NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of presentation
These
unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United
States (“GAAP”) and include all adjustments necessary for the fair presentation of the Company’s financial position
for the periods presented.
Principles
of Consolidation
The
unaudited consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company
transactions and balances have been eliminated in consolidation.
Use
of Estimates
In
preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the dates of the consolidated
financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Significant estimates and
assumptions made by management include, but are not limited to, revenue recognition, the allowance for bad debt, useful life of fixed
assets, income taxes and unrecognized tax benefits, valuation allowance for deferred tax assets, and assumptions used in assessing impairment
of long-lived assets. Actual results could differ from those estimates.
Business
Combination
The
Company applies the provisions of the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Codification
(“ASC”) 805, Business Combinations, in accounting for its acquisitions. It requires the Company to recognize separately from
goodwill the assets acquired and the liabilities assumed, at the acquisition date fair values. Goodwill as of the acquisition date is
measured as the excess of consideration transferred over the acquisition date fair values of the net assets acquired and the liabilities
assumed. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the
acquisition date as well as contingent consideration, where applicable, its estimates are inherently uncertain and subject to refinement.
As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to
the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period
or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are
recorded to the consolidated statements of operations.
Cash
and Cash Equivalents
Cash
equivalents consist of highly liquid investments with maturities of three months or less when purchased. Cash and cash equivalents are
on deposit with financial institutions without any restrictions. The Company maintains its cash with high credit quality financial institutions;
at times, such balances with any one financial institution may exceed Federal Deposit Insurance Corporation (“FDIC”) insured
limits.
Advertising
Advertising
costs are expensed when incurred and are included in selling, general, and administrative expense in the accompanying consolidated statements
of operations. We incurred advertising expenses of $24,174 and $55,410 for the six months ended June 30, 2023, and 2022, respectively.
Accounts
Receivable
The
Company’s accounts receivable arises from providing services. The Company does not adjust its receivables for the effects of a
significant financing component at contract inception if it expects to collect the receivables in one year or less from the time of sale.
The Company does not expect to collect receivables greater than one year from the time of sale.
The
Company’s policy is to maintain an allowance for potential credit losses on accounts receivable. Management reviews the composition
of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends
and changes in customer payment patterns to evaluate the adequacy of these reserves. Amounts determined to be uncollectible are charged
or written-off against the reserve. As of June 30, 2023, and December 31, 2022, there were $0 for bad debt allowance for accounts receivable.
Property
and equipment, net
Plant
and equipment are stated at cost less accumulated depreciation and impairment. Depreciation of property, plant and equipment and are
calculated on the straight-line method over their estimated useful lives or lease terms generally as follows:
SCHEDULE
OF PROPERTY AND EQUIPMENT, NET ESTIMATED USEFUL LIVES
| Classification |
|
Useful
Life |
| Equipment |
|
3
years |
Lease
On
January 2, 2020, the Company adopted ASC Topic 842, Leases, or ASC 842, using the modified retrospective transition method with a cumulative
effect adjustment to be accumulated deficit as of January 1, 2019, and accordingly, modified its policy on accounting for leases as stated
below. As described under “Recently Adopted Accounting Pronouncements,” below, the primary impact of adopting ASC 842 for
the Company was the recognition in the consolidated balance sheet of certain lease-related assets and liabilities for operating leases
with terms longer than 12 months. The Company elected to use the short-term exception and does not record assets/liabilities for short
term leases as of June 30, 2023, and December 31, 2022.
The
Company’s leases primarily consist of facility leases which are classified as operating leases. The Company assesses whether an
arrangement contains a lease at inception. The Company recognizes a lease liability to make contractual payments under all leases with
terms greater than twelve months and a corresponding right-of-use asset, representing its right to use the underlying asset for the lease
term. The lease liability is initially measured at the present value of the lease payments over the lease term using the collateralized
incremental borrowing rate since the implicit rate is unknown. Options to extend or terminate a lease are included in the lease term
when it is reasonably certain that the Company will exercise such an option. The right-of-use asset is initially measured as the contractual
lease liability plus any initial direct costs and prepaid lease payments made, less any lease incentives. Lease expense is recognized
on a straight-line basis over the lease term.
Leased
right-of-use assets are subject to impairment testing as a long-lived asset at the asset-group level. The Company monitors its long-lived
assets for indicators of impairment. As the Company’s leased right-of-use assets primarily relate to facility leases, early abandonment
of all or part of facility as part of a restructuring plan is typically an indicator of impairment. If impairment indicators are present,
the Company tests whether the carrying amount of the leased right-of-use asset is recoverable including consideration of sublease income,
and if not recoverable, measures impairment loss for the right-of-use asset or asset group.
Revenue
Recognition
In
May 2014 the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606),
which supersedes all existing revenue recognition requirements, including most industry specific guidance. This new standard requires
a company to recognize revenues when it transfers goods or services to customers in an amount that reflects the consideration that the
company expects to receive for those goods or services. The FASB subsequently issued the following amendments to ASU No. 2014-09 that
have the same effective date and transition date: ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus
Agent Considerations; ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing;
ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients; and ASU No. 2016-20,
Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. The Company adopted these amendments with
ASU 2014-09 (collectively, the new revenue standards).
Under
the new revenue standards, the Company recognizes revenues when its customer obtains control of promised goods or services, in an amount
that reflects the consideration which it expects to receive in exchange for those goods. The Company recognizes revenues following the
five step model prescribed under ASU No. 2014-09: (i) identify contract(s) with a customer; (ii) identify the performance obligations
in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract;
and (v) recognize revenues when (or as) we satisfy the performance obligation. The Company recognized revenue from providing temporary
and permanent staffing solutions and sale of consumer products.
Managed
Services Revenue
The
Company generates revenue from its managed services when a marketer (typically a brand, agency or partner) pays the Company to provide
custom content, influencer marketing, amplification or other campaign management services (“Managed Services”).
The
Company maintains separate arrangements with each marketer and content creator either in the form of a master agreement or terms of service,
which specify the terms of the relationship and access to its platforms, or by statement of work, which specifies the price and the services
to be performed, along with other terms. The transaction price is determined based on the fixed fee stated in the statement of work and
does not contain variable consideration. Marketers who contract with the Company to manage their advertising campaigns or custom content
requests may prepay for services or request credit terms. The agreement typically provides for either a non-refundable deposit, or a
cancellation fee if the agreement is canceled by the customer prior to completion of services. Billings in advance of completed services
are recorded as a contract liability until earned. The Company assesses collectability based on a number of factors, including the creditworthiness
of the customer and payment and transaction history.
For
Managed Services Revenue, the Company enters into an agreement to provide services that may include multiple distinct performance obligations
in the form of: (i) an integrated marketing campaign to provide influencer marketing services, which may include the provision of blogs,
tweets, photos or videos shared through social network offerings and content promotion, such as click-through advertisements appearing
in websites and social media channels; and (ii) custom content items, such as a research or news article, informational material or videos.
Marketers typically purchase influencer marketing services for the purpose of providing public awareness or advertising buzz regarding
the marketer’s brand and they purchase custom content for internal and external use. The Company may provide one type or a combination
of all types of these performance obligations on a statement of work for a lump sum fee. Revenue is accounted for when the performance
obligation has been satisfied depending on the type of service provided. The Company views its obligation to deliver influencer marketing
services, including management services, as a single performance obligation that is satisfied at the time the customer receives the benefits
from the services.
Based
on the Company’s evaluations, revenue from Managed Services is reported on a gross basis because the Company has the primary obligation
to fulfill the performance obligations and it creates, reviews and controls the services. The Company takes on the risk of payment to
any third-party creators and it establishes the contract price directly with its customers based on the services requested in the statement
of work. The deferred revenue as of June 30, 2023, and December 31, 2022, were $0 and $27,500, respectively.
Subscription-Based
Revenue
The
Company recognizes subscription-based revenue through Honeydrip.com, its social media website, which allows customers to visit the creator’s
personal page over the contract period without taking possession of the products or deliverables. Customers incur costs on either a subscription
or consumption basis. Revenue provided on a subscription basis is recognized ratably over the contract period and revenue provided on
a consumption basis is recognized when the subscriber paid and received their access to the content. The Company reported the subscription-based
revenue at net basis since the Company is acting as an agent solely arranging for the third-party creator or influencer to provide the
services directly to the self-service customer through the platform or by posting the requested content. In April 2022, the Company has
determined it will be recognized at gross because they have control of the services before it is transferred to the end customer. The
Company provided services like online chat and other services directly with the end customers by their internal team. Also, the Company
will establish the price on behalf of the content creators as disclosed in the agreement. The Company has sole power to change the price
based on the market. These are good indicator that the Company controls the specified goods or services before it is transferred to the
customer.
Software
Development Costs
We
apply ASC 350-40, Intangibles—Goodwill and Other—Internal Use Software, in review of certain system projects. These system
projects generally relate to software we do not intend to sell or otherwise market. In addition, we apply this guidance to our review
of development projects related to software used exclusively for our SaaS subscription offerings. In these reviews, all costs incurred
during the preliminary project stages are expensed as incurred. Once the projects have been committed to and it is probable that the
projects will meet functional requirements, costs are capitalized. These capitalized software costs are amortized on a project-by-project
basis over the expected economic life of the underlying product on a straight-line basis, which is five years. Amortization commences
when the software is available for its intended use. Amounts capitalized related to development of internal use software are included
in property and equipment, net, on our Consolidated Balance sheets and related depreciation is recorded as a component of amortization
of intangible assets and depreciation in our consolidated statements of operations. For the six months ended June 30, 2023, and 2022,
we capitalized $62,825 and $198,182, respectively, related to internal use software and recorded $31,502 and $23,000 in related amortization
expense, respectively. Unamortized costs of capitalized internal use software totaled $778,374 and $777,192 as of June 30, 2023, and
December 31, 2022, respectively.
Goodwill
Impairment
We
test goodwill at least annually for impairment at the reporting unit level. We recognize an impairment charge if the carrying amount
of a reporting unit exceeds its fair value. When a portion of a reporting unit is disposed, goodwill is allocated to the gain or loss
on disposition based on the relative fair values of the business or businesses disposed and the portion of the reporting unit that will
be retained.
For
other intangible assets that are not deemed indefinite-lived, cost is generally amortized on a straight-line basis over the asset’s
estimated economic life, except for individually significant customer-related intangible assets that are amortized in relation to total
related sales. Amortizable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the
related carrying amounts may not be recoverable. In these circumstances, they are tested for impairment based on undiscounted cash flows
and, if impaired, written down to estimated fair value based on either discounted cash flows or appraised values. The Company impaired
$0 and $0 of goodwill for the six months ended June 30, 2023 and 2022, respectively.
Impairment
of Long-Lived Assets
Long-lived
assets, which include property, plant and equipment and intangible assets, are reviewed for impairment whenever events or changes in
circumstances indicate the carrying amount of an asset may not be recoverable.
Recoverability
of long-lived assets to be held and used is measured by comparing the carrying amount of an asset to the estimated undiscounted future
cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows,
an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the assets. Fair
value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable.
Based on its review, the Company believes that, as of and for the six months ended June 30, 2023, and 2022, there were no impairment
loss of its long-lived assets.
Income
Taxes
The
Company accounts for income taxes using the asset and liability approach that requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns.
In estimating future tax consequences, the Company generally considers all expected future events other than enactments of changes in
the tax law. For deferred tax assets, management evaluates the probability of realizing the future benefits of such assets. The Company
establishes valuation allowances for its deferred tax assets when evidence suggests it is unlikely that the assets will be fully realized.
The
Company recognizes the tax effects of an uncertain tax position only if it is more likely than not to be sustained based solely on its
technical merits as of the reporting date and then only in an amount more likely than not to be sustained upon review by the tax authorities.
Income tax positions that previously failed to meet the more likely than not threshold is recognized in the first subsequent financial
reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more likely than not threshold
is derecognized in the first subsequent financial reporting period in which that threshold is no longer met. The Company classifies potential
accrued interest and penalties related to unrecognized tax benefits within the accompanying consolidated statements of operations and
comprehensive income (loss) as income tax expense.
Commitments
and Contingencies
The
Company follows subtopic 450-20 of the FASB ASC to report accounting for contingencies. Certain conditions may exist as of the date the
financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events
occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.
In
assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in
such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits
of the amount of relief sought or expected to be sought therein.
If
the assessment of a contingency indicates it is probable a material loss was incurred and the amount of the liability can be estimated,
then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential
material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the
contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss
contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.
Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on
the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not
materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to credit risk consist primarily of accounts receivable. The Company does not require
collateral or other security to support these receivables. The Company conducts periodic reviews of the financial condition and payment
practices of its customers to minimize collection risk on accounts receivable.
Basic
Income (Loss) Per Share
Under
the provisions of ASC 260, “Earnings per Share,” basic loss per common share is computed by dividing net loss available to
common shareholders by the weighted average number of shares of common stock outstanding for the periods presented. Diluted net loss
per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that would then share in the income of the Company, subject to anti-dilution
limitations. Potential common shares consist of the convertible promissory notes payable as of June 30, 2023, and December 31, 2022.
As of June 30, 2023, and December 31, 2022, there were 8,981,932,773 and 7,921,962,277 potential shares issuable upon conversion of convertible
notes payable.
The
table below presents the computation of basic and diluted earnings per share for the three months ended June 30, 2023 and 2022:
SCHEDULE
OF COMPUTATION OF BASIC AND DILUTED EARNING PER SHARE
| | |
For the three
months ended
June 30, 2023 | | |
For the three
months ended
June 30, 2022 | |
| Numerator: | |
| | | |
| | |
| Net loss | |
$ | (371,922 | ) | |
$ | (4,926,111 | ) |
| Denominator: | |
| | | |
| | |
| Weighted average common shares outstanding—basic | |
| 8,480,503,383 | | |
| 171,582,787 | |
| Dilutive common stock equivalents | |
| - | | |
| - | |
| Weighted average common shares outstanding—diluted | |
| 8,480,503,383 | | |
| 171,582,787 | |
| Net loss per share: | |
| | | |
| | |
| Basic | |
$ | (0.00004 | ) | |
$ | (0.03 | ) |
| Diluted | |
$ | (0.00004 | ) | |
$ | (0.03 | ) |
The
table below presents the computation of basic and diluted earnings per share for the six months ended June 30, 2023 and 2022:
| | |
For the six
months ended
June 30, 2023 | | |
For the six
months ended
June 30, 2022 | |
| Numerator: | |
| | | |
| | |
| Net loss | |
$ | (2,594,241 | ) | |
$ | (8,424,264 | ) |
| Denominator: | |
| | | |
| | |
| Weighted average common shares outstanding—basic | |
| 8,109,652,138 | | |
| 140,059,057 | |
| Dilutive common stock equivalents | |
| - | | |
| - | |
| Weighted average common shares outstanding—diluted | |
| 8,109,652,138 | | |
| 140,059,057 | |
| Net loss per share: | |
| | | |
| | |
| Basic | |
$ | (0.00004 | ) | |
$ | (0.06 | ) |
| Diluted | |
$ | (0.0003 | ) | |
$ | (0.06 | ) |
Stock
based Compensation
Stock
based compensation cost to employees is measured at the date of grant, based on the calculated fair value of the stock-based award, and
will be recognized as expense over the employee’s requisite service period (generally the vesting period of the award) under ASC
718. Share-based compensation awards issued to non-employees for services rendered are recorded at either the fair value of the services
rendered or the fair value of the share-based payment, whichever is more readily determinable.
Fair
Value of Financial Instruments
FASB
ASC 820, Fair Value Measurement defines fair value as the price that would be received upon sale of an asset or paid upon transfer
of a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market
for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the
asset or liability, not on assumptions specific to the entity.
Fair
Value Measurements
The
Company applies the provisions of ASC 820-10, Fair Value Measurements and Disclosures. ASC 820-10 defines fair value and establishes
a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures.
The three levels of valuation hierarchy are defined as follows:
| ● |
Level
1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets. |
| ● |
Level
2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that
are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. |
| ● |
Level
3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
Cash,
accounts receivable, accounts payable, and accrued expenses and deferred revenue – The carrying amounts reported in the consolidated
balance sheets for these items are a reasonable estimate of fair value due to their short term nature.
Convertible
notes payable – Convertible promissory notes payable are recorded at amortized cost. The carrying amount approximates their
fair value.
The
Company uses Level 3 inputs for its valuation methodology for the derivative liabilities as their fair values were determined by using
the binomial option-pricing model based on various assumptions. The Company’s derivative liabilities are adjusted to reflect fair
value at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments to fair
value of derivatives.
The
following table presents the Company’s assets and liabilities required to be reflected within the fair value hierarchy as of June
30, 2023, and December 31, 2022.
SCHEDULE
OF ASSETS AND LIABILITIES UNDER FAIR VALUE HIERARCHY
| | |
Fair Value | | |
Fair Value Measurements at June 30, 2023 | |
| | |
As of | | |
Using Fair Value Hierarchy | |
| Description | |
June 30, 2023 | | |
Level 1 | | |
Level 2 | | |
Level 3 | |
| Derivative liability | |
$ | 1,734,228 | | |
$ | - | | |
$ | - | | |
$ | 1,734,228 | |
| | |
| | | |
| | | |
| | | |
| | |
| Total | |
$ | 1,734,228 | | |
$ | - | | |
$ | - | | |
$ | 1,734,228 | |
| | |
Fair Value | | |
Fair Value Measurements at December 31, 2022 | |
| | |
As of | | |
Using Fair Value Hierarchy | |
| Description | |
December 31, 2022 | | |
Level 1 | | |
Level 2 | | |
Level 3 | |
| Derivative liability | |
$ | 799,988 | | |
$ | - | | |
$ | - | | |
$ | 799,988 | |
| | |
| | | |
| | | |
| | | |
| | |
| Total | |
$ | 799,988 | | |
$ | - | | |
$ | - | | |
$ | 799,988 | |
Derivative
instruments
The
fair value of derivative instruments is recorded and shown separately under liabilities. Changes in the fair value of derivatives liability
are recorded in the consolidated statement of operations under other (income) expense.
Our
Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify
as embedded derivatives under ASC 815. For derivative financial instruments that are accounted for as liabilities, the derivative instrument
is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the
consolidated statements of operations. For stock-based derivative financial instruments, the Company uses binomial option-pricing model
to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including
whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative
instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the
derivative instrument could be required within 12 months of the balance sheet date.
Beneficial
Conversion Features
If
a conversion features did not meet the definition of derivative liability under ASC 815, the Company evaluates the conversion feature
for a beneficial conversion feature. The effective conversion price was compared to the market price on the date of the note. If the
effective conversion price was less than the market value of underlying common stock at the inception of the convertible promissory note,
the Company recorded the difference as debt discounts and amortized over the life of the notes using the effective interest method.
Related
Parties
The
Company follows subtopic 850-10 of the FASB ASC for the identification of related parties and disclosure of related party transactions.
Pursuant to Section 850-10-20 related parties include:
a.
affiliates of the Company; b. entities for which investments in their equity securities would be required, absent the election of the
FV option under the FV Option Subsection of Section 825– 10–15, to be accounted for by the equity method by the investing
entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship
of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if
one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting
parties might be prevented from fully pursuing its own separate interests; and g. other parties that can significantly influence the
management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and
can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing
its own separate interests.
New
Accounting Pronouncements
In
June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326): Measurement of Credit Losses
on Financial Instruments (“ASU 2016-13”). ASU 2016-13 requires companies to measure credit losses utilizing a methodology
that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform
credit loss estimates. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including those interim periods within
those fiscal years. We are currently considering the impact for the adoption of this guidance on its consolidated financial statements.
In
August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Topic 470) and Derivatives and Hedging-Contracts
in Entity’s Own Equity (Topic 815): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU
2020-06”). ASU 2020-06 requires companies to measure conversion of debt into equity that contain derivatives with difference as
a gain or loss. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including those interim periods within those
fiscal years. The Company is currently considering the material impact of adopting this guidance on its consolidated financial statements.
NOTE
8 – CONVERTIBLE NOTES PAYABLE
Convertible
Promissory Note – GS Capital Partners #2
On
February 19, 2021, the Company entered into another securities purchase agreement with GS Capital (the “GS Capital #2”),
pursuant to which, on same date, the Company issued a convertible promissory note (the “GS Capital #2 Note”) to GS Capital
the aggregate principal amount of $577,778 for a purchase price of $520,000, reflecting a $57,778 original issue discount, and in connection
therewith, sold to GS Capital 100,000 shares of Company’s common stock, par value $0.001 per share at a purchase price of $100,
representing a per share price of $0.001 per share. In addition, at the closing of this sale, the Company reimbursed GS Capital the sum
of $10,000 for GS Capital’s costs in completing the transaction, which amount GS Capital withheld from the total purchase price
paid to the Company.
The
GS Capital #2 Note has a maturity date of February 19, 2022, and bears interest at 10% per year. No payments of the principal amount
or interest are due prior to the maturity date other than as specifically set forth in the GS Capital #2 Note, and the Company may prepay
all or any portion of the principal amount and any accrued and unpaid interest at any time without penalty.
The
GS Capital #2 Note (and the principal amount and any accrued and unpaid interest) is convertible into shares of the Company Common Stock
at GS Capital’s election at any time following the time that the Securities and Exchange Commission (“SEC”) qualifies
the Company’s offering statement related to the Company’s planned offering of Company Common Stock pursuant to Regulation
A under the Securities Act of 1933, as amended (the “Regulation A Offering”). At such time, the GS Capital #2 Note (and the
principal amount and any accrued and unpaid interest) will be convertible at a conversion price equal to 70% of the initial offering
price of the Company Common Stock in the Regulation A Offering, subject to a customary beneficial ownership limitation of 9.99%, which
may be waived by GS Capital on 61 days’ notice to the Company. The conversion price is subject to customary adjustments for any
stock splits, etc. which occur following the determination of the conversion price.
The
$57,778 original issue discounts, the fair value of 100,000 shares issued, and the beneficial conversion features were recorded as debt
discounts and amortized over the term of the note. Therefore, the total debt discounts at the inception date of this convertible promissory
note were $577,778.
Convertible
Promissory Note – New GS Note #2
On
November 26, 2021, the Company entered into an Amendment and Restructuring Agreement (the “Restructuring Agreement”) with
GS Capital Partners, LLC to cancel the conversion exercised in the quarter ended June 30, 2021.
On
June 29, 2022, the “Company entered into an Exchange Agreement (the “Exchange Note”) with GS Capital. The Exchange
Note amended and restated in its entirety the previous Note Purchase Agreement between the same parties.
The
Exchange Note replaces the Note Purchase Agreement in its entirety, which was a promissory note carrying an outstanding amount of $577,778.
The Exchange Note is thus a new note in the amount of $635,563.48, with a conversion price equal to 85% of the closing per share trading
price of the Company’s shares of common stock, $0.000001 par value per share (“Common Stock”) on the last trading day
prior to the delivery of the notice of conversion, as reported on the National Quotations Bureau OTC Market exchange which the Company’s
shares are traded.
The
change in conversion features were recorded as loss on debt extinguishment of $188,771 and recognition of derivative liability of $416,588
as of June 30, 2022.
GS
Capital converted $421,063 of the principal amount and $4,690 accrued interest to 378,633,891 common shares in the quarter ended September
30, 2022. It further converted $65,000 of principal to 481,221,646 common Shares in the first quarter of 2023. The balance of the GS
Capital #2 Note as of June 30, 2023, was $20,000. The Company is currently in default of the New GS Note #2.
Convertible
Promissory Note – GS Capital Partners #3
On
March 16, 2022, the Company entered into another securities purchase agreement with GS Capital (the “GS Capital #3”), pursuant
to which, on same date, the Company issued a convertible promissory note (the “GS Capital #3 Note”) to GS Capital the aggregate
principal amount of $577,778 for a purchase price of $520,000, reflecting a $57,778 original issue discount, and in connection therewith,
sold to GS Capital 100,000 shares of Company’s common stock, par value $0.000001 per share at a purchase price of $100, representing
a per share price of $0.001 per share. In addition, at the closing of this sale, the Company reimbursed GS Capital the sum of $10,000
for GS Capital’s costs in completing the transaction, which amount GS Capital withheld from the total purchase price paid to the
Company.
The
GS Capital #3 Note has a maturity date of March 22, 2022, and bears interest at 10% per year. No payments of the principal amount or
interest are due prior to the maturity date other than as specifically set forth in the GS Capital #3 Note, and the Company may prepay
all or any portion of the principal amount and any accrued and unpaid interest at any time without penalty.
The
GS Capital #3 Note (and the principal amount and any accrued and unpaid interest) is convertible into shares of the Company Common Stock
at GS Capital’s election at any time following the time that the SEC qualifies the Company’s offering statement related to
the Company’s planned Regulation A Offering. At such time, the GS Capital #3 Note (and the principal amount and any accrued and
unpaid interest) will be convertible at a conversion price equal to 70% of the initial offering price of the Company Common Stock in
the Regulation A Offering, subject to a customary beneficial ownership limitation of 9.99%, which may be waived by GS Capital on 61 days’
notice to the Company. The conversion price is subject to customary adjustments for any stock splits, etc. which occur following the
determination of the conversion price.
The
$57,778 original issue discounts, the fair value of 100,000 shares issued, and the beneficial conversion features were recorded as debt
discounts and amortized over the term of the note. Therefore, the total debt discounts at the inception date of this convertible promissory
note were $577,778.
On
November 26, 2021, the Company entered into an Amendment and Restructuring Agreement (the “Restructuring Agreement”) with
GS Capital Partners, LLC to extend the maturity to September 22, 2022.
The
balance of the GS Capital #3 Note as of June 30, 2023 and December 31, 2022 was $577,778 and $577,778, respectively. The Company is currently
in default of the GS Capital #3 Note.
Convertible
Promissory Note – GS Capital Partners #4
On
April 1, 2021, the Company entered into another securities purchase agreement with GS Capital (the “GS Capital #4”), pursuant
to which, on same date, the Company issued a convertible promissory note to GS Capital the aggregate principal amount of $550,000 for
a purchase price of $500,000, reflecting a $50,000 original issue discount, and in connection therewith, sold to GS Capital 45,000 shares
of Company’s common stock, par value $0.001 per share at a purchase price of $45, representing a per share price of $0.001 per
share. In addition, at the closing of this sale, the Company reimbursed GS Capital the sum of $10,000 for GS Capital’s costs in
completing the transaction, which amount GS Capital withheld from the total purchase price paid to the Company.
The
GS Capital Note #4 has a maturity date of April 1, 2022, and bears interest at 10% per year. No payments of the principal amount or interest
are due prior to the maturity date other than as specifically set forth in the GS Capital Note, and the Company may prepay all or any
portion of the principal amount and any accrued and unpaid interest at any time without penalty.
The
GS Capital Note (and the principal amount and any accrued and unpaid interest) is convertible into shares of the Company Common Stock
at GS Capital’s election at any time following the time that the SEC qualifies the Company’s offering statement related to
the Company’s planned offering of Company Common Stock pursuant to Regulation A under the Securities Act. At such time, the GS
Capital Note (and the principal amount and any accrued and unpaid interest) will be convertible at a conversion price equal to 70% of
the initial offering price of the Company Common Stock in the Regulation A Offering, subject to a customary beneficial ownership limitation
of 9.99%, which may be waived by GS Capital on 61 days’ notice to the Company. The conversion price is subject to customary adjustments
for any stock splits, etc. which occur following the determination of the conversion price.
The
$50,000 original issue discounts, the fair value of 45,000 shares issued, and the beneficial conversion features were recorded as debt
discounts and amortized over the term of the note. Therefore, the total debt discount at the inception date of this convertible promissory
note was recorded at $550,000.
On
November 26, 2021, the Company entered into an Amendment and Restructuring Agreement (the “Restructuring Agreement”) with
GS Capital Partners, LLC to extend the maturity to October 1, 2022.
The
balance of the GS Capital Note #4 as of June 30, 2023, and December 31, 2022 was $550,000 and $550,000, respectively. The Company is
currently in default of the GS Capital #4 Note.
Convertible
Promissory Note – GS Capital Partners #5
On
April 29, 2021, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with GS Capital,
pursuant to which, on same date, the Company issued a convertible promissory note to GS Capital in the aggregate principal amount of
$550,000 for a purchase price of $500,000, reflecting a $50,000 original issue discount (the “GS Capital Note #5”) and, in
connection therewith, sold to GS Capital 125,000 shares of the Company’s common stock, par value $0.001 per share (the “Company
Common Stock”) at a purchase price of $125, representing a per share price of $0.001 per share. In addition, at the closing of
this sale, the Company reimbursed GS Capital the sum of $5,000 for GS Capital’s costs in completing the transaction, which amount
GS Capital withheld from the total purchase price paid to the Company.
The
April 2021 GS Capital Note #5 has a maturity date of April 29, 2022, and bears interest at 10% per year. No payments of the principal
amount or interest are due prior to the maturity date other than as specifically set forth in the GS Capital Note #5, and the Company
may prepay all or any portion of the principal amount and any accrued and unpaid interest at any time without penalty.
The
GS Capital Note #5 (and the principal amount and any accrued and unpaid interest) is convertible into shares of the Company’s common
stock, par value $0.001 per share (the “Company Common Stock”) at GS Capital’s election at any time following the time
that the SEC qualifies the Company’s offering statement related to the Company’s planned offering of Company Common Stock
pursuant to Regulation A under the Securities Act. At such time, the GS Capital Note #5 (and the principal amount and any accrued and
unpaid interest) will be convertible at a conversion price equal to 70% of the initial offering price of the Company Common Stock in
the Regulation A Offering, subject to a customary beneficial ownership limitation of 9.99%, which may be waived by GS Capital on 61 days’
notice to the Company. The conversion price is subject to customary adjustments for any stock splits, etc. which occur following the
determination of the conversion price.
The
$50,000 original issue discounts, the fair value of 125,000 shares issued, and the beneficial conversion features were recorded as debt
discounts and amortized over the term of the note. Therefore, the total debt discount at the inception date of this convertible promissory
note was recorded at $550,000.
On
November 26, 2021, the Company entered into an Amendment and Restructuring Agreement (the “Restructuring Agreement”) with
GS Capital Partners, LLC to extend the maturity to October 29, 2022.
The
balance of the GS Capital Note #5 as of June 30, 2023 and December 31, 2022 was $550,000 and $550,000, respectively.
Convertible
Promissory Note – GS Capital Partners #6
On
June 3, 2021, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with GS Capital,
pursuant to which, on same date, the Company issued a convertible promissory note to GS Capital in the aggregate principal amount of
$550,000 for a purchase price of $500,000, reflecting a $50,000 original issue discount (the “GS Capital Note #6”) and, in
connection therewith, sold to GS Capital 85,000 shares of the Company’s common stock, par value $0.001 per share (the “Company
Common Stock”) at a purchase price of $85, representing a per share price of $0.001 per share. In addition, at the closing of this
sale, the Company reimbursed GS Capital the sum of $5,000 for GS Capital’s costs in completing the transaction, which amount GS
Capital withheld from the total purchase price paid to the Company.
The
GS Capital Note #6 has a maturity date of June 3, 2022, and bears interest at 10% per year. No payments of the principal amount or interest
are due prior to the maturity date other than as specifically set forth in the GS Capital Note #6, and the Company may prepay all or
any portion of the principal amount and any accrued and unpaid interest at any time without penalty.
The
GS Capital Note #6 (and the principal amount and any accrued and unpaid interest) is convertible into shares of the Company’s common
stock, par value $0.001 per share (the “Company Common Stock”) at GS Capital’s election at any time following the time
that the SEC qualifies the Company’s offering statement related to the Company’s planned offering of Company Common Stock
pursuant to Regulation A under the Securities Act. At such time, the GS Capital Note #6 (and the principal amount and any accrued and
unpaid interest) will be convertible at a conversion price equal to 70% of the initial offering price of the Company Common Stock in
the Regulation A Offering, subject to a customary beneficial ownership limitation of 9.99%, which may be waived by GS Capital on 61 days’
notice to the Company. The conversion price is subject to customary adjustments for any stock splits, etc. which occur following the
determination of the conversion price.
The
$50,000 original issue discounts, the fair value of 85,000 shares issued, and the beneficial conversion features were recorded as debt
discounts and amortized over the term of the note. Therefore, the total debt discount at the inception date of this convertible promissory
note were recorded at $550,000.
On
November 26, 2021, the Company entered into an Amendment and Restructuring Agreement (the “Restructuring Agreement”) with
GS Capital Partners, LLC to extend the maturity to December 3, 2022.
The
balance of the GS Capital Note #6 as of June 30, 2023, and December 31, 2022 was $550,000 and $550,000, respectively. The Company is
currently in default of the GS Capital #6 Note.
Convertible
Promissory Note – Eagle Equities LLC
On
April 13, 2021, the Company entered into a securities purchase agreement (the “Eagle SPA”) with Eagle Equities LLC (“Eagle
Equities”), pursuant to which, on same date, the Company issued a convertible promissory note to Eagle Equities in the aggregate
principal amount of $1,100,000 for a purchase price of $1,000,000, reflecting a $100,000 original issue discount (the “Eagle Equities
Note”), and, in connection therewith, sold to Eagle Equities 165,000 shares of Company’s common stock, par value of $0.001
per share (the “Company Common Stock”) at a purchase price of $165.00, representing a per share price of $0.001 per share.
In addition, at the closing of this sale, the Company reimbursed Eagle Equities the sum of $10,000 for Eagle Equities’ costs in
completing the transaction, which amount Eagle Equities withheld from the total purchase price paid to the Company.
The
Eagle Equities Note has a maturity date of April 13, 2022 and bears interest at 10% per year. No payments of the principal amount or
interest are due prior to the maturity date other than upon the circumstances set forth in the Eagle Equities Note – specifically,
if (i) the SEC qualifies the Company’s offering statement related to the Company’s planned offering of Company Common Stock
pursuant to Regulation A under the Securities Act; and (ii) the Company receives $3,500,000 in net proceeds from such Regulation A Offering,
then Company must repay the principal amount and any accrued and unpaid interest on the Eagle Equities Note within three (3) business
days from the date of such occurrence. The Company may prepay all or any portion of the principal amount and any accrued and unpaid interest
at any time without penalty.
The
Eagle Equities Note (and the principal amount and any accrued and unpaid interest) is convertible into shares of the Company Common Stock
at Eagle Equities’ election at any time following the time that the SEC qualifies the Company’s offering statement related
to the Company’s planned offering of Company Common Stock pursuant to Regulation A under the Securities Act. At such time, the
Eagle Equities Note (and the principal amount and any accrued and unpaid interest) will be convertible in restricted shares of Company
Common Stock at a conversion price equal to 70% of the initial offering price of the Company Common Stock in the Regulation A Offering,
subject to a customary beneficial ownership limitation of 9.99%, which may be waived by Eagle Equities on 61 days’ notice to the
Company. The conversion price is subject to customary adjustments for any stock splits, etc. which occur following the determination
of the conversion price. Alternatively, if the SEC has not qualified the Company’s offering statement related to the Company’s
planned offering of Company Common Stock pursuant to Regulation A under the Securities Act by October 10, 2021, and Eagle Equities Note
has not yet been fully repaid, then Eagle Equities will have the right to convert the Eagle Equities Note (and the principal amount and
any accrued and unpaid interest) into restricted shares of Company Common Stock at a conversion price of $6.50 per share (subject to
customary adjustments for any stock splits, etc., which occur following April 13, 2021).
The
$100,000 original issue discounts, the fair value of 165,000 shares issued, and the beneficial conversion features were recorded as debt
discounts and amortized over the term of the note. Therefore, the total debt discount at the inception date of this convertible promissory
note were recorded at $1,100,000.
The
balance of the Eagle Equities Note as of June 30, 2023, and December 31, 2022, was $1,100,000 and $1,100,000, respectively. The Company
is currently in default of the Eagle Equities Note.
Convertible
Promissory Note – Chris Etherington
On
August 27, 2021, the Company entered into a note purchase agreement (the “Chris Etherington Note Purchase Agreement”) with
Chris Etherington, with an effective date of August 26, 2021, pursuant to which, on same date, the Company issued a convertible promissory
note to Mr. Etherington in the aggregate principal amount of $165,000 for a purchase price of $150,000, reflecting a $15,000 original
issue discount (the “Chris Etherington Note”) and, in connection therewith, issued to Mr. Etherington a Warrant to purchase
37,500 shares of the Company’s common stock, par value $0.001 per share (the “Company Common Stock”) at an exercise
price of $2.00 per share, subject to adjustment (the “Chris Etherington Warrant”). In addition, in connection with the Chris
Etherington Note Purchase Agreement, the Company entered into a Security Agreement on same date with Mr. Etherington, pursuant to which
the Company’s obligations under the Chris Etherington Note were secured by a first priority lien and security interest on all of
the assets of the Company (the “Chris Etherington Security Agreement”). While each of the Chris Etherington Warrant, Security
Agreement, Note, and Note Purchase Agreement have an effective date and/or effective issue date of August 26, 2021, each was entered
into and/or issued on August 27, 2021.
The
Chris Etherington Note has a maturity date of August 26, 2022, and bears interest at 10% per year. No payments of the principal amount
or interest are due prior to the maturity date other than as specifically set forth in the Chris Etherington Note, and the Company may
prepay all or any portion of the principal amount and any accrued and unpaid interest at any time without penalty.
The
Chris Etherington Note (and the principal amount and any accrued and unpaid interest) is convertible into shares of Company Common Stock
at any time following August 26, 2021, until the note is repaid. The conversion price per share of Common Stock shall initially mean
the lesser of (i) $1.00 or (ii) 75% of the lowest daily volume weighted average price of the Common Stock during the 20 Trading Days
(as defined in the Chris Etherington Note) immediately preceding the date of the respective conversion. The conversion price is subject
to customary adjustments for any stock splits, etc. which occur following the determination of the conversion price.
The
Chris Etherington Note contains customary events of default, including, but not limited to:
| |
● |
if
the Company fails to pay the then-outstanding principal amount and accrued interest on the Chris Etherington Note on any date any
such amounts become due and payable, and any such failure is not cured within three business days of written notice thereof by Mr.
Etherington: or |
| |
● |
the
Company fails to remain compliant with the Depository Trust Company (“DTC”), thus incurring a “chilled” status
with DTC; or |
| |
● |
any
trading suspension is imposed by the SEC under Section 12(j) or Section 12(k) of the Exchange Act; or |
| |
● |
the
occurrence of any delisting of the Company Common Stock from any securities exchange on which the Company Common Stock is listed
or suspension of trading of the Company Common Stock on the OTC Markets. |
If
an event of default has occurred and is continuing, Mr. Etherington may declare all or any portion of the then-outstanding principal
amount of the Chris Etherington Note, together with all accrued and unpaid interest thereon, due and payable, and the Chris Etherington
Note shall thereupon become immediately due and payable in cash and Mr. Etherington will also have the right to pursue any other remedies
that Mr. Etherington may have under applicable law. In the event that any amount due under the Chris Etherington Note is not paid as
and when due, such amounts shall accrue interest at the rate of 18% per year, simple interest, non-compounding, until paid.
The
$15,000 original issue discounts, the fair value of 37,500 warrants issued, and the conversion features were recorded as debt discounts
and amortized over the term of the note. Therefore, the total debt discount at the inception date of this convertible promissory note
was recorded at $165,000. For the excess amount of derivative liability, the Company recorded accretion expense of $160,538 at the inception
date of this note.
The
balance of the Chris Etherington Note as of June 30, 2023 and December 31, 2022 was $165,000 and $165,000, respectively. The Company
is currently in default of the Chris Etherington Note.
Convertible
Promissory Note – Rui Wu
On
August 27, 2021, the Company entered into a note purchase agreement (the “Rui Wu Note Purchase Agreement”) with Rui Wu, an
individual (“Rui Wu”), with an effective date of August 26, 2021, pursuant to which, on same date, the Company issued a convertible
promissory note to Rui Wu in the aggregate principal amount of $550,000 for a purchase price of $500,000, reflecting a $50,000 original
issue discount (the “Rui Wu Note”) and, in connection therewith, issued to Rui Wu a Warrant to purchase 125,000 shares of
the Company’s common stock, par value $0.001 per share (the “Company Common Stock”) at an exercise price of $2.00 per
share, subject to adjustment (the “Rui Wu Warrant”). In addition, in connection with the Rui Wu Note Purchase Agreement,
the Company entered into a Security Agreement on same date with Rui Wu, pursuant to which the Company’s obligations under the Rui
Wu Note were secured by a first priority lien and security interest on all of the assets of the Company (the “Rui Wu Security Agreement”).
While each of the Rui Wu Warrant, Security Agreement, Note, and Note Purchase Agreement have an effective date and/or effective issue
date of August 26, 2021, each was entered into and/or issued on August 27, 2021.
The
Rui Wu Note has a maturity date of August 26, 2022, and bears interest at 10% per year. No payments of the principal amount or interest
are due prior to the maturity date other than as specifically set forth in the Rui Wu Note, and the Company may prepay all or any portion
of the principal amount and any accrued and unpaid interest at any time without penalty.
The
Rui Wu Note (and the principal amount and any accrued and unpaid interest) is convertible into shares of Company Common Stock at any
time following August 26, 2021, until the note is repaid. The conversion price per share of Common Stock shall initially mean the lesser
of (i) $1.00 or (ii) 75% of the lowest daily volume weighted average price of the Common Stock during the 20 Trading Days (as defined
in the Rui Wu Note) immediately preceding the date of the respective conversion. The conversion price is subject to customary adjustments
for any stock splits, etc. which occur following the determination of the conversion price.
The
Rui Wu Note contains customary events of default, including, but not limited to:
| |
● |
if
the Company fails to pay the then-outstanding principal amount and accrued interest on the Rui Wu Note on any date any such amounts
become due and payable, and any such failure is not cured within three business days of written notice thereof by Rui Wu: or |
| |
● |
the
Company fails to remain compliant with the Depository Trust Company (“DTC”), thus incurring a “chilled” status
with DTC; or |
| |
● |
any
trading suspension is imposed by the SEC under Section 12(j) or Section 12(k) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”); or |
| |
● |
the
occurrence of any delisting of the Company Common Stock from any securities exchange on which the Company Common Stock is listed
or suspension of trading of the Company Common Stock on the OTC Markets. |
If
an event of default has occurred and is continuing, Rui Wu may declare all or any portion of the then-outstanding principal amount of
the Rui Wu Note, together with all accrued and unpaid interest thereon, due and payable, and the Rui Wu Note shall thereupon become immediately
due and payable in cash and Rui Wu will also have the right to pursue any other remedies that Rui Wu may have under applicable law. In
the event that any amount due under the Rui Wu Note is not paid as and when due, such amounts shall accrue interest at the rate of 18%
per year, simple interest, non-compounding, until paid.
The
$50,000 original issue discounts, the fair value of 125,000 warrants issued, and the conversion features were recorded as debt discounts
and amortized over the term of the note. Therefore, the total debt discount at the inception date of this convertible promissory note
was recorded at $550,000. For the excess amount of derivative liability, the Company recorded accretion expense of $514,850 at the inception
date of this note.
The
balance of the Riu Wu Note as of June 30, 2023, and 2022 was $550,000 and $550,000, respectively. The Company is currently in default
of the Rui Wu Note.
Convertible
Note – Fast Capital, LLC
On
January 13, 2022, the Company entered into a Securities Purchase Agreement, (the “SPA”) dated as of January 10, 2022, by
and between the Company and Fast Capital, LLC (the “Buyer”). Pursuant to the terms of the SPA, the Company agreed to issue
and sell, and the Buyer agreed to purchase (the “Purchase”), a 10% convertible note in the aggregate principal amount of
$120,000 (the “Note”). The Note has an original issue discount of $10,000, resulting in gross proceeds to the Company of
$110,000.
The
Note bears interest at a rate of 10% per annum and reached maturity on January 10, 2023. The Note may be prepaid or assigned with the
following penalties/premiums:
SCHEDULE
OF PREPAID CONVERTIBLE NOTES PAYABLE
| Prepay Date | |
Prepay Amount |
| On or before 30 days | |
115% of principal plus accrued interest |
| 31 – 60 days | |
120% of principal plus accrued interest |
| 61 – 90 days | |
125% of principal plus accrued interest |
| 91 – 120 days | |
130% of principal plus accrued interest |
| 121 – 150 days | |
135% of principal plus accrued interest |
| 151 – 180 days | |
140% of principal plus accrued interest |
The
Note may not be prepaid after the 180th day.
The
Buyer has the right from time to time, and at any time after 180 days to convert all or any part of the outstanding and unpaid principal
amount of the Note into common stock, subject to a 4.99% equity blocker.
The
conversion price of the Note equals 70% of the lowest trading price of the Company’s common stock for the 20 prior trading days,
including the day upon which a notice of conversion is delivered.
The
balance of the Fast Capital note as of June 30, 2023, and December 31, 2022 was $120,000 and $120,000 respectively. The Company is currently
in default of the Fast Capital Note.
Convertible
Promissory Note – ONE44 Capital LLC
On
February 16, 2022, the Company entered into a Securities Purchase Agreement, (the “ONE44 Capital purchase agreement”) dated
February 15, 2022, by and between the Company and ONE44 Capital LLC. Pursuant to the terms of the SPA, the Company agreed to issue and
sell, and the Buyer agreed to purchase, a convertible note in the aggregate principal amount of $175,500 (the “ONE44 Capital Note”).
The ONE44 Capital Note has an original issue discount of $17,500, resulting in gross proceeds to the Company of $158,000.
The
ONE44 Capital Note bears interest at a rate of 4% per annum and matures on February 16, 2023. Any amount of principal or interest on
the Note which is not paid when due will bear interest at a rate of 24% per annum. The Note may not be prepaid in whole or in part except
as provided in the Note by way of conversion at the option of the Buyer.
The
Buyer has the right from time to time, and at any time during the period beginning on the date that is 180 days following February 16,
2022 and ending on the later of (i) February 16, 2023, and (ii) the date of payment of the Default Amount (as defined in the Note), to
convert all or any part of the outstanding and unpaid principal amount of the Note into common stock, subject to a 4.99% equity blocker.
The
conversion price of the ONE44 Capital Note equals the lesser of the Variable Conversion Price (as hereinafter defined) and $1.00. The
“Variable Conversion Price” means 65% multiplied by the lowest VWAP (as defined in the Note) for the Company’s common
stock during the 3 trading date period ending on the latest complete trading day prior to the conversion date.
Since
the conversion price is based on 65% of the VWAP during the 3-trading day period immediately prior to the option conversion date, the
Company has determined that the conversion feature is considered a derivative liability for the Company, which is detailed in Note 10.
The
$17,500 original issue discounts, the $8,000 reimbursement and the conversion features were recorded as debt discounts and amortized
over the term of the note. Therefore, the total debt discount at the inception date of this convertible promissory note were recorded
at $148,306.
ONE44
Capital LLC converted $45,000 principal to common shares in the quarter ended March 31, 2023.
On
March 7, 2023, the Company entered into a Debt Repayment and Release Agreement by and between the Company and ONE44 Capital LLC. Pursuant
to the terms of the Agreement, the Company agreed to pay to ONE44 $88,738 as full and complete payment of certain debt owed by the Company
to ONE44 pursuant to a 4% convertible redeemable note due February 16, 2023, dated February 16, 2022 (the “Note”), in the
principal sum of $90,000, plus accrued interest. On March 7, 2023, pursuant to the terms of the Agreement, the Company paid ONE44 $88,738,
the debt was settled, and the ONE44 Capital Note was terminated.
The
balance of the ONE44 Capital note as of June 30, 2023 and December 31, 2022 was $0 and $135,000 respectively.
Convertible
Promissory Note – ONE44 Capital LLC #2
On
May 20, 2022, the Company entered into a Securities Purchase Agreement, (the “ONE44 Capital purchase agreement #2”) by and
between the Company and ONE44 Capital LLC. Pursuant to the terms of the SPA, the Company agreed to issue and sell, and the Buyer agreed
to purchase, a convertible note in the aggregate principal amount of $115,000 (the “ONE44 Capital Note”). The ONE44 Capital
Note has an original issue discount of $10,000 and reimbursement of $5,000, resulting in gross proceeds to the Company of $100,000.
The
ONE44 Capital Note bears interest at a rate of 4% per annum and matures on May 20, 2023. Any amount of principal or interest on the Note
which is not paid when due will bear interest at a rate of 24% per annum. The Note may not be prepaid in whole or in part except as provided
in the Note by way of conversion at the option of the Buyer.
ONE44
is entitled, at its option, at any time after the sixth monthly anniversary of cash payment, to convert all or any amount then outstanding
under the May 2022 ONE44 Note into shares of common stock at a price per share equal to 55% of the lowest daily trading VWAP of the Company’s
common stock for the 20 prior trading days, subject to a 4.99% equity blocker and subject to the terms of the May 2022 ONE44 Note.
Since
the conversion price is based on 55% of the lowest daily trading VWAP of the Company’s common stock for the 20 prior trading days,
the Company has determined that the conversion feature is considered a derivative liability for the Company, which is detailed in Note
10.
The
$10,000 original issue discounts, the $5,000 reimbursement and the conversion features were recorded as debt discounts and amortized
over the term of the note. Therefore, the total debt discount at the inception date of this convertible promissory note were recorded
at $95,000.
ONE44
Capital LLC converted $20,000 principal to common shares in the quarter ended March 31, 2023 and converted $20,000 principal and $770
interest to common shares in the quarter ended June 30, 2023.
On
May 10, 2023, the Company entered into debt repayment and release agreement with ONE44 Capital LLC. Pursuant to the terms of the Agreement,
the Company agreed to pay to ONE44 $77,893 as full and complete payment of certain debt owed by the Company to ONE44 pursuant to a 4%
convertible redeemable note due May 20, 2023 (the “Note”), in principal sum of $75,000, plus accrued interest. On May 11,
2023, pursuant to the terms of the Agreement, the Company paid ONE44 $77,893, the debt was settled, and the ONE44 Capital Note was terminated.
The
balance of the ONE44 Capital note as of June 30, 2023, and December 31, 2022 was $0 and $135,000, respectively.
Convertible
Promissory Note – 1800 Diagonal Lending LLC
On
June 23, 2022, the Company entered into a Securities Purchase Agreement, (the “Sixth Street #4 purchase agreement”), by and
between the Company and Diagonal Lending LLC. Pursuant to the terms of the SPA, the Company agreed to issue and sell, and the Buyer agreed
to purchase, a convertible note in the aggregate principal amount of $86,625 (the “Diagonal Note”). The Diagonal Note has
an original issue discount of $7,875, $3,000.00 paid to legal counsel for the Company, and $750.00 which amount was retained by the Investor
as a due diligence fee resulting in gross proceeds to the Company of $75,000.
The
Note has a maturity date of June 23, 2023 and bears interest at 10% per annum. No payments of the principal amount or interest are due
prior to the maturity date, other than as specifically set forth in the Note. The Company may not prepay the Note prior to the maturity
date, other than by way of a conversion initiated by Investor.
The
Note provides Investor with conversion rights to convert all or any part of the outstanding and unpaid principal amount of the Note at
any time, from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following
the date of the Note and ending on the later of: (i) the Maturity Date; and (ii) the date of payment of the Default Amount (as defined
in the Note). Notwithstanding the foregoing, the Investor shall not be entitled to a conversion under the Note upon which the sum of
(1) the number of shares of common stock, $0.000001 par value per share (“Common Stock”) beneficially owned by the Investor
and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted
portion of the Note or the unexercised or unconverted portion of any other security of the Company subject to a similar limitation on
conversion or exercise) and (2) the number of shares of Common Stock issuable upon the conversion would result in beneficial ownership
by the Investor and its affiliates of more than 4.99% of the outstanding shares of Common Stock.
The
conversion price is equal to the lesser of the variable conversion price and fixed conversion price which is $1.00. The variable conversion
price is defined in the Note as 75% multiplied by the lowest VWAP for shares of Common Stock during the 20 trading days immediately preceding
the Conversion Date.
Since
the conversion price is based on the lesser of (i) $1.00 or (ii) 75% of the VWAP during the 20-trading day period immediately prior to
the option conversion date, the Company has determined that the conversion feature is considered a derivative liability for the Company,
which is detailed in Note 10.
The
$11,625 original issue discounts and the conversion features were recorded as debt discounts and amortized over the term of the note.
Therefore, the total debt discount at the inception date of this convertible promissory note were recorded at $86,625.
Three
conversions occurred during the period ending March 31, 2023, resulting in a principal reduction of $46,500 and remaining balance was
settled on February 17, 2023 as disclosed below.
On
February 17, 2023, the Company entered into a Settlement and Release Agreement by and between the Company and 1800 Diagonal Lending LLC.
Pursuant to the terms of the Agreement, in full and final settlement of the the Diagonal lending LLC notes, the Company agreed to (i)
pay to the Lender $105,000; and (ii) issue to the Lender shares of the Company’s common stock with respect to the Lender’s
notice of conversion dated February 16, 2023 relating to a partial conversion of Note #1 (with a then-current balance of $45,479).
As
a result, as of February 17, 2023, pursuant to the terms of the Agreement, the Debt was settled and all the 1800 Diagonal Lending LLC
notes were terminated.
The
balance of the Diagonal note as of June 30, 2023 and December 31, 2022 was $0 and $86,625, respectively.
Convertible
Promissory Note – Diagonal Lending LLC
On
July 8, 2022, the Company entered into a Securities Purchase Agreement, (the “1800 Diagonal Lending LLC purchase agreement”),
by and between the Company and Diagonal Lending LLC. Pursuant to the terms of the SPA, the Company agreed to issue and sell, and the
Buyer agreed to purchase, a convertible note in the aggregate principal amount of $61,812 (the “Diagonal Note”). The Diagonal
Note has an original issue discount of $5,375 and $3,750 paid to legal counsel for the Company, resulting in gross proceeds to the Company
of $52,688.
The
Note has a maturity date of July 8, 2023 and bears interest at 10% per annum. No payments of the principal amount or interest are due
prior to the maturity date, other than as specifically set forth in the Note. The Company may not prepay the Note prior to the maturity
date, other than by way of a conversion initiated by Investor.
The
Note provides Investor with conversion rights to convert all or any part of the outstanding and unpaid principal amount of the Note at
any time, from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following
the date of the Note and ending on the later of: (i) the Maturity Date; and (ii) the date of payment of the Default Amount (as defined
in the Note). Notwithstanding the foregoing, the Investor shall not be entitled to a conversion under the Note upon which the sum of
(1) the number of shares of common stock, $0.000001 par value per share (“Common Stock”) beneficially owned by the Investor
and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted
portion of the Note or the unexercised or unconverted portion of any other security of the Company subject to a similar limitation on
conversion or exercise) and (2) the number of shares of Common Stock issuable upon the conversion would result in beneficial ownership
by the Investor and its affiliates of more than 4.99% of the outstanding shares of Common Stock.
The
conversion price is equal to the lesser of the variable conversion price and fixed conversion price which is $1.00. The variable conversion
price is defined in the Note as 75% multiplied by the lowest VWAP for shares of Common Stock during the 20 trading days immediately preceding
the Conversion Date.
Since
the conversion price is based on the lesser of (i) $1.00 or (ii) 75% of the VWAP during the 20-trading day period immediately prior to
the option conversion date, the Company has determined that the conversion feature is considered a derivative liability for the Company,
which is detailed in Note 10.
The
$5,375 original issue discounts and the conversion features were recorded as debt discounts and amortized over the term of the note.
Therefore, the total debt discount at the inception date of this convertible promissory note were recorded at $61,812.
On
February 17, 2023, the Company entered into a Settlement and Release Agreement by and between the Company and 1800 Diagonal Lending LLC.
Pursuant to the terms of the Agreement, in full and final settlement of the the Diagonal lending LLC notes, the Company agreed to (i)
pay to the Lender $105,000; and (ii) issue to the Lender shares of the Company’s common stock with respect to the Lender’s
notice of conversion dated February 16, 2023 relating to a partial conversion of Note #1 (with a then-current balance of $45,479).
As
a result, as of February 17, 2023, pursuant to the terms of the Agreement, the Debt was settled and all the 1800 Diagonal Lending LLC
notes were terminated.
The
balance of the Diagonal note as of June 30, 2023, and December 31, 2022, was $0 and $0, respectively.
Below is the summary of the principal balance and debt discounts as of June 30, 2023.
SCHEDULE
OF CONVERTIBLE PROMISSORY NOTE