Quarterly report pursuant to Section 13 or 15(d)

Convertible Note Payable (Tables)

v3.22.1
Convertible Note Payable (Tables)
3 Months Ended
Mar. 31, 2022
Schedule of Convertible Note Payable

Convertible note payable consists of the following at March 31, 2022 and December 31, 2021, respectively:

 Schedule of Convertible Note Payable

    March 31,     December 31,  
    2022     2021  
             
On September 24, 2021, the Company completed the sale of a (i) Promissory Note in the principal amount of $750,000 (the “Second AJB Note”) to AJB Capital Investments LLC (“AJB Capital”), (ii) a three-year warrant to purchase 1,500,000 shares of the Company’s common stock at an initial exercise price of $0.25 per share, and (iii) a three-year warrant to purchase 2,000,000 shares of the Company’s common stock at an initial exercise price of $0.50 per share, for an aggregate purchase price of $705,000, pursuant to a Securities Purchase Agreement between the Company and AJB Capital (the “Purchase Agreement”). The aggregate estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 197% and a call option value of $0.1053 and $0.1001, respectively, was $358,017, based on and is being amortized as a debt discount over the life of the loan. The Company received net proceeds of $678,750 after deductions of debt discounts, consisting of $45,000 pursuant to an original issue discount, $15,000 of legal fees and $11,250 of brokerage fees.
 
The Note matures on September 24, 2022 (the “Maturity Date”), bears interest at a rate of 8% per annum, and, following an event of default only, is convertible into shares of the Company’s common stock at a conversion price equal to the lesser of 90% of the lowest trading price during (i) the 20 trading day period preceding the issuance date of the note, or (ii) the 20 trading day period preceding date of conversion of the Note. The Note is also subject to covenants, events of defaults, penalties, default interest and other terms and conditions customary in transactions of this nature.
 
Pursuant to the Purchase Agreement, the Company paid a commitment fee to AJB Capital in the amount of $250,000 (the “Commitment Fee”) in the form of 1,250,000 shares of the Company’s common stock (the “Commitment Fee Shares”). During the six month period following the six month anniversary of the closing date, AJB Capital shall be entitled to be issued additional shares of common stock of the Company to the extent AJB Capital’s sale of the Commitment Fee Shares has resulted in net proceeds in an amount less than the Commitment Fee. The Commitment Fee Shares resulted in a debt discount of $150,062 that is being amortized over the life of the loan.
 
The obligations of the Company to AJB Capital under the Note and the Purchase Agreement are secured by a lien on the Company’s assets pursuant to a Security Agreement between the Company and AJB Capital.
  $ 750,000     $ 750,000  
                 
Total convertible notes payable     750,000       750,000  
Less: unamortized debt discounts     269,824       412,673  
Convertible note payable, net of discounts   $ 480,176     $ 337,327  
AJB capital [Member]  
Schedule of Convertible Debt Discounts

The Company recognized aggregate debt discounts on the convertible notes and notes payable to AJB Capital for the three months ended March 31, 2022 and the year ended December 31, 2021, as follows:

 Schedule of Convertible Debt Discounts

    March 31,     December 31,  
    2022     2021  
             
Fair value of 3,250,000 commitment shares of common stock   $ 418,312     $ 418,312  
Fair value of warrants to purchase 3,500,000 shares of common stock     358,017       358,017  
Original issue discounts     53,700       53,700  
Legal and brokerage fees     39,300       39,300  
Total debt discounts     869,329       869,329  
Amortization of debt discounts     599,505       456,656  
Unamortized debt discounts   $ 269,824     $ 412,673