Convertible Notes Payable | 7. Convertible Notes Payable a) On December 22, 2011, the Company entered into two Convertible Promissory Note agreements for an aggregate of $4,000. The Notes bear interest at 10% per annum, and the principal amount and any interest thereon are due 60 days following demand. Pursuant to the agreements, the notes are convertible into shares of common stock of the Company’s subsidiary, Eco-logical Concepts, Inc., at $0.01 per share. At May 31, 2017 and 2016, the Company owed accrued interest of $2,178 and $1,778, respectively. At May 31, 2017 and 2016, the balance owing on the two notes was $4,000. b) On December 22, 2011, the Company entered into a Convertible Promissory Note agreement for $10,000. The note bears interest at 10% per annum, and the principal amount and any interest thereon are due 60 days following demand. Pursuant to the agreement, the note is convertible into shares of common stock of the Company’s subsidiary, Eco-logical Concepts, Inc., at $0.01 per share. In addition, as a condition precedent to the right to convert the debt to common stock of the Company, the holder must purchase 3,000,000 shares of common stock of the Company’s subsidiary at $0.01 per share. At May 31, 2017 and 2016, the Company owed accrued interest of $484 and $367, respectively. At May 31, 2017 and 2016, the balance owing on the note was $1,177. c) On December 28, 2011, the Company entered into a Convertible Promissory Note agreement for $1,000. The Note bears interest at 10% per annum, and the principal amount and any interest thereon are due 60 days following demand. Pursuant to the agreement, the note is convertible into shares of common stock of the Company’s subsidiary, Eco-logical Concepts, Inc., at $0.001 per share. At May 31, 2017 and 2016, the Company owed accrued interest of $543 and $443, respectively. At May 31, 2017 and 2016, the balance owing on the note was $1,000. d) On February 19, 2016, the Company entered into a Convertible Promissory Note agreement for $14,000. The note bears interest at 8% per annum, and the principal amount and any interest thereon are due one year following the borrowing date. Pursuant to the agreement, the note is convertible into shares of common stock at a conversion price to be mutually finalized between the Company and the holder within 48 hours of the conversion request. At May 31, 2017 and 2016, the Company owed accrued interest of $883 and $304, respectively. During the year ended May 31, 2017, the Company issued 1,400 shares of common stock pursuant to the conversion of the $14,000 note. At May 31, 2017 and 2016, the balance owing on the note was $nil and $14,000, respectively. e) On May 12, 2016, the Company entered into a Convertible Promissory Note agreement for $10,000. The note bears interest at 8% per annum, and the principal amount and any interest thereon are due one year following the borrowing date. Pursuant to the agreement, the note is convertible into shares of common stock at a conversion price to be mutually finalized between the Company and the holder within 48 hours of the conversion request. At May 31, 2017 and 2016, the Company owed accrued interest of $627 and $40, respectively. During the year ended May 31, 2017, the Company issued 800 shares of common stock pursuant to the conversion of the $10,000 note. At May 31, 2017 and 2016, the balance owing on the note was $nil, and $10,000, respectively. f) On July 19, 2016, the Company entered a Securities Purchase Agreement whereas the Company agreed to issue two Convertible Redeemable Notes for an aggregate of $121,000. The notes bear interest at 12% per annum and contain a 10% original issue discount, such that the purchase price of each $60,500 note is $55,000. The principal amount and any interest thereon are due one year following the borrowing date. During the first six months that the first Convertible Redeemable Note is in effect, the Company may redeem the Note at 140% of the par value plus accrued interest. The first of the two Convertible Redeemable Notes was paid to the Company on July 19, 2016. The second Convertible Redeemable Note (“Back-End Note”) shall initially be paid for by an offsetting $55,000 promissory note issued to the Company by the lender, provided that prior to the conversion of the Back-End Note, the lender must have paid off the promissory note in cash. Payment to the Company under the promissory note must be no later than April 19, 2017. The promissory note was initially secured by the pledge of the Back-End Note. Pursuant to the agreements, the notes are convertible into shares of common stock at any time at a conversion price equal to 50% of the average of the three lowest trading prices of the common stock for the twenty prior trading days including the day upon which a notice of conversion is received by the Company. In connection with the first note, the Company incurred financing costs of $3,000 and an original issue discount of $5,500, which have been recorded as debt discount. On March 16, 2017, the Back-End Note was funded. In connection with the Back-End Note, the Company incurred financing costs of $3,000 and an original issue discount of $5,500, which have been recorded as debt discount. In relation to the first note, the embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging In relation to the Back-End Note, which was funded on March 16, 2017, the embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging g) On July 19, 2016, the Company entered into a Convertible Promissory Note agreement for $56,750. The principal amount and any interest thereon are due nine months following the borrowing date. The note bears interest at 12% per annum, increasing to 24% per annum if any principal or interest is not paid when due. From 151 days following the issuance date of the note to the180 days, the Company has the right to prepay the Note of up to 150% of all amounts owed. Pursuant to the agreement, the note is convertible into shares of common stock at a conversion price equal to the lesser of (i) a 50% discount to the lowest trading price of the common stock during the 25 trading days prior to the issuance date and (ii) a 50% discount to the lowest trading price of the common stock during the 25 trading-day period prior to conversion. The Company incurred financing costs of $6,750 which has been recorded as a discount. The embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging h) On August 25, 2016, the Company entered into a Convertible Promissory Note agreement for $10,000. The note bears interest at 8% per annum, and the principal amount and any interest thereon are due one year following the borrowing date. Pursuant to the agreement, the note is convertible into shares of common stock at a conversion price to be mutually finalized between the Company and the holder within 48 hours of the conversion request. At May 31, 2017, the Company owed accrued interest of $612. At May 31, 2017, the balance owing on the note was $10,000. i) On October 11, 2016, a lender of the Company issued at total of $75,000 of promissory notes payable to two third-party lenders (Note 6(ii)). On October 21, 2016, the Company entered into Debt Conversion Agreements with the lenders, whereby the loan amount became convertible to common stock of the Company. The Notes bear interest at 8% per annum. Pursuant to the Debt Conversion Agreements, the notes are convertible into shares of common stock at a conversion price equal to $10 per share. In March 2017, the conversion price was amended to $2.75 per share. Upon entering into the Debt Conversion Agreements, the terms of the notes were determined to be substantially different and debt extinguishment accounting under ASC 470-50 Modifications and Extinguishments The embedded conversion option was in the money and subject to recognition of debt discount from the beneficial conversion feature at issuance date. The Company recorded an additional discount of $90,004 to the note payable. Since the notes were due on demand, the discount was fully accreted upon issuance. During the year ended May 31, 2017, the Company issued 8,050 shares of common stock pursuant to the conversion of $68,175 of principal of the Notes. At May 31, 2017, the Company owed accrued interest of $19,994. At May 31, 2017, the balance owing on the two notes was $6,825. j) On December 8, 2016, a lender of the Company issued a $15,000 promissory note payable and accrued interest of $2,349 to a third-party lender (Note 6(iii)). On February 3, 2017, the Company entered into a Debt Conversion Agreement with the lender, whereby the loan amount became convertible to common stock of the Company. The Note bears interest at 8% per annum. Pursuant to the Debt Conversion Agreement, the Note is convertible into shares of common stock at a conversion price equal to $10 per share. In February 2017, the conversion price was amended to $2.75 per share. Upon entering into the Debt Conversion Agreement, the terms of the note were determined to be substantially different and debt extinguishment accounting under ASC 470-50 Modifications and Extinguishments The embedded conversion option was in the money and subject to recognition of debt discount from the beneficial conversion feature at issuance date. The Company recorded an additional discount of $17,349 to the note payable. Since the note was due on demand, the discount was fully accreted upon issuance. During the year ended May 31, 2017, the Company issued 2,600 shares of common stock pursuant to the conversion of $13,675 of principal of the Notes. At May 31, 2017, the Company owed accrued interest of $2,529. At May31, 2017, the balance owing on the note was $1,325. k) On January 31, 2017, the Company entered a Securities Purchase Agreement whereby the Company agreed to issue a Convertible Promissory Note of $120,000. The Convertible Promissory Note bears interest at 8% per annum and contains an original issue discount of $18,000, such that the purchase price of the $120,000 note is $102,000. The principal amount and any interest thereon are due one year following the borrowing date. Pursuant to the agreement, the Convertible Promissory Note is convertible into shares of common stock at any time at a conversion price equal to 50% of the lowest trading price of the common stock for the twenty-five prior trading days ending on the last complete trading day prior to the conversion date. If at any time while the note is outstanding the lowest trading price of the Company’s common stock is equal to or lower than $30 per share, then an additional 10% discount shall be factored into the conversion price until the note is no longer outstanding. In addition, at any time the trading price of the Company’s common stock is equal to or lower than $10 per share, an additional $10,000 shall be immediately added to the balance of the note. The first tranche of the Convertible Promissory Note of $40,000 was paid to the Company on January 31, 2017. In connection with the first tranche, the Company incurred financing costs of $2,000 and an original issue discount of $6,000, which have been recorded as a discount. In April 2017, the Company’s common stock price per share was lower than $10. Accordingly, the Company increased the principal amount and debt discount by $10,000. The embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging l) On February 10, 2017, the Company entered into a Convertible Promissory Note agreement for $59,500. The principal amount and any interest thereon are due on November 10, 2017. The note bears interest at 8% per annum, increasing to 18% per annum if any principal or interest is not paid when due. The note contains an original issue discount of $7,500 so the purchase price of the note is $52,000. Pursuant to the agreement, the note is convertible into shares of common stock at any time at a conversion price equal to 50% of the lowest trading price of the common stock for the twenty-five prior trading days to the date of the conversion notice. If at any time while the note is outstanding the lowest trading price of the Company’s common stock is equal to or lower than $0.003, then an additional 10% discount shall be factored into the conversion price until the note is no longer outstanding. Additionally, if at any time while the note is outstanding, the lowest trading price of the Company’s common stock is equal to or lower than $10 per share, then an additional $10,000 shall immediately be added to the balance of the note. The Company incurred financing costs of $7,000 and an original issue discount of $7,500, which have been recorded as a discount. In April 2017, the Company’s common stock price per share was lower than $10. Accordingly, the Company increased the principal amount and debt discount by $10,000. The embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging m) On March 30, 2017, the Company entered a Securities Purchase Agreement with a lender whereby the Company agreed to issue nine convertible notes for an aggregate of $285,450 with the first note being in the amount of $52,250 and the rest of the eight notes being in the amount of $29,150. The notes bear interest at 12% per annum commencing on March 30, 2017, and contain a 10% original issue discount, such that the purchase price of the first note is $47,500 and the rest of the eight notes (or “Back-End Notes”) is $26,500. The proceeds for the Back-End Notes will be funded one at a time in 30 day increments commencing April 30, 2017 through November 30, 2017. However, the Company must maintain a bid of $10 per common stock share over 5 consecutive trading days before the closing of each Back-End Note. In March 2017, the first note was funded. The note bears interest at 12% per annum and matures on March 30, 2018. The note contains an original issue discount of $4,750 so the purchase price of the note is $47,500. Pursuant to the agreement, the note is convertible into shares of common stock at any time at a conversion price equal to 50% of the average of the three lowest trading prices of the common stock for the twenty days, including the day upon which a notice of conversion is received by the Company, prior to conversion. During the first six months, the Company may redeem the first note at 140% of the par value plus accrued interest. The Company also incurred financing costs of $2,500 which has been recorded as a discount. In relation to the first note, the embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature of $81,812 resulted in an additional discount to the note payable of $45,000 and the remaining $36,812 was recognized as a loss on changes in fair value of derivative liability. During the year ended May 31, 2017, the Company recorded accretion of $7,610 increasing the carrying value of the note to $7,610. At May 31, 2017, the Company owed accrued interest of $1,065. On May 1, 2017, the first Back-End Note was funded. In connection with the first Back-End Note, the Company incurred financing costs of $1,500 and an original issue discount of $2,650, which have been recorded as a discount. The Back-End Note bears interest at 12% per annum and matures on March 30, 2018.Pursuant to the agreement, the note is convertible into shares of common stock at any time at a conversion price equal to 50% of the average of the three lowest trading prices of the common stock for the twenty days, including the day upon which a notice of conversion is received by the Company, prior to conversion. In relation to the Back-End Note, which was funded on May 1, 2017, the embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging n) On March 7, 2017, a lender of the Company assigned a $20,000 promissory note payable to a third-party lender. On March 8, 2017, the lender issued a $7,000 portion of the $20,000 promissory note payable to another third-party lender. On March 20, 2017, the Company entered into a Debt Conversion Agreement with the lender, whereby $7,000 of the loan principal and unpaid interest of $2,758 became convertible to common stock of the Company. The note bears interest at 10% per annum. Pursuant to the Debt Conversion Agreement, the note is convertible into shares of common stock at a conversion price equal to $2.75 per share. Upon entering into the Debt Conversion Agreement, the terms of the note were determined to be substantially different and debt extinguishment accounting under ASC 470-50 Modifications and Extinguishments was required. There was no difference between the reacquisition price of the debt and the net carrying amount of the extinguished debt. As a result, there was no gain or loss on extinguishment of debt recognized. The embedded conversion option was in the money and subject to recognition of debt discount from the beneficial conversion feature at issuance date. The Company recorded an additional discount of $9,758 to the note. Since the Note is due on demand, the discount was fully accreted upon issuance. At May 31, 2017, the Company owed accrued interest of $2,896. At May 31, 2017, the balance owing on the note was $7,000. o) On April 4, 2017, a lender of the Company assigned a $7,000 promissory note payable to a third-party lender. On April 5, 2017, the Company entered into a Debt Conversion Agreement with the third-party lender, whereby $7,000 of the loan principal became convertible to common stock of the Company. The note is non interest-bearing. Pursuant to the Debt Conversion Agreement, the note is convertible into shares of common stock at a conversion price equal to $2.75 per share. Upon entering into the Debt Conversion Agreement, the terms of the note were determined to be substantially different and debt extinguishment accounting under ASC 470-50 Modifications and Extinguishments The embedded conversion option was in the money and subject to recognition of debt discount from the beneficial conversion feature at issuance date. The Company recorded an additional discount of $7,000 to the note payable. Since the note is due on demand, the discount was fully accreted upon issuance. During the year ended May 31, 2017, the Company issued 2,545 shares of common stock pursuant to the conversion of $7,000 of principal of the notes. At May 31, 2017, the balance owing on the mote was $nil. p) On April 20, 2017, a lender of the Company assigned a $7,000 promissory note payable to a third-party lender, and the Company entered into a Debt Conversion Agreement with the third-party lender, whereby $7,000 of the loan principal became convertible to common stock of the Company. The note is non interest-bearing. Pursuant to the Debt Conversion Agreement, the note is convertible into shares of common stock at a conversion price equal to $1.75 per share. Upon entering into the Debt Conversion Agreement, the terms of the note were determined to be substantially different and debt extinguishment accounting under ASC 470-50 Modifications and Extinguishments The embedded conversion option was in the money and subject to recognition of debt discount from the beneficial conversion feature at issuance date. The Company recorded an additional discount of $7,000 to the note payable. Since the note is due on demand, the discount was fully accreted upon issuance. During the year ended May 31, 2017, the Company issued 4,000 shares of common stock pursuant to the conversion of $7,000 of principal of the Notes. At May 31, 2017, the balance owing on the note was $nil. q) On May 5, 2017, a lender of the Company assigned a $7,000 promissory note payable to a third-party lender, and the Company entered into a Debt Conversion Agreement with the third-party lender, whereby $7,000 of the loan principal became convertible to common stock of the Company. The note is non interest-bearing. Pursuant to the Debt Conversion Agreement, the note is convertible into shares of common stock at a conversion price equal to $0.69 per share. Upon entering into the Debt Conversion Agreement, the terms of the note were determined to be substantially different and debt extinguishment accounting under ASC 470-50 Modifications and Extinguishments The embedded conversion option was in the money and subject to recognition of debt discount from the beneficial conversion feature at issuance date. The Company recorded an additional discount of $7,000 to the note payable. Since the note is due on demand, the discount was fully accreted upon issuance. During the year ended May 31, 2017, the Company issued 3,200 shares of common stock pursuant to the conversion of $2,200 of principal of the notes. At May 31, 2017, the balance owing on the note was $4,800. |