allocate 20% of the proceeds received by the Company under the Crown Bridge Equity Line, if
any, to pay Aurum for the operations of the MMMM Mining Subsidiaries, among other terms and conditions. In connection with the MBO Agreement,
Aurum assumed all of the liabilities of the MMMM Mining Subsidiaries, which were disclosed to the Company as totaling approximately $96,673.
As a result of this transaction, a loss of $403,327 was recorded.
NOTE
6 – INVESTMENTS
Investments
in debt and marketable securities, other than investments accounted for under the equity method, are classified as trading, available-for-sale
or held-to-maturity. Our marketable equity investments are classified as either trading or available-for-sale with their cost basis determined
by the specific identification method. Our investments in debt securities are carried at either amortized cost or fair value. Investments
in debt securities that the Company has the positive intent and ability to hold to maturity are carried at amortized cost and classified
as held-to-maturity. Investments in debt securities that are not classified as held-to-maturity are carried at fair value and classified
as either trading or available-for-sale. Realized and unrealized gains and losses on trading securities and realized gains and losses
on available-for-sale securities are included in net income. Unrealized gains and losses, net of deferred taxes, on available-for-sale
securities are included in our consolidated balance sheets as a component of AOCI, except for the change in fair value attributable to
the currency risk being hedged.
Available
for Sale Securities and Held to Maturity
As
of June 30, 2021 and 2020, our available for sale securities had a fair value of $2,981 and $0, respectively, and consisted primarily
of equity securities. The Company had net unrealized gains on available for sale securities of $2,737 and $0 as of June 30, 2021 and
2020, respectively. The Company did not have any held to maturity securities.
Trading
Securities
As
of June 30, 2021 and 2020, the Company had no outstanding trading securities. The Company’s trading securities primarily consist
of the short term trading of options. The company had net realized income from trading securities of $19,707 and $0 for the period ended
June 30, 2021 and 2020, respectively.
NOTE
7 – NOTE PAYABLE
On
April 9, 2021, the Company entered into a Master Senior Loan Agreement (“MSLA”) with BeachStar Partners, LLC as Lender and
Administrative Agent. Pursuant to the MSLA, the Company borrowed the initial sum of $4,200,000, which sum has been received by the Company
in full. A Promissory was issued at closing, the Note bears interest at 18% per annum based on a 360-day year and is due eighteen months
from the funding day. The Company pays interest monthly in the amount greater of $63,000 or 4% of the collections received by the Company.
The Company has authorized the lender to apply the portion of each collections payment that exceeds the monthly interest amount to future
monthly interest amount scheduled through the maturity date, at which time such excess payments shall be applied to the principle of
the loan The MSLA is not convertible to the Company’s stock unless in the event of a material uncured default of the MSLA. The
MSLA further provides for additional incremental loans in tranches of $1,000,000 per every 500 insured lives added by the Company, up
to a maximum of 65,000 insured lives, or $130,000,000
NOTE
8 – CONVERTIBLE DEBT
On
or about November 27, 2018, the Company issued a convertible promissory note to an institutional investor for the principal sum of $63,000.00,
together with interest at 12% per annum, with a maturity date of November 27, 2019 (the “Note”). The Note was convertible
at any time during the period beginning 180 days following the date of the Note to convert all or any part of the outstanding and unpaid
principal amount of the Note into shares of Common Stock at a Variable Conversion Price, which is equal to 58% multiplied by the Market
Price defined as the average of the lowest two (2) Trading Prices for the Company’s Common Stock during the preceding 15 trading
day period prior to the Conversion Date. The Company paid $3,000 as a fee which is recorded as a debt discount and being amortized over
the life of the loan.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.1770 was $131,158
using a binomial pricing model and was calculated as a derivative liability discount to the Note. That amount is recorded as a new contra-note
payable, but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the Note. Because of the derivative
nature of the $131,158 valuation of the conversion feature, $71,158 is recorded as an expense in the current period and reported as a
loss on issuance of convertible debt. An accredited investor acquired the note from the institutional investor, with the consent of the
Company, in consideration for the payment of the outstanding principal, accrued interest and prepayment penalty in the aggregate amount
of $96,816. The Company then issued a replacement convertible promissory note payable to the acquiring institutional investor for the
principal sum of $96,816 with identical terms to the original note (interest at 12% per annum, maturity date of November 27, 2019, conversion
rights and conversion price.) This transaction was treated as an extinguishment and reissuance of the original note and resulted in accelerated
recognition of interest expense for original issue discount debt discount of $1,471, interest expense for derivative liability debt discount
of $26,425 and a loss on extinguishment in the amount of $29,943.
The
conversion feature of the replacement note represents an embedded derivative. A derivative liability with an intrinsic value of $0.1775
was $292,344 using a binomial pricing model and was calculated as a derivative liability discount to the Note. That amount is recorded
as a new contra-note payable amount, but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of
the Note. Because of the derivative nature of the $292,344 valuation of the conversion feature, $195,528 was recorded as an expense and
reported as a loss on issuance of convertible debt.
On
or about November 29, 2019, the Company and the institutional investor entered into a Note Extension Agreement (“Extension Agreement”).
Pursuant to the Extension Agreement the maturity date was extended to November 30, 2020.
During
the period ended June 30, 2021, $0 of regular interest and $0 of derivative liability discount was expensed. During the period ended
June 30, 2020, $14,371 of regular interest and $32993 of derivative liability discount was expensed.
On
or about October 1, 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $94,000,
together with interest at the rate of 10% per annum with a maturity date of September 30, 2020. The investor has the right at any time
following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid
and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 60% multiplied by the Market Price (representing
a discount rate of 50%), in which Market Price is the lowest closing bid price for the Company’s Common Stock during the preceding
20 trading day period including the Conversion Date.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.04487 was $210,363
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable. Because of the derivative nature of the $210,363 valuation of the conversion feature, $116,363
is recorded as an expense and reported as a loss on issuance of convertible debt.
During
the period ended June 30, 2021, $0 of regular interest and $0 of derivative liability discount was expensed. During the period ended
June 30, 2020, $7,031, of regular interest, $0 of original issue and $70,307 of derivative liability discount was expensed.
On
or about September 1, 2020, the Company entered into a Note Modification Agreement (“Modification”) in which the above two
notes in the amount of $96,816 of principal and $20,403 of accrued interest and another note in the amount of $94,000 in principal and
$8,627 of accrued interest (described below) were superseded and consolidated into a single new long-term note in the principal amount
of $250,000. The new note bears interest at a rate of 8% per annum and has a maturity date of December 31, 2021.
In
December 2020, the investor converted $96,000 of Principal due under the Modification into 2,400,000 shares of common stock. In January
2021, the investor converted the remaining $134,000 into 3,350,000 shares of common stock and fully retired the note.
During
the period ended June 30, 2021, $4,910 of regular interest and $225,993 of derivative liability discount was expensed, there was no corresponding
expense during the period ended June 30, 2020
On
or about April 25, 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $75,000,
together with interest at the rate of 12%per annum, with a maturity date of April 25, 2020. The investor had the right at any time during
the period beginning 180 days following the date of the Note to convert all or any part of the outstanding and unpaid principal amount
of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price equal 58% multiplied by the Market
Price, representing a discount rate of 42%, in which Market Price is the average of the lowest two Trading Prices for the Company’s
Common Stock during the preceding 20 trading day period including the Conversion Date. The Company paid $1,250 in original issue discount
and $3,000 as a fee both of which are recorded as a debt discount and being amortized over the life of the loan.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.1062 was $139,348
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded OID and transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable. Because of the derivative nature of the $139,348 valuation of the conversion feature, $69,348
was recorded as an expense and reported as a loss on issuance of convertible debt.
Between
December 2019 and June 2020, the investor converted all of the outstanding principal and interest in the amount $75,000 of principal
and $10,580 of accrued interest into 615,293 post-split shares of common stock.
During
the period ended June 30, 2021, $0 of regular interest, $0 of original issue discount and $0 of derivative liability discount was expensed.
During the period ended June 30, 2020, $6,684 of regular interest, $2,842 of original issue discount, and $39,781 of derivative liability
discount was expensed.
On
or about April 29, 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $66,000,
together with interest at the rate of 12% per annum, with a maturity date of April 29, 2020. The investor has the right at any time following
the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable
shares of Common Stock at a Variable Conversion Price which is equal 58% multiplied by the Market Price (representing a discount rate
of 42%), in which Market Price is the average of the lowest two Trading Prices for the Company’s Common Stock during the preceding
20 trading day period including the Conversion Date. The Company paid $6,000 in original issue discount and $3,000 as a fee both of which
are recorded as a debt discount and being amortized over the life of the loan.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.1510 was $175,334
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded OID and transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable. Because of the derivative nature of the $175,334 valuation of the conversion feature, $118,334
was recorded as an expense and reported as a loss on issuance of convertible debt.
During
the period ended June 3, 2021, $7,898 of regular interest, $0 of original issue discount and $0 of derivative liability discount was
expensed. During the period ended June 30, 2020, $7,291 of regular interest, $5,213 of original issue discount, and $33,016 of derivative
liability discount was expensed.
On
or about May 7, 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $50,000,
together with interest at the rate of 12% per annum, with a maturity date of May 7, 2020. The investor had the right at any time following
the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable
shares of Common Stock at a Variable Conversion Price which is equal 60% multiplied by the Market Price (representing a discount rate
of 40%), in which Market Price is the average of the lowest two Trading Prices for the Company’s Common Stock during the preceding
20 trading day period prior to the Conversion Date. The Company paid $3,500 as a fee which is recorded as a debt discount and being amortized
over the life of the loan.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.1607 was $131,162
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded OID and transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable. Because of the derivative nature of the $131,162 valuation of the conversion feature, $84,662
was recorded as an expense in the current period and reported as a loss on issuance of convertible debt.
During
the period ended June 30, 2021, $5,485 of regular interest, $0 of original issue discount and $0 of derivative liability discount was
expensed. During the period ended June 30, 2020, $5,244, of regular interest, $2,104 of original issue discount, and $27,951 of derivative
liability discount was expensed.
On
April 5, 2021 the investor converted the outstanding principal of $50,000 into 925,930 shares of common stock.
On
or about May 17, 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $50,000,
together with interest at the rate of 12% per annum, with a maturity date of February 17, 2020. The investor has the right at any time
following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid
and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 58% multiplied by the Market Price, representing
a discount rate of 42%, in which Market Price is the lowest bid price for the Company’s Common Stock during the preceding 20 trading
day period including the Conversion Date. The Company paid $5,000 as a fee which is recorded as a debt discount and being amortized over
the life of the loan.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.0902 was $76,989
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable. Because of the derivative nature of the $76,989 valuation of the conversion feature, $31,989
was recorded was an expense and reported as a loss on issuance of convertible debt.
On
January 21, 2020, the May 17, 2019 note was assigned to another investor with the original terms of the note remaining unchanged.
During
the period ended June 30, 2021, $5,984 of regular interest, $0 of original issue discount and $0 of derivative liability discount was
expensed. During the period ended June 30, 2020, $6,707, of regular interest, $2,536 of original issue discount, and $22,826 of derivative
liability discount was expensed.
On
April 16, 2021, the Company paid the outstanding principal and interest at a discount in the amount of $37,410 to fully extinguish the
debt and recorded a gain on extinguishment in the amount of $30,541
On
or about May 21, 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $110,000,
together with interest at the rate of 8% per annum, with a maturity date of November 21, 2019. The investor has the right at any time
during the period beginning 180 days following the date of the Note to convert all or any part of the outstanding and unpaid principal
amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 60% multiplied
by the Market Price, representing a discount rate of 40%, in which Market Price is the lowest bid price for the Company’s Common
Stock during the preceding 20 trading day period including the Conversion Date. The Company paid $5,000 as a fee which is recorded as
a debt discount and being amortized over the life of the loan.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.0765 was $138,861
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable. Because of the derivative nature of the $138,861 valuation of the conversion feature, $38,861
was recorded as an expense and reported as a loss on issuance of convertible debt.
Between
May 2020 and June 2020, the investor converted all of the outstanding principal and interest in the amount $110,000 of principal and
$19,222 of accrued interest into 1,495,119 post-split shares of common stock.
During
the period ended June 30, 2021, $0 of regular interest, $0 of original issue discount and $0 of derivative liability discount was expensed.
During the period ended June 30, 2020, $16,039, of regular interest, $2,826 of original issue discount, and $28,261 of derivative liability
discount was expensed.
On
or about June 11, 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $70,000,
together with guaranteed interest at the rate of 15% per annum with a six-month minimum, with a maturity date of September 11, 2019.
The investor has the right if the note is defaulted to convert all or any part of the outstanding and unpaid principal amount of the
Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 50% multiplied by the Market
Price, representing a discount rate of 50%, in which Market Price is the lowest trading price for the Company’s Common Stock during
the preceding 30 trading day period prior to the Conversion Date. The Company paid $20,000 in original issue discount which is recorded
as a debt discount and being amortized over the life of the loan.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.0631 was $122,694
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable. Because of the derivative nature of the $122,694 valuation of the conversion feature, $72,694
was recorded as an expense and reported as a loss on issuance of convertible debt.
On
September 25, 2019, a third-party institutional investor acquired the $70,000 note dated June 11, 2019, with the consent of the Company,
paying the outstanding principal, accrued interest and prepayment penalty in the aggregate amount of $95,760. The Company then issued
a replacement convertible promissory note payable to third-party purchaser for the principal sum of $95,760 with interest at 10% per
annum, a maturity date of September 25, 2020, granting the purchaser the right at any time to convert all or any part of the outstanding
and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which
is equal to the lesser of 60% multiplied by the average of the two lowest trading prices during the 20 trading days preceding the date
of the note, or the average of the two lowest trading prices for the Company’s Common Stock during the preceding 20 trading day
period prior to the Conversion Date. This transaction was treated as an extinguishment of the original note and resulted in recognition
a loss on extinguishment in the amount of $49,762.
The
conversion feature of this replacement note represents an embedded derivative. A derivative liability with an intrinsic value of $0.04407
was $145,522 using a binomial pricing model and was calculated as a derivative liability discount to the Note. That amount is recorded
as a new contra-note payable amount, but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of
the Note. Because of the derivative nature of the $145,522 valuation of the conversion feature, $49,762 was recorded as an expense and
reported as a loss on issuance of convertible debt.
Between
January 2020 and May 2020, the investor converted all of the outstanding principal and interest in the amount $95,760 of principal and
$5,644 of accrued interest into 705,850 post-split shares of common stock.
During
the period ended June 30, 2021, $0 of regular interest and $0 of derivative liability discount was expensed. During the period ended
June 30, 2020, $5,511 of regular interest and $92,710 of derivative liability discount was expensed.
On
or about July 1, 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $112,500,
together with interest at the rate of 12% per annum with a maturity date of December 25, 2020, which investor has the right at any time
following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid
and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 60% multiplied by the Market Price, representing
a discount rate of 40%, in which Market Price is the average of the two lowest trading prices for the Company’s Common Stock during
the preceding 20 trading day period prior to the Conversion Date. The Company paid fees of $122,500 which was recorded as a debt discount
and being amortized over the life of the loan
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.0696 was $182,517
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable. Because of the derivative nature of the $182,517 valuation of the conversion feature, $82,517
was recorded aas an expense and reported as a loss on issuance of convertible debt.
On
April 1, 2020, the investor assigned $62,541 of principal and interest to another investor. Between April 2020 and May 2020, that investor
converted all of the assigned principal into 840,024 post-split shares of common stock.
Between
April 2020 and May 2020, the investor also converted the remaining $62,541 of principal and $2,551 of accrued interest into 761,862 post-split
shares of common stock.
During
the period ended June 30, 2021, $0 of regular interest, $0 of original issue discount and $0 of derivative liability discount was expensed.
During the period ended June 30, 2020, $12,015, of regular interest, $18,525 of original issue discount, and $74,098 of derivative liability
discount was expensed.
On
or about July 12 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $75,000,
together with interest at the rate of 12% per annum with a maturity date of April 12, 2020, which investor has the right at any time
following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid
and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 50% multiplied by the Market Price, representing
a discount rate of 50%, in which Market Price is the lowest trading price (average of the two lowest closing bid prices) for the Company’s
Common Stock during the preceding 25 trading day period prior to the Conversion Date. The Company paid $7,500 in original issue discount,
fees of $2,750 and issued warrants valued at $27,911 all of which are recorded as a debt discount and being amortized over the life of
the loan
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.0416 was $91,496
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable. Because of the derivative nature of the $91,496 valuation of the conversion feature, $54,656
was recorded as an expense in the current period and reported as a loss on issuance of convertible debt.
Between
January 2020 and June 2020, the investor converted the outstanding $75,000 of principal and $6,149 of accrued interest into 754,604 post-split
shares of common stock.
During
the period ended June 30, 2021, $0 of regular interest, $0 of original issue discount and $0 of derivative liability discount was expensed.
During the period ended June 30, 2020, $6,091, of regular interest, $31,651 of original issue discount, and $26,122 of derivative liability
discount was expensed.
On
or about August 13 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $225,000,
together with interest at the rate of 10% per annum with a maturity date of February 13, 2020, which investor has the right at any time
following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid
and non-assessable shares of Common Stock at a Variable Conversion Price which is equal to the lower of $0.08 and 60% of the average
of the two lowest closing bid prices for the Company’s Common Stock during the preceding 20 trading day period prior to the Conversion
Date. The Company paid $22,500 in original issue discount and fees of $7,500 which are recorded as a debt discount and being amortized
over the life of the loan. Additionally, the Company issued warrants valued at $479,670, this amount is also recorded as a debt discount,
but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. As a result of this
cap, $284,670 is recorded as an expense and reported as a loss on issuance of convertible debt.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.0754 was $642,857
using a binomial pricing model and was calculated as a derivative liability discount to the note. Because the entire note now was fully
discounted by the amounts above, the $642,857 was recorded as an expense and reported as a loss on issuance of convertible debt.
On
February 13, 2020, the note entered a maturity date default resulting in a default premium of $94,600 being added to the principal of
the note and the interest rate increasing to 18%.
Between
February 2020 and June 2020, the investor converted the outstanding $225,000 of principal, $94,600 of default premium and $27,656 of
accrued interest into 2,943,441 post-split shares of common stock.
During
the period ended June 30, 2021, $0 of regular interest, $0 of original issue discount and $0 of derivative liability discount was expensed.
During the period ended June 30, 2020, $24,656, of regular interest and $166,304 of original issue was expensed.
On
or about August 29 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $55,000,
together with interest at the rate of 8% per annum with a maturity date of August 28, 2020, which investor has the right at any time
following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid
and non-assessable shares of Common Stock at a Variable Conversion Price which is 60% of the average of the two lowest closing bid prices
for the Company’s Common Stock during the preceding 20 trading day period prior to the Conversion Date. The Company paid $5,000
in original issue discount and fees of $2,500 which are recorded as a debt discount and being amortized over the life of the loan.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.05368 was $84,403
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable. Because of the derivative nature of the $84,403 valuation of the conversion feature, $36,903
was recorded as an expense and reported as a loss on issuance of convertible debt.
Between
March 2020 and May 2020, the investor converted the outstanding $55,000 of principal and $2,828 of accrued interest into 353,123 post-split
shares of common stock.
During
the period ended June 30, 2021, $0 of regular interest, $0 of original issue discount and $0 of derivative liability discount was expensed.
During the period ended June 30, 2020, $2,424, of regular interest, $6,824 of original issue and $43,217 of derivative liability discount
was expensed.
On
or about November 12, 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $59,400,
together with interest at the rate of 12% per annum with a maturity date of November 12, 2020. The investor has the right at any time
following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid
and non-assessable shares of Common Stock at a Variable Conversion Price which is equal to the lesser of 60% multiplied by the Market
Price (representing a discount rate of 50%), in which Market Price is the average of the two lowest closing bid prices for the Company’s
Common Stock during the 20 trading day period prior to the date of the note, or 60% multiplied by the Market Price (representing a discount
rate of 40%), in which Market Price is the average of the two lowest closing bid prices for the Company’s Common Stock during the
preceding 20 trading day period prior to the Conversion Date.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.0483 was $125,504
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable. Because of the derivative nature of the $125,504 valuation of the conversion feature, $75,504
was recorded as an expense in the current period and reported as a loss on issuance of convertible debt.
Between
May 2020 and June 2020, the investor converted the outstanding principal of $59,400 and accrued interest of $3,564 into 639,021 of post-split
shares of common stock.
During
the period ended June 30, 2021, $0 of regular interest, $0 of original issue discount and $0 of derivative liability discount was expensed.
During the period ended June 30, 2020, $3,564, of regular interest, $9,400 of original issue and $50,000 of derivative liability discount
was expensed
On
or about December 20, 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $33,333,
together with interest at the rate of 10% per annum with a maturity date of February 13, 2020. The investor has the right at any time
following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid
and non-assessable shares of Common Stock at a Variable Conversion Price which is equal to the lower of $0.02 and 60% of the average
of the two lowest closing bid prices for the Company’s Common Stock during the preceding 20 trading day period including the Conversion
Date. The Company paid $8,333 in original issue discount and fees which are recorded as a debt discount and being amortized over the
life of the loan. Additionally, the Company issued warrants valued at $98,000, this amount is also recorded as a debt discount, but only
for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. As a result of this cap, $73,000
is recorded as an expense and reported as a loss on issuance of convertible debt.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.0179 was $29,833
using a binomial pricing model and was calculated as a derivative liability discount to the note. Because the entire note now was fully
discounted by the amounts above, the $29,833 was recorded as an expense and reported as a loss on issuance of convertible debt.
During
the period ended June 30, 2020, the Company paid this note in full.
During
the period ended June 30, 2021, $0 of regular interest, $0 of original issue discount and $0 of derivative liability discount was expensed.
During the period ended June 30, 2020, $15,667, of regular interest, $33,333 of original issue and $0 of derivative liability discount
was expensed.
On
or about January 17, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $50,000,
together with interest at the rate of 10% per annum with a maturity date of October 11, 2020. The investor has the right at any time
following 180 days of the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into
fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal to the lower of $0.02 and 50% of the
average of the two lowest trading prices for the Company’s Common Stock during the preceding 30 trading day period prior to the
Conversion Date.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $4.94 was $247,000
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable. Because of the derivative nature of the $247,000 valuation of the conversion feature, $197,000
was recorded as an expense in the current period and reported as a loss on issuance of convertible debt.
During
the period ended June 30, 2021, $1,140 of regular interest was recaptured as a result of over expensing in the prior quarter and $2,052
of derivative liability discount was expensed. During the period ended June 30, 2020, $2,260, of regular interest, $0 of original issue
and $30,784 of derivative liability discount was expensed.
On
or about January 20, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $115,000,
together with interest at the rate of 8% per annum with a maturity date of January 11, 2021. The Company paid $15,000 in original issue
discount and fees which are recorded as a debt discount and being amortized over the life of the loan. The investor has the right has
the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the
Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 60% of the average of the
two lowest closing prices for the Company’s Common Stock during the preceding 20 trading day period prior to the Conversion Date.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $4.58 was $438,917
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable. Because of the derivative nature of the $438,917 valuation of the conversion feature, $338,917
is recorded was an expense in the current period and reported as a loss on issuance of convertible debt.
Between
July 2020 and September 2020, the investor converted the outstanding $115,000 of principal and $5,008 of accrued interest into 849,788
post-split shares of common stock.
During
the period ended June 30, 2021, $0, of regular interest, $0 of original issue discount and $0 of derivative liability was expensed. During
the period ended June 30, 2020, $4,114, of regular interest, $6,598 of original issue discount and $43,989 of derivative liability was
expensed.
On
or about March 3, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $112,750,
together with interest at the rate of 12% per annum, and a default interest amount of 24%, with a maturity date of January 11, 2021.
The Company paid $12,750 in original issue discount and fees which are recorded as a debt discount and being amortized over the life
of the loan. Additionally, the Company issued warrants valued at $32,214, this amount is also recorded as a debt discount, but only for
an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. The investor has the right at any
time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully
paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 60% of the average of the two lowest closing
prices for the Company’s Common Stock during the preceding 20 trading day period prior to the Conversion Date.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $3.64 was $271,345
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable. Because of the derivative nature of the $271,345 valuation of the conversion feature, $203,560
was recorded as an expense and reported as a loss on issuance of convertible debt.
On
September 15, 2020, the investor converted $55,193 of principal and $7,228 of accrued interest into 917,395 of post-split shares of common
stock.
During
the period ended December 31, 2020 the investor converted the remaining principal of $57,557, $670 of accrued interest and $1,500 in
financing fee into 1,203,822 shares of common stock
During
the period ended June 30, 2021, $244 of regular interest, $18,971 of original issue discount and $28,600 of derivative liability discount
was expensed. During the period ended June 30, 2020, $4,472, of regular interest, $14,660 of original issue and $22,100 of derivative
liability discount was expensed.
On
or about June 4, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $75,000,
together with interest at the rate of 12% per annum, and a default interest amount of 18%, with a maturity date of June 4, 2021. The
Company paid $2,000 in original issue discount and fees which are recorded as a debt discount and being amortized over the life of the
loan. The investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid
principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal
42% of the lowest closing price for the Company’s Common Stock during the preceding 15 trading day period prior to the Conversion
Date.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $.3637 was $201,137
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable. Because of the derivative nature of the $201,137 valuation of the conversion feature, $128,137
was recorded as an expense and reported as a loss on issuance of convertible debt.
On
December 11, 2020 the investor converted the outstanding principal of $75,000 and $4,512 of accrued interest into 806,413 shares of common
stock.
During
the period ended June 30, 2021, $1,603 of regular interest, $1,353 of original issue discount and $49,400 of derivative liability discount
was expensed. During the period ended June 30, 2020, $641 of regular interest, $142 of original issue discount and $5,200 of derivative
liability discount was expensed.
On
or about June 5, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $220,000,
together with interest at the rate of 8% per annum, and a default interest amount of 18%, with a maturity date of June 5, 2021. The Company
paid $30,000 in original issue discount and fees which are recorded as a debt discount and being amortized over the life of the loan.
The investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal
amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 60% of the
of the lowest closing price for the Company’s Common Stock during the preceding 20 trading day period prior to the Conversion Date,
or $1.00.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $.30314 was $479,972
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable. Because of the derivative nature of the $479,972 valuation of the conversion feature, $289,972
was recorded as an expense in the current period and reported as a loss on issuance of convertible debt.
On
December 11, 2020 the investor converted principal of $40,000 into 404,040 shares of common stock.
On
February 18, 2021 the investor converted principal of $40,000 into 467,836 shares of common stock.
On
March 5, 2021 the investor converted principal of $55,000 into 572,917 shares of common stock.
On
April 8, 2021 the investor converted principal of $55,000 into 1,078,431 shares of common stock.
On
April 15, 2021, the Company paid $30,000 in principle, 12,956 in accrued interest and $4,644 as a prepayment penalty in the total amount
of $47,600 to fully extinguish the note.
During
the period ended March 31, 2021 the investor converted principal of $95,000 into 1,040,750 shares of common stock.
During
the period ended June 30, 2021, $7,314 of regular interest, $20,384 of original issue discount and $129,096 of derivative liability discount
was expensed. During the period ended June 30, 2020, $1,205 of regular interest, $2,055 of original issue discount and $6,849 of derivative
liability discount was expensed.
On
or about June 8, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $44,000,
together with interest at the rate of 8% per annum, and a default interest amount of 24%, with a maturity date of June 10, 2021. The
Company paid $6,000 in original issue discount and fees which are recorded as a debt discount and being amortized over the life of the
loan. The investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid
principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal
60% of the of the lowest closing price for the Company’s Common Stock during the preceding 20 trading day period prior to the Conversion
Date, or $1.00.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $.29498 was $67,600
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable. Because of the derivative nature of the $67,600 valuation of the conversion feature, $29,600
was recorded as an expense and reported as a loss on issuance of convertible debt.
On
December 16, 2020, the Company signed a Standstill and Revival Agreement with this investor, pursuant to which the debt holder agrees
to not tender any notices of conversion for a period of six (6) months from the date of the agreement. In consideration of the agreement,
the company issued 20,000 shares of common stock valued at $4,340, and made a cash payment of $21,800. These amounts were recorded as
financing fees.
On
April 13,2021, the Company paid $44,000 in principle, $3,012 in accrued interest and $14,148 as a prepayment penalty in the total amount
of $61,160 to fully extinguish the note.
During
the period ended June 30, 2021, $1,897 of regular interest, $4,126 of original issue discount and $26,132 of derivative liability discount
was expensed. During the period ended June 30, 2020, $215 of regular interest, $360 of original issue discount and $2,278 of derivative
liability discount was expensed.
On
or about June 10, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $44,000,
together with interest at the rate of 8% per annum, and a default interest amount of 24%, with a maturity date of June 10, 2021. The
Company paid $6,000 in original issue discount and fees which are recorded as a debt discount and being amortized over the life of the
loan. The investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid
principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal
60% of the of the lowest closing price for the Company’s Common Stock during the preceding 20 trading day period prior to the Conversion
Date, or $1.00.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $.3603 was $82,569
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable. Because of the derivative nature of the $82,569 valuation of the conversion feature, $44,569
was recorded as an expense and reported as a loss on issuance of convertible debt.
On
December 16, 2020 the investor converted the outstanding principal of $44,000 and $1,774 of accrued interest into 462,368 shares of common
stock.
During
the period ended June 30, 2021, $660 of regular interest, $4,136 of original issue discount and $26,196 of derivative liability discount
was expensed. During the period ended June 30, 2020, $196 of regular interest, $329 of original issue discount and $2,082 of derivative
liability discount was expensed.
On
or about July 1, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $173,500,
together with interest at the rate of 12% per annum, and a default interest amount of 24%, with a maturity date of June 15, 2021. The
Company paid $28,675 in original issue discount and fees which are recorded as a debt discount and being amortized over the life of the
loan. Additionally, the Company issued two warrants valued at $210,092, this amount is also recorded as a debt discount, but only for
an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. The investor has the right at any
time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully
paid and non-assessable shares of Common Stock at the lowest closing price during the previous 5-day period ending on the latest complete
day prior to the date of the note or the Volume Weighted Average Price (“VWAP”) for the 5 trading days prior to the date
of conversion.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $.3116 was $168,946
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable. Because of the derivative nature of the $168,946 valuation of the conversion feature, $168,946
was recorded as an expense and reported as a loss on issuance of convertible debt.
On
April 13,2021, the Company paid $94,180 in principle, $16,483 in accrued interest and $4,337 as a prepayment penalty in the total amount
of $115,000 to fully extinguish the note.
During
the period ended June 30, 2021, $11,220 of regular interest and $128,261 of original issue discount was expensed. There was no corresponding
expense during the period ended June 30, 2020.
On
or about July 6, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of up to $150,000,
together with interest at the rate of 10% per annum, the first twelve months being guaranteed, and a default interest amount of 15%,
with a maturity date of twelve months from the effective date of each tranche. The investor has the right at any time following the date
of each tranche to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable
shares of Common Stock at the lower of 60% of the lesser of the lowest traded price or lowest closing bid price during the previous twenty
five day period prior to the date of the note and 60% of the lesser of the lowest traded price or lowest closing bid price during the
previous twenty five day period prior to the date of conversion.
On
or about July 6, 2020, the first tranche of the above convertible promissory note was received by the Company, with a maturity date of
July 6, 2021. The Company paid $8,000 in original issue discount and fees which are recorded as a debt discount and being amortized over
the life of the loan. Additionally, the Company issued warrants valued at $27,083, this amount is also recorded as a debt discount, but
only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $.2996 was $89,167
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable. Because of the derivative nature of the $89,167 valuation of the conversion feature, $74,250
was recorded as an expense and reported as a loss on issuance of convertible debt.
On
April 13,2021, the Company paid $50,000 in principle, $3,904 in accrued interest and $28,596 as a prepayment penalty in the total amount
of $82,500 to fully extinguish the note.
During
the period ended June 30, 2021, $2,658 of regular interest, $26,456 of original issue discount and $11,248 of derivative liability discount
was expensed. There was no corresponding expense during the period ended June 30, 2020.
On
or about August 28, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $110,000,
together with interest at the rate of 10% per annum, and a default interest amount of 24%, with a maturity date of August 27, 2021. The
Company paid $15,000 in original issue discount and fees which are recorded as a debt discount and being amortized over the life of the
loan. Additionally, the Company issued a warrant valued at $15,625, this amount is also recorded as a debt discount, but only for an
amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. The investor has the right at any time
following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid
and non-assessable shares of Common Stock at 60% of the lowest closing price during the previous 20-day period ending on the latest complete
day prior to the date of the note.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $.2085 was $155,957
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable. Because of the derivative nature of the $155,957 valuation of the conversion feature, $76,582
was recorded as an expense and reported as a loss on issuance of convertible debt.
On
March 2, 2021, the investor converted 80,000 in principle into 2,018,750 shares of common stock
On
April 13,2021, the Company paid $30,000 in principle, $6,025 in accrued interest and $11,983 as a prepayment penalty in the total amount
of $48,008 to fully extinguish the note.
During
the period ended June 30, 2021, $5,017 of regular interest, $27,849 of original issue discount and $72,179 of derivative liability discount
was expensed. There was no corresponding expense during the period ended March 31, 2020.
On
or about April 1, 2020, the Company issued a promissory note to an institutional investor for the principal sum of $150,000, together
with interest at the rate of 1.5% per month, subject to a fixed minimum of $2,250 per month. The lender was also granted 4% of collections
received by the Company, from which interest would be paid first and any remaining amount would be applied to the outstanding principal.
On
or about June 1, 2020 the above promissory note was amended to increase the outstanding principal to $300,000, and the fixed minimum
was increased to $4,500.
On
or about September 21, 2020, the above promissory note was amended, restated and consolidated into a convertible debt note in the amount
of $600,000, with a maturity date of March 31, 2022. On the first day of each month a fixed minimum interest payment of $9000 is due.
The investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal
amount of the Note into fully paid and non-assessable shares of Common Stock at $0.30 per share.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $.0751 was $132,388
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable.
On
April 13,2021, this convertible note was acquired by another investor and is no longer a convertible debt all remaining derivative liability
discount was expensed.
During
the period ended June 30, 2021, $54,000 of regular interest and $130,951 of derivative liability discount was expensed. There was no
corresponding expense during the period ended March 31, 2020.
On
or about October 21, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $55,000,
together with interest at the rate of 10% per annum, with a maturity date of June 16, 2021. The investor has the right after 180 days
following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid
and non-assessable shares of Common Stock at the lower of $0.20 or the Variable Conversion Price which is equal to 70% multiplied by
the Market Price (representing a discount rate of 30%), in which Market Price is the lowest closing price for the Company’s Common
Stock during the preceding 20 trading day period preceding the Conversion Date. The Company paid $5,000 in original issue discount and
$3,500 as a fee both of which are recorded as a debt discount and being amortized over the life of the loan. Additionally, the Company
issued 50,000 shares of common stock valued at $11,000, which was also recorded as a debt discount and is being amortized of the life
of the loan.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.1883 was $192,143
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded OID and transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable. Because of the derivative nature of the $192,143 valuation of the conversion feature, $156,593
was recorded as an expense in the current period and reported as a loss on issuance of convertible debt.
On
April 13,2021, the Company paid $55,000 in principle, $7,269 in accrued interest and $3,731 as a prepayment penalty in the total amount
of $66,000 to fully extinguish the note.
During
the period ended June 30, 2021, $7,269 of regular interest, $19,500 of original issue discount and $35,550 of derivative liability discount
was expensed. There was no corresponding expense during the period ended June 30, 2020.
On
or about October 22, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $55,000,
together with interest at the rate of 12% per annum, with a maturity date of October 21, 2021. The investor has the right after 180 days
following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid
and non-assessable shares of Common Stock at the lower of $0.20 or the Variable Conversion Price which is equal to 60% multiplied by
the Market Price (representing a discount rate of 40%), in which Market Price is the lowest closing price for the Company’s Common
Stock during the preceding 20 trading day period preceding the Conversion Date. The Company paid $5,000 in original issue discount and
$3,500 as a fee both of which are recorded as a debt discount and being amortized over the life of the loan.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.1951 was $232,262
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded OID and transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable. Because of the derivative nature of the $232,262 valuation of the conversion feature, $185,762
was recorded as an expense and reported as a loss on issuance of convertible debt.
On
April 13,2021, the Company paid $55,000 in principle, $3,110 in accrued interest and $17,057 as a prepayment penalty in the total amount
of $71,167 to fully extinguish the note.
During
the period ended June 30, 2021, $3,110 of regular interest, $8,500 of original issue discount and $46,500 of derivative liability discount
was expensed. There was no corresponding expense during the period ended June 30, 2020.
On
or about November 10, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $116,600,
together with interest at the rate of 10% per annum, with a maturity date of August 10, 2021. A lump-sum 10% interest payment was immediately
due on the issued date and was added to the principal balance and payable on the maturity date. The investor has the right at any time
following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid
and non-assessable shares of Common Stock at the Variable Conversion Price which is equal to 60% multiplied by the Market Price (representing
a discount rate of 40%), in which Market Price is the lowest closing price for the Company’s Common Stock during the preceding
20 trading day period preceding the Conversion Date. The Company paid $11,660 in original issue discount and $4,940 as a fee both of
which are recorded as a debt discount and being amortized over the life of the loan. Additionally, the Company issued 114,155 shares
of common stock valued at $21,689, which was also recorded as a debt discount and is being amortized of the life of the loan.
The
conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.1538 was $163,028
using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note
payable amount (similar to the recorded OID and transaction costs), but only for an amount not in excess of and thus capped by the otherwise
undiscounted amount of the note payable. Because of the derivative nature of the $163,028 valuation of the conversion feature, $84,717
was recorded as an expense and reported as a loss on issuance of convertible debt.
On
April 13,2021, the Company paid $128,260 in principle, $17,051 in accrued interest and $34,253 as a prepayment penalty in the total amount
of $179,564 to fully extinguish the note.
During
the period ended June 30, 2021, $28,711 of regular interest, $38,289 of original issue discount and $78,311 of derivative liability discount
was expensed. There was no corresponding expense during the period ended March 31, 2020.
NOTE
9 – COMMON AND PREFERRED STOCK
On
May 13, 2019, the Company filed a Definitive Information Statement on Schedule 14 C for the purpose of increasing the authorized shares
of common stock, par value $0.001 (“Common Stock”) from 100,000,000 shares to 900,000,000 shares of Common Stock.
Preferred
Stock
Series
B Super Voting Preferred Stock
On
March 21, 2019, the Company, while under the control of former CEO, Chairman and principal shareholder, Sheldon Karasik, filed a Certificate
of Designation amending the Articles of Incorporation and designating the rights and restrictions of one (1) share of newly authorized
Series B Super Voting Preferred Stock, par value $0.10 per share (the “Series B Preferred Stock”), pursuant to resolutions
approved by the Board of Directors (the “Board”) on November 5, 2018. On March 21, 2019, the Company issued to Sheldon Karasik,
the Chief Executive Officer, President and Chairman of the Board, the one (1) share of Series B Preferred Stock for $0.16, which price
was based on the closing price of the Company’s Common Stock of $0.16 as of November 5, 2018, the date of the issuance, which was
approved by the Company’s then Board. Sheldon Karasik, as the holder of the Series B Preferred Stock, was entitled to vote together
with the holders of the Company’s Common Stock upon all matters that may be submitted to holders of Common Stock for a vote, and
on all such matters, the share of Series Voting Preferred Stock shall be entitled to that number of votes equal to 51% of the total number
of votes that all issued and outstanding shares of Common Stock and all other securities of the Company are entitled to, as of any such
date of determination, on a fully diluted basis. The Company filed the Certificate of Designation with the Secretary of State of Idaho
on March 21, 2019. In connection with the closing of the SEAs and the MBO Agreement, Mr. Karasik transferred and assigned the Series
B Preferred Stock to Pat Dileo, the Company’s newly appointed CEO and Chairman.
Series
C and Series D Convertible Preferred Stock
On
April 2, 2019, the Company filed two Certificates of Designation amending the Articles of Incorporation and the Certificates of Designation
of the rights and restrictions of 400,000 shares of Series C Convertible Preferred Stock par value $0.10 and 400,000 shares of Series
D Convertible Preferred Stock par value $0.10, which were originally issued pursuant to two separate Share Exchange Agreements, see Note
5. The shares of Series C Preferred Stock may convert into a number of shares of the Company’s Common stock equal to a total of
67.5% of the Company’s outstanding shares of Common Stock on the date of closing on a fully diluted basis provided the beneficial
ownership of the holder of Series C Stock does not exceed 4.99% of the outstanding shares of the Company’s Common Stock upon said
conversion and subject to the preference, rights, limitations, qualifications and restrictions of the Series C Convertible Preferred
Stock as described in the Certificate of Designation. The Series C Holders will not have any voting rights.
During
the quarter ended September 30, 2020, a total of 2,080 shares of the Series C Preferred Stock were converted into 950,000 shares of common
stock.
During
the quarter ended December 31, 2020, 3,275 shares of Series C Preferred Stock were converted into 2,000,000 shares of common stock.
During
the quarter ended March 31, 2021, a total of 3,646 shares of Series C Preferred Stock were converted into 3,650,000 shares of common
stock.
The
shares of Series D Preferred Stock may convert into a number of shares of the Company’s Common stock equal to a total of 25% of
the Company’s outstanding shares of Common Stock on the date of closing on a fully diluted basis provided the beneficial ownership
of the holder of Series D Stock does not exceed 4.99% of the outstanding shares of the Company’s Common Stock upon said conversion
and subject to the preference, rights, limitations, qualifications and restrictions of the Series C Convertible Preferred Stock as described
in the Certificate of Designation. The Series D Holders will not have any voting rights.
During
the quarter ended June 30, 2021, the Company issued 2,000,000 warrants and a note in the amount of 2,000,000 for the extinguishment of
the Series D Preferred Stock. A loss on extinguishment was recorded in the amount of $2,238,691.
Series
E Convertible Preferred Stock
On
April 8, 2019, the Company filed a Certificates of Designation amending the Articles of Incorporation and the Certificates of Designation
of the rights and restrictions of 25,000 shares of Series E Convertible Preferred Stock with par value $0.10 and stated value $10. The
shares of Series E Preferred Stock may convert into a number of shares of the Company’s Common stock equal to a total of thirty-three
thousandths of a percent (0.00033%) of the Company’s outstanding shares of Common Stock on the date of closing on a fully diluted
basis provided the beneficial ownership of the holder of Series E Stock does not exceed 4.99% of the outstanding shares of the Company’s
Common Stock upon said conversion and subject to the preference, rights, limitations, qualifications and restrictions of the Series E
Convertible Preferred Stock as described in the Certificate of Designation. The Series E Holders will not have any voting rights.
On
April 8, 2019, the Company issued 18,182 shares of Series E Convertible Preferred Stock (“Series E Preferred”) to an institutional
investor in consideration for funding the $100,000 payment made to Aurum pursuant to the MBO Agreement.
During
the quarter ended March 31, 2021, a total of 1,365 shares of Series E Convertible Preferred stock were converted into 2,150,000 shares
of common stock.
During
the quarter ended June 30, 2021, the Company issued 2,000,000 shares of common stock and 1,000,000 warrants valued at $139,346 for the
extinguishment of the Series E Preferred Stock. A loss on extinguishment was recorded in the amount of $417,655.
Series
F Convertible Preferred Stock
On
March 9, 2019, the Company filed a Certificates of Designation amending the Articles of Incorporation and the Certificates of Designation
of the rights and restrictions of 20,750 shares of Series F Convertible Preferred Stock with par value $0.10 and stated value $10. The
shares of Series F Preferred Stock may convert into a number of shares of the Company’s Common stock based on a Conversion Rate
calculated as the “Conversion Amount divided by Conversion Price” where Conversion Amount is the sum of the Stated Value
of Series F Preferred shares to be converted and $1,250 worth of Common Stock to cover the Preferred Shareholder’s transaction
expenses and the Conversion Price is the lower of (i) the lowest Closing Bid Price, or (ii) the Fixed Price equal to $.04 per share,
on the date of closing on a fully diluted basis provided the beneficial ownership of the holder of Series F Stock does not exceed 4.99%
of the outstanding shares of the Company’s Common Stock upon said conversion and subject to the preference, rights, limitations,
qualifications and restrictions of the Series F Convertible Preferred Stock as described in the Certificate of Designation. The Series
F Holders will not have any voting rights.
During
the period ended March 31, 2020, 50 shares of Series F Preferred Stock were converted into 43,750 shares of common stock.
During
the period ended June 30, 2020, 11,870 shares of Series F Preferred Stock were converted into 3,217,500 shares of common stock.
During
the period ended September 30, 2020, 5,430 of the outstanding shares of Series F Preferred Stock were converted into 1,420,000 shares
of common stock.
On
October 2, 2020, the 3,400 remaining outstanding shares of Series F Preferred Stock was converted into 881,250 shares of common stock.
13%
Series G Cumulative Redeemable Perpetual Preferred Stock
On
April 27, 2020, the Company filed a Certificate of Designation amending the Articles of Incorporation and designation the rights and
restrictions of 2,000,000 shares of 13% Series G Cumulative Redeemable Perpetual Preferred Stock, par value $0.10 and a stated value
of $25 per share. The Series G Holders will not have any voting rights. To date, no shares of the Series G Cumulative Redeemable Perpetual
Preferred Stock have been issued or are outstanding.
Series
M Convertible Preferred Stock
On
April 27, 2020, the Company filed a Certificates of Designation amending the Articles of Incorporation and the Certificates of Designation
of the rights and restrictions of 50,000 shares of Series M Convertible Preferred Stock with par value $0.10. Each share of Series M
Preferred Stock may convert into 50 shares of the Company’s outstanding shares of Common Stock on the date of closing provided
the beneficial ownership of the holder of Series M Stock does not exceed 4.99% of the outstanding shares of the Company’s Common
Stock upon said conversion and subject to the preference, rights, limitations, qualifications and restrictions of the Series M Convertible
Preferred Stock as described in the Certificate of Designation. The Series M Holders will not have any voting rights.
On
May 28, 2020, the Company’s Board of Directors approved the execution of consulting services agreements with six unrelated persons/entities,
none of whom were affiliates of the Company, pursuant to which the Company agreed to the issuance of 11,500 shares of a Series M Convertible
Preferred Stock.
During
the quarter ended September 30, 2020, the Company issued 11,500 shares of Series M Preferred Shares to consultants for services valued
at $691,214. One shareholder converted 1,500 shares into 75,000 shares of common stock.
During
the quarter ended December 31, 2020 the Company issued 4,500 shares of Series M Preferred Shares for 225,000 shares of common shares
that had previously been disclosed as “shares to be issued”.
During
the quarter ended March 31, 2021, a total of 6,000 shares of Series M Convertible Preferred stock were converted into 300,000 shares
of common stock.
During
the quarter ended June 30, 2021, there was no activity.
Series
A Convertible Preferred Stock
On
July 2, 2020, the Company filed a Certificates of Designation amending the Articles of Incorporation and the Certificates of Designation
of the rights and restrictions of 2,851,318 shares of Series A Convertible Preferred Stock with par value $0.10. Each shares of Series
M Preferred Stock may convert into 1 share of the Company’s outstanding shares of Common Stock on the date of closing provided
the beneficial ownership of the holder of Series M Stock does not exceed 4.99% of the outstanding shares of the Company’s Common
Stock upon said conversion and subject to the preference, rights, limitations, qualifications and restrictions of the Series A Convertible
Preferred Stock as described in the Certificate of Designation. The Series A Holders will not have any voting rights. The shares were
issued in exchange for an outstanding warrant.
During
the quarter ended September 30, 2020, 950,000 shares of Series A Preferred Stock were converted into 950,000 shares of common stock.
During
the quarter ended June 30, 2021, there was no activity.
Series
H Convertible Preferred Stock
On
August 28, 2020, the Company filed a Certificates of Designation amending the Articles of Incorporation and the Certificates of Designation
of the rights and restrictions of 5,000 shares of Series H Convertible Preferred Stock with par value $0.10 and stated value $10. The
shares of Series H Preferred Stock may convert into a number of shares of the Company’s Common stock based on a Conversion Rate
calculated as the “Conversion Amount divided by Conversion Price” where Conversion Amount is the sum of the Stated Value
of Series H Preferred shares to be converted and $1,250 worth of Common Stock to cover the Preferred Shareholder’s transaction
expenses and the Conversion Price is the lower of (i) the lowest Closing Bid Price, or (ii) the Fixed Price equal to $.25 per share,
on the date of closing on a fully diluted basis provided the beneficial ownership of the holder of Series H Stock does not exceed 4.99%
of the outstanding shares of the Company’s Common Stock upon said conversion and subject to the preference, rights, limitations,
qualifications and restrictions of the Series H Convertible Preferred Stock as described in the Certificate of Designation. The Series
H Holders will not have any voting rights. The shares were issued for cash of $25,000.
During
the quarter ended March 31, 2021, a total of 1,259 shares of Series H Convertible Preferred stock were converted into 599,733 shares
of common stock.
During
the quarter ended June 30, 2021, there was no activity.
7%
Series O Cumulative Redeemable Perpetual Preferred Stock
On
September 28, 2020, the Company filed a Certificates of Designation amending the Articles of Incorporation and designation the rights
and restrictions of 1,000,000 shares of Series O 7% Redeemable Cumulative Preferred Stock, par value $0.10 and a stated value of $12.50.
The Series O Holders will not have any voting rights. None of these shares have been issued.
9%
Series N Convertible Preferred Stock
On
November 20, 2020, the Company filed a Certificates of Designation amending the Articles of Incorporation and the Certificates of Designation
of the rights and restrictions of 100,000 shares of Series N Convertible Preferred Stock with par value $0.10. Each shares of Series
N Preferred Stock may convert into the Company’s outstanding shares of Common Stock on the date of closing at a Variable Conversion
Price which is equal to 65% of the average of the lowest three Volume-Weighted Average Price for the Company’s Common Stock (representing
a discount rate of 35%) during the ten (10) Trading Days ending on the latest complete Trading Day prior to the Conversion Date, provided
the beneficial ownership of the holder of Series N Stock does not exceed 4.99% of the outstanding shares of the Company’s Common
Stock upon said conversion and subject to the preference, rights, limitations, qualifications and restrictions of the Series N Convertible
Preferred Stock as described in the Certificate of Designation. The Series N Holders will not have any voting rights.
On
November 27, 2020 the Company issued 10,300 of Series N Preferred Stock for cash of $103,000 and paid $3,000 in fees related to the issuance.
During
the quarter ended June 30, 2021, the Company paid $136,933 to extinguish the Series N Convertible Preferred Stock. A loss on extinguishment
was recorded in the amount of $33,933.
The
shares of Preferred Stock outstanding at June 30, 2021 and September 30, 2020
SCHEDULE
OF PREFERRED STOCK OUTSTANDING
|
Preferred Stock Series
|
|
June 30, 2021
|
|
|
September 30,2020
|
|
|
|
|
Period Ended
|
|
|
Preferred Stock Series
|
|
June 30, 2021
|
|
|
September 30,2020
|
|
|
A
|
|
|
190,981
|
|
|
|
190,981
|
|
|
B
|
|
|
1
|
|
|
|
1
|
|
|
C
|
|
|
390,981
|
|
|
|
397,920
|
|
|
D
|
|
|
-
|
|
|
|
400,000
|
|
|
E
|
|
|
-
|
|
|
|
-
|
|
|
F
|
|
|
-
|
|
|
|
3,400
|
|
|
H
|
|
|
3,741
|
|
|
|
5,000
|
|
|
M
|
|
|
8,500
|
|
|
|
10,000
|
|
|
N
|
|
|
-
|
|
|
|
-
|
|
|
Total
|
|
|
594,204
|
|
|
|
607,702
|
|
Common
Stock
On
February 23, 2020, the Company implemented a 1 for 100 reverse split of its outstanding common stock (the “Reverse Split”).
All issuances for services are valued at market price on the approximate date of service unless otherwise noted.
During
the three-month period ended December 31, 2019, the Company authorized for issuance 66,666 shares of common stock valued at $2,158 for
investor relations, these are disclosed on the balance sheet as shares to be issued.
On
December 5, 2019, the Company issued 7,819 shares of common stock for the conversion of principal of $7,000 and accrued interest of $460
at a conversion price of $0.009541.
During
the three-month period ended March 31, 2020, the Company issued 5,000 shares of stock for services and recorded an additional 5,000 shares
as “to be issued” for a total value of $40,000; 130,094 shares of common stock for the conversion of principal of $68,287,
accrued interest of $13,342 and financing fees of $1,750; 43,750 shares of common stock for the conversion of 50 shares of Series F Preferred
Stock
During
the three-month period ended June 30, 2020, the Company issued 8,970,724 shares of common stock for the conversion of convertible debt;
1,074,302 shares of common stock for conversion of warrants; 3,217,500 shares of common stock for conversion of 11,870 shares of Series
F Preferred Stock and 200,000 shares for services valued at $77,500
During
the three-month period ended September 30, 2020, the Company issued 2,267,183 shares of common stock for the conversion of convertible
debt valued at $203,180; 3,395,000 shares of common stock for conversion of preferred stock (see above); and 10,000 shares of common
stock for services that had previously been recorded as “stock to be issued” Additionally, 750,000 shares were recorded as
stock to be issued for services in the amount of $255,000.
During
the three-month period ended December 31, 2020, the Company issued 5,276,643 shares of common stock for the conversion of convertible
debt valued at $321,015; 164,155 shares of common stock for the issuance of convertible debt valued at $32,688. The $32,688 was recorded
as debt discount and will be amortized over the life of the notes; 20,000 shares of common stock for financing fees valued at $4,340;
2,881,250 for the conversion of preferred stock (see above); and 2,199,073 for conversion of warrants. Additionally, 230,659 shares of
common stock were authorized for issuance valued at $45,050, the shares are disclosed in “to be issued”.
During
the three-month period ended March 31, 2021, the Company issued 2,004,361 shares of common stock for the conversion of convertible debt
valued at $105,000 and 50,318 for a commitment share adjustment related to convertible debt valued at $11,020
During
the three-month period ended June 30, 2021, the Company issued 6,409,503 shares of common stock for the conversion of convertible debt
valued at $309,750 and 2,000,000 shares of common stock and 1,000,000 warrants for the conversion of 16,902 shares of Series E Preferred
Stock. (see above)
The
following warrants were outstanding at June 30, 2021:
SUMMARY
OF WARRANTS OUTSTANDING
|
Warrant Type
|
|
Warrants
Issued and
Unexercised
|
|
|
Exercise
Price
|
|
|
Expiration
Date
|
|
Warrants
|
|
|
10,000
|
|
|
$
|
5.00
|
|
|
December 2021
|
|
Warrants
|
|
|
5,000
|
|
|
$
|
10.00
|
|
|
December 2021
|
|
Warrants
|
|
|
1,666,667
|
|
|
$
|
0.02
|
|
|
December 2024
|
|
Warrants
|
|
|
5,837,500
|
|
|
$
|
0.40
|
|
|
June 2025
|
|
Warrants
|
|
|
1,249,995
|
|
|
$
|
0.60
|
|
|
July 2023
|
|
Warrants
|
|
|
625,000
|
|
|
$
|
0.40
|
|
|
August 2023
|
|
Warrants
|
|
|
2,000,000
|
|
|
$
|
1.00
|
|
|
June 2024
|
|
Warrants
|
|
|
2,000,000
|
|
|
$
|
1.00
|
|
|
June 2024
|
The
following warrants were outstanding at June 30, 2020:
|
Warrant Type
|
|
Warrants
Issued and
Unexercised
|
|
|
Exercise
Price
|
|
|
Expiration
Date
|
|
Warrants
|
|
|
10,000
|
|
|
$
|
5.00
|
|
|
December 2021
|
|
Warrants
|
|
|
5,000
|
|
|
$
|
10.00
|
|
|
December 2021
|
|
Warrants
|
|
|
5,358
|
|
|
$
|
7.00
|
|
|
July 2024
|
|
Warrants
|
|
|
49,451
|
|
|
$
|
8.00
|
|
|
August 2024
|
|
Warrants
|
|
|
33,334
|
|
|
$
|
2.00
|
|
|
December 2024
|
|
Warrants
|
|
|
8,054
|
|
|
$
|
7.00
|
|
|
March 3, 2025
|
NOTE
10 – RELATED PARTY TRANSACTIONS
During
the year ended September 30, 2016 the Company issued a note payable to a family member of a former officer in the amount of $15,000.
$3,000 was converted to 300,000 shares of common stock and $5,000 was repaid in cash. The note bears interest at a rate of 10% beginning
on July 24, 2016, the balance of principal and interest at June 30, 2021 and 2020 was $11,565 and $10,515, respectively.
During
the year ended September 30, 2017 the Company issued two notes payable to Premium Exploration Mining in the amount of $35,000 and $15,000
each having an interest rate of 5%, the balance of principal and interest at June 30, 2021 and June 30, 2020 was $67,797 and 62,649,
respectively, the companies had directors in common at the time of the transaction.
On
March 21, 2019, we filed a Certificate of Designation amending our Articles of Incorporation and designating the rights and restrictions
of one (1) share of our Series B Super Voting Preferred Stock, par value $0.10 per share (the “Series B Preferred Stock”),
pursuant to resolutions approved by our Board of Directors (the “Board”) on November 5, 2018. On March 21, 2019, we issued
to Sheldon Karasik, who was then our Chief Executive Officer, President and Chairman, the one (1) share of our Series B Preferred Stock
in exchange for $0.16, which price was based on the closing price of our Common Stock as of November 5, 2018, the date the issuance was
approved by our Board. Sheldon Karasik, as the holder of our Series B Preferred Stock, is entitled to vote together with the holders
of our Common Stock upon all matters that may be submitted to holders of our Common Stock for a vote, and on all such matters, the share
of Series Voting Preferred Stock shall be entitled to that number of votes equal to 51% of the total number of votes that all issued
and outstanding shares of Common Stock and all other securities of the Company are entitled to, as of any such date of determination,
on a fully diluted basis. The Company filed the Certificate of Designation with the Secretary of State of Idaho on March 21, 2019. On
or about April 16, 2019, in connection with the closing of the Share Exchange Agreements between the Company and NuAxess and PR345, n/k/a
OpenAxess, Sheldon Karasik sold, transferred and assigned his one (1) share of Series B Preferred Stock to Pat Dileo, the Company’s
new Chief Executive Officer and Chairman.
NOTE
11 – INCOME TAXES
Topic
740 in the Accounting Standards Codification (ASC 740) prescribes recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition,
classification, interest and penalties, accounting in interim periods, disclosure and transition. At June 30, 2020 the Company had taken
no tax positions that would require disclosure under ASC 740.
The
Company files income tax returns in the U.S. federal jurisdiction and the State of Idaho. The Company is currently in arrears in filing
their federal and state tax returns, both jurisdictions statute of limitations of three years does not begin until the tax returns are
filed.
Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amount used for income tax purposes.
Significant
components of the deferred tax assets at an anticipated tax rate 21% for the period ended June 30, 2021 and September 30, 2019 are as
follows:
SUMMARY
OF DEFERRED TAX ASSETS
|
|
|
June 30, 2021
|
|
|
September 30, 2020
|
|
|
Net operating loss carryforwards
|
|
|
22,596,054
|
|
|
|
16,910,125
|
|
|
Deferred tax asset
|
|
|
5,078,381
|
|
|
|
3,884,335
|
|
|
Valuation allowance for deferred asset
|
|
|
(5,078,381
|
)
|
|
|
(3,884,335
|
)
|
|
Net deferred tax asset
|
|
|
-
|
|
|
|
-
|
|
At
June 30, 2021 and September 30, 2020, the Company has net operating loss carryforwards of approximately $22,596,054 and $16,910,125 which
will begin to expire in the year 2031. The change in the allowance account from September 30, 2020 to June 30, 2021 was $1,194,046.
On
December 22, 2017 H.R. 1, originally known as the Tax Cuts and Jobs Act, (the “Tax Act”) was enacted. Among the significant
changes to the U.S. Internal Revenue Code, the Tax Act lowered the U.S. federal corporate income tax rate (“Federal Tax Rate”)
from 35% to 21% effective January 1, 2018. The Company will compute its income tax expense for the December 31, 2017 fiscal year using
a Federal Tax Rate of 21%. The remeasurement of the deferred tax assets resulted in a $68,010 reduction in tax assets to $885,961 from
an estimate of $953,971 that the assets would have been using a 35% effective tax rate.
NOTE
12 – SUBSEQUENT EVENTS
As
disclosed in the Company’s Form 8-K filed on August 3, 2021, the Company reported that: (i) effective July 31, 2021, Pat Dileo
resigned as CEO, Interim CFO and member of the Board; (ii) Joseph Frontiere was appointed as Interim CEO, Interim CFO and Chairman of
the Board and Douglas Cole was appointed to as a member of the Board.