| Convertible Notes Payable |
| 10. |
Convertible Notes Payable |
● |
Convertible
Notes Payable consist of the following at June 30, 2020 and 2019. |
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On
April 30, 2018, the Company entered into a convertible promissory note and a security purchase agreement
dated April 30, 2018, in the amount of $225,000. The lender was Eagle Equities, LLC. The notes have
a maturity of April 30, 2019 and interest rate of 8% per annum and are convertible at a price of 60%
of the lowest closing bid price on the primary trading market on which the Company's Common Stock
is then listed for the fifteen (15) trading days immediately prior to conversion. The note may be prepaid,
but carries a penalty in association with the remittance amount, as there is an accretion component
to satisfy the note with cash. The convertible note qualifies for derivative accounting and bifurcation
under ASC 815, "Derivatives and Hedging." The fair value of the $225,000 Notes was calculated
using the Black-Scholes pricing model at $287,174, with the following assumptions: risk-free interest
rate of 2.24%, expected life of 1 year, volatility of 202%, and expected dividend yield of zero. Because
the fair value of the note exceeded the net proceeds from the $225k Notes, a charge was recorded to
"Financing cost" for the excess of the fair value of the note, for a net charge of $62,174.
As of June 30, 2020 and 2019, the debt discount was $0.
On
June 5, 2018, the Company received cash in conjunction with a convertible promissory note and Securities Purchase Agreement
dated June 5, 2018. The note was in the amount of in the amount of $210,000. The lender was Eagle Equities, LLC. The notes
have a maturity of June 6, 2019 and interest rate of 8% per annum and are convertible at a price of 60% of the lowest
closing bid price on the primary trading market on which the Company's Common Stock is then listed for the fifteen
(15) trading days immediately prior to conversion. The note may be prepaid, but carries a penalty in association with
the remittance amount, as there is an accretion component to satisfy the note with cash. The convertible note qualifies
for derivative accounting and bifurcation under ASC 815, "Derivatives and Hedging." The fair value of the
$210,000 Notes was calculated using the Black-Scholes pricing model at $265,498, with the following assumptions: risk-free
interest rate of 2.09%, expected life of 1 year, volatility of 200%, and expected dividend yield of zero. Because the
fair value of the note exceeded the net proceeds from the $210k Notes, a charge was recorded to "Financing cost"
for the excess of the fair value of the note, for a net charge of $55,498. As of June 30, 2020, and 2019, the debt discount
was $0. This note has been successfully retired via conversions into shares during the year ended June 30, 2020. The Company
fair valued the notes as of conversion date and accounted for a loss on conversion of $180,755 included under line item
"Loss on debt extinguishment upon note conversion, net".
On
July 2, 2018, the Company entered into a convertible promissory note and a security purchase agreement dated July 12,
2018, in the amount of $207,000. The lender was Eagle Equities, LLC. The notes have a maturity of July 12, 2019 and interest
rate of 8% per annum and are convertible at a price of 60% of the lowest closing bid price on the primary trading market
on which the Company's Common Stock is then listed for the fifteen (15) trading days immediately prior to conversion.
The note may be prepaid, but carries a penalty in association with the remittance amount, as there is an accretion component
to satisfy the note with cash The convertible note qualifies for derivative accounting and bifurcation under ASC 815,
"Derivatives and Hedging." The fair value of the $207,000 Notes was calculated using the Black-Scholes pricing
model at $257,842, with the following assumptions: risk-free interest rate of 2.59%, expected life of 1 year, volatility
of 183%, and expected dividend yield of zero. Because the fair value of the note exceeded the net proceeds from the $207k
Notes, a charge was recorded to "Financing cost" for the excess of the fair value of the note, for a net charge
of $50,842. As of June 30, 2020, and 2019, the debt discount was $0 and $1,134, respectively.
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This
note has been successfully retired via conversions into shares during the year ended June 30, 2020. The Company fair valued
the notes as of conversion date and accounted for a loss on conversion of $73,760 included under line item "Loss on debt extinguishment upon note conversion, net". |
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On
November 16, 2018, the Company entered into a convertible promissory note and a security purchase
agreement dated November 16, 2018, in the amount of $130,000. The lender was Eagle Equities,
LLC. The notes have a maturity of November 16, 2019 and interest rate of 8% per annum and
are convertible at a price of 65% of the lowest closing bid price on the primary trading market
on which the Company's Common Stock is then listed for the fifteen (15) trading days
immediately prior to conversion. The note may be prepaid, but carries a penalty in association
with the remittance amount, as there is an accretion component to satisfy the note with cash.
The convertible note qualifies for derivative accounting and bifurcation under ASC 815, "Derivatives
and Hedging." The fair value of the $130,000 Notes was calculated using the Black-Scholes
pricing model at $131,898, with the following assumptions: risk-free interest rate of 2.71%,
expected life of 1 year, volatility of 150%, and expected dividend yield of zero. Because
the fair value of the note exceeded the net proceeds from the $130k Notes, a charge was recorded
to "Financing cost" for the excess of the fair value of the note, for a net charge
of $1,898. As of June 30, 2020, and 2019, the debt discount was $0 and $48,795, respectively. |
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This note has been
successfully retired via conversions into shares during the year ended June 30, 2020. The Company fair valued the notes as
of conversion date and accounted for a loss on conversion of $19,845 included under line item "Loss on debt extinguishment upon note conversion, net". |
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On
December 18, 2018, the Company entered into a convertible promissory note and a security purchase
agreement dated December 18, 2018, in the amount of $130,000. The lender was Eagle Equities,
LLC. The notes have a maturity of December 18, 2019 and interest rate of 8% per annum and
are convertible at a price of 65% of the lowest closing bid price on the primary trading market
on which the Company's Common Stock is then listed for the fifteen (15) trading days
immediately prior to conversion. The note may be prepaid, but carries a penalty in association
with the remittance amount, as there is an accretion component to satisfy the note with cash.
The convertible note qualifies for derivative accounting and bifurcation under ASC 815, "Derivatives
and Hedging." The fair value of the $130,000 Notes was calculated using the Black-Scholes
pricing model at $128,976, with the following assumptions: risk-free interest rate of 2.64%,
expected life of 1 year, volatility of 144%, and expected dividend yield of zero. Because
the fair value of the note did not exceed the net proceeds from the $130k Notes, no charge
was recorded to "Financing cost" for the excess of the fair value of the note.
As of June 30, 2020, and 2019, the debt discount was $0 and $60,425, respectively. |
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This note has been
successfully retired via conversions into shares during the year ended June 30, 2020. The Company fair valued the notes as
of conversion date and accounted for a loss on conversion of $36,927 included under line item "Loss on debt extinguishment upon note conversion, net". |
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On
January 28, 2019, the Company entered into a convertible promissory note and a security
purchase agreement dated January 28, 2019, in the amount of $234,000. The lender was
Eagle Equities, LLC. The notes have a maturity of January 28, 2020 and interest rate
of 8% per annum and are convertible at a price of 65% of the lowest closing bid price
on the primary trading market on which the Company's Common Stock is then listed
for the fifteen (15) trading days immediately prior to conversion. The note may be prepaid,
but carries a penalty in association with the remittance amount, as there is an accretion
component to satisfy the note with cash. The convertible note qualifies for derivative
accounting and bifurcation under ASC 815, "Derivatives and Hedging." The
fair value of the $234,000 Notes was calculated using the Black-Scholes pricing model
at $226,452, with the following assumptions: risk-free interest rate of 2.60%, expected
life of 1 year, volatility of 135%, and expected dividend yield of zero. Because the
fair value of the note did not exceed the net proceeds from the $234k Notes, no charge
was recorded to "Financing cost" for the excess of the fair value of the
note. As of June 30, 2020, and 2019, the debt discount was $0 and $131,528, respectively. |
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This note has been
successfully retired via conversions into shares during the year ended June 30, 2020. The Company fair valued the notes as
of conversion date and accounted for a loss on conversion of $80,394 included under line item "Loss on debt extinguishment upon note conversion, net". |
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On
February 14, 2019, the Company entered into a convertible promissory note and a security purchase
agreement dated February 14, 2019, in the amount of $104,000. The lender was Eagle Equities,
LLC. The notes have a maturity of February 14, 2020 and interest rate of 8% per annum and
are convertible at a price of 70% of the lowest closing bid price on the primary trading market
on which the Company's Common Stock is then listed for the fifteen (15) trading days
immediately prior to conversion. The note may be prepaid, but carries a penalty in association
with the remittance amount, as there is an accretion component to satisfy the note with cash.
The convertible note qualifies for derivative accounting and bifurcation under ASC 815, "Derivatives
and Hedging." The fair value of the $104,000 Notes was calculated using the Black-Scholes
pricing model at $90,567, with the following assumptions: risk-free interest rate of 2.53%,
expected life of 1 year, volatility of 136%, and expected dividend yield of zero. Because
the fair value of the note did not exceed the net proceeds from the $104k Notes, no charge
was recorded to "Financing cost" for the excess of the fair value of the note.
As of June 30, 2020, and 2019, the debt discount was $0 and $56,821, respectively. $50,000
of the note has been successfully retired via conversion into shares during the year ended
June 30, 2020. The Company fair valued the notes as of conversion date and accounted for a
loss on conversion of $4,098 included under line item "Loss on debt extinguishment upon note conversion, net". |
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On
April 29, 2019, the Company entered into a convertible promissory note and a security purchase
agreement dated April 29, 2019, in the amount of $208,000. The lender was Eagle Equities,
LLC. The notes have a maturity of April 29, 2020 and interest rate of 8% per annum and are
convertible at a price of 70% of the lowest closing bid price on the primary trading market
on which the Company's Common Stock is then listed for the fifteen (15) trading days
immediately prior to conversion. The note may be prepaid, but carries a penalty in association
with the remittance amount, as there is an accretion component to satisfy the note with cash.
The convertible note qualifies for derivative accounting and bifurcation under ASC 815, "Derivatives
and Hedging." The fair value of the $208,000 Notes was calculated using the Black-Scholes
pricing model at $170,098, with the following assumptions: risk-free interest rate of 2.42%,
expected life of 1 year, volatility of 118%, and expected dividend yield of zero. Because
the fair value of the note did not exceed the net proceeds from the 208k Notes, no charge
was recorded to "Financing cost" for the excess of the fair value of the note.
As of June 30, 2020, and 2019, the debt discount was $0 and $141,204, respectively |
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On June
11, 2019, the Company entered into a convertible promissory note and a security purchase agreement dated June 11, 2019, in
the amount of $300,000. The lender was Eagle Equities, LLC. The notes have a maturity of June 11, 2020 and interest rate of
8% per annum and are convertible at a price of 70% of the lowest closing bid price on the primary trading market on which
the Company's Common Stock is then listed for the fifteen (15) trading days immediately prior to conversion. The note
may be prepaid, but carries a penalty in association with the remittance amount, as there is an accretion component to satisfy
the note with cash. The convertible note qualifies for derivative accounting and bifurcation under ASC 815, "Derivatives
and Hedging." The fair value of the $300,000 Notes was calculated using the Black-Scholes pricing model at $240,217,
with the following assumptions: risk-free interest rate of 2.05%, expected life of 1 year, volatility of 16%, and expected
dividend yield of zero. Because the fair value of the note did not exceed the net proceeds from the $300k Notes, no charge
was recorded to "Financing cost" for the excess of the fair value of the note. As of June 30, 2020, and 2019,
the debt discount was $0 and $227,713, respectively. |
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On July 5, 2019,
the Company entered into a convertible promissory note and a security purchase agreement dated July 5, 2019, in the amount
of $300,000. The lender was Eagle Equities, LLC. The notes have a maturity of July 5, 2020 and interest rate of 8% per annum
and are convertible at a price of 70% of the lowest closing bid price on the primary trading market on which the Company's
Common Stock is then listed for the fifteen (15) trading days immediately prior to conversion. The note may be prepaid, but
carries a penalty in association with the remittance amount, as there is an accretion component to satisfy the note with cash.
The convertible note qualifies for derivative accounting and bifurcation under ASC 815, "Derivatives and Hedging."
The fair value of the $300,000 Notes was calculated using the Black-Scholes pricing model at $239,759, with the following
assumptions: risk-free interest rate of 1.98%, expected life of 1 year, volatility of 118%, and expected dividend yield of
zero. Because the fair value of the note did not exceed the net proceeds from the 300k Notes, no charge was recorded to "Financing
cost" for the excess of the fair value of the note. As of June 30, 2020, the debt discount was $2,627. |
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On August 8, 2019,
the Company entered into a convertible promissory note and a security purchase agreement dated August 8, 2019, in the amount
of $300,000. The lender was Eagle Equities, LLC. The notes have a maturity of August 8, 2020 and interest rate of 8% per annum
and are convertible at a price of 70% of the lowest closing bid price on the primary trading market on which the Company's
Common Stock is then listed for the fifteen (15) trading days immediately prior to conversion. The note may be prepaid, but
carries a penalty in association with the remittance amount, as there is an accretion component to satisfy the note with cash.
The convertible note qualifies for derivative accounting and bifurcation under ASC 815, "Derivatives and Hedging."
The fair value of the $300,000 Notes was calculated using the Black-Scholes pricing model at $254,082, with the following
assumptions: risk-free interest rate of 1.79%, expected life of 1 year, volatility of 113%, and expected dividend yield of
zero. Because the fair value of the note did not exceed the net proceeds from the $300k Notes, no charge was recorded to "Financing
cost" for the excess of the fair value of the note. As of June 30, 2020, the debt discount was $26,452. |
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On August 29, 2019,
the Company entered into a convertible promissory note and a security purchase agreement dated August 29, 2019, in the amount
of $300,000. The lender was Eagle Equities, LLC. The notes have a maturity of August 29, 2020 and interest rate of 8% per
annum and are convertible at a price of 70% of the lowest closing bid price on the primary trading market on which the Company's
Common Stock is then listed for the fifteen (15) trading days immediately prior to conversion. The note may be prepaid, but
carries a penalty in association with the remittance amount, as there is an accretion component to satisfy the note with cash.
The convertible note qualifies for derivative accounting and bifurcation under ASC 815, "Derivatives and Hedging."
The fair value of the $300,000 Notes was calculated using the Black-Scholes pricing model at $234,052, with the following
assumptions: risk-free interest rate of 1.75%, expected life of 1 year, volatility of 113%, and expected dividend yield of
zero. Because the fair value of the note did not exceed the net proceeds from the $300,000 Notes, no charge was recorded to
"Financing cost" for the excess of the fair value of the note. As of June 30, 2020, the debt discount was $37,833. |
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On September 24,
2019, the Company entered into a convertible promissory note and a security purchase agreement dated September 24, 2019, in
the amount of $150,000. The lender was Eagle Equities, LLC. The notes have a maturity of September 24, 2020 and interest rate
of 8% per annum and are convertible at a price of 70% of the lowest closing bid price on the primary trading market on which
the Company's Common Stock is then listed for the fifteen (15) trading days immediately prior to conversion. The note
may be prepaid, but carries a penalty in association with the remittance amount, as there is an accretion component to satisfy
the note with cash. The convertible note qualifies for derivative accounting and bifurcation under ASC 815, "Derivatives
and Hedging." The fair value of the $150,000 Notes was calculated using the Black-Scholes pricing model at $118,009,
with the following assumptions: risk-free interest rate of 1.78%, expected life of 1 year, volatility of 113%, and expected
dividend yield of zero. Because the fair value of the note did not exceed the net proceeds from the $150k Notes, no charge
was recorded to "Financing cost" for the excess of the fair value of the note. As of June 30, 2020, the debt discount
was $27,482. |
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On November 7, 2019,
the Company entered into a convertible promissory note and a security purchase agreement dated November 7, 2019, in the amount
of $150,000. The lender was Eagle Equities, LLC. The notes have a maturity of November 7, 2020 and interest rate of 8% per
annum and are convertible at a price of 70% of the lowest closing bid price on the primary trading market on which the Company's
Common Stock is then listed for the fifteen (15) trading days immediately prior to conversion. The note may be prepaid, but
carries a penalty in association with the remittance amount, as there is an accretion component to satisfy the note with cash.
The convertible note qualifies for derivative accounting and bifurcation under ASC 815, "Derivatives and Hedging."
The fair value of the $150,000 Notes was calculated using the Black-Scholes pricing model at $121,875, with the following
assumptions: risk-free interest rate of 1.58%, expected life of 1 year, volatility of 122%, and expected dividend yield of
zero. Because the fair value of the note did not exceed the net proceeds from the $150k Notes, no charge was recorded to "Financing
cost" for the excess of the fair value of the note. As of June 30, 2020, the debt discount was $43,074. |
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On December
31, 2019, the Company entered into a convertible promissory note and a security purchase agreement dated December 31, 2019,
in the amount of $150,000. The lender was Eagle Equities, LLC. The notes have a maturity of December 31, 2020 and interest
rate of 8% per annum and are convertible at a price of 70% of the lowest closing bid price on the primary trading market on
which the Company's Common Stock is then listed for the fifteen (15) trading days immediately prior to conversion. The
note may be prepaid, but carries a penalty in association with the remittance amount, as there is an accretion component to
satisfy the note with cash. The convertible note qualifies for derivative accounting and bifurcation under ASC 815, "Derivatives
and Hedging." The fair value of the $150,000 Notes was calculated using the Black-Scholes pricing model at $189,172,
with the following assumptions: risk-free interest rate of 1.59%, expected life of 1 year, volatility of 115%, and expected
dividend yield of zero. Because the fair value of the note exceed the net proceeds from the $150k Notes, $39,172 was recorded
to "Financing cost" for the excess of the fair value of the note. As of June 30, 2020, the debt discount was $75,205. |
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On February 6, 2020,
the Company entered into a convertible promissory note and a security purchase agreement dated February 6, 2020, in the amount
of $200,000. The lender was Eagle Equities, LLC. The notes have a maturity of February 6, 2021 and interest rate of 8% per
annum and are convertible at a price of 70% of the lowest closing bid price on the primary trading market on which the Company's
Common Stock is then listed for the fifteen (15) trading days immediately prior to conversion. The note may be prepaid, but
carries a penalty in association with the remittance amount, as there is an accretion component to satisfy the note with cash.
The convertible note qualifies for derivative accounting and bifurcation under ASC 815, "Derivatives and Hedging."
The fair value of the $200,000 Notes was calculated using the Black-Scholes pricing model at $156,061, with the following
assumptions: risk-free interest rate of 1.51%, expected life of 1 year, volatility of 113%, and expected dividend yield of
zero. As of June 30, 2020, the debt discount was $94,064. |
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On February 26,
2020, the Company entered into a convertible promissory note and a security purchase agreement dated February 26, 2020, in
the amount of $187,000. The lender was Eagle Equities, LLC. The notes have a maturity of February 6, 2021 and interest rate
of 8% per annum and are convertible at a price of 70% of the lowest closing bid price on the primary trading market on which
the Company's Common Stock is then listed for the fifteen (15) trading days immediately prior to conversion. The note
may be prepaid, but carries a penalty in association with the remittance amount, as there is an accretion component to satisfy
the note with cash. The convertible note qualifies for derivative accounting and bifurcation under ASC 815, "Derivatives
and Hedging." The fair value of the $187,000 Notes was calculated using the Black-Scholes pricing model at $150,268,
with the following assumptions: risk-free interest rate of 1.18%, expected life of 1 year, volatility of 118%, and expected
dividend yield of zero. As of June 30, 2020, the debt discount was $99,218. |
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On April
30, 2020, the Company entered into a convertible promissory note and a security purchase agreement dated April 30, 2020, in
the amount of $205,700. This note carried an Original Discount of 10% or $18,700 which was included in interest expense at
the time of valuation. The lender was Eagle Equities, LLC. The notes have a maturity of April 30, 2021 and interest rate of
8% per annum and are convertible at a price of 78% of the lowest closing bid price on the primary trading market on which
the Company's Common Stock is then listed for the twenty (20) trading days immediately prior to conversion. The note
may be prepaid, but carries a penalty in association with the remittance amount, as there is an accretion component to satisfy
the note with cash. The convertible note qualifies for derivative accounting and bifurcation under ASC 815, "Derivatives
and Hedging." The fair value of the $205,700 Notes was calculated using the Black-Scholes pricing model at $128,369,
with the following assumptions: risk-free interest rate of 0.16%, expected life of 1 year, volatility of 106%, and expected
dividend yield of zero. As of June 30, 2020, the debt discount was $106,916. |
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On June 23, 2020,
the Company entered into a convertible promissory note and a security purchase agreement dated June 23, 2020, in the amount
of $205,700. This note carried an Original Discount of 10% or $18,700 which was included in interest expense at the time of
valuation. The lender was Eagle Equities, LLC. The notes have a maturity of June 23, 2021 and interest rate of 8% per annum
and are convertible at a price of 78% of the lowest closing bid price on the primary trading market on which the Company's
Common Stock is then listed for the twenty (20) trading days immediately prior to conversion. The note may be prepaid, but
carries a penalty in association with the remittance amount, as there is an accretion component to satisfy the note with cash.
The convertible note qualifies for derivative accounting and bifurcation under ASC 815, "Derivatives and Hedging."
The fair value of the $205,700 Notes was calculated using the Black-Scholes pricing model at $132,236, with the following
assumptions: risk-free interest rate of 0.18%, expected life of 1 year, volatility of 108%, and expected dividend yield of
zero. As of June 30, 2020, the debt discount was $129,700. |
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Below
is a reconciliation of the convertible notes payable as presented on the Company's balance sheet as of June 30, 2020: |
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Principal
($) |
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Debt
Discount ($) |
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Net
Value
($) |
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| Balance
at June 30, 2018 |
|
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1,576,024 |
|
|
|
(942,154 |
) |
|
|
633,870 |
|
| Convertible
notes payable issued during fiscal year ended June 30, 2019 |
|
|
1,602,005 |
|
|
|
- |
|
|
|
1,602,005 |
|
| Note
paid |
|
|
(102,076 |
) |
|
|
- |
|
|
|
(102,076 |
) |
| Notes
converted into shares of common stock |
|
|
(1,327,953 |
) |
|
|
- |
|
|
|
(1,327,953 |
) |
| Debt
discount associated with new convertible notes |
|
|
- |
|
|
|
(1,482,314 |
) |
|
|
(1,482,314 |
) |
| Amortization
of debt discount |
|
|
- |
|
|
|
1,794,209 |
|
|
|
1,794,209 |
|
| Balance at June 30,
2019 |
|
|
1,748,000 |
|
|
|
(630,259 |
) |
|
|
1,117,741 |
|
| Convertible
notes payable issued during fiscal year ended June 30, 2020 |
|
|
2,148,400 |
|
|
|
- |
|
|
|
2,148,400 |
|
| Notes
converted into shares of common stock |
|
|
(961,000 |
) |
|
|
- |
|
|
|
(961,000 |
) |
| Debt
discount associated with new convertible notes |
|
|
- |
|
|
|
(1,684,711 |
) |
|
|
(1,684,711 |
) |
| Amortization
of debt discount |
|
|
- |
|
|
|
1,709,759 |
|
|
|
1,709,759 |
|
| Balance at June 30,
2020 |
|
|
2,935,400 |
|
|
|
(605,211 |
) |
|
|
2,330,189 |
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