| Convertible Notes Payable | Note
5. Convertible Notes Payable
and Derivative Liability On June 4, 2019, the Company
borrowed $55,000 from an unrelated third party. The loan is evidenced by an unsecured note which had an original issuance discount of
$5,000 which will be amortized over the life of the note. The loan bears interest at a rate of 10% and is due and payable on March 4,
2020 and is currently past due. If a default notice is received the interest rate will be 20%. At any time on or before December 1, 2019
the Company may prepay the loan by paying the lender the outstanding loan principal and accrued interest plus premiums ranging from 20%
to 40%. After December 1, 2019, the Company may not repay the loan without the consent of the lender. At any time after December 1, 2019,
the unpaid principal is convertible into shares of the Company’s common stock at the conversion price. The conversion price is 65%
of the lowest trading price of the Company’s common stock during the 20 consecutive trading days immediately prior to the date of
conversion. Due to the variable conversion feature the note conversion feature was bifurcated from the note and recorded as a derivative
liability. The day one derivative liability was $33,615 which was recorded as a discount on the note payable. As of March 31, 2021, the
balance on the loan, net of unamortized discount of $0, was $55,000. On September 9, 2019, the Company
borrowed $30,000 from an unrelated third party. The loan is evidenced by an unsecured note which had an original issuance discount of
$2,500 plus an additional $2,500 to pay for transaction fees of the lender, which will be amortized over the life of the note. The loan
bears interest at a rate of 9% and is due and payable on March 9, 2020 and is currently past due. If a default notice is received the
interest rate will be 18%. The Company may prepay the loan by paying the lender the outstanding loan principal and accrued interest plus
premiums ranging from 5% to 25% and accrued interest. The unpaid principal is convertible into shares of the Company’s common stock
at the conversion price. The conversion price is 50% of the lowest trading price of the Company’s common stock during the 20 consecutive
trading days immediately prior to the date of conversion. Due to the variable conversion feature the note conversion feature was bifurcated
from the note and recorded as a derivative liability. The day one derivative liability was $31,581, of which $20,291 was recorded as a
day one loss on the derivative liability and an additional $11,290 was recorded as a discount on the notes payable. In addition, the note
holder was issued 25,000 shares of common stock with a relative fair value of $13,710 which was recorded as a debt discount and will be
amortized over the life of the note. On February 11, 2021, the Company repaid $30,000 in principal, $3,854 in accrued interest and $11,146
additional interest expense on the convertible note payable. As of ,
2021, the balance on the loan, net of unamortized discount of $0, was $0. On November 14, 2019, the Company
entered into a debt agreement to borrow $85,000. The unsecured note had an original issuance discount of $20,000, which will be amortized
over the life of the note. The loan bears interest at a rate of 9% and is due and payable on May 14, 2020 and is currently past due. If
a default notice is received the interest rate will be 18%. The Company may prepay the loan by paying the lender the outstanding loan
principal and accrued interest plus premiums ranging from 5% to 25% and accrued interest. The unpaid principal is convertible into shares
of the Company’s common stock at the conversion price. The conversion price is 50% of the lowest trading price of the Company’s
common stock during the 20 consecutive trading days immediately prior to the date of conversion. Due to the variable conversion feature
the note conversion feature was bifurcated from the note and recorded as a derivative liability. The day one derivative liability was
$89,071, of which $24,071 was recorded as a day one loss on the derivative liability and an additional $65,000 was recorded as a discount
on the convertible notes payable. As of March 31, 2021, the balance on the loan, net of unamortized discount of $0, was $85,000. On January 23, 2020, the Company
entered into an agreement for up to $120,000 in debt financing. The unsecured note had an original issuance discount of $10,500, which
will be amortized over the life of the note. The loan bears interest at a rate of 10% and each tranche is due and payable twelve months
from the date funded. The Company may prepay the loan by paying the lender the outstanding loan principal and accrued interest plus premiums
ranging from 5% to 25% and accrued interest. The unpaid principal is convertible into shares of the Company’s common stock at the
conversion price. The conversion price is 45% of the lowest trading price of the Company’s common stock during the 25 consecutive
trading days immediately prior to the date of conversion. On January
23, 2020, the Company received $40,000 with original issuance discount of $5,000 from the first tranche of the note. On August 12, 2020,
the Company received $20,000 with original issuance discount of $4,150 from the second tranche of the note. In addition, the note holder
was issued 45,777 common stock warrants with a fair value of $6,249 which was recorded as a day one loss on the derivative liability.
Due to the variable conversion feature the note conversion feature was bifurcated from the note and recorded as a derivative liability.
The first tranche day one derivative liability was $50,164, of which $15,164 was recorded as a day one loss on the derivative liability
and an additional $35,000 was recorded as a discount on the notes payable. The second tranche day one derivative liability was $18,135,
of which $2,285 was recorded as a day one loss on the derivative liability and an additional $15,850 was recorded as a discount on the
notes payable. During the year ended December 31, 2020, $6,538 of the unsecured convertible note principal and $3,000 of interest was
converted into 325,000 shares of common stock, of which 125,000 shares at a conversion price of $0.02275 per share and 175,000 shares
at $0.035 per share. On November 20, 2020, the Company paid $33,463 in principal payments, $2,765 of accrued expense and $50,772
of additional interest expense on the note. On January 15, 2021, the Company repaid $20,000 in principal, $882 in accrued interest and
$12,118 additional interest expense on the convertible note payable. As of March 31, 2021, the balance on the loan, net of unamortized
discount of $0, was $0. In 2020, the Company issued convertible
notes in the principal amount of $285,000. The notes are unsecured, have a six-month maturity, bear interest at 8% per year, and
are due and payable at various dates from April through June 2021. At the option of the holder, the notes can be converted into shares
of the Company’s common stock. The number of shares of the Company’s common stock which will be issued upon any conversion
will be determined by dividing the amount to be converted by $0.10. Due to the other variable convertible notes, these fixed convertible
notes are treated as derivatives due to possibility of insufficient shares available at conversion to settle the notes. The day one derivative
liability was $254,317, of which $10,317 was recorded as a day one loss on the derivative liability and an additional $244,000 was recorded
as a discount on the convertible notes payable. On January 15, 2021, the Company converted a $10,000 promissory note into 100,000
shares of common stock at a conversion price of $0.10. As of March 31, 2021, the balance on the loans, net of unamortized discount of
$137,590, was $137,410. On August 6, 2020, the Company
issued a note in the principal amount of $390,000 for payment of investor relations services. The investor relations services are for
a period of one year and recorded as a prepaid asset with a balance of $162,500 as of March 31, 2021. The note does not bear interest,
is unsecured and is due and payable on August 6, 2023. At the option of the holder, the note is convertible into shares of the Company's
common stock. The unpaid principal is convertible into shares of the Company’s common stock at the conversion price. The conversion
price shall be the lesser of $0.40 or 85% of the trading price of the Company’s common stock on the day immediately preceding the
date of conversion. Due to the variable conversion feature the note conversion feature was bifurcated from the note and recorded as a
derivative liability. The day one derivative liability was $158,542, which was recorded as a discount on the convertible notes payable
and will be amortized over the life of the note. As of March 31, 2021, the balance on the loan, net of unamortized discount of $55,598
was $334,402. On November 17, 2020, the Company
entered into a debt agreement to borrow $85,000. The unsecured note had an original issuance discount of $3,500, which will be amortized
over the life of the note. The loan bears interest at a rate of 8% and is due and payable on November 17, 2021. The unpaid principal is
convertible into shares of the Company’s common stock at the conversion price. The conversion price is 65% of the average two lowest
trading price of the Company’s common stock during the 15 consecutive trading days immediately prior to the date of conversion.
Due to the variable conversion feature the note conversion feature was bifurcated from the note and recorded as a derivative liability.
The day one derivative liability was $130,303, of which $48,803 was recorded as a day one loss on the derivative liability and an additional
$81,500 was recorded as a discount on the convertible notes payable On February 3, 2021, the Company repaid $85,000 in principal,
$1,453 in accrued interest and $21,590 additional interest expense on the convertible note payable. As of March 31, 2021, the balance
on the loan, net of unamortized discount of $0, was $0. During the three months ended
March 31, 2021, the Company issued convertible notes in the principal amount of $150,000. The notes are unsecured, have a six-month
maturity, bear interest at 8% per year, and are due and payable at various dates from July through August 2021. At the option of the holder,
the notes can be converted into shares of the Company’s common stock. The number of shares of the Company’s common stock
which will be issued upon any conversion will be determined by dividing the amount to be converted by $0.10. Due to the other variable
convertible notes, these fixed convertible notes are treated as derivatives due to possibility of insufficient shares available at conversion
to settle the notes. The day one derivative liability was $360,675, of which $213,495 was recorded as a day one loss on the derivative
liability and an additional $147,180 was recorded as a discount on the convertible notes payable. As of March 31, 2021, the balance
on the loans, net of unamortized discount of $123,918, was $26,082. As of March 31, 2021, the total
derivative liability on the above notes was adjusted to a fair value of $1,521,846. During the three months ended March 31, 2021, $171,930
of the discount was amortized leaving an unamortized balance of $317,106. The fair value of the conversion option was estimated using
the Black-Scholes option pricing model and the following assumptions during the period: fair value
of stock $0.188 - $0.48, volatility of 43.17% - 58.56% based on a comparable company peer group, expected term of 0.50 - 5.00 years, risk-free
rate of 0.05% - 0.92% and a dividend yield of 0%. |
