Convertible Notes Payable | Note 7. Convertible Notes Payable Convertible notes payable at September 30, 2022 and December 31, 2021, consist of the following: Schedule of Convertible Notes Payable September 30, December 31, Note 1 – Accredited investors $ - $ 25,000 Note 2 – Shareholder 100,000 100,000 Note 3 – Mercer Note 706,000 756,000 Note 4 – Mercer Note #2 440,000 - Total 1,246,000 881,000 Debt discount and issuance costs (122,189 ) (238,896 ) Total convertible notes payable 1,123,811 642,104 Less: current portion 1,123,811 542,104 Non-current portion $ - $ 100,000 Note 1 – Effective December 23, 2020, the Company issued a Convertible Promissory Note in the principal amount of $ 25,000 September 25, 2020 0 2,555 On February 23, 2022 the shareholder the outstanding principal of $ 25,000 59,415 0.47 14,854 0.705 Note 2 – Effective May 7, 2021, the Company issued a Convertible Promissory Note in the principal amount of $ 100,000 10 September 30, 2022 The Company may satisfy the Note upon maturity or Default, as defined, by the issuance of common shares at a conversion price equal to the greater of a 25% discount to the 15-day average market price of the Company’s common stock or $0.50. The principal and interest accrued are convertible at any time through the maturity date of September 30, 2022 at the option of the holder using the same conversion calculation 14,000 6,521 Note 3 – Effective August 10, 2021, the Company entered into a Securities Purchase Agreement with an accredited investor pursuant to which it issued to the investor an Original Issue Discount Secured Convertible Promissory Note (the “$806,000 Note”) in the principal amount of $ 806,000 930,000 750,000 The principal amount of the $806,000 Note and all interest accrued thereon is payable on August 10, 2022, and is secured by a lien on substantially all of the Company’s assets. The $806,000 Note provides for interest at the rate of 5 0.65 0.65 0.65 On November 11, 2021, Mercer Street Global Opportunity Fund, LLC (“Mercer Fund”), converted $ 50,000 76,923 0.65 The 930,000 three years 1.25 $806,000 As a result of the issuance of a $ 440,000 0.20 0.20 Mercer Fund converted $ 50,000 250,000 0.20 On October 17, 2022, the Company received notice from the manager of Mercer Fund of its agreement to forebear from the exercise of any rights it might have as a result of any defaults under the $806,000 Note and the related documents between the Company and the Mercer Fund, provided that the Mercer Fund The $806,000 Note continues to accrue interest at 5 As of September 30, 2022, all original issue discount and debt issuance costs, including the allocated relative fair value of the Warrants, have been recognized. The remaining principal balance of $ 706,000 $806,000 43,273 0 $806,000 15,446 204,835 34,060 Note 4 – Effective July 19, 2022, the Company entered into a Securities Purchase Agreement with Mercer Fund pursuant to which it issued an Original Issue Discount Secured Convertible Promissory Note (the “$440,000 Note”) in the principal amount of $ 440,000 550,000 400,000 The principal amount of the $440,000 Note and all interest accrued thereon is payable on July 19, 2023, and are secured by a lien on substantially all of the Company’s assets. The $440,000 Note provides for interest at the rate of 5 0.20 The $440,000 Note provides for various events of default similar to those provided for in similar transactions, including the failure to timely pay amounts due thereunder. The Note provides further that the Company will be liable to the Buyer for various amounts, including the cost of a buy-in, if the Company shall default in its obligation to register the shares issuable upon conversion of the Note for sale by the Buyer under the Securities Act or otherwise fails to facilitate Buyer’s sale of the shares issuable upon conversion of the Note as required by the terms of the Note. The 550,000 0.50 The Registration Rights Agreement requires the Company to file with the Securities and Exchange Commission within 60 days following the closing of the issuance of the $440,000 Note, a registration statement (the “Registration Statement”) with respect to all shares which may be acquired upon conversion of the $440,000 Note and exercise of the Warrant (the “Registrable Securities”) and to cause the Registration Statement to be declared effective no later than 90 days after the date of the issuance of the $440,000 Note, provided, that if the Company is notified by the SEC that the Registration Statement will not be reviewed or is no longer subject to further review and comments, the Company shall cause the Registration Statement to be declared effective on the fifth trading day following the date on which the Company is so notified. The Company is to cause the Registration Statement to remain continuously effective until all Registrable Securities covered by such Registration Statement have been sold, or may be sold pursuant to Rule 144 without the volume or other limitations of such rule, or are otherwise not required to be registered in reliance upon the exemption in Section 4(a)(1) or 4(a)(7) under the Securities Act. The Company accounts for the allocation of its issuance costs to its Warrants in accordance with ASC 470-20, Debt with Conversion and Other Options The Company estimated the fair value of the Warrants utilizing the Black-Scholes pricing model, which is dependent upon several assumptions such as the expected term of the Warrants, expected volatility of the Company’s stock price over the expected term, expected risk-free interest rate over the expected term and expected dividend yield rate over the expected term. The Company believes this valuation methodology is appropriate for estimating the fair value of warrants. The value allocated to the relative fair value of the Warrants was recorded as debt issuance costs and additional paid in capital. The principal, net of the original issue discount and debt issuance costs, including the allocated relative fair value of the Warrants, which are being recognized over the life of the $440,000 Note, along with associated interest, is recorded with current liabilities on the Company’s condensed consolidated balance sheets. As of September 30, 2022, the $440,000 Note had $ 4,219 89,860 32,329 |