Notes Payable |
9. |
Notes Payable |
● |
Notes Payable consist of the following at September
30, 2020, |
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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 September 30, 2020, and June 30, 2020, the debt discount
was $0. |
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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 trading 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.
This note has been successfully
retired via conversion into shares during the three months ended September 30, 2019. The Company fair valued the notes
as of conversion date and accounted for a gain on conversion of $25,398 included under line item "change in derivative
liability" and also, reclassed the related $74,472 derivative liability balance into additional paid in capital.
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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 trading 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 September 30, 2020, and June 30, 2020, the debt discount was $0
and $0, respectively. $50,000 of the note has been successfully retired via conversion into shares during the year ended June
30, 2020 and $54,000 of the note has been successfully retired via conversion into shares during the three months ended September
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" during 2020 fiscal year and accounted
for a loss on conversion of $36,242. |
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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 trading 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 September 30, 2020, and June 30, 2020, the debt discount was $0 and $0, respectively. $208,000
of the note has been successfully retired via conversion into shares during the three months ended September 30, 2020. The
Company fair valued the notes as of conversion date and accounted for a loss on conversion of $109,561 included under line
item "Loss on debt extinguishment upon note conversion, net". |
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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 trading
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 September
30, 2020 and June 30, 2020, the debt discount was $0 and $46,726, respectively. The Company fair valued the notes as of conversion
date and accounted for a loss on conversion of $42,595 included under line item "Loss on debt extinguishment upon note conversion,
net". |
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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
trading 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 September 30, 2020 and June 30, 2020, the debt discount was $0 and $2,627, respectively. |
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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 trading 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 September 30, 2020, and June 30, 2020 the debt discount was $0 and $26,452, respectively. |
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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 trading 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 $300k Notes, no charge was recorded to "Financing cost" for the excess of the
fair value of the note. As of September 30, 2020, and June 30, 2020 the debt discount was $0 and $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 trading 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 September 30, 2020 and June 30, 2020, the debt discount was $0
and $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 trading 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 September 30, 2020 and June 30, 2020, the debt discount was $12,354
and $43,074, respectively. |
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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 trading 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 exceeded 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 September 30, 2020 and June 30, 2020, the debt discount was $37,797 and
$75,205, respectively. |
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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 trading 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 September 30, 2020 and June 30, 2020,
the debt discount was $54,728 and $94,064, respectively.
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 trading 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 September 30, 2020 and June 30, 2020, the debt discount
was $61,342 and $99,218, respectively.
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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 September 30, 2020 and June 30, 2020, the debt
discount was $74,560 and $106,916, respectively. |
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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 September 30, 2020 and June 30, 2020, the debt
discount was $96,369 and $129,700, respectively. |
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On August 12, 2020, the Company entered into a convertible promissory
note and a security purchase agreement dated August 12, 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 August 12, 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 $126,029, with the following assumptions: risk-free interest rate of 0.13%, expected
life of 1 year, volatility of 101%, and expected dividend yield of zero. As of September 30, 2020, the debt discount was $109,110. |
Below is a reconciliation of
the convertible notes payable as presented on the Company's balance sheet as of September 30, 2020:
|
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Principal
($) |
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|
Debt Discount ($) |
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Net
Value
($) |
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Balance at June 30, 2019 |
|
|
1,748,000 |
|
|
|
(630,259 |
) |
|
|
1,117,741 |
|
Convertible notes payable issued during fiscal year ended June 30, 2020 |
|
|
2,148,400 |
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|
|
- |
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|
2,148,400 |
|
Notes converted into shares of common stock |
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|
(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 |
|
Convertible notes payable issued during three months ended September 30, 2020 |
|
|
205,700 |
|
|
|
- |
|
|
|
205,700 |
|
Notes converted into shares of common stock |
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|
(347,000 |
) |
|
|
- |
|
|
|
(347,000 |
) |
Debt discount associated with new convertible notes |
|
|
- |
|
|
|
(126,029 |
) |
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|
(126,029 |
) |
Amortization of debt discount |
|
|
- |
|
|
|
322,739 |
|
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|
322,739 |
|
True-up adjustment in debt discount and derivative liability |
|
|
- |
|
|
|
(37,360) |
|
|
|
(37,360) |
|
Balance at September 30, 2020 |
|
|
2,794,100 |
|
|
|
(445,861 |
) |
|
|
2,348,239 |
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