Notes Payable |
9. |
Notes
Payable |
● |
Notes
Payable consist of the following at December 31, 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. While this note is technically in default, our lender has agreed, in writing, to forbear
any additional interest or penalties relating to this default providing the Company is in compliance with the remaining terms of
the note. 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 December 31, 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 six months ended December 31, 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 December 31, 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 six months ended December 31, 2020.The Company fair valued the notes as of conversion date and accounted for a loss on conversion of $36,242 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 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 December 31, 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 six months ended December 31, 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 December 31, 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 $177,160
included under line item "Loss on debt extinguishment upon note conversion, net". This
note has been extinguished through the conversion into common shares as of December 31, 2020. |
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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. While this note is technically in default, our lender has agreed, in writing, to forbear any additional
interest or penalties relating to this default providing the Company is in compliance with the remaining terms of the note. 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 December 31, 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. While
this note is technically in default, our lender has agreed, in writing, to forbear any additional interest or penalties relating
to this default providing the Company is in compliance with the remaining terms of the note. 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 December 31, 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. While this note is technically in default, our lender has agreed, in writing, to forbear
any additional interest or penalties relating to this default providing the Company is in compliance with the remaining terms of
the note. 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 December 31, 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. While this note is technically in default, our lender has agreed, in
writing, to forbear any additional interest or penalties relating to this default providing the Company is in compliance with the
remaining terms of the note. 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 December
31, 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. While this note is technically in default, our lender has agreed, in writing,
to forbear any additional interest or penalties relating to this default providing the Company is in compliance with the remaining
terms of the note. 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 December 31, 2020 and June
30, 2020, the debt discount was $0 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. While this note is technically in default, our lender has agreed, in writing,
to forbear any additional interest or penalties relating to this default providing the Company is in compliance with the remaining
terms of the note. 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 December 31, 2020 and June 30,
2020, the debt discount was $0 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
December 31, 2020 and June 30, 2020, the debt discount was $15,392 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 December 31, 2020 and June 30, 2020, the debt discount
was $23,467 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 December 31, 2020 and June 30, 2020, the debt discount was $42,555 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 December 31, 2020 and June 30, 2020, the debt discount was $63,401 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 December 31, 2020, the debt discount was $77,690. |
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On
October 13, 2020, the Company entered into a convertible promissory note and a security purchase agreement dated October 13,
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 October 13, 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 $126,471,
with the following assumptions: risk-free interest rate of 0.13%, expected life of 1 year, volatility of 103.1%, and expected
dividend yield of zero. As of December 31, 2020, the debt discount was $99,097. |
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On
December 21, 2020, the Company entered into a convertible promissory note and a security purchase agreement dated December
21, 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 December 21, 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 $121,112,
with the following assumptions: risk-free interest rate of 0.09%, expected life of 1 year, volatility of 93.97%, and expected
dividend yield of zero. As of December 31, 2020, the debt discount was $117,794. |
Below
is a reconciliation of the convertible notes payable as presented on the Company's balance sheet as of December 31, 2020:
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Principal ($) |
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Debt Discount ($) |
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Net Value ($) |
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Balance at June 30, 2019 |
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1,748,000 |
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|
|
(630,259 |
) |
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1,117,741 |
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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 |
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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 |
) |
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|
(1,684,711 |
) |
Amortization of debt discount |
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|
- |
|
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|
1,709,759 |
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|
|
1,709,759 |
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Balance at June 30, 2020 |
|
|
2,935,400 |
|
|
|
(605,211 |
) |
|
|
2,330,189 |
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Convertible notes payable issued during six months ended December 31, 2020 |
|
|
617,100 |
|
|
|
- |
|
|
|
617,100 |
|
Notes converted into shares of common stock |
|
|
(562,000 |
) |
|
|
- |
|
|
|
(562,000 |
) |
Debt discount associated with new convertible notes |
|
|
- |
|
|
|
(373,612 |
) |
|
|
(373,612 |
) |
Amortization of debt discount |
|
|
- |
|
|
|
576,787 |
|
|
|
576,787 |
|
True-up adjustment in debt discount and derivative liability |
|
|
- |
|
|
|
(37,360 |
) |
|
|
(37,360 |
) |
Balance at September 30, 2020 |
|
|
2,990,500 |
|
|
|
(439,396 |
) |
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|
2,551,104 |
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Amortization expense for the six months ended December 31, 2020
and 2019, totaled $576,787 and $831,436, respectively and Amortization expense for the three months ended December 31, 2020 and
2019, totaled $254,048 and $449,169 respectively.
As of December 31, 2020 and June 30, 2020, the unamortized portion
of debt discount was $439,396 and $605,211, respectively.
Interest expense for the six months ended December 31, 2020
and 2019, totaled $195,530 and $42,336, respectively and interest expense for the three months ended December 31, 2020 and 2019,
totaled $111,575 and $15,738, respectively.
As
of December 31, 2020 and June 30, 2020, the accrued interest related to convertible notes was $247,942 and $192,625, respectively.
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