NOTE 6 - CONVERTIBLE NOTES PAYABLE | On December 21, 2017, the Company entered into a Securities Purchase Agreement whereas, Crown Bridge Partners, LLC (the "buyer") wished to purchase from the Company securities consisting of the Company’s 8% convertible notes payable for an aggregate principal amount of up to $120,000. As additional consideration, the Company issued a Common Stock Purchase Warrant (the “warrant”) for 32,000 shares at an exercise price of $1.25 over an exercise period of 5 years. Due to the provisions of the warrant, the warrant was classified as a derivative warrant liability, the fair value of which was determined using the Black-Scholes valuation model. On May 11, 2018, the Company repaid the convertible note payable. The warrant remained outstanding after the repayment of the convertible note payable (see Notes 7 and 8). On June 21, 2018, the Company issued a convertible note to Power Up Lending Group, LTD. for $128,000. The note bears interest at 12%, matures on March 30, 2019, and is convertible into common stock at 58% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion. The Company also recorded a $3,000 debt discount due to issuance fees. The holder’s conversion option under the note does not become active until 180 days after the issuance date. During the nine months ended May 31, 2019, the holder’s option to convert became active and the Company recorded a derivative liability of $38,008, in which the fair value of the embedded derivative was determined using the Black-Scholes valuation model. The value of the derivative liability was attributed to debt discount. The debt discount is amortized over the term of the note or to the date of conversion, and the derivative liability is revalued at each conversion or reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period. During the nine months ended May 31, 2019, the holder exercised its conversion options to settle the note payable of $128,000 plus accrued interest of $7,680 in exchange for 26,281,973 shares of the Company’s common stock. As a result, the Company recorded a loss on extinguishment of debt of $266,660. On July 13, 2018, the Company entered into a Securities Purchase Agreement whereas, EMA Financial, LLC (the "buyer") wishes to purchase from the Company a 10% convertible note for a principal amount of $83,500. On July 13, 2018, the Company issued a convertible promissory note (the “note”) to the buyer for $81,830 in proceeds, after a $1,670 original issue discount. The note matured on April 12, 2019. The note is convertible at a conversion price of 50% of the lowest trading price during the 10 days prior to the conversion date. At the closing, the Company paid closing costs and a consulting fee totaling $7,340. Accordingly, the Company recorded a debt discount of $9,010. At issuance, the holder’s option to convert was active and the Company recorded a derivative liability of $48,702, in which the fair value of the embedded derivative was determined using the Black-Scholes valuation model. The derivative liability was attributed to debt discount. The debt discount is amortized over the term of the note or to the date of conversion, and the derivative liability is revalued at each conversion or reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period. During the nine months ended May 31, 2019, the holder effected conversions for a total of 21,217,000 shares to extinguish a portion of the convertible note payable. As a result, the Company recorded a loss on extinguishment of debt of $198,773. Also during the nine months ended May 31, 2019, in accordance with the terms of the note agreement, the Company incurred debt penalties totaling $30,000 for market loss and for failure to timely replenish reserve shares, which was added to outstanding principal balance of the convertible note payable On September 27, 2018, the Company issued a convertible note to Power Up Lending Group, LTD. for $53,000. The note bears interest at 12%, matures on July 15, 2019, and is convertible into common stock at 58% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion. The Company also recorded a $3,000 debt discount due to issuance fees. The holder’s conversion option under the note did not become active until 180 days after the issuance date. During the nine months ended May 31, 2019, the holder exercised its conversion options to settle the note payable of $53,000 plus accrued interest of $3,180 in exchange for 11,467,898 shares of the Company’s common stock. As a result, the Company recorded a loss on extinguishment of debt of $53,788. On November 6, 2018, the Company entered into a Securities Purchase Agreement whereas, Auctus Fund, LLC (the "buyer") wishes to purchase from the Company a 12% convertible note for a principal amount of $111,000. On November 6, 2018, the Company issued a convertible promissory note (the “note”) to the buyer for $97,250 in proceeds, after a $13,750 reduction for issuance fees. The note matures on August 6, 2019. The note is convertible at a conversion price of 55% of the lowest trading price during the 25-day period ending one trading day prior to the date of the conversion notice. At the closing, the Company paid closing costs and fees totaling $6,000. Accordingly, the Company recorded a debt discount of $19,750. At issuance, the holder’s option to convert was active and the Company recorded a derivative liability of $15,063, in which the fair value of the embedded derivative was determined using the Black-Scholes valuation model. The derivative liability was attributed to debt discount. The debt discount is amortized over the term of the note or to the date of conversion, and the derivative liability is revalued at each conversion or reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period. During the nine months ended May 31, 2019, the holder effected conversions for a total of 9,086,100 shares to extinguish a portion of the convertible note payable. As a result, the Company recorded a loss on extinguishment of debt of $50,259. On April 2, 2019, the Company issued a convertible note to Power Up Lending Group, LTD. for $25,000. The note bears interest at 12%, matures on February 15, 2020, and is convertible into common stock at 58% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion. The Company also recorded a $3,000 debt discount due to issuance fees. The holder’s conversion option under the note does not become active until 180 days after the issuance date. On May 7, 2019, the Company issued a convertible note to Power Up Lending Group, LTD. for $78,000. The note bears interest at 12%, matures on March 15, 2020, and is convertible into common stock at 58% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion. The Company also recorded a $7,000 debt discount due to issuance fees. The holder’s conversion option under the note does not become active until 180 days after the issuance date. The following table summarizes the balances of convertible notes payable: May 31, August 31, 2019 2018 Power Up Lending Group, LTD $ - $ 125,667 EMA Financial, LLC 47,928 33,002 Auctus Fund, LLC 88,481 - Power Up Lending Group, LTD 22,545 - Power Up Lending Group, LTD 71,700 - Convertible notes payable, net of discount $ 230,654 $ 158,669 Amortization of the debt discounts recorded as interest expense during the nine months ended May 31, 2019 and 2018 totaled $114,946 and $129,934, respectively. Each of the convertible notes payable include a debt covenant stating that during the period the conversion right exists, the borrower will reserve from its authorized and unissued common stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of common stock upon the full conversion of the notes issued pursuant to the securities purchase agreement. The borrower is required at all times to have authorized and reserved between five to ten times the number of shares that would be issuable upon full conversion of the note. At July 24, 2019, the Company had sufficient authorized and unissued common stock to meet the reserve demand of its convertible notes payable. |