| Debt | Note
4 - Debt Promissory
Notes Payable In
2014 and 2016, the Company issued two promissory notes in the total principal amount of $70,000. The promissory notes bear interest at 10%
per annum, with a provision for an increase in the interest rate upon an event of default, due on December 31, 2019. At March 31, 2023
and December 31, 2022, the note was in default, and the balance outstanding was $70,000. During
the year ended December 31, 2016, the Company issued two unsecured promissory notes and borrowed an aggregate amount of $80,000. The
promissory notes bear interest at 10% per annum, with a provision for an increase in the interest rate upon an event of default
as defined therein and were due at various due dates in May and September 2017. The due dates of both notes were extended to December
31, 2019. During the year ended December 31, 2022, total principal and accrued interest in the amount of $50,000 of principal and
$27,972 of interest were converted into a $95,088 convertible note resulting in carrying value of $30,000 as
of December 31, 2022. As
of March 31, 2023 and December 31, 2022, the balance outstanding on these notes was $30,000. As
of March 31, 2023, the above promissory notes were in default with an interest rate increased by 2% over the original interest rate. Accrued
interest at March 31, 2023 and December 31, 2022 on these notes totalled $125,414 and $122,414, respectively. During
the year ended December 31, 2022, the Company entered into 5 promissory note agreements in the aggregate amount of $250,000, of which
$175,000 with the related parties. The notes have a 1-year term, bear interest of 7% and 9% if paid in cash. The outstanding
principal balance was $250,000 as of March 31, 2022. Accrued interest at March 31, 2023 and December 31, 2022 on these notes totalled
$12,138 and $7,513, respectively. During
the three months ended March 31, 2023, $7,008 in principal and $60,976 in interest were forgiven by creditors. Convertible
Notes Payable and Convertible Notes Payable – Related Party In
February 2023, the Company entered into a convertible promissory note agreement in the amount of $25,000 with a related party. The note
has a 1 year term, bear interest of 9%, and has a conversion price equal to the lesser of (1) the most recent issuance price;
or, (2) closing price for the common stock on the maturity date. The outstanding principal balance was $25,000 as of March 31, 2022.
Accrued interest as of March 31, 2023 was $194. In
February and March 2023, the Company entered into Note Purchase Agreements with four investors not affiliated with the Company (the “Purchasers”)
pursuant to which the Purchasers purchased from the Company convertible notes (the “Convertible Notes”) with an aggregate
principal amount of $1,500,000, of which $400,000 was recorded as a receivable as of March 31, 2023, and received subsequently in April
2023. The outstanding principal and accrued interest balances at March 31, 2023 were $1,500,000 and $1,635, respectively. The
Convertible Notes provide for a maturity of 12-months; 7.5% interest per annum; and, no right to prepay during the first 6-months after
the date of issuance (the “Issuance Date”). The Convertible Notes are convertible into shares of common stock of the Company
(the “Conversion Shares”) as follows: (a)
The Convertible Notes automatically convert into Conversion Shares upon the shares of the Company’s common stock being listed on
a higher exchange due to the (i) pricing and funding of an S-1 registration statement; or, (ii) the closing of a transaction resulting
in the uplist (either, a “Triggering Transaction”). The conversion price for the Conversion Shares in an automatic conversion
shall be equal to: (1)
75% of the price under the Triggering Transaction if within 120-days of the Issuance Date; (2)
70% of the price under the Triggering Transaction if within 121 to 150-days of the Issuance Date; (3)
65% of the price under the Triggering Transaction if more than 150-days of the Issuance Date. (b)
The Purchasers have the right to convert into Conversion Shares, in whole or in part, at any time after 180-days following the Issuance
Date. The conversion price for the Conversion Shares in a voluntary conversion shall be equal to 65% of the volume weighted average price
for the Company’s common stock during the 20-consecutive trading days preceding the conversion. Scheduled
maturities of debt remaining as of March 31, 2023 for each respective fiscal year end are as follows:
2023 $ 350,000
2024 1,525,000
Total $ 1,875,000 The
following table reconciles, for the three months ended March 31, 2023 and 2022, the beginning and ending balances for financial instruments
related to the embedded conversion features that are recognized at fair value in the consolidated financial statements.
Three
months ended
March 31, March 31,
Balance of embedded derivative
at the beginning of the period $ $ 211,345
Change in fair value
of conversion features (211,345 )
Balance of embedded
derivatives at the end of the period $ - $ - |
