NOTE
1 – ORGANIZATION AND NATURE OF THE BUSINESS
Organization
Kaya
Holdings, Inc. FKA (Alternative Fuels Americas, Inc.) is a holding company. The Company was incorporated in 1993 and has engaged
in a number of businesses. Its name was changed on May 11, 2007 to NetSpace International Holdings, Inc. (a Delaware corporation)
(“NetSpace”). NetSpace acquired 100% of Alternative Fuels Americas, Inc. (a Florida corporation) in January 2010 in
a stock-for-member interest transaction and issued 6,567,247 shares of common stock and 100,000 shares of Series C convertible
preferred stock to existing shareholders. Certificate of Amendment to the Certificate of Incorporation was filed in October 2010
changing the Company’s name from NetSpace International Holdings, Inc. to Alternative Fuels Americas, Inc. (a Delaware corporation).
Certificate of Amendment to the Certificate of Incorporation was filed in March 2015 changing the Company’s name from Alternative
Fuels Americas, Inc. (a Delaware corporation) to Kaya Holdings, Inc.
The
Company has four subsidiaries: Alternative Fuels Americas, Inc, a Florida corporation, which is wholly-owned, Marijuana Holdings
Americas, Inc., a Florida corporation (“MJAI”), which is majority-owned, 34225 Kowitz Road, LLC, a wholly-owned Oregon
limited liability company which holds ownership of the Company’s 26 acre property in Lebanon, Oregon on which it plans to
develop a legal cannabis cultivation and manufacturing facility, and Kaya Brand International, Inc. (KBI) a Florida Corporation
which the Company owns 85% of which was formed on October 14, 2019 to expand the business overseas
MJAI
develops and operates the Company’s legal cannabis retail operations in Oregon through controlling ownership interests in
five Oregon limited liability companies: MJAI Oregon 1 LLC, MJAI Oregon 2 LLC (inactive), MJAI Oregon 3 LLC (inactive) , MJAI
Oregon 4 LLC (inactive) and MJAI Oregon 5 LLC.
MJAI
Oregon 1 LLC is the entity that holds the licenses for the Company’s retail store operations and pending OLCC Production
and Processing license transfer applications for the 260 Grimes Street property in Eugene, Oregon. MJAI Oregon 5 LLC maintains
the Company’s pending OLCC Producer Application for the Company’s 26 acre farm property in Lebanon Oregon.
KBI
is the entity that holds controlling ownership interests in Kaya Farms Greece, S.A. (a Greek corporation) and Kaya Shalvah (“Kaya
Farms Israel”, an Israeli corporation). These two entities were formed to facilitate expansion of the Company’s business
in Greece and Israel respectively.
Nature
of the Business
In
January 2014, KAYS incorporated MJAI, a wholly-owned subsidiary, to focus on opportunities in the legal recreational and medical
marijuana in the United States. MJAI has concentrated its efforts in Oregon, where through controlled Oregon limited liability
companies, it initially secured licenses to operate a medical marijuana dispensary (an “MMD”) and following legalization
of recreational cannabis use in Oregon, has secured licenses to operate four retail outlets and purchased 26 acres for development
as a legal cannabis cultivation and manufacturing facility. The Company has developed the Kaya Shack™ brand for its retail
operations and the Kaya Farms ™ brand for its cannabis gowing and processing operations.
On
July 3, 2014 opened its first Kaya Shack™ MMD in Portland, Oregon. In April 2015, KAYS commenced its own medical marijuana
grow operations for the cultivation and harvesting of legal marijuana thereby becoming the first publicly traded U.S. company
to own a majority interest in a vertically integrated legal marijuana enterprise in the United States. In October 2015, concurrent
with Oregon commencing legal sales of recreational marijuana through MMDs, KAYS opened its second retail outlet in Salem, Oregon,
the Kaya Shack™ Marijuana Superstore. During 2015, the Company also consolidated its grow operations and manufacturing operations
into a single facility in Portland, Oregon.
In
2016, Oregon began the process to transition legal marijuana sales from Oregon Health Authority (“OHA”) licensed MMDs
and grow operations to Oregon Liquor Control Commission (“OLCC”) licensed recreational marijuana retailers and producer
and processing facilities. Effective January 1, 2017, all retailers of recreational marijuana were required to have a recreational
marijuana sales license issued by the OLLC for each retail outlet operated.
In
2016 the Company applied for OLLC licenses for its two initial Kaya Shack™ retail outlets (Portland, Oregon and South Salem,
Oregon), and also submitted license applications for its two new locations under construction and development at that time.
In
late December 2016, we received our OLCC recreational license for the South Salem Kaya Shack™ Marijuana Superstore (Kaya
Shack™ OLCC Marijuana Retailer License #1) and recreational and medical sales continued without interruption from 2016 through
the present at that location.
On
March 21, 2017, we received our North Salem Kaya Shack™ outlet (Kaya Shack™ OLCC Marijuana Retailer License #2) a
2,600-square foot Kaya Shack™ Marijuana Superstore in North Salem, Oregon, whereupon the location opened for business with
both recreational and medical sales.
On
May 2, 2017, we received our OLCC recreational license for our Portland Kaya Shack™ outlet (Kaya Shack™ OLCC Marijuana
Retailer License #3) after a delay of approximately four months. During that period, we were limited to solely medical sales at
the Portland location. Upon receipt of Kaya Shack™ OLCC Marijuana Retailer License #3, recreational sales recommenced at
that location.
During
August of 2017, the Company purchased a 26 acre parcel in Lebanon, Linn County, Oregon, on which we intend to construct an 85,000
square foot Kaya Farms™ Greenhouse Grow and Production Facility at the property.
On
February 15, 2018, we received our OLCC recreational, medical and home delivery license for the Central Salem Kaya ShackTM
outlet (Kaya ShackTM OLCC Marijuana Retailer License #4) a 3,100-square foot Kaya ShackTM Marijuana
Superstore in Central Salem, Oregon. After various construction and permitting delays, On April 12, 2018, the location opened
for business with both recreational and medical sales.
On
August 18, 2018, the Company had concluded the purchase of the Eugene, Oregon based Sunstone Farms manufacturing facility, which
was licensed by the OLCC for both the production of medical and recreational marijuana flower and the processing of cannabis concentrates/extracts/edibles.
The purchase included a 12,000 square foot building housing and indoor grow facility, as well as equipment for growing and extraction
activity. The purchase price of $1.3 was paid for by the issuance of 12 million shares of KAYS restricted stock to the seller
at closing. Additionally, the seller purchased 2.5 million restricted shares for $250,000 in cash in a private transaction with
the Company, and became a Board Member of Kaya Holdings. While the shares carried a lock-up-restriction allowing for their staged
eligibility for resale over a 61-month period from the date of the purchase of the facility by KAYS, none of the shares have been
submitted for resale.
In
mid-April, 2019 the Company was notified by Sunstone that the OLCC had filed an administrative proceeding and was proposing that
Sunstone’s licenses for the facility purchased by KAYS be cancelled, claiming that Sunstone had not filed paperwork correctly
with respect to the transaction and the historical ownership of Bruce Burwick, the seller of the facility to the Company. Neither
the Issuer nor any of its agents, consultants, employees or related entities was named as a respondent to the action and accordingly
could not respond to the proceedings.
On
September 26, 2019, the Company formed the majority owned subsidiary Kaya Brands International,
Inc. (“KBI”) to serve as the Company’s vehicle for expansion into worldwide cannabis markets.
On
November 4, 2019 the Company filed an 8-K announcing that its majority owned subsidiary, Kaya Brands International, Inc. (“KBI”),
had executed a memorandum of understanding (“MOU”) setting forth the terms for KBI’s acquisition of a 50% ownership
interest in Greekkannabis, PC (“GKC”), an Athens, Greece based cannabis company which at the time was awaiting issuance
of a medical cannabis cultivation, processing, and export license from the Greek government.
In
February, 2020 the Company renewed the OLCC Marijuana Retailer Licenses #1, 2 and 4 listed above and did not renew OLCC Marijuana
Retailer License #3 and ceased operations at that location. Additionally, the Company is in the process of seeking to transfer
OLCC License #4 to either its 12,000 square foot property in Eugene, Oregon to facilitate a delivery hub for Eugene, Oregon or
other such location to make effective use of MJAI Retailer License #4.
On
April 22, 2020 KAYS/KBI received confirmation from its Greek Counsel that the Greek Government had approved and issued the Crucial
Installation License for the GKC facility which is the subject of the previously announced MoU executed by and between KBI and
GKC. The license allows for construction of a medical cannabis cultivation and process facility which includes twelve (12) 35,000
square foot of light deprivation greenhouses and an additional 50,000 square foot building for workspace, storage and administrative
offices situated on fifteen acres of land in Thibes, Greece.
On
June 7, 2020 Kaya Shalvah (“Kaya Farms Israel”) was incorporated by the Company’s Israel Counsel, Sullivan &
Worcester. KBI owns a majority of Kaya Farms Israel.
On
October 15, 2020 the OLCC approved a settlement between the OLCC and Sunstone Marketing Partners that required that the licenses
for the Eugene Oregon based Sunstone Farms facility be sold to a third party (other than KAYS) or surrendered. For more information,
please see Note 16, Subsequent Events and Part I, Item 3, Legal Proceedings elsewhere in this filing.
On
November 27, 2020 Kaya Farms Greece, S.A. (“KFG)” was incorporated by the Company’s Greek Counsel Dalakos, Fassolis
and Theofanopoulos of Piraeus, Greece. KBI owns a majority of KFG.
On
December 31, 2020, the Company entered into a joint venture agreement with Greekkbannabis. The current joint venture arrangements
are in the developmental stage and therefore only the initial start-up costs are included in the financial statement for the year
ended December 31, 2020. For more information, please see Note, 16 Subsequent Events, and also information on Kaya Farms Greece
elsewhere in this filing.
On
January 11, 2021, KAYS/KBI, through a majority owned subsidiary of KBI (Kaya Farms Greece or “KFG") and Greekkannabis
(“GKC") executed an agreement for KBI to acquire 50% of GKC. The terms are as follows:
1.
Prior to the execution of the transaction, the GKC shareholders owned a total of 320 shares (100%) of GKC.
2.
Pursuant to first section of the contract, KBI has initially acquired 80 shares of GKC (from the current shareholders) for
payment of 30,000 Euros- 20,000 Euros have been paid from the $31,688 (25,000 Euros) sent to Greece on December 31, 2020 and the
remaining 10,000 Euros is due to be paid by June 30, 2021. This leaves current shareholders on GKC side with 240 shares.
3.
GKC is in process of issuing an additional 160 shares of GKC to KFG in exchange for additional paid in capital by KFG of 16,000
Euros. At the conclusion of the process (minutes of meetings have to be published in Greek Government publications, etc which
will take a few months), KFG will own 50% of GKC (240 shares) and the current shareholders of GKC will own 50% (240 shares).
5.
An operating agreement is currently being drafted that allows for 5 board members (2 from KFG and 3 from GKC). Ilias will become
the President and Panos will become the vice president and Managing Director. Final terms will include the provision that a super
majority (80%) is required to enter into a transaction in excess of 100K Euros and also to issue new shares, encumber/sell
existing shares, enter into decisions regarding infrastructure, development and construction decisions, etc.
NOTE
2 – LIQUIDITY AND GOING CONCERN
The
Company’s consolidated financial statements as of March 31, 2021 have been prepared on a going concern basis, which contemplates
the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company incurred
a net loss of $5,520,208 for the three months ended March 31, 2021 and a net loss of $657,767 for the three months ended March
31, 2020. The increase in net loss is due to the changes in derivative liabilities, the increase in amortization of debt discount
and derivative liabilities expense, as wells as the company continues to have operating losses. At March 31, 2021 the Company
has a working capital deficiency of $25,551,438 and is totally dependent on its ability to raise capital. The Company has a plan
of operations and acknowledges that its plan of operations may not result in generating positive working capital in the near future.
Even though management believes that it will be able to successfully execute its business plan, which includes third-party financing
and capital issuance, and meet the Company’s future liquidity needs, there can be no assurances in that regard. These matters
raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements
do not include any adjustments that might result from the outcome of this material uncertainty. Management recognizes that the
Company must generate additional funds to successfully develop its operations and activities. Management plans include:
•
|
|
the
sale of additional equity and debt securities,
|
•
|
|
alliances and/or
partnerships with entities interested in and having the resources to support the further development of the Company’s
business plan,
|
•
|
|
business transactions
to assure continuation of the Company’s development and operations,
|
•
|
|
development of a
unified brand and the pursuit of licenses to operate recreational and medical marijuana facilities under the branded name.
|
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
Basis
of Presentation
The
accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally
accepted in the United States of America (U.S. GAAP) under the accrual basis of accounting.
Reclassifications
Certain prior period amounts have been reclassified to conform
to the current period presentation.
Use
of Estimates
The
preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.
Such
estimates and assumptions impact both assets and liabilities, including but not limited to: net realizable value of accounts receivable
and inventory, estimated useful lives and potential impairment of property and equipment, the valuation of intangible assets,
estimate of fair value of share based payments and derivative liabilities, estimates of fair value of warrants issued and recorded
as debt discount, estimates of tax liabilities and estimates of the probability and potential magnitude of contingent liabilities.
Making
estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect
of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered
in formulating its estimate could change in the near term due to one or more future non-conforming events. Accordingly, actual
results could differ significantly from estimates.
Risks
and Uncertainties
The
Company’s operations are subject to risk and uncertainties including financial, operational, regulatory and other risks
including the potential risk of business failure.
The
Company has experienced, and in the future expects to continue to experience, variability in its sales and earnings. The
factors expected to contribute to this variability include, among others, (i) the uncertainty associated with the commercialization
and ultimate success of the product, (ii) competition inherent at other locations where product is expected to be sold (iii) general
economic conditions and (iv) the related volatility of prices pertaining to the cost of sales.
Fiscal
Year
The
Company’s fiscal year-end is December 31.
Principles
of Consolidation
The
accompanying consolidated financial statements include the accounts of Kaya Holdings, Inc. and all wholly and majority-owned subsidiaries.
All significant intercompany balances have been eliminated.
Wholly-owned
subsidiaries:
|
·
|
Alternative Fuels
Americas, Inc. (a Florida corporation)
|
|
·
|
34225 Kowitz Road,
LLC (an Oregon LLC)
|
|
|
|
Majority-owned
subsidiaries:
Kaya
Brands International, Inc. (a Florida Corporation)
Kaya
Shalvah (“Kaya Farms Israel”, an Israeli corporation) majority owned subsidia y of KBI)
Kaya
Farms Greece, S.A. (a Greek Corporation) majority owned subsidiary of KBI)
|
·
|
Marijuana Holdings
Americas, Inc. (a Florida corporation)
|
|
o
|
MJAI Oregon 2 LLC
(inactive)
|
|
o
|
MJAI Oregon 3 LLC
(inactive)
|
|
o
|
MJAI Oregon 4 LLC
(inactive)
|
Non-Controlling
Interest
The
company owned 55% of Marijuana Holdings Americas until September 30, 2019. Starting October 1, 2019, Kaya Holding, Inc. owns 65%
of Marijuana Holdings Americas, Inc. As of December 31, 2019 Kaya owns 65% of Marijuana Holdings Americas, Inc.
The
company owned 85% of Kaya Brands International, Inc. until July 31, 2020. Starting August 1, 2020, Kaya Holding, Inc. owns 65%
of Kaya Brands International, Inc.
Cash
and Cash Equivalents
Cash
and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions
and all highly liquid investments with an original maturity of three months or less. The Company had no cash equivalents.
Inventory
Inventory
consists of finished goods purchased, which are valued at the lower of cost or market value, with cost being determined on the first-in,
first-out method. The Company periodically reviews historical sales activity to determine potentially obsolete items and also
evaluates the impact of any anticipated changes in future demand. Total Value of Finished goods inventory as of March 31, 2021
is $61,980 and $47,618 as of December 31, 2020. Inventory allowance
and impairment were $0 and $0 as of March 31, 2021 and December 31, 2020, respectively.
Property
and Equipment
Property
and equipment is stated at cost, less accumulated depreciation and is reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Depreciation
of property and equipment is provided utilizing the straight-line method over the estimated useful lives, ranging from 5-30 years
of the respective assets. Expenditures for maintenance and repairs are charged to expense as incurred.
Upon
sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and
any gain or loss is reflected in the statements of operations.
Long-lived
assets
The
Company reviews long-lived assets and certain identifiable intangibles held and used for possible impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In evaluating the fair value and
future benefits of its intangible assets, management performs an analysis of the anticipated undiscounted future net cash flow
of the individual assets over the remaining amortization period. The Company recognizes an impairment loss if the carrying value
of the asset exceeds the expected future cash flows.
Accounting
for the Impairment of Long-Lived Assets
We
evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Upon such an occurrence, recoverability of assets to be held and used is measured by comparing the
carrying amount of an asset to forecasted undiscounted net cash flows expected to be generated by the asset. If the carrying amount
of the asset exceeds its estimated 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 asset. For long-lived assets held for sale, assets are written down to fair value,
less cost to sell. Fair value is determined based on discounted cash flows, appraised values or management's estimates, depending
upon the nature of the assets.
Operating
Leases
We
lease our retail stores under non-cancellable operating leases. Most store leases include tenant allowances from landlords, rent
escalation clauses and/or contingent rent provisions. We recognize rent expense on a straight-line basis over the lease term,
excluding contingent rent, and record the difference between the amount charged to expense and the rent paid as a deferred rent
liability.
Deferred
Rent and Tenant Allowances
Deferred
rent is recognized when a lease contains fixed rent escalations. We recognize the related rent expense on a straight-line basis
starting from the date of possession and record the difference between the recognized rental expense and cash rent payable as
deferred rent. Deferred rent also includes tenant allowances received from landlords in accordance with negotiated lease
terms. The tenant allowances are amortized as a reduction to rent expense on a straight-line basis over the term of the lease
starting at the date of possession.
Earnings
Per Share
In
accordance with ASC 260, Earnings per Share, the Company calculates basic earnings per share by dividing net income (loss) by
the weighted average number of common shares outstanding during the period. Diluted earnings per share are computed if the Company
has net income; otherwise it would be anti-dilutive, and would result from the conversion of a convertible note.
Income
Taxes
The
Company accounts for income taxes in accordance with ASC 740, Accounting for Income Taxes, as clarified by ASC 740-10, Accounting
for Uncertainty in Income Taxes. Under this method, deferred income taxes are determined based on the estimated future tax
effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted
tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In
providing for deferred taxes, the Company considers tax regulations of the jurisdictions in which the Company operates, estimates
of future taxable income, and available tax planning strategies. If tax regulations, operating results or the ability to implement
tax-planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required. Valuation
allowances are recorded related to deferred tax assets based on the “more likely than not” criteria of ASC 740.
ASC
740-10 requires that the Company recognize the financial statement benefit of a tax position only after determining that the relevant
tax authority would more likely than not sustain the position following an audit. For tax positions meeting the “more-likely-than-not”
threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood
of being realized upon ultimate settlement with the relevant tax authority.
Fair
Value of Financial Instruments
The
Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance
on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability,
as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that
market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes
a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation
techniques, are assigned a hierarchical level.
The
following are the hierarchical levels of inputs to measure fair value:
•
|
|
Level 1 –
Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities.
|
•
|
|
Level 2 - Inputs
reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets
or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs
that are derived principally from or corroborated by observable market data by correlation or other means.
|
•
|
|
Level 3 – Unobservable
inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These
assumptions are required to be consistent with market participant assumptions that are reasonably available.
|
|
Fair
Value Measurements at March 31, 2021
|
|
|
Level
1
|
|
|
|
Level
2
|
|
|
|
Level
3
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
$
|
70,786
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Total
assets
|
|
70,786
|
|
|
|
-
|
|
|
|
-
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Convertible
debentures, net of discounts of $561,953
|
|
-
|
|
|
|
-
|
|
|
|
6,924,786
|
|
Short
term debt, net of discounts of $-0-
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Derivative
liability
|
|
-
|
|
|
|
-
|
|
|
|
22,454,404
|
|
Total
liabilities
|
|
-
|
|
|
|
-
|
|
|
|
29,379,190
|
|
|
$
|
70,786
|
|
|
$
|
-
|
|
|
$
|
29,379,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
Value Measurements at December 31, 2020
|
|
|
Level
1
|
|
|
|
Level
2
|
|
|
|
Level
3
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
$
|
43,162
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Total
assets
|
|
43,162
|
|
|
|
-
|
|
|
|
-
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Convertible
debentures, net of discounts of $494,930
|
|
-
|
|
|
|
-
|
|
|
|
6,762,817
|
|
Short
term debt, net of discounts of $-0-
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Derivative
liability
|
|
-
|
|
|
|
-
|
|
|
|
17,328,904
|
|
Total
liabilities
|
|
-
|
|
|
|
-
|
|
|
|
24,091,721
|
|
|
$
|
43,162
|
|
|
$
|
-
|
|
|
$
|
(24,091,721)
|
|
The
carrying amounts of the Company’s financial assets and liabilities, such as cash, prepaid expenses, other current assets,
accounts payable & accrued expenses, certain notes payable and notes payable – related party, approximate their fair
values because of the short maturity of these instruments.
The
Company accounts for its derivative liabilities, at fair value, on a recurring basis under level 3. See Note 7.
Embedded
Conversion Features
The
Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to
determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative
at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment
under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration
of any beneficial conversion feature.
Derivative
Financial Instruments
The
Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates
all of it financial instruments, including stock purchase warrants, to determine if such instruments are derivatives or contain
features that qualify as embedded derivatives.
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 as charges or credits to income.
For option-based simple derivative financial instruments, the Company uses the Binomial option-pricing model to value the derivative
instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such
instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
In
July 2017, the FASB issued ASU 2017-11 Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480);
Derivative and Hedging (Topic 815). The amendments in Part I of this Update change the classification analysis of certain
equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial
instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification
when assessing whether the instrument is indexed to an entity’s own stock. The amendment also clarifies existing disclosure
requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion
option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round
feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share
(“EPS”) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That
effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments
with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial
conversion features (in Subtopic 470-20, Debt-Debt with Conversion and Other Options), including related EPS guidance (in Topic
260). The amendments in Part II of this Update recharacterize the indefinite deferral of certain provisions of Topic 480 that
now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect.
Prior
to this Update, an equity-linked financial instrument with a down round feature that otherwise is not required to be classified
as a liability under the guidance in Topic 480 is evaluated under the guidance in Topic 815, Derivatives and Hedging, to determine
whether it meets the definition of a derivative. If it meets that definition, the instrument (or embedded feature) is evaluated
to determine whether it is indexed to an entity’s own stock as part of the analysis of whether it qualifies for a scope
exception from derivative accounting. Generally, for warrants and conversion options embedded in financial instruments that are
deemed to have a debt host (assuming the underlying shares are readily convertible to cash or the contract provides for net settlement
such that the embedded conversion option meets the definition of a derivative), the existence of a down round feature results
in an instrument not being considered indexed to an entity’s own stock. This results in a reporting entity being required
to classify the freestanding financial instrument or the bifurcated conversion option as a liability, which the entity must measure
at fair value initially and at each subsequent reporting date.
The
amendments in this Update revise the guidance for instruments with down round features in Subtopic 815-40, Derivatives and Hedging—Contracts
in Entity’s Own Equity, which is considered in determining whether an equity-linked financial instrument qualifies for a
scope exception from derivative accounting. An entity still is required to determine whether instruments would be classified in
equity under the guidance in Subtopic 815-40 in determining whether they qualify for that scope exception. If they do qualify,
freestanding instruments with down round features are no longer classified as liabilities and embedded conversion options with
down round features are no longer bifurcated.
For
entities that present EPS in accordance with Topic 260, and when the down round feature is included in an equity-classified freestanding
financial instrument, the value of the effect of the down round feature is treated as a dividend when it is triggered and as a
numerator adjustment in the basic EPS calculation. This reflects the occurrence of an economic transfer of value to the holder
of the instrument, while alleviating the complexity and income statement volatility associated with fair value measurement on
an ongoing basis. Convertible instruments are unaffected by the Topic 260 amendments in this Update.
The
amendments in Part 1 of this Update are a cost savings relative to former accounting. This is because, assuming the required criteria
for equity classification in Subtopic 815-40 are met, an entity that issued such an instrument no longer measures the instrument
at fair value at each reporting period (in the case of warrants) or separately accounts for a bifurcated derivative (in the case
of convertible instruments) on the basis of the existence of a down round feature. For convertible instruments with embedded conversion
options that have down round features, applying specialized guidance such as the model for contingent beneficial conversion features
rather than bifurcating an embedded derivative also reduces cost and complexity. Under that specialized guidance, the issuer recognizes
the intrinsic value of the feature only when the feature becomes beneficial instead of bifurcating the conversion option and measuring
it at fair value each reporting period.
The
amendments in Part II of this Update replace the indefinite deferral of certain guidance in Topic 480 with a scope exception.
This has the benefit of improving the readability of the Codification and reducing the complexity associated with navigating the
guidance in Topic 480.
The
Company adopted this new standard on January 1, 2019; however, the Company needs to continue the derivative liabilities due to
variable conversion price on some of the convertible instruments. As such, it did not have a material impact on the Company’s
consolidated financial statements.
Beneficial
Conversion Feature
For
conventional convertible debt where the rate of conversion is below market value, the Company records a "beneficial conversion
feature" ("BCF") and related debt discount.
When
the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective
debt instrument (offset to additional paid in capital) and amortized to interest expense over the life of the debt.
Debt
Issue Costs and Debt Discount
The
Company may record debt issue costs and/or debt discounts in connection with raising funds through the issuance of debt. These
costs may be paid in the form of cash, or equity (such as warrants). These costs are amortized to interest expense over the life
of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.
Original
Issue Discount
For
certain convertible debt issued, the Company may provide the debt holder with an original issue discount. The original
issue discount would be recorded to debt discount, reducing the face amount of the note and is amortized to interest expense over
the life of the debt.
Extinguishments
of Liabilities
The
Company accounts for extinguishments of liabilities in accordance with ASC 860-10 (formerly SFAS 140) “Accounting for Transfers
and Servicing of Financial Assets and Extinguishment of Liabilities”. When the conditions are met for extinguishment accounting,
the liabilities are derecognized and the gain or loss on the sale is recognized.
Stock-Based
Compensation - Employees
The
Company accounts for its stock-based compensation in which the Company obtains employee services in share-based payment transactions
under the recognition and measurement principles of the fair value recognition provisions of section 718-10-30 of the FASB Accounting
Standards Codification. Pursuant to paragraph 718-10-30-6 of the FASB Accounting Standards Codification, all transactions in which
goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value
of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.
The
measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance
is complete or the date on which it is probable that performance will occur.
If
the Company is a newly formed corporation or shares of the Company are thinly traded, the use of share prices established in the
Company’s most recent private placement memorandum (based on sales to third parties) (“PPM”), or weekly or monthly
price observations would generally be more appropriate than the use of daily price observations as such shares could be artificially
inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.
The
fair value of share options and similar instruments is estimated on the date of grant using a Binomial Option Model option-pricing
valuation model. The ranges of assumptions for inputs are as follows:
•
|
|
Expected
term of share options and similar instruments: The expected life of options and similar
instruments represents the period of time the option and/or warrant are expected to be
outstanding. Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards
Codification the expected term of share options and similar instruments represents the
period of time the options and similar instruments are expected to be outstanding taking
into consideration of the contractual term of the instruments and employees’ expected
exercise and post-vesting employment termination behavior into the fair value (or calculated
value) of the instruments. Pursuant to paragraph 718-10-S99-1, it may be appropriate
to use the simplified method, i.e., expected term = ((vesting term + original
contractual term) / 2), if (i) A company does not have sufficient historical exercise
data to provide a reasonable basis upon which to estimate expected term due to the limited
period of time its equity shares have been publicly traded; (ii) A company significantly
changes the terms of its share option grants or the types of employees that receive share
option grants such that its historical exercise data may no longer provide a reasonable
basis upon which to estimate expected term; or (iii) A company has or expects to have
significant structural changes in its business such that its historical exercise data
may no longer provide a reasonable basis upon which to estimate expected term. The Company
uses the simplified method to calculate expected term of share options and similar instruments
as the company does not have sufficient historical exercise data to provide a reasonable
basis upon which to estimate expected term.
|
•
|
|
Expected
volatility of the entity’s shares and the method used to estimate it. Pursuant
to ASC Paragraph 718-10-50-2(f)(2)(ii) a thinly-traded or nonpublic entity that uses
the calculated value method shall disclose the reasons why it is not practicable for
the Company to estimate the expected volatility of its share price, the appropriate industry
sector index that it has selected, the reasons for selecting that particular index, and
how it has calculated historical volatility using that index. The Company
uses the average historical volatility of the comparable companies over the expected
contractual life of the share options or similar instruments as its expected volatility. If
shares of a company are thinly traded the use of weekly or monthly price observations
would generally be more appropriate than the use of daily price observations as the volatility
calculation using daily observations for such shares could be artificially inflated due
to a larger spread between the bid and asked quotes and lack of consistent trading in
the market.
|
•
|
|
Expected
annual rate of quarterly dividends. An entity that uses a method that employs
different dividend rates during the contractual term shall disclose the range of expected
dividends used and the weighted-average expected dividends. The expected dividend
yield is based on the Company’s current dividend yield as the best estimate of
projected dividend yield for periods within the expected term of the share options and
similar instruments.
|
•
|
|
Risk-free
rate(s). An entity that uses a method that employs different risk-free rates shall disclose
the range of risk-free rates used. The risk-free interest rate is based on
the U.S. Treasury yield curve in effect at the time of grant for periods within the expected
term of the share options and similar instruments.
|
Generally,
all forms of share-based payments, including stock option grants, warrants and restricted stock grants and stock appreciation
rights are measured at their fair value on the awards’ grant date, based on estimated number of awards that are ultimately
expected to vest.
The
expense resulting from share-based payments is recorded in general and administrative expense in the statements of operations.
Stock-Based
Compensation – Non-Employees
Equity
Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services
In
June 2018, the FASB issued ASU No. 2018-07, Compensation – Stock Compensation: Improvement to Nonemployee Share-Based Payment
Accounting (Topic 718). The ASU supersedes ASC 505-50, Equity-Based Payment to Non-Employment and expends the scope of the Topic
718 to include stock-based payments granted to non-employees. Under the new guidance, the measurement date and performance and
vesting conditions for stock-based payments to non-employees are aligned with those of employees, most notably aligning the award
measurement date with the grant date of an award. The new guidance is required to be adopted using the modified retrospective
transition approach. The Company adopted the new guidance effective January 1, 2019, with an immaterial impact on its financial
statements and related disclosures.
The
fair value of share options and similar instruments is estimated on the date of grant using a Binomial option-pricing valuation
model. The ranges of assumptions for inputs are as follows:
•
|
|
Expected
term of share options and similar instruments: Pursuant to Paragraph 718-10-50-2(f)(2)(i)
of the FASB Accounting Standards Codification the expected term of share options and
similar instruments represents the period of time the options and similar instruments
are expected to be outstanding taking into consideration of the contractual term of the
instruments and holder’s expected exercise behavior into the fair value (or calculated
value) of the instruments. The Company uses historical data to estimate holder’s
expected exercise behavior. If the Company is a newly formed corporation or
shares of the Company are thinly traded the contractual term of the share options and
similar instruments is used as the expected term of share options and similar instruments
as the Company does not have sufficient historical exercise data to provide a reasonable
basis upon which to estimate expected term.
|
•
|
|
Expected
volatility of the entity’s shares and the method used to estimate it. Pursuant
to ASC Paragraph 718-10-50-2(f)(2)(ii) a thinly-traded or nonpublic entity that uses
the calculated value method shall disclose the reasons why it is not practicable for
the Company to estimate the expected volatility of its share price, the appropriate industry
sector index that it has selected, the reasons for selecting that particular index, and
how it has calculated historical volatility using that index. The Company
uses the average historical volatility of the comparable companies over the expected
contractual life of the share options or similar instruments as its expected volatility. If
shares of a company are thinly traded the use of weekly or monthly price observations
would generally be more appropriate than the use of daily price observations as the volatility
calculation using daily observations for such shares could be artificially inflated due
to a larger spread between the bid and asked quotes and lack of consistent trading in
the market.
|
•
|
|
Expected
annual rate of quarterly dividends. An entity that uses a method that employs
different dividend rates during the contractual term shall disclose the range of expected
dividends used and the weighted-average expected dividends. The expected dividend
yield is based on the Company’s current dividend yield as the best estimate of
projected dividend yield for periods within the expected term of the share options and
similar instruments.
|
•
|
|
Risk-free
rate(s). An entity that uses a method that employs different risk-free rates shall disclose
the range of risk-free rates used. The risk-free interest rate is based on
the U.S. Treasury yield curve in effect at the time of grant for periods within the expected
term of the share options and similar instruments.
|
Revenue
Recognition
Effective
January 1, 2018, the Company adopted ASC 606 – Revenue from Contracts with Customers. Under ASC 606, the Company recognizes
revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following
steps: (1) identifying the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the
transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue
when each performance obligation is satisfied.
To
confirm, all of our OLCC licensed cannabis retail sales operations are conducted and operated on a “cash and carry”
basis- product(s) from our inventory accounts are sold to the customer(s) and the customer settles the account at time of receipt
of product via cash payment at our retail store; the transaction is recorded at the time of sale in our point of sale software
system. Revenue is only reported after product has been delivered to the customer and the customer has paid for the product with
cash.
To
date the only other revenue we have received is for ATM transactions and revenue from this activity is only reported after we
receive payment via check from the ATM service provider company.
Cost
of Sales
Cost
of sales represents costs directly related to the purchase of goods and third party testing of the Company’s products.
Related
Parties
The
Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure
of related party transactions.
Pursuant
to Section 850-10-20 the 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 fair value option under the Fair Value 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.
The
consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements,
expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated
in the preparation of consolidated or combined financial statements is not required in those statements.
The
disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions
to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such
other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the
dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change
in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties
as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
Contingencies
The
Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain
conditions may exist as of the date the consolidated 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 that it is probable that a material loss has been 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 potentially 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. However, there is no assurance that such matters will not materially and adversely affect the Company’s business,
consolidated financial position, and consolidated results of operations or consolidated cash flows.
Uncertain
Tax Positions
The
Company did not take any uncertain tax positions and had no adjustments to its income tax liabilities or benefits pursuant to
the provisions of Section 740-10-25 for the reporting period ended March 31, 2021.
Subsequent
Events
The
Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent
events. The Company will evaluate subsequent events through the date when the financial statements are issued.
Pursuant
to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued
when they are widely distributed to users, such as through filing them on EDGAR.
Recently
Issued Accounting Pronouncements
From
time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company
as of the specified effective date. Unless otherwise discussed, the Company believes that the effect of recently issued standards
that are not yet effective will not have a material effect on its consolidated financial position or results of operations upon
adoption.
In
February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02). Under ASU No. 2016-2, an entity is required
to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements.
ASU No. 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors
are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial
statements to assess the amount, timing and uncertainty of cash flows arising from leases. For public companies, the Company adopted
this standard on January 1, 2019 using the modified retrospective method. The new standard provides a number of optional practical
expedients in transition. The Company elected the package of practical expedients’, which permitted the Company not to reassess
under the new standard its prior conclusions about lease identification, lease classification and initial direct costs; and all
of the new standard’s available transition practical expedients.
On
adoption, the Company recognized a right of use asset of $638,593, operating lease liabilities of $638,593, based on the present
value of the remaining minimum rental payments under current leasing standards for its existing operating lease.
The
new standard also provides practical expedients for a company’s ongoing accounting. The Company elected the short-term lease
recognition exemption for its leases. For those leases with a lease term of 12 months or less, the Company will not recognize
ROU assets or lease liabilities.
In
July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480);
Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II)
Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain
Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” to simply the accounting for certain instruments
with down round features. The amendments require companies to disregard the down round feature when assessing whether the instrument
is indexed to its own stock, for purposes of determining liability or equity classification. Further, companies that provide earnings
per share (“EPS”) data will adjust the basic EPS calculation for the effect of the feature when triggered and will
also recognize the effect of the trigger within equity. The standard is effective for public companies for fiscal years, and interim
periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company adopted this new
standard on January 1, 2019 and did not have a material impact on the Company’s consolidated financial statements.
In
June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718)”: Improvements to Nonemployee
Share-Based Payment Accounting. This ASU was issued to expend the scope of Topic 718 to include share-based payment transactions
for acquiring goods and services from nonemployees. Previously, these awards were recorded at the fair value of consideration
received or the fair value of the equity instruments issued and were measured at the earlier of the commitment date of the date
performance was completed. The amendments in this ASU require nonemployee share-based payment awards to be measured at the grant-date
fair value of the equity instrument. ASU 2018-07 was effective for fiscal years, including interim periods within those fiscal
years beginning after December 15, 2018. The Company adopted ASU 2018-07 effective on October 1, 2019 and it did not have a material
impact on the Company’s consolidated financial statements.
In
August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820).” This standard modifies
disclosure requirements related to fair value measurement and is effective for all entities for fiscal years, and interim periods
within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. Implementation on a prospective
or retrospective basis varies by specific disclosure requirement. The standard also allows for early adoption of any removed
or modified disclosures upon issuance while delaying adoption of the additional disclosures until their effective date. The Company
is currently assessing the impact of adopting this standard on its consolidated financial statements.
In
December 2019, the FASB issued ASU No. 2019-12, “Simplifying the Accounting for Income Taxes (Topic 740)”. This standard
simplifies the accounting for income taxes. This standard is effective for fiscal years beginning after December 15, 2020, including
interim periods within those fiscal years. Early adoption is permitted for all entities. The Company is currently assessing the
impact of adopting this standard on its consolidated financial statements.
In
August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and
Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40)” (“ASU 2020-06”).
ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including
convertible instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative,
which aims to reduce unnecessary complexity in U.S. GAAP. The ASU’s amendments are effective for fiscal years beginning
after December 15, 2023, and interim periods within those fiscal years. The Company is currently evaluating the impact ASU 2020-06
will have on its financial statements.
NOTE
4 – PROPERTY, PLANT AND EQUIPMENT
Property,
plant and equipment consisted of the following at March 31, 2021 and December 31, 2020:
|
|
March
31, 2021
|
|
December
31, 2020
|
(Unaudited)
|
(Audited)
|
ATM
Machine
|
|
$
|
5,600
|
|
|
$
|
5,600
|
|
Computer
|
|
|
18,990
|
|
|
|
18,990
|
|
Furniture
& Fixtures
|
|
|
43,466
|
|
|
|
43,466
|
|
HVAC
|
|
|
41,768
|
|
|
|
41,768
|
|
Land
|
|
|
697,420
|
|
|
|
697,420
|
|
Leasehold
Improvements
|
|
|
142,979
|
|
|
|
142,979
|
|
Machinery
and Equipment
|
|
|
312,331
|
|
|
|
312,331
|
|
Sign
|
|
|
12,758
|
|
|
|
12,758
|
|
Structural
|
|
|
1,017,359
|
|
|
|
1,017,359
|
|
Vehicle
|
|
|
79,744
|
|
|
|
79,744
|
|
Total
|
|
|
2,372,415
|
|
|
|
2,372,415
|
|
Less:
Accumulated Depreciation
|
|
|
(577,731)
|
|
|
|
(547,469)
|
|
Property,
Plant and Equipment - net
|
|
$
|
1,794,684
|
|
|
$
|
1,824,946
|
|
Depreciation
expense totaled of $30,262 and $55,675 for the three months ended March 31, 2021 and 2020, respectively. Due to the closure of
2 stores, the Company removed net asset of $173,658 and record loss of disposal of fixed asset $173,658 during the years ended
December 31, 2020.
NOTE
5 – NON-CURRENT ASSETS
Other
assets consisted of the following at March 31, 2021 and December 31, 2020:
|
|
March
31, 2021
(Unaudited)
|
|
December
31, 2020
(Audited)
|
Rent
Deposits
|
|
$
|
11,016
|
|
|
$
|
11,016
|
|
Security
Deposits
|
|
|
5,491
|
|
|
|
5,491
|
|
Non-Current
Assets
|
|
$
|
16,507
|
|
|
$
|
16,507
|
|
Due
to the closure of 2 stores, the Company expensed rent deposit of $11,016 during the years ended December 31, 2020.
NOTE
6 – CONVERTIBLE DEBT
These
debts have a price adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded
Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability
with an offset to discounts on convertible debt. Discounts have been amortized to interest expense over the respective term of
the related note. In determining the indicated value of the convertible note issued, the Company used the Binomial Options Pricing
Model with a risk-free interest rate of ranging from 0.11% to 0.47%, volatility ranging from 106% to 142%, trading prices ranging
from $0.020 per share to $0.66 per share and a conversion price ranging from $0.15 per share to $0.38 per share. The total derivative
liabilities associated with these notes were $22,454,404 at March 31, 2021 and $17,328,904 at December 31, 2020.
See
Below Summary Table
Convertible
Debt Summary
|
|
Debt
Type
|
Debt
Classification
|
Interest
Rate
|
Due
Date
|
Ending
|
CT
|
LT
|
3/31/2021
|
12/31/2020
|
|
|
|
|
|
|
|
|
A
|
Convertible
|
X
|
|
10.0%
|
1-Jan-17
|
25,000
|
$ 25,000
|
B
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
82,391
|
82,391
|
C
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
41,195
|
41,195
|
D
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
262,156
|
262,156
|
O
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
136,902
|
136,902
|
P
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
66,173
|
66,173
|
Q
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
65,274
|
65,274
|
S
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
63,205
|
63,205
|
T
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
313,634
|
313,634
|
BB
|
Convertible
|
X
|
|
10.0%
|
1-Jan-20
|
50,000
|
50,000
|
CC
|
Convertible
|
X
|
|
10.0%
|
1-Jan-20
|
100,000
|
100,000
|
KK
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
188,000
|
188,000
|
LL
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
749,697
|
749,697
|
MM
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
124,690
|
124,690
|
NN
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
622,588
|
622,588
|
OO
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
620,908
|
620,908
|
PP
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
611,428
|
611,428
|
QQ
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
180,909
|
180,909
|
RR
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
586,804
|
586,804
|
SS
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
174,374
|
174,374
|
TT
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
345,633
|
345,633
|
UU
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
171,304
|
171,304
|
VV
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
121,727
|
113,322
|
XX
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
112,734
|
112,734
|
YY
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
173,039
|
173,039
|
ZZ
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
166,603
|
166,603
|
AAA
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
104,641
|
104,641
|
BBB
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
87,066
|
87,066
|
CCC
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
29,055
|
25,000
|
DDD
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
75,262
|
75,262
|
EEE
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
160,619
|
160,619
|
GGG
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
79,422
|
79,422
|
HHH
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
39,741
|
35,000
|
JJJ
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
52,455
|
52,455
|
LLL
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
77,992
|
77,992
|
MMM
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
51,348
|
51,348
|
PPP
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
95,979
|
95,979
|
RRR
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
16,177
|
15,000
|
SSS
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
75,000
|
75,000
|
TTT
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
80,000
|
80,000
|
UUU
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
20,614
|
20,000
|
VVV
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
75,000
|
75,000
|
WWW
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
60,000
|
-
|
XXX
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
100,000
|
-
|
YYY
|
Convertible
|
|
X
|
8.0%
|
1-Jan-24
|
50,000
|
-
|
|
|
|
|
|
|
|
|
Total
Convertible Debt
|
7,486,739
|
7,257,747
|
Less:
Discount
|
(561,953)
|
(494,930)
|
Convertible
Debt, Net of Discounts
|
$ 6,924,786
|
$ 6,762,817
|
Convertible
Debt, Net of Discounts, Current
|
$ 175,000
|
$ 363,243
|
Convertible
Debt, Net of Discounts, Long-term
|
$ 6,749,786
|
$ 6,399,574
|
FOOTNOTES
FOR CONVERTIBLE DEBT SUMMARY TABLE
(A)
At
the option of the holder the convertible note may be converted into shares of the Company’s common stock at the lesser of
$0.40 or 20% discount to the market price, as defined, of the Company’s common stock. The Company is currently in discussions
with the lender on a payment schedule. The outstanding balance of this note is convertible into a variable number of the Company’s
common stock. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The
derivative component of the obligation is initially valued and classified as a derivative liability with an offset to discounts
on convertible debt. Discounts are being amortized to interest expense over the respective term of the related note. In determining
the indicated value of the convertible note issued, the Company used the Binomial Options Pricing Model with a risk-free interest
rate of ranging from 0.11% to 2.63%, volatility ranging from 84.63% to 243.37%, trading prices ranging from $0.42 per share to
$6.75 per share and a conversion price ranging from $0.34 per share to $6.15 per share. The balance of the convertible note at
March 31, 2021 including accrued interest and net of the discount amounted to $54,326.
A
recap of the balance of outstanding convertible debt at March 31, 2021 is as follows:
Principal
balance
|
|
$
|
25,000
|
|
Accrued
interest
|
|
|
29,326
|
|
Balance
maturing for the period ending:
|
|
|
|
|
March
31, 2021
|
|
$
|
54,326
|
|
The
Company valued the derivative liabilities at March 31, 2021 at $30,449. The Company recognized a change in the fair value of derivative
liabilities for the three months ended March 31, 2021 of $14,624 which were added (credited) to operations. In determining
the indicated values at March 31, 2021, since the debt is in default, the company used the maximum value these embedded options
represent, with a trading price of $0.48, and conversion prices of $0.38 per share.
(B),
(C), (D)
All
these amended debts have a price adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic 815-15
“Embedded Derivative.” The derivative component of the obligation is initially valued and classified as a derivative
liability with an offset to discounts on convertible debt. Discounts have been amortized to interest expense over the respective
term of the related note. In determining the indicated value of the convertible note issued, the Company used the Binomial Options
Pricing Model with a risk-free interest rate of ranging from 0.05% to 2.59%, volatility ranging from 84.63% to 243.23%, trading
prices ranging from $0.42 per share to $6.15 per share and a conversion price ranging from $0.15 per share to $2.25 per share.
The Note and Interest is convertible into common shares at $0.15 per share. In January 2020, the maturity date of the notes had
been extended to January 1, 2024. The balance of the convertible note at March 31, 2021 including accrued interest and net of
the discount amounted to $424,110. The derivative liability associated with this note as of March 31, 2021 were $1,176,014. During
2020, interest of $28,574 was capitalized.
(O)
On
March 31, 2016 the Company received $100,000 from the issuance of convertible debt. Interest is stated at 12%. The Note and Interest
is convertible into common shares at $0.15 per share In January 2020, the maturity date of the notes had been extended to January
1, 2024. The derivative component of the obligation is initially valued and classified as a derivative liability with an offset
to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related note. In
determining the indicated value of the convertible note issued, the Company used the Binomial Options Pricing Model with a risk-free
interest rate of ranging from 0.16% to 2.59%, volatility ranging from 84.63% to 157.47%, trading prices ranging from $0.42 per
share to $4.05 per share and a conversion price of $0.15 per share. The balance of the convertible note at March 31, 2021 including
accrued interest and net of the discount amounted to $150,524. The derivative liability associated with this note as of March
31, 2021 were $417,370. During 2020, interest of $10,142 was capitalized.
(P)
On
July 13, 2016 the Company received $50,000 from the issuance of convertible debt. Interest is stated at 12%. The Note and Interest
is convertible into common shares at $0.15 per share. In January 2020, the maturity date of the notes had been extended to January
1, 2024. The derivative component of the obligation is initially valued and classified as a derivative liability with an offset
to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related note. In
determining the indicated value of the convertible note issued, the Company used the Binomial Options Pricing Model with a risk-free
interest rate of ranging from 0.16% to 2.59%, volatility ranging from 84.63% to 157.47%, trading prices ranging from $0.42 per
share to $4.05 per share and a conversion price of $0.15 per share. The balance of the convertible note at March 31, 2021 including
accrued interest and net of the discount amounted to $72,757. The derivative liability associated with this note as of March 31,
2021 were $201,741. During 2020, interest of $4,902 was capitalized.
(Q)
On
August 30, 2016 the Company received $50,000 from the issuance of convertible debt. Interest is stated at 12%. The Note and Interest
is convertible into common shares at $0.15 per share. In January 2020, the maturity date of the notes had been extended to January
1, 2024. In determining the indicated value of the convertible note issued, the Company used the Binomial Options Pricing Model
with a risk-free interest rate of ranging from 0.16% to 2.59%, volatility ranging from 84.63% to 154.71%, trading prices ranging
from $0.42 per share to $4.05 per share and a conversion price of $0.15 per share. The balance of the convertible note at March
31, 2021 including accrued interest and net of the discount amounted to $71,769. The derivative liability associated with this
note as of March 31, 2021 was $199,001. During 2020, interest of $4,835 was capitalized.
(S)
On
December 1, 2016 the Company received $50,000 from the issuance of convertible debt. Interest is stated at 12%. The Note and Interest
is convertible into common shares at $0.15 per share. In January 2020, the maturity date of the notes had been extended to January
1, 2024. In determining the indicated value of the convertible note issued, the Company used the Binomial Options Pricing Model
with a risk-free interest rate of ranging from 0.16% to 2.59%, volatility ranging from 84.63% to 154.71%, trading prices ranging
from $0.42 per share to $4.05 per share and a conversion price of $0.15 per share. The balance of the convertible note at March
31, 2021 including accrued interest and net of the discount amounted to $69,493. The derivative liability associated with this
note as of March 31, 2021 were $192,693. During 2020, interest of $4,682 was capitalized.
(T)
On
December 30, 2016 the Company received $250,000 from the issuance of convertible debt. Interest is stated at 8%. The Note and
Interest is convertible into common shares at $0.15 per share. In January 2020, the maturity date of the notes had been extended
to January 1, 2024. In determining the indicated value of the convertible note issued, the Company used the Binomial Options Pricing
Model with a risk-free interest rate of ranging from 0.16% to 2.59%, volatility ranging from 84.63% to 154.71%, trading prices
ranging from $0.42 per share to $4.05 per share and a conversion price of $0.15 per share. The balance of the convertible note
at March 31, 2021 including accrued interest and net of the discount amounted to $344,842. The derivative liability associated
with this note as of March 31, 2021 were $956,177. During 2020, interest of $23,232 was capitalized.
(BB)
On
September 23, 2015 the Company received a total of $50,000 from an accredited investor in exchange for a two year note in the
aggregate amount of $50,000 with interest accruing at 10%. The note is convertible after September 23, 2015 and is convertible
into the Company’s common stock at a conversion rate of $0.15 per share. The market value of the stock at the date when
the debt becomes convertible was $1.17. The debt issued is a result of a financing transaction and contain a beneficial conversion
feature. The accrued interest of $5,000 was converted to 166,666 shares of common stock on September 15, 2019. The accrued interest
of $5,000 was paid in cash in the year of 2020. On January 1, 2019, due date of this note was extended until January 1, 2020.
The lender and the Company are in discussion to extend the maturity terms. No gain or loss on conversion was recorded as conversions
were made within the terms of agreement. The balance of the convertible note at March 31, 2021 including accrued interest and
net of the discount amounted to $56,222. The derivative liability associated with this note as of March 31, 2021 was $79,998.
(CC)
On
September 23, 2015 the Company received a total of $100,000 from an accredited investor in exchange for a two year note in the
aggregate amount of $100,000 with interest accruing at 10%. The note was convertible after September 23, 2015 and was convertible
into the Company’s common stock at a conversion rate of $.45 per share. The market value of the stock at the date when the
debt becomes convertible was $1.17. The debt issued is a result of a financing transaction and contain a beneficial conversion
feature. The balance of the convertible note at March 31, 2021 including accrued interest and net of the discount amounted to
$122,444. The derivative liability associated with this note as of March 31, 2021 was $174,225. On January 1, 2019, due date of
this note was extended until January 1, 2020. The lender and the Company are in discussion to extend the maturity terms.
(KK)
On
January 4, 2017, the Company received $150,000 from the issuance of convertible debt. Interest is stated at 8%. The Note and Interest
is convertible into common shares at $0.15 per share. . In January 2020, the maturity date of the notes had been extended to January
1, 2024. This note has a price adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded
Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with
an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related
note. In determining the indicated value of the convertible note issued, the Company used the Binomial Options Pricing Model with
a risk-free interest rate of ranging from 0.16% to 2.59%, volatility ranging from 84.63% to 154.71%, trading prices ranging from
$0.42 per share to $4.05 per share and a conversion price of $0.15 per share. The balance of the convertible note at March 31,
2021 including accrued interest and net of the discount amounted to $206,707. The derivative liability associated with this note
as of March 31, 2021 was $573,156. During 2020, interest of $13,926 was capitalized.
(LL)
On
January 20, 2017, the Company received $600,000 from the issuance of convertible debt. Interest is stated at The Note and Interest
is convertible into common shares at $0.15 per share. In January 2020, the maturity date of the notes had been extended to January
1, 2024. This note has a price adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded
Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with
an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related
note. In determining the indicated value of the convertible note issued, the Company used the Binomial Options Pricing Model with
a risk-free interest rate of ranging from 0.16% to 2.59%, volatility ranging from 84.63% to 154.71%, trading prices ranging from
$0.42 per share to $4.65 per share. The balance of the convertible note at March 31, 2021 including accrued interest and net of
the discount amounted to $824,298. The derivative liability associated with this note as of March 31, 2021 were $2,285,603. During
2020, interest of $55,533 was capitalized.
(MM)
On
January 31, 2017, the Company received $100,000 from the issuance of convertible debt. Interest is stated at 8% The Note and Interest
is convertible into common shares at $0.15 per share. In January 2020, the maturity date of the notes had been extended to January
1, 2024. This note has a price adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded
Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with
an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related
note. In determining the indicated value of the convertible note issued, the Company used the Binomial Options Pricing Model with
a risk-free interest rate of ranging from 0.16% to 2.59%, volatility ranging from 84.63% to 154.71%, trading prices ranging from
$0.42 per share to $4.65 per share. The balance of the convertible note at March 31, 2021 including accrued interest and net of
the discount amounted to $137,096. The derivative liability associated with this note as of March 31, 2021 were $380,143. During
2020 interest of $9,190 was capitalized.
(NN)
On
February 7, 2017, the Company received $500,000 from the issuance of convertible debt. Interest is stated at 8% The Note and Interest
is convertible into common shares at $0.15 per share. In January 2020, the maturity date of the notes had been extended to January
1, 2024. This note has a price adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded
Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with
an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related
note. In determining the indicated value of the convertible note issued, the Company used the Binomial Options Pricing Model with
a risk-free interest rate of ranging from 0.16% to 2.59%, volatility ranging from 84.63% to 154.71%, trading prices ranging from
$0.42 per share to $4.65 per share. The balance of the convertible note at March 31, 2021 including accrued interest and net of
the discount amounted to $684,540. The derivative liability associated with this note as of March 31, 2021 was $1,898,084. During
2020, interest of $46,118 was capitalized.
(OO)
On
February 21, 2017, the Company received $500,000 from the issuance of convertible debt. Interest is stated at 8% The Note and
Interest is convertible into common shares at $0.15 per share. In January 2020, the maturity date of the notes had been extended
to January 1, 2024. This note has a price adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic
815-15 “Embedded Derivative.” The derivative component of the obligation is initially valued and classified as a derivative
liability with an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term
of the related note. In determining the indicated value of the convertible note issued, the Company used the Binomial Options
Pricing Model with a risk-free interest rate of ranging from 0.16% to 2.59%, volatility ranging from 84.63% to 154.71%, trading
prices ranging from $0.42 per share to $0.30 per share. The balance of the convertible note at March 31, 2021 including accrued
interest and net of the discount amounted to $682,692. The derivative liability associated with this note as of March 31, 2021
was $1,892,964. During 2020, interest of $45,993 was capitalized.
(PP)
On
May 11, 2017, the Company received $500,000 from the issuance of convertible debt. Interest is stated at 8% The Note and Interest
is convertible into common shares at $0.15 per share. In January 2020, the maturity date of the notes had been extended to January
1, 2024. This note has a price adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded
Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with
an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related
note. In determining the indicated value of the convertible note issued, the Company used the Binomial Options Pricing Model with
a risk-free interest rate of ranging from 0.16% to 2.59%, volatility ranging from 84.63% to 141.62%, trading prices ranging from
$0.42 per share to $4.05 per share. The balance of the convertible note at March 31, 2021 including accrued interest amounted
to $672,269, net of the discount of $1,336. The derivative liability associated with this note as of December 31, 2021 was $1,864,062.
During 2020, interest of $45,291 was capitalized.
(QQ)
On
July 17, 2017, the Company received $150,000 from the issuance of convertible debt. Interest is stated at 8% The Note and Interest
is convertible into common shares at $0.15 per share. In January 2020, the maturity date of the notes had been extended to January
1, 2024. This note has a price adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded
Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with
an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related
note. In determining the indicated value of the convertible note issued, the Company used the Binomial Options Pricing Model with
a risk-free interest rate of ranging from 0.16% to 2.63%, volatility ranging from 84.63% to 141.62%, trading prices ranging from
$0.42 per share to $4.05 per share. The balance of the convertible note at March 31, 2021 including accrued interest amounted
to $198,910, net of the discount of $481. The derivative liability associated with this note as of March 31, 2021 was $551,537.
During 2020, interest of $13,401 was capitalized.
(RR)
On
November 1, 2017, the Company received $500,000 from the issuance of convertible debt. Interest is stated at 8% The Note and Interest
is convertible into common shares at $0.15 per share. In January 2020, the maturity date of the notes had been extended to January
1, 2024. This note has a price adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded
Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with
an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related
note. In determining the indicated value of the convertible note issued, the Company used the Binomial Options Pricing Model with
a risk-free interest rate of ranging from 0.16% to 2.63%, volatility ranging from 84.63% to 141.62%, trading prices ranging from
$0.42 per share to $4.05 per share. The balance of the convertible note at March 31, 2021 including accrued interest amounted
to $645,195, net of the discount of $1,959. The derivative liability associated with this note as of March 31, 2021 was $1,788,991.
During 2020, interest of $86,804 was capitalized.
(SS)
On
December 21, 2017, the Company received $150,000 from the issuance of convertible debt. Interest is stated at 8% The Note and
Interest is convertible into common shares at $0.15 per share. In January 2020, the maturity date of the notes had been extended
to January 1, 2024. This note has a price adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic
815-15 “Embedded Derivative.” The derivative component of the obligation is initially valued and classified as a derivative
liability with an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term
of the related note. In determining the indicated value of the convertible note issued, the Company used the Binomial Options
Pricing Model with a risk-free interest rate of ranging from 0.16% to 2.63%, volatility ranging from 84.63% to 141.62%, trading
prices ranging from $0.42 per share to $4.05 per share. The balance of the convertible note at March 31, 2021 including accrued
interest amounted to $191,725, net of the discount of $614. The derivative liability associated with this note as of March 31,
2021 were $531,614. During 2020, interest of $24,374 was capitalized.
(TT)
On
February 5, 2018, the Company received $300,000 from the issuance of convertible debt. Interest is stated at 8% The Note and Interest
is convertible into common shares at $0.15 per share. In January 2020, the maturity date of the notes had been extended to January
1, 2024. This note has a price adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded
Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with
an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related
note. In determining the indicated value of the convertible note issued, the Company used the Binomial Options Pricing Model with
a risk-free interest rate of ranging from 0.16% to 2.63%, volatility ranging from 84.63% to 141.62%, trading prices ranging from
$0.42 per share to $7.35 per share. The balance of the convertible note at March 31, 2021 including accrued interest amounted
to $380,026 , net of the discount of $1,218. The derivative liability associated with this note as of March 31, 2021 was $1,053,732.
During 2020, interest of $45,633 was capitalized.
(UU)
On
March 23, 2018, the Company received $150,000 from the issuance of convertible debt. Interest is stated at 8%. The Note and Interest
is convertible into common shares at $0.15 per share. In January 2020, the maturity date of the notes had been extended to January
1, 2024. This note has a price adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded
Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with
an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related
note. In determining the indicated value of the convertible note issued, the Company used the Binomial Options Pricing Model with
a risk-free interest rate of ranging from 0.16% to 2.63%, volatility ranging from 84.63% to 141.62%, trading prices ranging from
$0.42 per share to $2.10 per share. The balance of the convertible note at March 31, 2021 including accrued interest amounted
to $188,350, net of the discount of $562. The derivative liability associated with this note as of March 31, 2021 was $522,255.
During 2020, interest of $21,304 was capitalized.
(VV)
On
December 21, 2017 the Company received a total of $80,000 from an accredited investor in exchange for a two year note in the aggregate
amount of $80,000 with interest accruing at 10% per year. The note is due January 1, 2019 with monthly payments of principal and
interest. On January 30, 2018, the accredited investor advanced an additional $20,000. The total $100,000 including $333 of unpaid
interest was exchanged for a convertible note (Note VV). Interest is stated at 5%. The Note and Interest is convertible into common
shares at $0.15 per share. In January 2021, the maturity date of the notes had been extended to January 1, 2024. This note has
a price adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.”
The derivative component of the obligation is initially valued and classified as a derivative liability with an offset to discounts
on convertible debt. Discounts are amortized to interest expense over the respective term of the related note. In determining
the indicated value of the convertible note issued, the Company used the Binomial Options Pricing Model with a risk-free interest
rate of ranging from 0.11% to 2.59%, volatility ranging from 84.63% to 141.62%, trading prices ranging from $0.42 per share to
$2.10 per share. The balance of the convertible note at March 31, 2021 including accrued interest amounted to $124,774, net of
the discount of $2. The derivative liability associated with this note as of March 31, 2021 was $345,967. During 2020, interest
of $8,385 was capitalized.
(XX)
On
May 29, 2018, the Company received $100,000 from the issuance of convertible debt. Interest is stated at 8%. The Note and Interest
is convertible into common shares at $0.15 per share. In January 2020, the maturity date of the notes had been extended to January
1, 2024. This note has a price adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded
Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with
an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related
note. In determining the indicated value of the convertible note issued, the Company used the Binomial Options Pricing Model with
a risk-free interest rate of ranging from 0.16% to 2.63%, volatility from 84.63% to 141.62%, trading prices ranging from $0.42
per share to $2.40 per share. The balance of the convertible note at March 31, 2021 including accrued interest amounted to $123,952,
net of the discount of $405. The derivative liability associated with this note as of March 31, 2021 were $343,692. During 2020,
interest of $12,734 was capitalized.
(YY)
On
July 18, 2018, the Company received $155,000 from the issuance of convertible debt. Interest is stated at 8%. The Note and Interest
is convertible into common shares at $0.15 per share. In January 2020, the maturity date of the notes had been extended to January
1, 2024. This note has a price adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded
Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with
an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related
note. In determining the indicated value of the convertible note issued, the Company used the Binomial Options Pricing Model with
a risk-free interest rate of ranging from 0.16% to 2.81%, volatility from 84.63% to 141.62%, trading prices ranging from $0.42
per share to $1.95 per share. The balance of the convertible note at March 31, 2021 including accrued interest amounted to $190,258,
net of the discount of $864. The derivative liability associated with this note as of March 31, 2021 was $527,544. During 2020,
interest of $18,039 was capitalized.
(ZZ)
On
August 13, 2018, the Company received $150,000 from the issuance of convertible debt. Interest is stated at 8%. The Note and Interest
is convertible into common shares at $0.15 per share. In January 2020, the maturity date of the notes had been extended to January
1, 2024. This note has a price adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded
Derivative.” The derivative component of the obligation is initially valued and classified as a derivative liability with
an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term of the related
note. In determining the indicated value of the convertible note issued, the Company used the Binomial Options Pricing Model with
a risk-free interest rate of ranging from 0.16% to 2.81%, volatility from 84.63% to 141.62%, trading prices ranging from $0.42
per share to $1.95 per share. The balance of the convertible note at March 31, 2021 including accrued interest amounted to $183,181,
net of the discount of $814. The derivative liability associated with this note as of March 31, 2021 were $507,923. During 2020,
interest of $16,603 was capitalized.
(AAA)
On
September 24, 2018, the Company received $95,000 from the issuance of convertible debt. Interest is stated at 8%. The Note and
Interest is convertible into common shares at $0.15 per share. In January 2020, the maturity date of the notes had been extended
to January 1, 2024. This note has a price adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic
815-15 “Embedded Derivative.” The derivative component of the obligation is initially valued and classified as a derivative
liability with an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term
of the related note. In determining the indicated value of the convertible note issued, the Company used the Binomial Options
Pricing Model with a risk-free interest rate of ranging from 0.16% to 2.81%, volatility from 84.63% to 142.66%, trading prices
ranging from $0.42 per share to $1.95 per share. The balance of the convertible note at March 31, 2021 including accrued interest
amounted to $115,053, net of the discount of $489. The derivative liability associated with this note as of March 31, 2021 were
$319,019. During 2020, interest of $9,641 was capitalized.
(BBB)
On
November 23, 2018, the Company received $80,000 from the issuance of convertible debt. Interest is stated at 8%. The Note and
Interest is convertible into common shares at $0.15 per share. In January 2020, the maturity date of the notes had been extended
to January 1, 2024. This note has a price adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic
815-15 “Embedded Derivative.” The derivative component of the obligation is initially valued and classified as a derivative
liability with an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term
of the related note. In determining the indicated value of the convertible note issued, the Company used the Binomial Options
Pricing Model with a risk-free interest rate of ranging from 0.16% to 2.81%, volatility from 84.63% to 141.62%, trading price
from $0.42 per share to $1.95 per share. The balance of the convertible note at March 31, 2021 including accrued interest amounted
to $95,730, net of the discount of $523. The derivative liability associated with this note as of March 31, 2021 was $265,438.
During 2020, interest of $7,066 was capitalized.
(CCC)
On
December 21, 2018, the Company received $25,000 from the issuance of convertible debt. Interest is stated at 8%. The Note and
Interest is convertible into common shares at $.75 per share. On January 22, 2019, the ratchet provision was activated due to
issuance of another convertible note. As such, the conversion price was decreased from $.75 per share to $.45 per share. As the
change is greater than 10%, the discount of $25,000 was recorded as a loss on extinguishment. The maturity date of the notes had
been extended to January 1, 2024. This note has a price adjustment provision. Therefore, the Company accounted for these Notes
under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation is initially valued and classified
as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized to interest expense over the
respective term of the related note. In determining the indicated value of the convertible note issued, the Company used the Binomial
Options Pricing Model with a risk-free interest rate of ranging from 0.11% to 2.63%, volatility from 84.63% to 141.62%, trading
price of ranging from $0.42 to $1.65 per share. The balance of the convertible note at March 31, 2021 including accrued interest
amounted to $29,622. The derivative liability associated with this note as of December 31, 2020 was $82,135.
(DDD)
On
January 22, 2019, the Company received $70,000 from the issuance of convertible debt. Interest is stated at 8%. The Note and Interest
is convertible into common shares at $.45 per share. Note is due in January of 2021. This note has a price adjustment provision.
Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component
of the obligation is initially valued and classified as a derivative liability with an offset to discounts on convertible debt.
Discounts are amortized to interest expense over the respective term of the related note. In determining the indicated value of
the convertible note issued, the Company used the Binomial Options Pricing Model with a risk-free interest rate of ranging from
0.16% to 2.59%, volatility from 84.63% to 141.62%, trading price of ranging from $0.42 to $1.65 per share. The balance of the
convertible note at March 31, 2021 including accrued interest amounted to $82,752, net of the discount of $18,843. The derivative
liability associated with this note as of March 31, 2021 was $229,453. During 2020, interest of $5,262 was capitalized.
(EEE)
On
February 11, 2019, the Company received $150,000 from the issuance of convertible debt. Interest is stated at 8%. The Note and
Interest is convertible into common shares at $0.15 per share. In January 2020, the maturity date of the notes had been extended
to January 1, 2024. This note has a price adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic
815-15 “Embedded Derivative.” The derivative component of the obligation is initially valued and classified as a derivative
liability with an offset to discounts on convertible debt. Discounts are amortized to interest expense over the respective term
of the related note. In determining the indicated value of the convertible note issued, the Company used the Binomial Options
Pricing Model with a risk-free interest rate of ranging from 0.16% to 2.48%, volatility from 84.63% to 141.62%, trading price
of ranging from $0.42 to $1.65 per share. The balance of the convertible note at March 31, 2021 including accrued interest amounted
to $176,602, net of the discount of $41,548. The derivative liability associated with this note as of March 31, 2021 was $489,680.
During 2020, interest of $10,619 was capitalized.
(FFF)
On
March 20, 2019, the Company received $15,000 from the issuance of convertible debt. Interest is stated at 8%. The Note and Interest
is convertible into common shares at $0.15 per share. Note is due in January of 2021. This note has a price adjustment provision.
Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component
of the obligation is initially valued and classified as a derivative liability with an offset to discounts on convertible debt.
Discounts are amortized to interest expense over the respective term of the related note. In determining the indicated value of
the convertible note issued, the Company used the Binomial Options Pricing Model with a risk-free interest rate of ranging from
0.11% to 2.40%, volatility from 82.70% to 141.62%, trading price of ranging from $0.42 to $1.65 per share. The convertible debt
of $15,000 and accrued interest of $1,690 were converted to 111,266 shares on July 20, 2020. There was no gain or loss on conversion
as the conversion was done per terms of the note agreement. The derivative liabilities of $37,251 associated to this note was
reclassified to APIC. The balance of the convertible note at March 31, 2021 including accrued interest amounted to -0-. The derivative
liability associated with this note as of March 31, 2021 were -0-.
(GGG)
On
April 6, 2019 the Company received $75,000 from the issuance of convertible debt to the Cayman Venture Capital Fund pursuant to
the May 2017 Financing Agreement, as amended. Interest is stated at 8%. The Note and Interest is convertible into common shares
at $0.15 per share. In January 2020, the maturity date of the notes had been extended to January 1, 2024. This note has a price
adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.”
The derivative component of the obligation is initially valued and classified as a derivative liability with an offset to discounts
on convertible debt. Discounts are amortized to interest expense over the respective term of the related note. In determining
the indicated value of the convertible note issued, the Company used the Binomial Options Pricing Model with a risk-free interest
rate of ranging from 0.16% to 2.40%, volatility from 82.70% to 141.62%, trading price of ranging from $0.42 to $1.65 per share.
The balance of the convertible note at March 31, 2021 including accrued interest amounted to $87,325, net of the discount of $10,166.
The derivative liability associated with this note as of March 31, 2021 was $242,134. During 2020, interest of $4,422 was capitalized.
(HHH)
On
April 22, 2019 the Company received $35,000 from the issuance of convertible debt to the High Net Worth Investor pursuant to the
January 2018 Financing Agreement, as amended. Interest is stated at 8%. The Note and Interest is convertible into common shares
at $0.15 per share. The maturity date of the notes had been extended to January 1, 2024. This note has a price adjustment
provision. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative
component of the obligation is initially valued and classified as a derivative liability with an offset to discounts on convertible
debt. Discounts are amortized to interest expense over the respective term of the related note. In determining the indicated value
of the convertible note issued, the Company used the Binomial Options Pricing Model with a risk-free interest rate of ranging
from 0.11% to 2.40%, volatility from 82.70% to 141.62%, trading price of ranging from $0.42 to $1.65 per share. The balance of
the convertible note at March 31, 2021 including accrued interest amounted to $40,516, net of the discount of $20. The derivative
liability associated with this note as of March 31, 2021 were $112,343.
(III)
On
May 6, 2019 the Company received $25,000 from the issuance of convertible debt to the High Net Worth Investor pursuant to the
January 2018 Financing Agreement, as amended. Interest is stated at 8%. The Note and Interest is convertible into common shares
at $0.15 per share. The Note is Due in January of 2021. This note has a price adjustment provision. Therefore, the Company
accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation
is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized
to interest expense over the respective term of the related note. In determining the indicated value of the convertible note issued,
the Company used the Binomial Options Pricing Model with a risk-free interest rate of ranging from 0.11% to 2.40%, volatility
from 82.70% to 141.62%, trading price of ranging from $0.42 to $1.65 per share. The convertible debt of $25,000 and accrued interest
of $2,390 were converted to 182,600 shares on July 20, 2020. There was no gain or loss on conversion as the conversion was done
per terms of the note agreement. The derivative liabilities of $61,990 associated to this note was reclassified to APIC. The balance
of the convertible note at March 31, 2021 including accrued interest amounted to -0-. The derivative liability associated with
this note as of March 31, 2021 were -0-.
(JJJ)
On
May 21, 2019 the Company received $50,000 from the issuance of convertible debt to the Cayman Venture Capital Fund pursuant to
the January 2018 Financing Agreement, as amended. Interest is stated at 8%. The Note and Interest is convertible into common shares
at $0.15 per share. This note has a price adjustment provision. Therefore, the Company accounted for these Notes under ASC
Topic 815-15 “Embedded Derivative.” The derivative component of the obligation is initially valued and classified
as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized to interest expense over the
respective term of the related note. In determining the indicated value of the convertible note issued, the Company used the Binomial
Options Pricing Model with a risk-free interest rate of ranging from 0.16% to 2.40%, volatility from 82.70% to 141.62%, trading
price of ranging from $0.42 to $1.65 per share. The balance of the convertible note at March 31, 2021 including accrued interest
amounted to $57,674, net of the discount of $16,126. The derivative liability associated with this note as of March 31, 2021 was
$159,919. During 2020, interest of $2,455 was capitalized.
(KKK)
On
June 5, 2019 the Company received $20,000 from the issuance of convertible debt to the High Net Worth Investor pursuant to the
January 2018 Financing Agreement, as amended. Interest is stated at 8%. The Note and Interest is convertible into common shares
at $0.15 per share. The Note is Due in January of 2021. This note has a price adjustment provision. Therefore, the Company
accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation
is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized
to interest expense over the respective term of the related note. In determining the indicated value of the convertible note issued,
the Company used the Binomial Options Pricing Model with a risk-free interest rate of ranging from 0.11% to 2.40%, volatility
from 82.70% to 141.62 trading price of ranging from $0.42 to $1.65 per share. The convertible debt of $20,000 and accrued interest
of $1,780 were converted to 145,200 shares on July 20, 2020. There was no gain or loss on conversion as the conversion was done
per terms of the note agreement. The derivative liabilities of $48,673 associated to this note was reclassified to APIC. The balance
of the convertible note at March 31, 2021 including accrued interest amounted to -0-. The derivative liability associated with
this note as of March 31, 2021 were -0-.
(LLL)
On
July 2, 2019 the Company received $75,000 from the issuance of convertible debt to the Cayman Venture Capital Fund pursuant to
the January 2018 Financing Agreement, as amended. Interest is stated at 8%. The Note and Interest is convertible into common shares
at $0.15 per share. In January 2020, the maturity date of the notes had been extended to January 1, 2024. This note has a
price adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.”
The derivative component of the obligation is initially valued and classified as a derivative liability with an offset to discounts
on convertible debt. Discounts are amortized to interest expense over the respective term of the related note. In determining
the indicated value of the convertible note issued, the Company used the Binomial Options Pricing Model with a risk-free interest
rate of ranging from 0.16% to 1.75%, volatility from 105.36% to 141.62%, trading price of ranging from $0.42 to $1.01 per share.
The balance of the convertible note at March 31, 2021 including accrued interest amounted to $85,753, net of the discount of $25,968.
The derivative liability associated with this note as of March 31, 2021 was $237,774. During 2020, interest of $2,992 was capitalized.
(MMM)
On
August 30, 2019 the Company received $50,000 from the issuance of convertible debt to the High Net Worth Investor pursuant to
the January 2018 Financing Agreement, as amended. Interest is stated at 8%. The Note and Interest is convertible into common shares
at $0.15 per share. In January 2020, the maturity date of the notes had been extended to January 1, 2024. This note has a
price adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.”
The derivative component of the obligation is initially valued and classified as a derivative liability with an offset to discounts
on convertible debt. Discounts are amortized to interest expense over the respective term of the related note. In determining
the indicated value of the convertible note issued, the Company used the Binomial Options Pricing Model with a risk-free interest
rate of ranging from 0.16% to 1.75%, volatility from 105.36% to 141.62%, trading price of ranging from $0.42 to $0.96 per share.
The balance of the convertible note at March 31, 2021 including accrued interest amounted to $56,457, net of the discount of $19,397.
The derivative liability associated with this note as of March 31, 2021 was $156,545. During 2020, interest of $1,348 was capitalized.
(OOO)
On
November 4, 2019, the Company received $10,000 from the issuance of convertible debt to the High Net Worth Investor pursuant to
the January 2018 Financing Agreement, as amended. Interest is stated at 8%. The Note and Interest is convertible into common shares
at $0.15 per share. The Note is Due in January of 2021. This note has a price adjustment provision. Therefore, the Company
accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation
is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized
to interest expense over the respective term of the related note. In determining the indicated value of the convertible note issued,
the Company used the Binomial Options Pricing Model with a risk-free interest rate of ranging from 0.11% to 1.59%, volatility
from 107.76% to 141.62%, trading price of ranging from $0.42 to $0.84 per share. The convertible debt of $10,000 and accrued interest
of $557 were converted to 70,380 shares on July 20, 2020. There was no gain or loss on conversion as the conversion was done per
terms of the note agreement. The derivative liabilities of $23,592 associated to this note was reclassified to APIC. The balance
of the convertible note at March 31, 2021 including accrued interest amounted to -0-. The derivative liability associated with
this note as of March 31, 2021 were -0-.
(PPP)
On
November 14, 2019 the Company received $95,000 from the issuance of convertible debt to the Cayman Venture Capital Fund pursuant
to the January 2018 Financing Agreement, as amended. Interest is stated at 8%. The Note and Interest is convertible into common
shares at $0.15 per share. In January 2020, the maturity date of the notes had been extended to January 1, 2024. This note
has a price adjustment provision. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.”
The derivative component of the obligation is initially valued and classified as a derivative liability with an offset to discounts
on convertible debt. Discounts are amortized to interest expense over the respective term of the related note. In determining
the indicated value of the convertible note issued, the Company used the Binomial Options Pricing Model with a risk-free interest
rate of ranging from 0.16% to 1.59%, volatility from 107.76% to 141.62%, trading price of ranging from $0.42 to $0.83 per share.
The balance of the convertible note at March 31, 2021 including accrued interest amounted to $105,529, net of the discount of
$42,584. The derivative liability associated with this note as of March 31, 2021 were $292,610. During 2020, interest of $979
was capitalized.
(QQQ)
On
December 19, 2019, the Company received $25,000 from the issuance of convertible debt to the High Net Worth Investor pursuant
to the January 2018 Financing Agreement, as amended. Interest is stated at 8%. The Note and Interest is convertible into common
shares at $0.15 per share. The Note is Due in January of 2021. This note has a price adjustment provision. Therefore, the
Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation
is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized
to interest expense over the respective term of the related note. In determining the indicated value of the convertible note issued,
the Company used the Binomial Options Pricing Model with a risk-free interest rate of ranging from 0.11% to 1.59%, volatility
from 107.76% to 141.62%, trading price of ranging from $0.42 to $0.90 per share. The convertible debt of $25,000 and accrued interest
of $1,146 were converted to 174,307 on July 20, 2020. There was no gain or loss on conversion as the conversion was done per terms
of the note agreement. The derivative liabilities of $58,430 associated to this note was reclassified to APIC. The balance of
the convertible note at March 31, 2021 including accrued interest amounted to -0-. The derivative liability associated with this
note as of March 31, 2021 were -0-.
(RRR)
On
January 8, 2020, the Company received $15,000 from the issuance of convertible debt to the High Net Worth Investor pursuant to
the January 2018 Financing Agreement, as amended. Interest is stated at 8%. The Note and Interest is convertible into common shares
at $0.15 per share. The maturity date of the notes had been extended to January 1, 2024. This note has a price adjustment
provision. Therefore, the Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative
component of the obligation is initially valued and classified as a derivative liability with an offset to discounts on convertible
debt. Discounts are amortized to interest expense over the respective term of the related note. In determining the indicated value
of the convertible note issued, the Company used the Binomial Options Pricing Model with a risk-free interest rate of ranging
from 0.11% to 1.55%, volatility from 115.62% to 141.62%, trading price of ranging from $0.42 to $0.81 per share. The balance of
the convertible note at March 31, 2021 including accrued interest amounted to $16,493, net of debt discount of $29. The derivative
liability associated with this note as of March 31, 2021 was $45,730.
(SSS)
On
January 10, 2020, the Company received $75,000 from the issuance of convertible debt to the Cayman Venture Capital Fund pursuant
to the January 2018 Financing Agreement, as amended. Interest is stated at 8%. The Note and Interest is convertible into common
shares at $0.15 per share. The Note is Due in January of 2024. This note has a price adjustment provision. Therefore, the
Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation
is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized
to interest expense over the respective term of the related note. In determining the indicated value of the convertible note issued,
the Company used the Binomial Options Pricing Model with a risk-free interest rate of ranging from 0.16% to 0.37%, volatility
from 115.62% to 141.62%, trading price of ranging from $0.42 to $0.75 per share. The balance of the convertible note at March
31, 2021 including accrued interest amounted to $82,315, net of debt discount of $39,223. The derivative liability associated
with this note as of March 31, 2021 was $228,242.
(TTT)
On
May 21, 2020, the Company received $80,000 from the issuance of convertible debt to the Cayman Venture Capital Fund pursuant to
the January 2018 Financing Agreement, as amended. Interest is stated at 8%. The Note and Interest is convertible into common shares
at $0.15 per share. The Note is Due in January of 2024. This note has a price adjustment provision. Therefore, the Company
accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation
is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized
to interest expense over the respective term of the related note. In determining the indicated value of the convertible note issued,
the Company used the Binomial Options Pricing Model with a risk-free interest rate of ranging from 0.16% to 0.28%, volatility
from 121.13% to 141.62%, trading price of ranging from $0.48 to $4.80 per share. The balance of the convertible note at March
31, 2021 including accrued interest amounted to $85,488, net of debt discount $50,623. The derivative liability associated with
this note as of March 31, 2021 was $237,041.
(UUU)
On
August 13, 2020, the Company received $20,000 from the issuance of convertible debt to the High Net Worth Investor pursuant to
the January 2018 Financing Agreement, as amended. Interest is stated at 8%. The Note and Interest is convertible into common shares
at $0.15 per share. The Note is Due in January of 2024. This note has a price adjustment provision. Therefore, the Company
accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation
is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized
to interest expense over the respective term of the related note. In determining the indicated value of the convertible note issued,
the Company used the Binomial Options Pricing Model with a risk-free interest rate of ranging from 0.11% to 1.55%, volatility
from 115.62% to 141.62%, trading price of ranging from $0.42 to $0.81 per share. The balance of the convertible note at March
31, 2021 including accrued interest amounted to $21,016, net of debt discount of $3,300. The derivative liability associated with
this note as of March 31, 2021 was $58,273.
(VVV)
On
September 24, 2020, the Company received $75,000 from the issuance of convertible debt to the Cayman Venture Capital Fund pursuant
to the January 2018 Financing Agreement, as amended. Interest is stated at 8%. The Note and Interest is convertible into common
shares at $0.15 per share. The Note is Due in January of 2024. This note has a price adjustment provision. Therefore, the
Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation
is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized
to interest expense over the respective term of the related note. In determining the indicated value of the convertible note issued,
the Company used the Binomial Options Pricing Model with a risk-free interest rate of ranging from 0.16% to 0.28%, volatility
from 121.13% to 141.62%, trading price of ranging from $0.48 to $4.80 per share. The balance of the convertible note at March
31, 2021 including accrued interest amounted to $78,074, net of debt discount of $10,840. The derivative liability associated
with this note as of March 31, 2021 was $216,483.
(WWW)
On
January 22, 2021, the Company received $60,000 from the issuance of convertible debt to the Cayman Venture Capital Fund pursuant
to the January 2018 Financing Agreement, as amended. Interest is stated at 8%. The Note and Interest is convertible into common
shares at $0.15 per share. The Note is Due in January of 2024. This note has a price adjustment provision. Therefore, the
Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation
is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized
to interest expense over the respective term of the related note. In determining the indicated value of the convertible note issued,
the Company used the Binomial Options Pricing Model with a risk-free interest rate of ranging from 0.16% to 0.28%, volatility
from 121.13% to 141.62%, trading price of ranging from $0.48 to $4.80 per share. The balance of the convertible note at March
31, 2021 including accrued interest amounted to $60,894, net of debt discount of $56,201. The derivative liability associated
with this note as of March 31, 2021 was $168,847.
(XXX)
On
February 28, 2021, the Company received $100,000 from the issuance of convertible debt to the High Net Worth Investor pursuant
to the January 2018 Financing Agreement, as amended. Interest is stated at 8%. The Note and Interest is convertible into common
shares at $0.15 per share. The Note is Due in January of 2024. This note has a price adjustment provision. Therefore, the
Company accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation
is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized
to interest expense over the respective term of the related note. In determining the indicated value of the convertible note issued,
the Company used the Binomial Options Pricing Model with a risk-free interest rate of ranging from 0.11% to 1.55%, volatility
from 115.62% to 141.62%, trading price of ranging from $0.42 to $0.81 per share. The balance of the convertible note at March
31, 2021 including accrued interest amounted to $100,679, net of debt discount of $97,011. The derivative liability associated
with this note as of March 31, 2021 was $279,163.
(YYY)
On
March 31, 2021, the Company received $50,000 from the issuance of convertible debt to the High Net Worth Investor pursuant to
the January 2018 Financing Agreement, as amended. Interest is stated at 8%. The Note and Interest is convertible into common shares
at $0.15 per share. The Note is Due in January of 2024. This note has a price adjustment provision. Therefore, the Company
accounted for these Notes under ASC Topic 815-15 “Embedded Derivative.” The derivative component of the obligation
is initially valued and classified as a derivative liability with an offset to discounts on convertible debt. Discounts are amortized
to interest expense over the respective term of the related note. In determining the indicated value of the convertible note issued,
the Company used the Binomial Options Pricing Model with a risk-free interest rate of ranging from 0.11% to 1.55%, volatility
from 115.62% to 141.62%, trading price of ranging from $0.42 to $0.81 per share. The balance of the convertible note at March
31, 2021 including accrued interest amounted to $50,000, net of debt discount of $50,000. The derivative liability associated
with this note as of March 31, 2021 was $138,640.
NOTE
7 – NON-CONVERTIBLE DEBT
|
|
March
31,
2021
|
|
December
31, 2020
|
Note
5
|
|
|
9,312
|
|
|
|
9,312
|
|
Total
Non-Convertible Debt
|
|
|
9,312
|
|
|
|
9,312
|
|
(5)
On September 16, 2016, the Company received a total of $31,661 to be used for equipment in exchange for a two year note in the
aggregate amount of $31,661 with interest accruing at 18% per year and a 10% loan fee. The note is default as of March 31, 2021
with an outstanding balance of $9,312.
B-Related
Party
|
|
|
|
|
Loan
payable - Stockholder, 0%, Due December 31, 2021 (1)
|
|
$
|
250,000
|
|
|
$
|
250,000
|
|
|
|
$
|
250,000
|
|
|
$
|
250,000
|
|