CONVERTIBLE NOTES PAYABLE | 8. CONVERTIBLE NOTES PAYABLE Convertible notes payable consisted of the following: Balance Balance Interest Conversion February 28, February 29, Issued Maturity Rate Rate per Share 2021 2020 January 31, 2013 February 28, 2017 X 10% $0.010 (3) $ — $ 119,091 May 31, 2013 November 30, 2016 X 10% $0.010 (3) — 261,595 August 31, 2014 November 30, 2016 X 10% $0.002 (3) — 355,652 November 30, 2014 November 30, 2016 X 10% $0.002 (3) — 103,950 February 28, 2015 February 28, 2017 X 10% $0.001 (3) — 63,357 May 31, 2015 August 31, 2017 X 10% $1.000 (3) — 65,383 August 31, 2015 August 31, 2017 X 10% $0.300 (3) — 91,629 November 30, 2015 November 30, 2018 X 10% $0.300 (3) — 269,791 February 29, 2016 February 28, 2019 X 10% 60% discount (2) — 95,245 May 31, 2016 May 31, 2019* X 10% $0.003 (3) — 35,100 July 18, 2016 July 18, 2017* 10% $0.003 (3) 3,500 3,500 December 31, 2016 December 31, 2020 8% 35% discount (2) 65,000 65,000 January 15, 2017 January 15, 2021 XXX 8% 35% discount (2) — 50,000 January 15, 2017 January 15, 2021YY 8% 35% discount (2) — 100,000 January 16, 2017 January 16, 2021 Y 8% 35% discount (2) — 150,000 March 8, 2017 March 8, 2020 W 10% 40% discount (2) — 100,000 March 9, 2017 March 9, 2021 XXX 8% 35% discount (2) — 50,000 April 26, 2017 April 26, 2018* 0% $0.001 — 68 Balance Balance Interest Conversion February 28, February 29, Issued Maturity Rate Rate per Share 2021 2020 May 1, 2017 May 1, 2021 XXX 8% 35% discount (2) — 50,000 May 4, 2017 May 4, 2018* 8% 40% discount (2) — 22,610 May 15, 2017 May 15, 2018 0% $0.001 — 1,280 May 17, 2017 May 17, 2020 XXX 10% 40% discount (1) — 85,000 June 7, 2017 June 7, 2018 8% 40% discount (2) — 156,764 June 16, 2017 June 16, 2018 0% $0.001 — 750 July 6, 2017 July 6, 2018 8% 40% discount (2) — 200,000 August 8, 2017 August 8, 2018 8% 40% discount (2) — 125,000 July 28, 2017 July 28, 2018 XX 15% 40% discount (2) — 47,913 August 29, 2017 August 29, 2018 XX 15% 50% discount (2) — 162,250 October 4, 2017 May 4, 2018 Z 8% 40% discount (2) — 150,000 October 16, 2017 October 16, 2018 XX 15% 50% discount (2) — 328,537 November 22, 2017 November 22, 2018 XX 15% 50% discount (2) — 550,275 December 28, 2017 December 28, 2017 10% 40% discount (2) — 57,008 December 29, 2017 December 29, 2018 XX 15% 50% discount (2) — 363,000 January 9, 2018 January 9, 2019 ZZ 8% 40% discount (2)(1) — 79,508 January 30, 2018 January 30, 2019 XX 15% 50% discount (2)(1) — 330,000 February 21, 2018 February 21, 2019 XX 15% 50% discount (2)(1) — 330,000 March 14, 2018 March 14, 2019* 10% 40% discount (2) — 50,000 June 7, 2017 June 9, 2019 ZZZ 8% 40% discount (2) — 200,000 April 9, 2018 April 9, 2019 XX 15% 50% discount (2) — 60,500 March 21, 2017 March 21, 2018 8% 40% discount (2) — 40,000 April 20, 2018 April 20, 2019 ZZ 8% 40% discount (2) — 97,659 May 2, 2018 December 2, 2018* 10% 40% discount (2) — 70,682 May 4, 2018 May 4, 2019 ZZ 12% 50% discount (2) — 123,750 May 14, 2018 December 14, 2018* 10% 50% discount (2) — 33,542 May 23, 2018 May 23, 2019 10% 50% discount (2) — 110,000 June 6, 2018 June 6, 2019 XX 15% 50% discount (2) — 282,949 June 19, 2018 March 19, 2019 15% 50% discount (2) — 43,125 July 6, 2017 June 9, 2019 8% 40% discount (2) — 200,000 August 1, 2018 August 1, 2019 XX 15% 50% discount (2) — 35,750 August 23, 2018 August 23, 2019 YYY 8% 45% discount (2) — 70,123 September 13, 2018 June 30, 2019 WWW 12% 45% discount (2) — 9,200 September 17, 2018 March 17, 2019* 10% 50% discount (2) — 4,945 September 20, 2018 September 20, 2019 XX 15% 50% discount (2) — 43,285 September 24, 2018 June 24, 2019* 8% 40% discount (2) — 63,913 August 8, 2017 June 9, 2019 8% 40% discount (2) — 125,000 November 8, 2018 August 15, 2019 WW 12% 45% discount (2) — 79,500 November 26, 2018 May 26, 2019* 10% 50% discount (2) — 44,799 August 29, 2019 August 29, 2020 ZZZ 8% 40% discount (2) — 26,250 January 19, 2021 January 19, 2022 12% $0.04 275,000 — January 27,2021 January 27, 2022 10% $0.10 (4) 550,000 — 893,500 6,834,228 Less: current portion of convertible notes payable 893,500 (6,734,227 ) Less: discount on noncurrent convertible notes payable — (30,486 ) Noncurrent convertible notes payable, net of discount $ — $ 69,515 Current portion of convertible notes payable $ 893,500 $ 6,734,227 Less: discount on current portion of convertible notes payable (697,276 ) (120,602 ) Current portion of convertible notes payable, net of discount $ 196,224 $ 6,613,625 * The indicated notes were in default as of February 28, 2021. Default interest rate 24% X On December 10, 2020 the Company settled the above notes indicated totaling $1,460,794 and associated accrued interest of $1,593,544 totaling $3,054,338 and derivative liabilities with a fair value of $153,707 in exchange for promissory notes dated December 10, 2020 totaling $3,054,338, maturing December 10, 2023 and bearing interest at 12% per annum and a warrant to purchase 250,000,000 shares at an exercise price of $.002 per share and a three year maturity having a fair value of $550,000. A loss on settlement of $396,297 was recorded. This note is secured by a general security interest against all of the Company’s present and after-acquired property. XX On December 10, 2020 the Company settled the above notes indicated totaling $2,683,357 and associated accrued interest of $1,237,811 totaling $3,921,168 and derivative liabilities with a fair market value of $1,787,235 in exchange for a promissory note dated December 10, 2020 of $3,921,168, maturing December 10, 2023 and bearing interest at 12% per annum and a warrant to purchase 450,000,000 shares at an exercise price of $.002 per share and a three year maturity having a fair value of $990,000. Again on settlement of $797,235 was recorded. This note is secured by a general security interest against all of the Company’s present and after-acquired property. XXX On December 14, 2020 the Company settled the above notes indicated totaling $235,000 and associated accrued interest of $75,375 totaling $310,375 and derivative liabilities with a fair market value of $161,854 in exchange for a promissory note dated December 14, 2020 of $310,375, maturing December 10, 2023 and bearing interest at 12% per annum, a warrant to purchase 25,000,000 shares at an exercise price of $.002 per share and a three year maturity having a fair value of $182,500 and 55 shares of Series F Preferred Shares having a fair value of $1,151,166. A loss on settlement of $171,812 was recorded. W On December 14, 2020 the Company settled the above note of $100,000 and associated accrued interest of $37,589 totaling $137,589 and derivative liabilities with a fair market value of $88,749 in exchange for a promissory note dated December 14, 2020 of $192,625, maturing December 14, 2023 and bearing interest at 12% per annum. A gain on settlement of $33,713 was recorded. WW On January 1 ,2021 the Company settled the above note of $79,500 and associated accrued interest of $28,925 totaling $108,425 and derivative liabilities with a fair market value of $97,560 in exchange for a promissory note dated January 1, 2021 of $145,000, maturing January 1, 2024 and bearing interest at 12% per annum. A gain on settlement of $60,985 was recorded. This note is secured by a general security interest against all of the Company’s present and after-acquired property. WWW On January 1 ,2021 the Company settled the above note of $9,200 and associated accrued interest of $6,944 totaling $16,144 and derivative liabilities with a fair market value of $12,555 in exchange for a promissory note dated January 1, 2021 of $25,000, maturing January 1, 2024 and bearing interest at 12% per annum. A gain on settlement of $3,699 was recorded. This note is secured by a general security interest against all of the Company’s present and after-acquired property. Y On February 25, 2021 the Company settled the above note of $150,000 and $48,493 in accrued interest totaling $198,493 and derivative liabilities with a fair market value of $118,273 for a cash payment of $198,493. A gain on settlement of $118,273 was recorded. YY On February 25, 2021 the Company settled the above note of $100,000 and $32,526 in accrued interest totaling $132,526 and derivative liabilities with a fair market value of $78,962 for a cash payment of $132,526. A gain on settlement of $78,962 was recorded. YYY On November 30, 2020 the Company entered into a settlement agreement for the above note of $ $42,584 and accrued interest of $32,416 totaling $75,000 for cash payment of $75,000. The Company paid the settlement on December 4 , 2020. Z On February 19, 2021 the Company settled the above note of $45,663 and $32,416 in accrued interest totaling $64,794 and derivative liabilities of $22,266 for a cash payment of $64,794. A gain on settlement of $22,266 was recorded. ZZ On February 25, 2021 the Company settled the above notes totaling $218,477 and $127,948 in accrued interest totaling $346,365 and derivative liabilities with a fair market value of $362,943 for a cash payment of $300,000. A gain on settlement of $409,308 was recorded. ZZZ On December 10, 2020 the Company settled the above notes indicated totaling $103,180 and associated accrued interest of $62,425 totaling $165,605 and derivative liabilities of $130,348 in exchange for a promissory note dated December 10, 2020 of $165,605, maturing December 10, 2023 and bearing interest at 12% per annum and a warrant to purchase 80,000,000 shares at an exercise price of $.002 per share and a three year maturity having a fair value of $45,652. A loss on settlement of $176,000 was recorded. (1) The note is convertible beginning six months after the date of issuance. (2) The notes are convertible at a discount (as indicated) to the average market price and are accounted for and evaluated under ASC 480 as discussed in Note 3. (3) The conversion price is not subject to adjustment from forward or reverse stock splits. (4) The per share conversion price into which Principal Amount and interest (including any Default Interest) under this Note shall be convertible into shares of Common Stock hereunder (the “Conversion Price”) shall be equal to $0.10 per share (the “Fixed Conversion Price”); provided, however, provided, further During the years ended February 28, 2021 and February 29, 2020, the Company incurred original issue discounts of $77,500 and $1,250, respectively, and debt discounts from derivative liabilities of $143,133 and $26,250, respectively, related to new convertible notes payable. These amounts are included in discounts on convertible notes payable and are being amortized to interest expense over the life of the convertible notes payable. During the years ended February 28, 2021 and February 29, 2020, the Company recognized interest expense related to the amortization of debt discount of $190,197 and $874,187, respectively. The Company recorded penalty interest of $939,705 during the year February 28, 2021 (February 29, 2020-$313,347) that is payable upon maturity if not already converted or settled prior to maturity. All the notes above are unsecured. As of February 28, 2021, the Company had total accrued interest payable of $49,764, all of which is classified as current. As of February 29, 2020, the Company had total accrued interest payable of $2,922,894, of which $2,778,583 is classified as current and $144,311 is classified as noncurrent. See description below for description of the convertible notes issued during the years ended February 28, 2021 and February 292, 2020. Convertible notes issued The Company determined that the embedded conversion features which result in a variable conversion rate, in the convertibles notes described below should be accounted for as derivative liabilities as a result of their variable conversion rates. During the year ended February 28, 2021, the Company had the following convertible note activity: ● The Company entered into a convertible note agreement with a lender on January 27, 2021 with a principal amount of $550,000 received cash proceeds of $463,500 with an original issue discount of $50,000 and issuance fees of $36,500. The note has a one year maturity and bears interest at 10%. The note was issued with a warrant to purchase 8,250,000 shares at an exercise price of $0.10 per share with a 3 year term and having a fair value of $1,149,225 using Black-Scholes with assumptions described in note 13 and 5,000,000 common shares having a fair value of 697,000. After allocating these charges to debt and equity according to their respective values , the initial debt balance net of a debt discount was $70,377 and the adjustment to paid in capital was $310,961.The discounts are being amortized over the term of the loan. In addition for the year ended February 28, 2021, the Company recorded a derivative discount on the embedded conversion feature of $82,162, , amortization expense of $12,401 with an unamortized discount of $467,222 at February 28, 2021. ● The Company entered into a convertible note agreement with a lender on January 19, 2021 with a principal amount of $275,000 received cash proceeds of $229,150 with an original issue discount of $27,500, and issuance fees of $18,350. The note has a one year maturity and bears interest at 12%. The note was issued with a warrant to purchase 11,000,000 shares at an exercise price of $0.045per share with a 3 year term and having a fair value of $594,0000 using Black-Scholes with assumptions described in note 13. The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their respective values , the initial debt balance net of a debt discount was $40,191 and the adjustment to paid in capital of $127,988. Also, for the year ended February 28, 2021, the Company recorded a derivative discount on the embedded conversion feature of $60,971, amortization expense of $8,255 with an unamortized discount of $226,554 at February 28, 2021. ● The Company recorded $939,705 in penalties as increases on various notes, with a corresponding charge to interest. ● Holders of certain convertible notes payable elected to convert a total of $2,420,559 of principal and $1,148,127 accrued interest, into 2,329,798,068 shares of common stock. No gain or loss was recognized on conversions as these conversions occurred within the terms of the agreement that provided for conversion. ● The Company entered into various debt settlement during the year where they settled principal of $556,664 and interest of $260,514 totaling $817,718 for cash payments totaling $770,813. See details on preceding page. ● The Company entered into various debt settlement during the year where they exchanged principal of $4,671,030 and interest of $3,042,613 totaling $7,713,643 in exchange for new promissory notes totaling $7,713 ,643 bearing interest at 12% and with three year maturities. In addition as part of the debt exchange the Company issued 805,000,000 warrants with a 3 year term and an exercise price of $0.002 having a fair value using black-scholes of 1,898,500 and 55 Series F Preferred Stock having a fair value of $1,151,166. Please see details on page F-17. During the year ended February 29, 2020, the Company had the following convertible note activity: ● On September 5, 2019, the Company received $25,000 of proceeds from an investor for a promissory note with a principal amount of $26,250, including an original issue discounts of $1,250 and maturing August 29, 2020. The promissory note is convertible into common shares of the Company at a conversion price equal to 60% of the lowest trading price of the Company’s common stock for the last 20 trading days prior to conversion, and has an 8% per annum interest rate. ● The Company wrote off a note payable for $32,600 and related interest of $97,139. The note has matured in February 2013, the company cannot contact the lender and the note is legally prescribed. A gain on settlement of debt of $129,739 was recorded The Company determined that certain Texas state legal requirements were met that allow the Company to treat the liability as no longer enforceable against the Company. ● The company recorded default penalties totaling $314,347 as increases to various notes, with a corresponding charge to interest. ● During the year ended February 29, 2020, holders of certain convertible notes payable elected to convert a total of $254,118 of principal, $244,050 accrued interest, and $500 of fees into 395,443 shares of common stock. No gain or loss was recognized on conversions as they occurred within the terms of the agreement that provided for conversion. Immediately prior to the conversion, the Company performed a valuation of the derivative liability attached to the notes and accrued interest converted and determined that the final derivative liability was $440,294. Upon conversion this amount was transferred from derivative liabilities to additional paid-in capital. |