NOTES PAYABLE | Convertible Notes Payable In accounting for its convertible notes payable, proceeds from the sale of a convertible debt instrument with Common Stock purchase warrants are allocated to the two elements based on the relative fair values of the debt instrument without the warrants and of the warrants themselves at time of issuance. The portions of the proceeds allocated to the warrants are accounted for as paid-in capital with an offset to debt discount. The remainder of the proceeds are allocated to the debt instrument portion of the transaction as prescribed by ASC 470-25-20. The Company then calculates the effective conversion price of the note based on the relative fair value allocated to the debt instrument to determine the fair value of any beneficial conversion feature (“BCF”) associated with the convertible note in accordance with ASC 470-20-30. The BCF is recorded to additional paid-in capital with an offset to debt discount. Both the debt discount related to the issuance of warrants and related to a BCF is amortized over the life of the note. Convertible Notes Payable – Related Parties Convertible notes payable due to related parties consisted of the following as of March 31, 2020 and June 30, 2019, respectively: Convertible Notes Payable – Related Parties March 31, June 30, 2020 2019 $30,000 face value, issued in August 2016, interest rate of 0% and is convertible into shares of the Company’s Common stock at $0.40 per share, matured June 30, 2019, net unamortized discount of $0 as of March 31, 2020 and June 30, 2019, respectively. The notes are currently in default. $ 30,000 $ 30,000 Various term notes with total face value of $89,500 issued from September 2017 to February 2018, interest rates of 0% and are convertible into shares of the Company’s common stock at $0.10 per share, matured from January 2019 to June 30, 2019, net unamortized discount of $0 as of December 31, 2019 and June 30, 2019, respectively. The notes are currently in default. 89,500 89,500 Total convertible notes payable – related parties 119,500 119,500 Less current portion 119,500 119,500 Convertible notes payable – related parties, long-term $ - $ - Convertible Notes Payable - Non-Related Parties Convertible notes payable due to non-related parties consisted of the following as of March 31, 2020 and June 30, 2019, respectively: Convertible Notes Payable - Non-Related Parties March 31, June 30, 2020 2019 Various term notes with total face value of $2,049,000, issued from July 2014 to March 2018, interest rates from 0% to 10% and are convertible into shares of the Company’s common stock from $0.10 to $0.40 per share, matured from October 2018 to June 2019. One of the notes and accrued interest was assigned to non-related party notes payable in September 2019 and three of the notes and accrued interest were assigned to a non-related convertible note payable in October 2019 The notes are currently in default. $ 1,844,000 $ 2,049,000 Two term notes with total face value of $373,000, issued in February 2017, interest rates of 10% and are convertible into shares of the Company’s common stock at lesser of 40% of the average three lowest closing bids twenty (20) days prior to the conversion date or $0.40 per share, matured June 2018, with additional extension fees of $81,000 added to principal. A total of $187,403 has been converted and $85,654 has been paid. The notes are currently in default. 180,943 186,597 $265,000 face value, issued in May 2017, interest rate of 10% and is convertible into shares of the Company’s common stock at the lesser of $0.31 or 60% of the lowest closing bids twenty-five (25) days prior to the conversion date, matured February 2018, of which $179,406 was converted. The note is currently in default. 85,594 104,845 Two term notes with total face value of $131,000 face value, issued on July 2017 and August 2017, interest rates of 12% and are convertible into shares of the Company’s common stock at 61% of the lowest two trading prices during the fifteen (15) trading day period ending to the date of conversion, matured May 2018 and June 2018, of which $72,000 was converted. The note is currently in default. 59,000 59,000 $115,000 face value, issued in November 2017, interest rate of 10% and is convertible into shares of the Company’s common stock at 57.5% of the lowest closing bids thirty (30) days prior to the conversion per share, matured August 2018. The note is currently in default. 115,000 115,000 $115,000 face value, issued in January 2018, interest rate of 10% and is convertible into shares of the Company’s common stock at the lesser of $0.12 and 57.5% of the lowest trading price during the prior thirty (30) days, matured October 2018. The note is currently in default. 115,000 115,000 $160,000 face value, issued in April 2018, of which $150,000 in principal and $10,000 in additional fees, interest rate of 10% and is convertible into shares of the Company’s common stock at the lesser of $0.05 or 57.5% of the lowest closing bids twenty (20) days prior to the conversion date, matured January 2019. The note is currently in default. 160,000 160,000 Two term notes with total face value of $415,000 face value, issued from an assignment in April 2018 of $370,000 in principal and an OID of $45,000, interest rates of 10% and are convertible into shares of the Company’s common stock at rate of 55% of the average trading price for the prior three (3) trading days, matured April 2019, of which $223,198 has been converted. The notes are currently in default. 191,802 191,802 Various term notes with total face value of $502,534, issued from May 2018 to June 2018, interest rates of 12% and are convertible into shares of the Company’s common stock at 61% of the lowest two trading prices during the fifteen (15) trading day period prior to the date of conversion, matured from October 2018 to June 2019, of which $69,898 has been converted and $164,499 has been paid. The note is currently in default. 268,137 268,137 $15,651 face value, issued in June 2018, interest rate of 12% and is convertible into shares of the Company’s common stock at 60% of the lowest trading price during the previous twenty (20) days to the date of conversion, matured June 30, 2019. The note is currently in default. 15,651 15,651 $120,000 face value, issued in July 2018 for prepaid services, interest rate of 15% and is convertible into shares of the Company's common stock at 70% of the lowest closing price per share during the twenty (20) days prior to the conversion, matures July 2019. The note is currently in default. 120,000 120,000 $39,759 face value, issued from an assignment in August 2018, interest rate of 12% and is convertible into shares of the Company’s common stock at 55% of the lowest sales price for common stock on principal market during the twenty-five (25) consecutive trading days immediately preceding the conversion date, matured November 2018. The note is currently in default. 39,759 39,759 $23,000 face value, issued in August 2018 of $20,000 in principal and an OID of $3,000, interest rate of 12% and is convertible into shares of the Company's common stock at 55% of the average of the three (3) lowest closing price during the 25 days prior to the conversion per share, matures August 2019, net unamortized discount of $0 and $3,214 as of March 31, 2020 and June 30, 2019, respectively, of which $23,000 was converted. - 19,786 Various term notes total value of $1,575,001 face value, issued from August 2018 to October 2019, of which $1,352,000 in principal and an OID of $223,001, interest rates of 10% and are convertible into shares of the Company’s common stock at equal the lesser of $0.12 and 70% of the lowest trading price for the common stock during the thirty (30) trading day period ending on the latest complete trading day prior to the conversion date, matures from August 2019 to December 2020, net unamortized discount of $228,010 and $273,843 as of March 31, 2020 and June 30, 2019, respectively. A total of $43,750 has been paid. Three notes totaling $1,111,896 in principal are currently in default. 1,303,241 838,053 Two term notes total value of $64,850, issued in August 2018, of which $61,850 in principal and an OID of $3,000, interest rate of 12% and is convertible into shares of the Company’s common stock at 61% of the lowest trading price for the prior fifteen (15) trading days immediately preceding the conversion date, matures August 2019, net unamortized discount of $0 and $6,998 as of March 31, 2020 and June 30, 2019, respectively, of which $4,550 has been paid. The notes are currently in default. 60,300 57,852 Two term notes total value of $178,000, issued from March 2019 to August 2019, of $160,000 in principal and an OID of $18,000, interest rate of 10% and is convertible into shares of the Company’s common stock at 58% of the lowest trading price for the common stock during the twenty-five (25) trading day period ending on the latest complete trading day prior to the conversion date, matures from March 2020 and August 2020, net unamortized discount of $30,153 and $65,899 as of March 31, 2020 and June 30, 2019, respectively, of which $26,350 has been converted. 121,497 23,101 Various term notes with total value of $562,500, issued from March 2019 to June 2019, of which $535,500 in principal and an OID of $27,000, interest rates of 12% and are convertible into shares of the Company’s common stock at 58% of the lowest trading price for the common stock during the twenty (20) trading day period ending on the latest complete trading day prior to the conversion date, matures from March 2020 and June 2020, net unamortized discount of $93,531 and $509,344 as of March 31, 2020 and June 30, 2019, respectively, of which $100,000 has been paid and $12,500 has been converted. 356,469 53,156 Two term notes with total value of $154,000, issued in April 2019 and June 2019,of which $143,000 in principal and an OID of $11,000, interest rates of 12% and is convertible into shares of the Company’s common stock at 60% of the lowest trading price for the common stock during the twenty (20) trading day period ending on the latest complete trading day prior to the conversion date, matures April 2020, net unamortized discount of $18,725 and $134,435 as of March 31, 2020 and June 30, 2019, respectively. 135,275 19,565 Two term notes total value $103,289, issued from April 2019 to July 2019 of $58,750 in principal, $10,000 in extension fees, $21,789 in additional fees, and an OID of $12,750, interest rate of 12% and is convertible into shares of the Company’s common stock at the lesser of 55% of the lowest trading price for the common stock during the twenty (20) trading day period ending on the latest complete trading day prior to the issuance date or 55% of the lowest trading price for the common stock during the twenty (20) trading day period ending on the latest complete trading day prior to the conversion date, matures from January 2020 to July 2020, net unamortized discount of $9,287 and $30,967 as of March 31, 2020 and June 30, 2019, respectively. A total of $10,000 has been paid. 84,002 7,533 $263,000 face value, issued from an assignment in October 2019, interest rates of 10% and is convertible into shares of the Company’s common stock at $0.02 per share, matures March 2020. 263,000 - Total convertible notes payable – non-related parties 5,518,670 4,443,837 Less current portion 5,518,670 4,443,837 Convertible notes payable – non-related parties, long-term $ - $ - During the nine months ended March 31, 2020, The Company evaluated the amendments under ASC 470-50, “ Debt - Modification and Extinguishment” From July 12, 2019 through October 18, 2019, the Company issued three convertible notes to non-related parties for a total of $541,355, of which $463,750 in principal and $77,605 in OID, that mature from July 12, 2020 to August 2, 2020. The notes bear between 10% to 12% interest per annum. The Company also assumed $21,789 in additional fees added to principal during the period. During the nine months ended March 31, 2020, the Company made cash payment of $120,204 toward principal various notes discussed above, had $10,000 in extension fees, converted $81,101 in principal, and assigned one note for $20,000 in principal and $3,468 in accrued interest into a non-related party note payable. During the nine months ended March 31, 2020, the Company also assigned two non-related party notes totaling $78,000 in principal as well as three non-related party convertible notes for $185,000 in principal into a non-related party note payable totaling $263,000. Notes Payable – Related Parties Notes payable due to related parties consisted of the following as of March 31, 2020 and June 30, 2019, respectively: Notes Payable – Related Parties March 31, June 30, 2020 2019 $5,000 face value, issued in November 2016, interest rate of 0%, which is due on demand. $ 5,000 $ 5,000 Various term notes with total face value of $213,000, issued from February 2017 to April 2019, interest rates of 0%, matured June 30, 2019. The notes are currently in default. 213,000 213,000 $58,200 face value, issued from June 2019 to February 2020, interest rate of 0%, matures June 2020. 58,200 12,000 Total notes payable – related parties 276,200 230,000 Less current portion 276,200 230,000 Notes payable - related parties, long term $ - $ - From July 15, 2019 through March 31, 2020, the Company issued notes to a related party for a total of $46,200 that all mature on June 30, 2020. The notes bear 0% interest per annum. The Company evaluated the notes for imputed interest and found it to be immaterial. Notes Payable – Non-Related Parties Notes payable due to non-related parties consisted of the following as of March 31, 2020 and June 30, 2019, respectively: Notes Payable – Non-Related Parties March 31, June 30, 2020 2019 Various term notes with a total face value of $442,325 issued from August 2017 to March 2020, of which $428,500 in principal, $4,250 of extension fees, and an OID of $11,075, interest rate of 0%, matured from December 2018 to April 2020 net of unamortized discount of $6,119 and $992 as of March 31, 2020 and June 30, 2019, respectfully. A total of $161,125 has been paid on principal and $13,200 has been converted on principal. One of the notes and accrued interest with a total face value of $52,000 was assigned to a non-related parties convertible note payable with a face value of $263,000 in October 2019. All but two notes are currently in default. $ 211,381 $ 209,758 Various notes with a total face value of $127,000 issued from August 2017 to December 2019, interest rate of 10%, matured from December 2018 through April 2020 net of unamortized discount of $696 and $0 as of March 31, 2020 and June 30, 2019, respectively. All but one note is currently in default. 126,304 102,000 Two term notes with total face value of $107,000, issued from September 2017 through March 2019, interest rate of 8% per month, matured from September 2018 and April 2019 net of unamortized discount of $0 as of March 31, 2020 and June 30, 2019. One of the notes and accrued interest with a total face value of $81,000 was assigned to non-related parties notes payable with a total face value of $900,204, and the other note and interest with a total face value of $26,000 was assigned to non-related parties convertible notes payable with a face value of $263,000 in September 2019 and October 2019, respectively. - 107,000 $225,000 face value, issued in March 2018, interest rate of 30%, matured March 2019 net of unamortized discount of $0 as of March 31, 2020 and June 30, 2019. The note and accrued interest were assigned to a non-related party notes payable with a total face value of $900,204 in September 2019. - 225,000 $260,000 face value, issued in June 2018, an additional $21,000 was added to principal by the noteholder, interest rate of 0%, matured December 2018 net of unamortized discount of $0 as of March 31, 2020 and June 30, 2019, of which $31,000 has been paid. The note and accrued interest were reassigned to non-related parties notes payable with a total face value of $900,204 in September 2019. - 250,000 $160,000 face value, issued in November 2018, interest rate of 5% per month, matured February 2019 net of unamortized discount of $0 as of March 31, 2020 and June 30, 2019. The note and accrued interest were reassigned to a non-related party notes payable with a total face value of $900,204 in September 2019. - 160,000 Four notes and one convertible note were assigned totaling $900,204 in September 2019, interest rate of 15%, matures April 2020 net of unamortized discount of $0 as of March 31, 2020. 900,204 - Two term notes with a face value of $100,000, issued in November 2019, interest rate of 5%, matures April 2020, net of unamortized discount of $1,113 as of March 31, 2020. 98,887 - $425,000 face value, issued in November 2019 resulting from a settlement agreement, interest rate of 0%, matures December 2022, net of unamortized discount of $0 as of March 31, 2020, of which $117 has been paid. 424,883 - Total note payable – non-related parties 1,761,659 1,053,758 Less current portion 1,761,659 1,053,758 Notes payable – non-related parties, long-term $ - $ - During the nine months ended March 31, 2020, The Company evaluated the amendments under ASC 470-50, “ Debt - Modification and Extinguishment” From July 9, 2019 to March 27, 2020, the Company issued eleven notes to non-related parties for a total of $312,325, $303,500 in principal and $8,825 in OID, that mature from October 14, 2019 to April 19, 2020. The notes bear rates from 0% to 10% interest per annum. The Company evaluated the non-interest-bearing notes for imputed interest and found it to be immaterial. As additional consideration, the Company issued 1,000,000 warrants to purchase shares of Common Stock valued at $12,595 and issued 3,000,000 shares of Common Stock Valued at $1,500. During the nine months ended March 31, 2020, the Company assigned five non-related party notes totaling $716,000 in principal and $160,736 in accrued interest as well as a non-related party convertible note for $20,000 in principal and $3,468 in accrued interest into a non-related party note payable totaling $900,204. On November 4, 2019, the Company issued a note to a non-related party for a total of $425,000 as part of a settlement agreement, that matures December 1, 2022. The note bears a rate of 0% interest per annum. The settlement agreement was for prior advertising services totaling $527,767. The Company recorded a gain on settlement of debt of $102,767. |