| Note 5. Notes Payable | Note 5. Notes Payable 2017 Convertible Note 12% On June 26, 2017 IronClad entered into a Securities Purchase Agreement to issue a 12% convertible note payable for an aggregate principal amount of $78,500 with the intent of meeting certain conditions precedent to closing and funding on or before July 7, 2017. The closing conditions were met prior to that date and the convertible note payable was closed and funded on July 6, 2017. The Company received cash proceeds of $75,000 net of transaction costs of $3,500. The $3,500 was recorded as a discount amount on the note payable and was amortized as interest expenses over the life of the note. $3,500 was amortized during the year ended March 31, 2018; accrued interest payable at March 31, 2018 was zero. The note matures on March 30, 2018 and interest costs accrue on the unpaid principal balance at 12% annually until March 30, 2018, and after that if not paid at maturity interest accrues annually at 22% until the principal amount and all interest accrued and unpaid are paid. The holder of the note, at its sole election, could convert the note into shares of common stock of the Company at any time during the period beginning on the date which is one hundred and eighty days following the date of the note (dated June 26, 2017) and ending on the later of i) the maturity date, or ii) the date of payment of a default amount, if any. The shares to be issued are a function of a variable conversion price which is 65% of a market price defined to be the lowest one day closing bid price for the Companys common stock during the fifteen-day trading period ending on the last trading day prior to exercising the conversion right. The Company will keep available authorized shares reserved, initially 289,846 shares, but in any event authorized shares equal to six times the number of shares that would be issuable upon full conversion of the note from time to time. The conversion feature of the note represented an embedded derivative. The derivative value at December 23, 2017 was determined using a Black-Scholes valuation model. Accounting recognition of $126,578 for the fair value of the derivative liability, $73,272 (net of $4,116 of amortization) was recorded as a contra liability to the original $78,500 recorded liability of the underlying convertible note, and a $49,190 loss was recognized as a fair valuation adjustment to earnings. Between January 10, 2018 and January 28, 2018, the note holder exercised its rights under the conversion provisions and through operation of the five conversion elections was issued, in total, 50,322 shares of stock which effectively repaid the loan balance. $73,272 was recorded as a gain on conversion during the year ended March 31, 2019 The dates, shares issued and principal amounts repaid at each conversion event are as follows: Conversion Date Principal Outstanding Principal Reduction Shares Issued Exercise Price 12/31/2017 $78,500 1/10/2018 $63,500 $(15,000) 8,242 $1.82 1/12/2018 $43,500 $(20,000) 10,989 $1.82 1/18/2018 $28,500 $(15,000) 8,242 $1.82 1/23/2018 $13,500 $(15,000) 9,819 $1.53 1/25/2018 $ $(13,500) 13,030 $1.40 Total 50,322 Commitment Note and Convertible Note On August 24, 2017, IronClad entered into an Investment Agreement to establish an equity line of funding for the potential future issuance and purchase of IronClads shares of Class A common stock. See Note 7. As consideration for its commitment to purchase shares of IronClads Class A common stock pursuant to the Investment Agreement, IronClad issued to the counterparty of the agreement a seven-month 10% convertible promissory note (the Commitment Note) in the principal amount of $100,000. The Commitment Note matured on March 24, 2018. The Commitment Note is convertible into shares of IronClads Class A common stock at the fixed price of $3.25 per share; provided, however, that at any time and from time to time after a default occurs solely due to the fact the Commitment Note is not retired on or before the maturity date, all or any part of the Commitment Note is convertible into shares of Class A common stock of the Company at a per share price equal to the lower of: (a) $3.25 or (b) 65% of the average of the two lowest per share trading prices of the Class A common stock during the twenty consecutive trading days prior to the conversion date. The Commitment Note is included as a financing fee expense at the date of the transaction. The Commitment Note was to finance the $100,000 cost of the commitment fee to the counterparty of the Investment Agreement and is accordingly included in the financing fee expenses for the period ended September 30, 2017. The amount of the commitment fee could be reduced by $35,000 or $17,500 if a registration statement registering the shares that would be issued under the equity line becomes effective within 90 or 135 days, respectively, of August 24, 2017. The registration statement was declared effective on December 18, 2017 a period less than 135 days (but more than 90 days) after August 24, 2017. Consequently, the principal balance of the commitment fee was reduced by $17,500 and $100,000 of financing fee expenses originally recognized in the three-month period ended September 30, 2017 were adjusted to reflect a lower $82,500 financing fee expense. During the year ended March 31, 2019, $15,692 of regular interest and $79,138 of derivative liability was expensed. During the year ended March 31, 2018, $10,810 of regular interest was expensed. On August 24, 2017, in connection with the entry into the Investment Agreement, IronClad also issued a 10% convertible note (the Convertible Note) in an aggregate principal amount of $330,000 with a 10% original issue discount (OID). The initial consideration in the amount of $165,000 was funded on August 24, 2017. The Company received net proceeds of $150,000 (which represents the deduction of the 10% original issue discount for the note holders due diligence and legal fees). The Company may make additional borrowings in such amounts and at such dates as the note holder may choose in its sole discretion. The balance of individual borrowings matures seven months from its funding date. The Convertible Note also has an embedded beneficial conversion feature (BCF) based on a stated conversion price of $1.00 per share. The market price of a share of IronClads common stock at the time of the first borrowing under the note was $3.50 thus establishing an intrinsic value of $2.50 on that date. The Company received the first borrowing for $165,000 under the Convertible Note on August 24, 2017 and net cash proceeds of $150,000 were received after deducting for the original issue discount and lender transaction costs of $15,000. An additional $12,000 of costs was incurred by IronClad directly relating to the note. Both the $15,000 and the $12,000 are recorded as discount amounts on the $165,000 note payable and are amortized as interest expenses over the life of the borrowing. The maturity date of this borrowing under the note is seven months from its funding date which is March 24, 2018. Between March 26, 2018 and February 25, 2019, the note holder exercised its rights under the conversion provisions and through operation of seven conversion elections was issued, in total, 4,588,586 shares of stock which effectively repaid the loan balance. Additionally, between March 14, 2019 and March 28, 2019, the note holder elected to convert approximately $37,698 of accrued interest into 7,683,614 shares of Class A common stock. The dates, shares issued and principal amounts repaid at each conversion event are as follows: Conversion Date Principal Outstanding Principal Reduction Shares Issued Exercise Price 12/31/2017 165,000 3/26/2018 $ 155,000 $(10,000) 9,958 $ 1.00425 06/01/18 $ 135,000 $(20,000) 32,219 $ 0.62 07/17/2018 $ 115,000 $(20,000) 61,538 $ 0.325 8/23/2018 $ 105,000 $(10,000) 73,260 $ 0.1365 09/14/18 $ 85,000 $(20,000) 236,686 $ 0.0845 02/06/19 $ 45,000 $(40,000) 2,051,282 $ 0.0195 02/25/19 $ - $(45,000) 2,123,643 $ 0.02119 Total 4,588,586 The valuation of the BCF related to the $165,000 borrowing on the Convertible Note and with an intrinsic value of $2.50 per share (based on a $3.50 closing price less the $1.00 per share conversion price) is approximately $424,407 using a Black-Scholes valuation model. That amount is recorded as a contra-note payable amount (similar to the recorded OID and transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. The amount of the beneficial conversion feature formally recorded is $138,000 ($165,000 net of $27,000) and will be amortized as interest expense over the life of the loan. On March 24, 2018 both the Commitment Note ($100,000 contractually reduced to $82,500 in 2017) and the first tranche of the 10% Convertible Note for $165,000 (less the $10,000 conversion in late March) reached their maturity dates and, except for a $10,000 conversion by Tangiers on the Convertible Note, were not repaid in cash. Consequently both notes were in maturity date default and, pursuant to the terms of the loans, were convertible at the lesser of $3.25 for the Commitment Note, and $1.00 for $165,000 note or 65% of the average lowest two trades for the prior 20 days, resulting in an initial recognition for derivative treatments for both notes. The valuation of the derivative liability related to the $82,500 borrowing on the Convertible Note and with an intrinsic value of $0.70 per share (based on a $1.67 closing price less the $0.97 per share present value of the conversion price) is approximately $79,138 using a Black-Scholes valuation model. That amount is recorded as a new contra-note payable amount (similar to the recorded OID and transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. This results in a net liability value of $3,362. The amount will be amortized as interest expense over an estimated remaining three month life of the already matured loan. The valuation of the derivative liability related to the $165,000 (reduced to $155,000) borrowing on the Convertible Note and with an intrinsic value of $0.70 per share (based on a $1.67 closing price less the $0.97 per share present value of the conversion price) is approximately $158,276 using a Black-Scholes valuation model. That amount is recorded as a new contra-note payable amount (similar to the recorded OID and transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Since the undiscounted (and unconverted) amount of the note is $155,000 the derivative valuation is recorded as $155,000. The amount will be amortized as interest expense over an estimated remaining three month life of the already matured loan. During the year ended March 31, 2019, $21,039 of regular interest and $155,000 of derivative liability was expensed. During the year ended March 31, 2018, $16,500 of regular interest, $27,000 of original issue discount and $138,578 of beneficial conversion was expensed. On October 23, 2017, a second borrowing of $82,500 under the Convertible Note for $330,000 was closed and funded. The Company received net proceeds of $75,000 after deducting for original issue discount and lender transaction costs of $7,500. An additional $6,000 of costs was incurred by IronClad relating to the Convertible Note. Both the $7,500 and the $6,000 were recorded as discount amounts on the $82,500 note payable and amortized as interest expenses over the life of the borrowing. The maturity date of this borrowing under the Convertible Note was also defined to be seven months from its borrowing date which is May 24, 2018. The market price of a share of IronClads common stock at the time of funding was $4.40 making the intrinsic value of the derivative $3.40. The valuation of the BCF is estimated to be approximately $289,000 and is capped at $69,000, the otherwise undiscounted amount of the note payable. Between March 14, 2019 and March 28, 2019, the holder of the note elected to convert $37,000 of principal into 8,024,179 shares of Class A common stock. The dates, shares issued and principal amounts repaid at each conversion event are as follows: Conversion Date Principal Outstanding Principal Reduction Shares Issued Exercise Price 12/31/18 82,500 3/14/2019 $77,500 $(5,000) 889,284 $.0056225 03/25/19 $53,500 $(24,000) 5,351,171 $0.004485 03/27/19 $49,500 $(4,000) 891,862 $0.004485 03/28/19 $45,500 $(4,000) 891,862 $0.004485 Total 8,024,179 During the year ended March 31, 2019, $16,026 of regular interest, $20,916 of original issue discount, and $57,024 of derivative liability was expensed. During the year ended March 31, 2018, $6,158 of regular interest, $12,136 of original issue discount and $49,449 of derivative liability was expensed. On March 15, 2018, a third and final borrowing of $82,500 under the Convertible Note for $330,000 was closed and funded. The Company received net proceeds of $75,000 after deducting for original issue discount and lender transaction costs of $7,500 and an additional $6,000 of loan closing costs incurred by IronClad. The maturity date of this borrowing under the Convertible Note is also defined to be seven months from its borrowing date which is October 24, 2018. The market price of a share of IronClads common stock at the time of funding was $1.85 making the intrinsic value of the derivative $0.85. The valuation of the BCF related to the $82,500 borrowing on the Convertible Note and with an intrinsic value of $0.85 per share (based on a $1.85 closing price less the $1.00 per share conversion price) is approximately $109,861 using a Black-Scholes valuation model. That amount is recorded as a contra-note payable amount (similar to the recorded OID and transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. The amount of the beneficial conversion feature formally recorded is $69,000 ($82,500 net of $13,500) and will be amortized as interest expense over the life of the loan. During the year ended March 31, 2019, $20,606 of regular interest, $12,491 of original issue discount, $63,841 of beneficial conversion and $20,064 of derivative liability was expensed. During the year ended March 31, 2018, $620 of regular interest, $1,009 of original issue discount and $5,159 of beneficial conversion was expensed. 2018 Convertible Notes, 12% On January 25, 2018 IronClad entered into a Securities Purchase Agreement to issue a new 12% convertible note payable for an aggregate principal amount of $88,000. The Company received cash proceeds of $85,000 net of transaction costs of $3,000. The $3,000 is recorded as a discount amount on the note payable and will be amortized as interest expenses over the life of the note. The general terms of the note, except for the principal amount borrowed, are identical to the initial 12% Convertible note entered into in 2017 and converted earlier in January 2018. The note matures on October 30, 2018 and interest costs accrue on the unpaid principal balance at 12% annually until October 30, 2018, and after that if not paid at maturity interest accrues annually at 22% until the principal amount and all interest accrued and unpaid are paid. The holder of the note, at its sole election, could convert the note into shares of common stock of the Company at any time during the period beginning on the date which is one hundred and eighty days following the date of the note (dated January 25, 2018) and ending on the later of i) the maturity date, or ii) the date of payment of a default amount, if any. The shares to be issued are a function of a variable conversion price which is 65% of a market price defined to be the lowest one day closing bid price for the Companys common stock during the fifteen-day trading period ending on the last trading day prior to exercising the conversion right. The Company would keep available authorized shares reserved, initially 289,846 shares, but in any event authorized shares equal to six times the number of shares that would be issuable upon full conversion of the note from time to time. During the year ended March 31, 2019, $3,009 of regular interest, $2,302 of original issue discount and $57,990 of derivative liability was expensed. During the year ended March 31, 2018, $1,765 of regular interest and $698 of original issue discount was expensed. The loan principal plus accrued interest, both totaling $124,268, was repaid on July 14, 2018 and the note was fully retired. On February 27, 2018 IronClad entered into a Securities Purchase Agreement to issue a 12% convertible note payable for an aggregate principal amount of $53,000. The Company received cash proceeds of $50,000 net of transaction costs of $3,000. The $3,000 is recorded as a discount amount on the note payable and will be amortized as interest expenses over the life of the note. The general terms of the note, except for the principal amount borrowed, are identical to the initial 12% Convertible note entered into in 2017 and converted earlier in January 2018. The note matures on November 03, 2018 and interest costs accrue on the unpaid principal balance at 12% annually until November 30, 2018, and after that if not paid at maturity interest accrues annually at 22% until the principal amount and all interest accrued and unpaid are paid. The holder of the note, at its sole election, may convert the note into shares of common stock of the Company at any time during the period beginning on the date which is one hundred and eighty days following the date of the note (dated February 27, 2018) and ending on the later of I) the maturity date, or ii) the date of payment of a default amount, if any. The shares to be issued are a function of a variable conversion price which is 65% of a market price defined to be the lowest one day closing bid price for the Companys common stock during the fifteen-day trading period ending on the last trading day prior to exercising the conversion right. The Company will keep available authorized shares reserved, initially 289,846 shares, but in any event authorized shares equal to six times the number of shares that would be issuable upon full conversion of the note from time to time. The conversion feature of the note represents an embedded derivative. Once definitive pricing facts and circumstances are known later in the year regarding the market value of IronClads common stock at that time, the cost of that derivative will be determined using a Black-Scholes valuation model. At the close of accounting periods subsequent to the initial valuation a redetermination of the derivative valuation will be made using an updated Black-Scholes valuation model. Any gain or loss in the liability value will be recognized as a fair valuation adjustment to earnings. The loan principal plus accrued interest, both totaling $75,620, was repaid on August 21, 2018 and the note was fully retired. During the year ended March 31, 2019. $2,492 of regular interest, $2,585 of original issue discount and $42,862 of derivative liability was expensed. During the year ended March 31, 2018, $558 of regular interest and $415 of original issue discount was expensed. Working Capital Loan for Services to New Customer by IronClad Pipeline IC, Inc. On February 27, 2018, IronClad borrowed $255,000 gross proceeds as an initial advance on a Credit Agreement (the Agreement) with a lending party. The Agreement, agreed to by both parties on February 1, 2018, enabled the Company, at its sole election, to borrow up to an aggregate amount of $500,000. The outstanding balance of any advances accrues interest at the annual rate of 8.5%. There is a transaction financing fee of 2% for any amount drawn under the facility. Proceeds received net of the transaction fee were $250,000. On March 21, 2018, IronClad borrowed and additional $245,000 gross proceeds as a second advance under the Agreement. Proceeds received net of the transaction fee were $240,000. During the period ended June 30, 2018, the Company repaid $100,000 of the principal, and then redrew another $100,000. On June 30, 2018 the Company repaid $25,000. During the period ended September 30, 2018, the Company repaid all of the outstanding principal balance of the loan, however the accrued interest remains outstanding the amount of $17,816 Interest is to be paid annually in cash on March 1, 2019 and 2020. Outstanding interest was not paid at March 1, 2019; the Company is negotiating with the lender to issue common stock in exchange for the accrued amount of interest owed. There is no penalty for any early principal repayments. The Company has pledged 500,000 of its common stock as collateral under the terms of the Agreement. In the event of default by the Company, the lender is entitled to receive one share of Company common stock for every one dollar in principle, interest, penalties, and fees that are owed and outstanding by the Company to Layer 3 Communications. The Agreement is also supported by a personal $500,000 guarantee from an officer of the Company. IronClad will pay a 5% guarantee fee of $25,000; $10,000 shortly after year end and the remaining $15,000 at such time as the Board of Directors determines the Company has sufficient liquidity to pay the balance owed. The guarantee fee was reviewed and approved by the Compensation Committee of the Board which determined that the 5% fee was an appropriate market-based rate for guarantees of loans of this nature and comparable risk. Terms of the Agreement specify the use of funds to be limited to only supporting the operations of its new service contract. The terms of the Agreement were amended, effective June 11, 2018, to also permit the use of funds for certain new patent application filings of IronClad. 2018 Financing Note On March 16, 2018, IronClad purchased several lines of corporate insurance coverage for a set of annual premiums that totaled $30,719. To pay for the coverage, IronClad paid $2,631 down on the coverages and entered into a financing agreement to borrow the $28,087 balance owed for the coverage. Interest on the loan is approximately 6% and the loan is repaid by eleven monthly principal and interest installment payments of $2,631 each. The cost of the insurance is recorded as a prepaid asset and is being amortized monthly over the annual period of the coverages. During the period ended September 30, 2018 this note was repaid in full. 2019 New Loan Agreements including Convertible Notes On June 26, 2018 IronClad entered into a Securities Purchase Agreement to issue a 10% convertible note payable for an aggregate principal amount of $250,000. The Company received cash proceeds of $235,000 net of transaction costs of $15,000. The $15,000 is recorded as a discount amount on the note payable and will be amortized as interest expenses over the life of the note. The general terms of the note, except for the principal amount borrowed, are identical to the initial 10% Convertible note entered into in 2017. The note matures on December 26, 2018 and interest costs accrue on the unpaid principal balance at 10% annually until December 26, 2018, and after that if not paid at maturity interest accrues annually at 24% until the principal amount and all interest accrued and unpaid are paid. The holder of the note, at its sole election, may convert the note into shares of common stock of the Company at any time on or following the date of the note and ending on the later of i) the maturity date, or ii) the date of payment of a default amount, if any. The shares to be issued are a function of a fixed conversion price of $1.00, or an alternate variable conversion price, triggered by events such as stock splits, stock dividends or rights offerings which is 70% of a market price defined to be the lowest five day closing bid price for the Companys common stock during the twenty-day trading period ending on the last trading day prior to exercising the conversion right. The Company will keep available authorized shares reserved, initially 3,081,854 shares, but in any event authorized shares equal to five times the number of shares that would be issuable upon full conversion of the note from time to time. The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.03281 was $189,211 using a binomial pricing model and was calculated as a discount to the note. That amount is recorded as a new contra-note payable amount (similar to OID and transactions costs and amounts discussed immediately below), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. The amount of the derivative liability formally recorded is $26,014 ($250,000 net of $223,986) and will be amortized as interest expense over the life of the loan. The remaining $163,197 is expensed as financing fees. As a commitment fee for the Note, the Company issued the holder 240,384 shares of common stock to be held in escrow until the Note is repaid. The holder will keep the shares, if the Note is not retired prior to its maturity date. The shares were valued at $165,865 and were recorded as a discount on the note and amortized through repayment of the note on November 1, 2018. Upon repayment of the note the shares were returned and the $165,865 expense was reversed Included in the share purchase agreement was a common stock purchase warrant issued by the Company to the holder to purchase 62,500 shares of common stock at $3.00 per share, exercisable for four years. The warrants were valued at $43,121 using a Black Scholes option pricing model and were recorded as a discount on the note. The warrants included a down round feature in January 2019. The warrant included a down round feature that would reduce the exercise price of the warrant, if the Company sold or granted any option to purchase, or sell or grant any right to reprice, or otherwise disposed of or issued common stock or securities entitling any person or entity to acquire shares of common stock (upon conversion, exercise or otherwise) at an effective price per share less than the then exercise price. On January 17, 2019, the down round feature was triggered and the exercise price was reduced to $0.0195 and the number of warrants exercisable was increased to 9,615,385. As a result, the original valuation of $43,121 was increased to $164,132 and a reduction to retained earnings was recorded for the difference, similar to a dividend, in the amount of $121,011. During the year ended March 31, 2019. $8,873 of regular interest, $58,121 of original issue discount, and $26,342 of derivative liability was expensed. On October 11, 2018 the holder of the note converted $100,000 of the principal into 3,076,923 shares of Class A capital stock. On November 1, 2018 the Company paid off the remaining $150,000 of principal in cash. On July 11, 2018 IronClad entered into a Securities Purchase Agreement (SPA) to issue a 9% convertible note payable for an aggregate principal amount of $270,000 comprised of the first note (First Note) being in the amount of $135,000.00, and the remaining note in the amount of $135,000.00, (a Back End Note). The Company received cash proceeds of $126,500 from the First Note net of transaction costs of $8,500. The $8,500 is recorded as a discount amount on the note payable and will be amortized as interest expenses over the life of the note. The First Note matures on July 11, 2019 and interest costs accrue on the unpaid principal balance at 9% annually until July 11, 2019, and after that if not paid at maturity interest accrues annually at 24% until the principal amount and all interest accrued and unpaid are paid. The Back End Note carries the same terms as the First Note, except it may not be repaid, but only converted. The Company is under no obligation to accept the Back End Note, but may do so at its sole discretion, following 180 days from the date of the note (dated July 11, 2018). As part of the SPA, the Holder issued the Company a collateralized secured promissory note in the amount of $131,500 that may be exchanged for cash against the Back End Note. On January 25, 2019, the holder of the note chose to cancel the Back End Note. The holder of the note, at its sole election, may convert the note into shares of common stock of the Company at any time during the period beginning on the date which is 180 days following the date of the note (dated July 11, 2018) and ending on the later of i) the maturity date, or ii) the date of payment of a default amount, if any. The shares to be issued are a function of a fixed conversion price of $1.00 per share for six months, and thereafter until maturity at a variable conversion price which is 65% of a market price defined to be the lowest trading price for the Companys common stock during the fifteen-day trading period ending on the last trading day prior to exercising the conversion right. The Company will keep available authorized shares reserved, initially 1,730,000 shares, but in any event the number of reserved shares at least equals 400% of the number of shares of Company common stock issuable upon conversion of the Note. During the year ended March 31, 2019 the holder of the note elected to convert $61,425 of principal and accrued interest into common stock. The dates, shares issued and principal amounts repaid at each conversion event are as follows: Conversion Date Principal Outstanding Principal Reduction Shares Issued Exercise Price 12/31/2018 135,000 2/04/2019 $120,000 $(15,000) 808,303 $0.0195 03/01/2019 $111,500 $(8,500) 921,451 $0.00975 03/21/2019 $99,000 $(12,500) 2,876,192 $0.004615 03/29/2019 $77,000 $(22,000) 5,218,503 $0.004485 The valuation of the derivative liability related to the $135,000 borrowing on the First Note and with an intrinsic value of $0.54 per share is approximately $248,386 using a binomial pricing model. That amount is recorded as a contra-note payable amount (similar to the recorded OID and transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. The amount of the derivative liability formally recorded is $126,500 ($135,000 net of $8,500) and will be amortized as interest expense over the life of the loan. The remaining $121,886 is expensed as financing fees. During the year ended March 31, 2019, $9,326 of regular interest, $4,029 of original issue discount, and $91,149 of derivative liability was expensed. On July 17, 2018 (transaction documents were originally dated June 29, but amended for action taken on July 17), IronClad issued a 12% convertible note (the Convertible Note) to a lender (the Holder) in an aggregate principal amount of $115,500. The Company received cash proceeds of $101,500 net of transaction costs of $14,000 that included $3,500 for attorneys fees. The note matures on July 18, 2019. Interest costs accrue on the unpaid principal balance at 12% annually until maturity, and after that if not paid, interest accrues annually at 18% until any unpaid principal amount and unpaid interest accrued are paid. The Holder of the note, at its sole election, may convert the note into shares of common stock of the Company at any time during the period beginning on the date which is one hundred and eighty days following the date of the note (dated July 18, 2018) and ending on the later of i) the maturity date, or ii) the date of payment of a default amount, if any. The shares to be issued upon conversion are a function of a variable conversion price which is 65% of a market price defined to be the lowest one (1) trading price for the Companys common stock during the fifteen (15) day trading period ending on the last trading day prior to the conversion date. The Company will keep available authorized shares reserved, initially 1,500,000 shares. During the year ended March 31, 2019 the holder of the note elected to convert $111,500 of principal and $4,000 of financing fees into 11,628,751 shares of Class A common stock. The dates, shares issued and principal amounts repaid at each conversion event are as follows: Conversion Date Principal Outstanding Principal Reduction Shares Issued Exercise Price 12/31/2018 115,500 01/22/2019 $106,500 $(9,000) 97,371 $0.097565 02/4/2019 $91,500 $(15,000) 794,872 $0.0195 02/12/2019 $77,000 $(14,500) 769,231 $0.0195 02/20/2019 $57,500 $(19,500) 1,025,642 $0.0195 02/28/2019 $42,500 $ |
