Quad M Solutions, Inc. - Quarter Report: 2021 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the Quarterly Period Ended March 31, 2021

Commission file number: 1-03319

Quad M Solutions, Inc.

(Exact name of registrant as specified in its charter)

Registrant’s Telephone Number, Including Area Code: (732) 423-5520

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Act): Yes [  ] No [X]

As of May 23, 2021, there were 45,566,686 shares of the issuer’s common stock outstanding.

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

QUAD M SOLUTIONS, INC.

(fka MINERAL MOUNTAIN MINING & MILLING COMPANY)

CONDENSED CONSOLIDATED BALANCE SHEETS

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

QUAD M SOLUTIONS, INC.

(fka MINERAL MOUNTAIN MINING & MILLING COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

QUAD M SOLUTIONS, INC.

(fka MINERAL MOUNTAIN MINING & MILLING COMPANY)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

QUAD M SOLUTIONS, INC.

(fka MINERAL MOUNTAIN MINING & MILLING COMPANY)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

The accompanying unaudited notes are an integral part of these condensed consolidated financial statements.

QUAD M SOLUTIONS, INC

(fka MINERAL MOUNTAIN MINING & MILLING COMPANY)

Notes to Condensed Consolidated Financial Statements

(Unaudited)

March 31, 2021

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Quad M Solutions, Inc (“the Company”), f/k/a Mineral Mountain Milling and Mining Company, was incorporated under the laws of the State of Idaho on August 4, 1932 for the purpose of mining and exploring for non-ferrous and precious metals, primarily silver, lead and copper. Until April 16, 2019, the Company had two wholly owned subsidiaries, Nomadic Gold Mines, Inc., an Alaska corporation, and Lander Gold Mines, Inc., a Wyoming corporation (the “MMMM Mining Subsidiaries”).

On March 22, 2019 the Company entered into two separate Share Exchange Agreements (“SEAs”) pursuant to which it agreed to acquire 100% of the capital stock of two newly-organized, privately-held third party entities, NuAxess 2, Inc., a Delaware corporation (‘NuAxess”), and PR345, Inc., a Texas corporation n/k/a OpenAxess, Inc. (“OpenAxess”). In consideration for the separate SEAs, the Company agreed upon the closing of the SEA to issue 400,000 shares of Series C Preferred Stock to the control shareholders of NuAxess and PR345, n/k/a OpenAxess and issued 400,000 shares of Series D Preferred Stock to the minority, non-control shareholders of the NuAxess and PR345, n/k/a OpenAxess.

The closing of the two SEAs occurred on April 16, 2019, at which date NuAxess and PR345, n/k/a as OpenAxess became wholly owned subsidiaries of the Company. In addition, on April 16, 2019, the Company sold 75% of its equity interests in the MMMM Mining Subsidiaries to Aurum, LLC, a newly organized Nevada corporation (“Aurum”) formed and controlled by Sheldon Karasik, the Company’s former CEO, Chairman and a principal shareholder, pursuant to the terms of a Share Exchange and Assignment Agreement (the “MBO Agreement”) for nominal consideration of $10, and the assumption by Aurum of all of the liabilities of the MMMM Mining Subsidiaries. In addition, as a condition to the closing of the SEAs, NuAxess and/or PR345 shall make a payment of $100,000 into an account designated by Aurum as working capital for the operations of the MMMM Mining Subsidiaries. The $100,000 was funded by an institutional investor in consideration for the issuance of 18,182 shares of Series E Convertible Preferred Stock. See Notes 6 and 8 below.

Reference is made to Recent Developments-Former MMMM Mining Subsidiaries under Note 3 – Former Mining Operations, and Note 6 – Share Exchange and Assignment Agreement, below. The purpose of entering into the MBO Agreement was to transfer all control of the Company’s former wholly-owned MMMM Mining Subsidiaries to Aurum with the Company retaining a 25% equity interest in the MMMM Mining Subsidiaries. Effective on September 15, 2019, the Company divested 6% of its equity interest in the MMMM Mining Subsidiaries to an unaffiliated third party for nominal consideration in the amount of $2000, represented by a note payable, reducing its equity interest from 25% to 19%. Other than its minority equity interest, the Company has no control nor any involvement in the management or operations of the former MMMM Mining Subsidiaries.

On May 13, 2019, the Company filed a Definitive Information Statement on Schedule 14C for the purpose of implementing corporate actions to: (i) increase the authorized shares of common stock, par value $0.001 (“Common Stock”) from 100 million shares to 900 million shares (the “Authorized Common Stock Share Increase”); and (ii) change the name of the Company from Mineral Mountain Mining & Milling Company to Quad M Solutions, Inc. (the “Name Change”).

On June 7, 2019, the Company filed Articles of Amendment to its Articles of Incorporation with the Secretary of State of the State of Idaho effecting the Name Change. On June 14, 2019 the Company filed Articles of Amendment to its Articles of Incorporation with the Secretary of State of the State of Idaho effecting the Authorized Common Stock Share Increase. In addition, on July 19, 2019, the Company obtained the requisite approval from FINRA for the Name Change.

The foregoing unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles in the United States of America for complete financial statements. These unaudited interim financial statements should be read in conjunction with the Company’s audited financial statements for the year ended September 30, 2020. In the opinion of management, the unaudited interim financial statements furnished herein includes all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented. Operating results for the six-month period ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending September 30, 2021.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of Quad M Solutions, Inc and its two wholly owned subsidiaries, NuAxess and Open Axess, is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States and have been consistently applied in the preparation of the financial statements.

Fair Value of Financial Instruments

The Company’s financial instruments as defined by ASC 825-10-50, include cash, receivables, accounts payable and accrued expenses. All instruments are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at September 30, 2020 and March 31, 2021.

The standards under ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. FASB ASC 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:

Level 1. Observable inputs such as quoted prices in active markets;

Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3. Unobservable inputs in which there is little of no market data, which require the reporting entity to develop its own assumptions.

The Company has convertible debt of $945,962 measured at fair value at March 31, 2021.

The Company has convertible debt of $818,962 measured at fair value at September 30, 2020.

Going Concern

As shown in the accompanying financial statements, the Company has incurred cumulative operating losses since inception. As of March 31, 2021, the Company has limited financial resources with which to achieve its objectives and attain profitability and positive cash flows from operations. As shown in the accompanying balance sheets and statements of operations, the Company has an accumulated deficit of $17,788,702. The Company’s working capital deficit is $3,671,254.

Achievement of the Company’s objectives will depend on its ability to obtain additional financing, to generate revenue from current and planned business operations, and to effectively operating and capital costs.

The Company plans to fund the operations of its two wholly owned subsidiaries, NuAxess and PR345, by potential sales of its common stock and/or by issuing debt securities to institutional investors. However, there is no assurance that the Company will be able to achieve these objectives, therefore substantial doubt about its ability to continue as a going concern exists.

Provision for Taxes

Income taxes are provided based upon the liability method of accounting pursuant to ASC 740-10-25 Income Taxes – Recognition. Under the approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard imposed by ASC 740-10-25-5 to allow recognition of such an asset. See Note 8.

Revenue Recognition

Sales revenues are generally recognized in accordance with the SAB 104 Public Company Guidance, when an agreement exists and price is determinable, the services are rendered, net of discounts, returns and allowance and collectability is reasonably assured. We are often entitled to bill our customers and receive payment from our customers in advance of recognizing the revenue. In the instances in which we have received payment from our customers in advance of recognizing revenue, we include the amounts in deferred or unearned revenue on our consolidated balance sheet.

Prior Period Reclassifications 

Certain prior period amounts have been reclassified to conform to current period presentation in this Report.

NOTE 3 – FORMER MINING OPERATIONS

On April 24, 2019, the Company filed a Form 8-K reporting that on April 16, 2019, the Company entered into a Share Exchange and Assignment Agreement (the “MBO Agreement”) between the Company and Aurum, LLC, a newly organized Nevada corporation formed by Sheldon Karasik, the Company’s former CEO, Chairman and principal shareholder for the purpose of entering into the MBO Agreement. Pursuant to the MBO Agreement, the Company sold, transferred and assigned to Aurum 75% of the capital stock of the MMMM Mining Subsidiaries for cash consideration of $10 plus the assumption by Aurum of all liabilities of the MMMM Mining Subsidiaries. The Company retained a 25% equity interest in the MMMM Mining Subsidiaries. Effective on September 15, 2019, the Company divested 6% of its equity interest in the MMMM Mining Subsidiaries to an unaffiliated third party for nominal consideration in the amount of $2000, represented by a note payable reducing its equity interest from 25% to 19%. Other than its minority 19% equity interest, the Company has no control nor any involvement in the management or operations of the former MMMM Mining Subsidiaries nor are the financial results of the former MMMM Mining Subsidiaries included in the accompanying interim financial statements.

NOTE 4 – ACQUISITION OF WHOLLY OWNED SUBSIDIARIES

On April 24, 2019, the Company filed a Form 8-K reporting that effective on April 16, 2019, the Company completed the closing of the two separate Share Exchange Agreements with unaffiliated third parties, dated March 22, 2019, pursuant to which the Company acquired 100% of the capital stock of NuAxess 2, Inc., a Delaware corporation, and PR345, Inc. n/k/a OpenAxess, Inc., a Texas corporation. Pursuant to these Agreements, the Company acquired all of the capital stock of NuAxess and PR345 in exchange for the issuance to the shareholders of NuAxess and PR345 shares of newly authorized Series C and D Convertible Preferred Stock, par value $0.10 per share (the “Series C and Series D Preferred”). Pursuant to the respective Certificates of Designation, as amended, applicable to the Series C and Series D Preferred, the holders of said shares are subject to, among other provisions, beneficial ownership limitations which provide that none of the holders of Series C and Series D Preferred nor any affiliates can exercise their conversion rights if, as a result of such conversions, a holder (including any affiliates) would own in excess of 4.99% of the Company’s outstanding shares. The Share Exchange Agreement transactions were valued at $80,000 and, as a result, a loss on acquisition in the amount of $76,900 was recorded

NOTE 5 – SHARE EXCHANGE AND ASSIGNMENT AGREEMENT

On April 16, 2019, the Company entered into a Share Exchange and Assignment Agreement (the “MBO Agreement”) with Aurum, LLC (“Aurum”), a newly formed Nevada corporation organized by Sheldon Karasik, the Company’s former CEO, Chairman and a principal shareholder for the purpose of acquiring 75% of the capital stock of the MMMM Mining Subsidiaries from the Company for cash consideration of $10 plus the assumption by Aurum of all of the liabilities of the Mining Subsidiaries. On the date of closing of the MBO Agreement, the Company made a payment of $100,000 to Aurum, which proceeds were to be used by Aurum to fund the operations of the MMMM Mining Subsidiaries. The $100,000 was funded by an institutional investor in consideration for the issuance of 18,182 shares of Series E Convertible Preferred Stock.

The MBO Agreement also required the Company to allocate 20% of the proceeds received by the Company under the Crown Bridge Equity Line, if any, to pay Aurum for the operations of the MMMM Mining Subsidiaries, among other terms and conditions. In connection with the MBO Agreement, Aurum assumed all of the liabilities of the MMMM Mining Subsidiaries, which were disclosed to the Company as totaling approximately $96,673. As a result of this transaction, a loss of $403,327 was recorded.

NOTE 6 – INVESTMENTS

Investments in debt and marketable securities, other than investments accounted for under the equity method, are classified as trading, available-for-sale or held-to-maturity. Our marketable equity investments are classified as either trading or available-for-sale with their cost basis determined by the specific identification method. Our investments in debt securities are carried at either amortized cost or fair value. Investments in debt securities that the Company has the positive intent and ability to hold to maturity are carried at amortized cost and classified as held-to-maturity. Investments in debt securities that are not classified as held-to-maturity are carried at fair value and classified as either trading or available-for-sale. Realized and unrealized gains and losses on trading securities and realized gains and losses on available-for-sale securities are included in net income. Unrealized gains and losses, net of deferred taxes, on available-for-sale securities are included in our consolidated balance sheets as a component of AOCI, except for the change in fair value attributable to the currency risk being hedged.

Available for Sale Securities and Held to Maturity

As of March 31, 2021 and 2020, our available for sale securities had a fair value of $5,718 and $0, respectively, and consisted primarily of equity securities. The Company had net unrealized gains on available for sale securities of $684 and $0 as of March 31, 2021 and 2020, respectively. The Company did not have any held to maturity securities.

Trading Securities

As of March 31, 2021 and 2020, the Company had no outstanding trading securities. The Company’s trading securities primarily consist of the short term trading of options. The company had net realized income from trading securities of $19,707 and $0 for the period ended March 31, 2021 and 2020, respectively.

NOTE 7 – CONVERTIBLE DEBT

On or about November 27, 2018, the Company issued a convertible promissory note to an institutional investor for the principal sum of $63,000.00, together with interest at 12% per annum, with a maturity date of November 27, 2019 (the “Note”). The Note was convertible at any time during the period beginning 180 days following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into shares of Common Stock at a Variable Conversion Price, which is equal to 58% multiplied by the Market Price defined as the average of the lowest two (2) Trading Prices for the Company’s Common Stock during the preceding 15 trading day period prior to the Conversion Date. The Company paid $3,000 as a fee which is recorded as a debt discount and being amortized over the life of the loan.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.1770 was $131,158 using a binomial pricing model and was calculated as a derivative liability discount to the Note. That amount is recorded as a new contra-note payable, but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the Note. Because of the derivative nature of the $131,158 valuation of the conversion feature, $71,158 is recorded as an expense in the current period and reported as a loss on issuance of convertible debt. An accredited investor acquired the note from the institutional investor, with the consent of the Company, in consideration for the payment of the outstanding principal, accrued interest and prepayment penalty in the aggregate amount of $96,816. The Company then issued a replacement convertible promissory note payable to the acquiring institutional investor for the principal sum of $96,816 with identical terms to the original note (interest at 12% per annum, maturity date of November 27, 2019, conversion rights and conversion price.) This transaction was treated as an extinguishment and reissuance of the original note and resulted in accelerated recognition of interest expense for original issue discount debt discount of $1,471, interest expense for derivative liability debt discount of $26,425 and a loss on extinguishment in the amount of $29,943.

The conversion feature of the replacement note represents an embedded derivative. A derivative liability with an intrinsic value of $0.1775 was $292,344 using a binomial pricing model and was calculated as a derivative liability discount to the Note. That amount is recorded as a new contra-note payable amount, but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the Note. Because of the derivative nature of the $292,344 valuation of the conversion feature, $195,528 was recorded as an expense and reported as a loss on issuance of convertible debt.

On or about November 29, 2019, the Company and the institutional investor entered into a Note Extension Agreement (“Extension Agreement”). Pursuant to the Extension Agreement the maturity date was extended to November 30, 2020.

During the period ended March 31, 2021, $0 of regular interest and $0 of derivative liability discount was expensed. During the period ended March 31, 2020, $9,061 of regular interest and $32,993 of derivative liability discount was expensed.

On or about October 1, 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $94,000, together with interest at the rate of 10% per annum with a maturity date of September 30, 2020. The investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 60% multiplied by the Market Price (representing a discount rate of 50%), in which Market Price is the lowest closing bid price for the Company’s Common Stock during the preceding 20 trading day period including the Conversion Date.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.04487 was $210,363 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $210,363 valuation of the conversion feature, $116,363 is recorded as an expense and reported as a loss on issuance of convertible debt.

During the period ended March 31, 2021, $0 of regular interest and $0 of derivative liability discount was expensed. During the period ended March 31, 2020, $4,687, of regular interest, $0 of original issue and $46,871 of derivative liability discount was expensed.

On or about September 1, 2020, the Company entered into a Note Modification Agreement (“Modification”) in which the above two notes in the amount of $96,816 of principal and $20,403 of accrued interest and another note in the amount of $94,000 in principal and $8,627 of accrued interest (described below) were superseded and consolidated into a single new long-term note in the Principal amount of $250,000. The new note bears interest at a rate of 8% per annum and has a maturity date of December 31, 2021.

In December 2020, the investor converted $96,000 of Principal due under the Modification into 2,400,000 shares of common stock. In January 2021, the investor converted the remaining $134,000 into 3,350,000 shares of common stock and fully retired the note.

During the period ended March 31, 2021, $4,910 of regular interest and $225,993 of derivative liability discount was expensed, there was no corresponding expense during the period ended March 31, 2020

On or about April 25, 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $75,000, together with interest at the rate of 12%per annum, with a maturity date of April 25, 2020. The investor had the right at any time during the period beginning 180 days following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price equal 58% multiplied by the Market Price, representing a discount rate of 42%, in which Market Price is the average of the lowest two Trading Prices for the Company’s Common Stock during the preceding 20 trading day period including the Conversion Date. The Company paid $1,250 in original issue discount and $3,000 as a fee both of which are recorded as a debt discount and being amortized over the life of the loan.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.1062 was $139,348 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded OID and transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $139,348 valuation of the conversion feature, $69,348 was recorded as an expense and reported as a loss on issuance of convertible debt.

Between December 2019 and June 2020, the investor converted all of the outstanding principal and interest in the amount $75,000 of principal and $10,580 of accrued interest into 615,293 post-split shares of common stock.

During the period ended March 31, 2021, $0 of regular interest, $0 of original issue discount and $0 of derivative liability discount was expensed. During the period ended March 31, 2020, $4,243 of regular interest, $2,500 of original issue discount, and $35,000 of derivative liability discount was expensed.

On or about April 29, 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $66,000, together with interest at the rate of 12% per annum, with a maturity date of April 29, 2020. The investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 58% multiplied by the Market Price (representing a discount rate of 42%), in which Market Price is the average of the lowest two Trading Prices for the Company’s Common Stock during the preceding 20 trading day period including the Conversion Date. The Company paid $6,000 in original issue discount and $3,000 as a fee both of which are recorded as a debt discount and being amortized over the life of the loan.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.1510 was $175,334 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded OID and transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $175,334 valuation of the conversion feature, $118,334 was recorded as an expense and reported as a loss on issuance of convertible debt.

During the period ended March 31, 2021, $7,898 of regular interest, $0 of original issue discount and $0 of derivative liability discount was expensed. During the period ended March 31, 2020, $3,971 of regular interest, $4,500 of original issue discount, and $28,500 of derivative liability discount was expensed.

On or about May 7, 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $50,000, together with interest at the rate of 12% per annum, with a maturity date of May 7, 2020. The investor had the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 60% multiplied by the Market Price (representing a discount rate of 40%), in which Market Price is the average of the lowest two Trading Prices for the Company’s Common Stock during the preceding 20 trading day period prior to the Conversion Date. The Company paid $3,500 as a fee which is recorded as a debt discount and being amortized over the life of the loan.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.1607 was $131,162 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded OID and transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $131,162 valuation of the conversion feature, $84,662 was recorded as an expense in the current period and reported as a loss on issuance of convertible debt.

During the period ended March 31, 2021, $5,485 of regular interest, $0 of original issue discount and $0 of derivative liability discount was expensed. During the period ended March 31, 2020, $3,008, of regular interest, $1,750 of original issue discount, and $23,250 of derivative liability discount was expensed.

On or about May 17, 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $50,000, together with interest at the rate of 12% per annum, with a maturity date of February 17, 2020. The investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 58% multiplied by the Market Price, representing a discount rate of 42%, in which Market Price is the lowest bid price for the Company’s Common Stock during the preceding 20 trading day period including the Conversion Date. The Company paid $5,000 as a fee which is recorded as a debt discount and being amortized over the life of the loan.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.0902 was $76,989 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $76,989 valuation of the conversion feature, $31,989 was recorded was an expense and reported as a loss on issuance of convertible debt.

On January 21, 2020, the May 17, 2019 note was assigned to another investor with the original terms of the note remaining unchanged.

During the period ended March 31, 2021, $5,984 of regular interest, $0 of original issue discount and $0 of derivative liability discount was expensed. During the period ended March 31, 2020, $3,715, of regular interest, $2,536 of original issue discount, and $22,826 of derivative liability discount was expensed.

On or about May 21, 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $110,000, together with interest at the rate of 8% per annum, with a maturity date of November 21, 2019. The investor has the right at any time during the period beginning 180 days following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 60% multiplied by the Market Price, representing a discount rate of 40%, in which Market Price is the lowest bid price for the Company’s Common Stock during the preceding 20 trading day period including the Conversion Date. The Company paid $5,000 as a fee which is recorded as a debt discount and being amortized over the life of the loan.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.0765 was $138,861 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $138,861 valuation of the conversion feature, $38,861 was recorded as an expense and reported as a loss on issuance of convertible debt.

Between May 2020 and June 2020, the investor converted all of the outstanding principal and interest in the amount $110,000 of principal and $19,222 of accrued interest into 1,495,119 post-split shares of common stock.

During the period ended March 31, 2021, $0 of regular interest, $0 of original issue discount and $0 of derivative liability discount was expensed. During the period ended March 31, 2020, $11,518, of regular interest, $2,826 of original issue discount, and $28,261 of derivative liability discount was expensed.

On or about June 11, 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $70,000, together with guaranteed interest at the rate of 15% per annum with a six-month minimum, with a maturity date of September 11, 2019. The investor has the right if the note is defaulted to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 50% multiplied by the Market Price, representing a discount rate of 50%, in which Market Price is the lowest trading price for the Company’s Common Stock during the preceding 30 trading day period prior to the Conversion Date. The Company paid $20,000 in original issue discount which is recorded as a debt discount and being amortized over the life of the loan.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.0631 was $122,694 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $122,694 valuation of the conversion feature, $72,694 was recorded as an expense and reported as a loss on issuance of convertible debt.

On September 25, 2019, a third-party institutional investor acquired the $70,000 note dated June 11, 2019, with the consent of the Company, paying the outstanding principal, accrued interest and prepayment penalty in the aggregate amount of $95,760. The Company then issued a replacement convertible promissory note payable to third-party purchaser for the principal sum of $95,760 with interest at 10% per annum, a maturity date of September 25, 2020, granting the purchaser the right at any time to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal to the lesser of 60% multiplied by the average of the two lowest trading prices during the 20 trading days preceding the date of the note, or the average of the two lowest trading prices for the Company’s Common Stock during the preceding 20 trading day period prior to the Conversion Date. This transaction was treated as an extinguishment of the original note and resulted in recognition a loss on extinguishment in the amount of $49,762.

The conversion feature of this replacement note represents an embedded derivative. A derivative liability with an intrinsic value of $0.04407 was $145,522 using a binomial pricing model and was calculated as a derivative liability discount to the Note. That amount is recorded as a new contra-note payable amount, but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the Note. Because of the derivative nature of the $145,522 valuation of the conversion feature, $49,762 was recorded as an expense and reported as a loss on issuance of convertible debt.

Between January 2020 and May 2020, the investor converted all of the outstanding principal and interest in the amount $95,760 of principal and $5,644 of accrued interest into 705,850 post-split shares of common stock.

During the period ended March 31, 2021, $0 of regular interest and $0 of derivative liability discount was expensed. During the period ended March 31, 2020, $4,618 of regular interest and $47,880 of derivative liability discount was expensed.

On or about July 1, 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $112,500, together with interest at the rate of 12% per annum with a maturity date of December 25, 2020, which investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 60% multiplied by the Market Price, representing a discount rate of 40%, in which Market Price is the average of the two lowest trading prices for the Company’s Common Stock during the preceding 20 trading day period prior to the Conversion Date. The Company paid fees of $122,500 which was recorded as a debt discount and being amortized over the life of the loan

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.0696 was $182,517 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $182,517 valuation of the conversion feature, $82,517 was recorded aas an expense and reported as a loss on issuance of convertible debt.

On April 1, 2020, the investor assigned $62,541 of principal and interest to another investor. Between April 2020 and May 2020, that investor converted all of the assigned principal into 840,024 post-split shares of common stock.

Between April 2020 and May 2020, the investor also converted the remaining $62,541 of principal and $2,551 of accrued interest into 761,862 post-split shares of common stock.

During the period ended March 31, 2021, $0 of regular interest, $0 of original issue discount and $0 of derivative liability discount was expensed. During the period ended March 31, 2020, $6,768, of regular interest, $4,167 of original issue discount, and $33,333 of derivative liability discount was expensed.

On or about July 12 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $75,000, together with interest at the rate of 12% per annum with a maturity date of April 12, 2020, which investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 50% multiplied by the Market Price, representing a discount rate of 50%, in which Market Price is the lowest trading price (average of the two lowest closing bid prices) for the Company’s Common Stock during the preceding 25 trading day period prior to the Conversion Date. The Company paid $7,500 in original issue discount, fees of $2,750 and issued warrants valued at $27,911 all of which are recorded as a debt discount and being amortized over the life of the loan

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.0416 was $91,496 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $91,496 valuation of the conversion feature, $54,656 was recorded as an expense in the current period and reported as a loss on issuance of convertible debt.

Between January 2020 and June 2020, the investor converted the outstanding $75,000 of principal and $6,149 of accrued interest into 754,604 post-split shares of common stock.

During the period ended March 31, 2021, $0 of regular interest, $0 of original issue discount and $0 of derivative liability discount was expensed. During the period ended March 31, 2020, $4,485, of regular interest, $27,819 of original issue discount, and $24,515 of derivative liability discount was expensed.

On or about August 13 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $225,000, together with interest at the rate of 10% per annum with a maturity date of February 13, 2020, which investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal to the lower of $0.08 and 60% of the average of the two lowest closing bid prices for the Company’s Common Stock during the preceding 20 trading day period prior to the Conversion Date. The Company paid $22,500 in original issue discount and fees of $7,500 which are recorded as a debt discount and being amortized over the life of the loan. Additionally, the Company issued warrants valued at $479,670, this amount is also recorded as a debt discount, but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. As a result of this cap, $284,670 is recorded as an expense and reported as a loss on issuance of convertible debt.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.0754 was $642,857 using a binomial pricing model and was calculated as a derivative liability discount to the note. Because the entire note now was fully discounted by the amounts above, the $642,857 wa recorded as an expense and reported as a loss on issuance of convertible debt.

On February 13, 2020, the note entered a maturity date default resulting in a default premium of $94,600 being added to the principal of the note and the interest rate increasing to 18%.

Between February 2020 and June 2020, the investor converted the outstanding $225,000 of principal, $94,600 of default premium and $27,656 of accrued interest into 2,943,441 post-split shares of common stock.

During the period ended March 31, 2021, $0 of regular interest, $0 of original issue discount and $0 of derivative liability discount was expensed. During the period ended March 31, 2020, $15,925, of regular interest and $166,304 of original issue was expensed.

On or about August 29 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $55,000, together with interest at the rate of 8% per annum with a maturity date of August 28, 2020, which investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is 60% of the average of the two lowest closing bid prices for the Company’s Common Stock during the preceding 20 trading day period prior to the Conversion Date. The Company paid $5,000 in original issue discount and fees of $2,500 which are recorded as a debt discount and being amortized over the life of the loan.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.05368 was $84,403 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $84,403 valuation of the conversion feature, $36,903 was recorded as an expense and reported as a loss on issuance of convertible debt.

Between March 2020 and May 2020, the investor converted the outstanding $55,000 of principal and $2,828 of accrued interest into 353,123 post-split shares of common stock.

During the period ended March 31, 2021, $0 of regular interest, $0 of original issue discount and $0 of derivative liability discount was expensed. During the period ended March 31, 2020, $2,237, of regular interest, $3,602 of original issue and $22,815 of derivative liability discount was expensed.

On or about November 12, 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $59,400, together with interest at the rate of 12% per annum with a maturity date of November 12, 2020. The investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal to the lesser of 60% multiplied by the Market Price (representing a discount rate of 50%), in which Market Price is the average of the two lowest closing bid prices for the Company’s Common Stock during the 20 trading day period prior to the date of the note, or 60% multiplied by the Market Price (representing a discount rate of 40%), in which Market Price is the average of the two lowest closing bid prices for the Company’s Common Stock during the preceding 20 trading day period prior to the Conversion Date.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.0483 was $125,504 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $125,504 valuation of the conversion feature, $75,504 was recorded as an expense in the current period and reported as a loss on issuance of convertible debt.

Between May 2020 and June 2020, the investor converted the outstanding principal of $59,400 and accrued interest of $3,564 into 639,021 of post-split shares of common stock.

During the period ended March 31, 2021, $0 of regular interest, $0 of original issue discount and $0 of derivative liability discount was expensed. During the period ended March 31, 2020, $2,772, of regular interest, $3,596 of original issue and $19,126 of derivative liability discount was expensed

On or about December 20, 2019, the Company issued a convertible promissory note to an institutional investor for the principal sum of $33,333, together with interest at the rate of 10% per annum with a maturity date of February 13, 2020. The investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal to the lower of $0.02 and 60% of the average of the two lowest closing bid prices for the Company’s Common Stock during the preceding 20 trading day period including the Conversion Date. The Company paid $8,333 in original issue discount and fees which are recorded as a debt discount and being amortized over the life of the loan. Additionally, the Company issued warrants valued at $98,000, this amount is also recorded as a debt discount, but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. As a result of this cap, $73,000 is recorded as an expense and reported as a loss on issuance of convertible debt.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.0179 was $29,833 using a binomial pricing model and was calculated as a derivative liability discount to the note. Because the entire note now was fully discounted by the amounts above, the $29,833 was recorded as an expense and reported as a loss on issuance of convertible debt.

During the period ended June 30, 2020, the Company paid this note in full.

During the period ended March 31, 2021, $0 of regular interest, $0 of original issue discount and $0 of derivative liability discount was expensed. During the period ended March 31, 2020, $944, of regular interest, $23,964 of original issue and $0 of derivative liability discount was expensed.

On or about January 17, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $50,000, together with interest at the rate of 10% per annum with a maturity date of October 11, 2020. The investor has the right at any time following 180 days of the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal to the lower of $0.02 and 50% of the average of the two lowest trading prices for the Company’s Common Stock during the preceding 30 trading day period prior to the Conversion Date.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $4.94 was $247,000 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $247,000 valuation of the conversion feature, $197,000 was recorded as an expense in the current period and reported as a loss on issuance of convertible debt.

During the period ended March 31, 2021, $5,304 of regular interest and $2,052 of derivative liability discount was expensed. During the period ended March 31, 2020, $1,014, of regular interest, $0 of original issue and $13,806 of derivative liability discount was expensed.

On or about March 3, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $112,750, together with interest at the rate of 12% per annum, and a default interest amount of 24%, with a maturity date of January 11, 2021. The Company paid $12,750 in original issue discount and fees which are recorded as a debt discount and being amortized over the life of the loan. Additionally, the Company issued warrants valued at $32,214, this amount is also recorded as a debt discount, but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. The investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 60% of the average of the two lowest closing prices for the Company’s Common Stock during the preceding 20 trading day period prior to the Conversion Date.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $3.64 was $271,345 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $271,345 valuation of the conversion feature, $203,560 was recorded as an expense and reported as a loss on issuance of convertible debt.

On September 15, 2020, the investor converted $55,193 of principal and $7,228 of accrued interest into 917,395 of post-split shares of common stock.

During the period ended December 31, 2020 the investor converted the remaining principal of $57,557, $670 of accrued interest and $1,500 in financing fee into 1,203,822 shares of common stock

During the period ended March 31, 2021, $0 of regular interest, $0 of original issue discount and $0 of derivative liability discount was expensed. During the period ended March 31, 2020, $1,789, of regular interest, $2,869 of original issue and $19,126 of derivative liability discount was expensed.

On or about June 4, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $75,000, together with interest at the rate of 12% per annum, and a default interest amount of 18%, with a maturity date of June 4, 2021. The Company paid $2,000 in original issue discount and fees which are recorded as a debt discount and being amortized over the life of the loan. The investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 42% of the lowest closing price for the Company’s Common Stock during the preceding 15 trading day period prior to the Conversion Date.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $.3637 was $201,137 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $201,137 valuation of the conversion feature, $128,137 was recorded as an expense and reported as a loss on issuance of convertible debt.

On December 11, 2020 the investor converted the outstanding principal of $75,000 and $4,512 of accrued interest into 806,413 shares of common stock.

During the period ended March 31, 2021, $0 of regular interest, $0 of original issue discount and $0 of derivative liability discount was expensed. There was no corresponding expense during the period ended March 31, 2020.

On or about June 5, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $220,000, together with interest at the rate of 8% per annum, and a default interest amount of 18%, with a maturity date of June 5, 2021. The Company paid $30,000 in original issue discount and fees which are recorded as a debt discount and being amortized over the life of the loan. The investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 60% of the of the lowest closing price for the Company’s Common Stock during the preceding 20 trading day period prior to the Conversion Date, or $1.00.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $.30314 was $479,972 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $479,972 valuation of the conversion feature, $289,972 was recorded as an expense in the current period and reported as a loss on issuance of convertible debt.

On December 11, 2020 the investor converted principal of $40,000 into 404,040 shares of common stock.

During the period ended March 31, 2021 the investor converted principal of $95,000 into 1,040,750 shares of common stock.

During the period ended March 31, 2021, $7,139 of regular interest, $14,959 of original issue discount and $94,740 of derivative liability discount was expensed. There was no corresponding expense during the period ended March 31, 2020.

On or about June 8, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $44,000, together with interest at the rate of 8% per annum, and a default interest amount of 24%, with a maturity date of June 10, 2021. The Company paid $6,000 in original issue discount and fees which are recorded as a debt discount and being amortized over the life of the loan. The investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 60% of the of the lowest closing price for the Company’s Common Stock during the preceding 20 trading day period prior to the Conversion Date, or $1.00.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $.29498 was $67,600 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $67,600 valuation of the conversion feature, $29,600 was recorded as an expense and reported as a loss on issuance of convertible debt.

On December 16, 2020, the Company signed a Standstill and Revival Agreement with this investor, pursuant to which the debt holder agrees to not tender any notices of conversion for a period of six (6) months from the date of the agreement. In consideration of the agreement, the company issued 20,000 shares of common stock valued at $4,340, and made a cash payment of $21,800. These amounts were recorded as financing fees.

During the period ended March 31, 2021, $1,7800 of regular interest, $2,992 of original issue discount and $18,948 of derivative liability discount was expensed. There was no corresponding expense during the period ended March 31, 2020.

On or about June 10, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $44,000, together with interest at the rate of 8% per annum, and a default interest amount of 24%, with a maturity date of June 10, 2021. The Company paid $6,000 in original issue discount and fees which are recorded as a debt discount and being amortized over the life of the loan. The investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at a Variable Conversion Price which is equal 60% of the of the lowest closing price for the Company’s Common Stock during the preceding 20 trading day period prior to the Conversion Date, or $1.00.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $.3603 was $82,569 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $82,569 valuation of the conversion feature, $44,569 was recorded as an expense and reported as a loss on issuance of convertible debt.

On December 16, 2020 the investor converted the outstanding principal of $44,000 and $1,774 of accrued interest into 462,368 shares of common stock.

During the period ended March 31, 2020, $660 of regular interest, $4,136 of original issue discount and $26,196 of derivative liability discount was expensed. There was no corresponding expense during the period ended March 31, 2020.

On or about July 1, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $173,500, together with interest at the rate of 12% per annum, and a default interest amount of 24%, with a maturity date of June 15, 2021. The Company paid $28,675 in original issue discount and fees which are recorded as a debt discount and being amortized over the life of the loan. Additionally, the Company issued two warrants valued at $210,092, this amount is also recorded as a debt discount, but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. The investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at the lowest closing price during the previous 5-day period ending on the latest complete day prior to the date of the note or the Volume Weighted Average Price (“VWAP”) for the 5 trading days prior to the date of conversion.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $.3116 was $168,946 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $168,946 valuation of the conversion feature, $168,946 was recorded as an expense and reported as a loss on issuance of convertible debt.

During the period ended March 31, 2021, $10,526 of regular interest and $90,479 of original issue discount was expensed. There was no corresponding expense during the period ended December 31, 2019.

On or about July 6, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of up to $150,000, together with interest at the rate of 10% per annum, the first twelve months being guaranteed, and a default interest amount of 15%, with a maturity date of twelve months from the effective date of each tranche. The investor has the right at any time following the date of each tranche to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at the lower of 60% of the lesser of the lowest traded price or lowest closing bid price during the previous twenty five day period prior to the date of the note and 60% of the lesser of the lowest traded price or lowest closing bid price during the previous twenty five day period prior to the date of conversion.

On or about July 6, 2020, the first tranche of the above convertible promissory note was received by the Company, with a maturity date of July 6, 2021. The Company paid $8,000 in original issue discount and fees which are recorded as a debt discount and being amortized over the life of the loan. Additionally, the Company issued warrants valued at $27,083, this amount is also recorded as a debt discount, but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $.2996 was $89,167 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $89,167 valuation of the conversion feature, $74,250 was recorded as an expense and reported as a loss on issuance of convertible debt.

During the period ended March 31, 2021, $2,493 of regular interest, $17,257 of original issue discount and $7,337 of derivative liability discount was expensed. There was no corresponding expense during the period ended March 31, 2020.

On or about August 28, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $110,000, together with interest at the rate of 10% per annum, and a default interest amount of 24%, with a maturity date of August 27, 2021. The Company paid $15,000 in original issue discount and fees which are recorded as a debt discount and being amortized over the life of the loan. Additionally, the Company issued a warrant valued at $15,625, this amount is also recorded as a debt discount, but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. The investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at 60% of the lowest closing price during the previous 20-day period ending on the latest complete day prior to the date of the note.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $.2085 was $155,957 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $155,957 valuation of the conversion feature, $76,582 was recorded as an expense and reported as a loss on issuance of convertible debt.

During the period ended March 31, 2021, $4,917 of regular interest, $15,312 of original issue discount and $39,688 of derivative liability discount was expensed. There was no corresponding expense during the period ended March 31, 2020.

On or about April 1, 2020, the Company issued a promissory note to an institutional investor for the principal sum of $150,000, together with interest at the rate of 1.5% per month, subject to a fixed minimum of $2,250 per month. The lender was also granted 4% of collections received by the Company, from which interest would be paid first and any remaining amount would be applied to the outstanding principal.

On or about June 1, 2020 the above promissory note was amended to increase the outstanding principal to $300,000, and the fixed minimum was increased to $4,500.

On or about September 21, 2020, the above promissory note was amended, restated and consolidated into a convertible debt note in the amount of $600,000, with a maturity date of March 31, 2022. On the first day of each month a fixed minimum interest payment of $9000 is due. The investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at $0.30 per share.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $.0751 was $132,388 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable.

During the period ended March 31, 2021, $54,000 of regular interest, $27,000 of original issue discount and $43,571 of derivative liability discount was expensed. There was no corresponding expense during the period ended March 31, 2020.

On or about October 21, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $55,000, together with interest at the rate of 10% per annum, with a maturity date of June 16, 2021. The investor has the right after 180 days following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at the lower of $0.20 or the Variable Conversion Price which is equal to 70% multiplied by the Market Price (representing a discount rate of 30%), in which Market Price is the lowest closing price for the Company’s Common Stock during the preceding 20 trading day period preceding the Conversion Date. The Company paid $5,000 in original issue discount and $3,500 as a fee both of which are recorded as a debt discount and being amortized over the life of the loan. Additionally, the Company issued 50,000 shares of common stock valued at $11,000, which was also recorded as a debt discount and is being amortized of the life of the loan.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.1883 was $192,143 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded OID and transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $192,143 valuation of the conversion feature, $156,593 was recorded as an expense in the current period and reported as a loss on issuance of convertible debt.

During the period ended March 31, 2021, $6,765 of regular interest, $13,191 of original issue discount and $24,049 of derivative liability discount was expensed. There was no corresponding expense during the period ended March 31, 2020.

On or about October 22, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $55,000, together with interest at the rate of 12% per annum, with a maturity date of October 21, 2021. The investor has the right after 180 days following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at the lower of $0.20 or the Variable Conversion Price which is equal to 60% multiplied by the Market Price (representing a discount rate of 40%), in which Market Price is the lowest closing price for the Company’s Common Stock during the preceding 20 trading day period preceding the Conversion Date. The Company paid $5,000 in original issue discount and $3,500 as a fee both of which are recorded as a debt discount and being amortized over the life of the loan.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.1951 was $232,262 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded OID and transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $232,262 valuation of the conversion feature, $185,762 was recorded as an expense and reported as a loss on issuance of convertible debt.

During the period ended March 31, 2021, $2,893 of regular interest, $3,736 of original issue discount and $20,440 of derivative liability discount was expensed. There was no corresponding expense during the period ended March 31, 2020.

On or about November 10, 2020, the Company issued a convertible promissory note to an institutional investor for the principal sum of $116,600, together with interest at the rate of 10% per annum, with a maturity date of August 10, 2021. A lump-sum 10% interest payment was immediately due on the issued date and was added to the principal balance and payable on the maturity date. The investor has the right at any time following the date of the Note to convert all or any part of the outstanding and unpaid principal amount of the Note into fully paid and non-assessable shares of Common Stock at the Variable Conversion Price which is equal to 60% multiplied by the Market Price (representing a discount rate of 40%), in which Market Price is the lowest closing price for the Company’s Common Stock during the preceding 20 trading day period preceding the Conversion Date. The Company paid $11,660 in original issue discount and $4,940 as a fee both of which are recorded as a debt discount and being amortized over the life of the loan. Additionally, the Company issued 114,155 shares of common stock valued at $21,689, which was also recorded as a debt discount and is being amortized of the life of the loan.

The conversion feature of the note represents an embedded derivative. A derivative liability with an intrinsic value of $0.1538 was $163,028 using a binomial pricing model and was calculated as a derivative liability discount to the note. That amount is recorded as a new contra-note payable amount (similar to the recorded OID and transaction costs), but only for an amount not in excess of and thus capped by the otherwise undiscounted amount of the note payable. Because of the derivative nature of the $163,028 valuation of the conversion feature, $84,717 was recorded as an expense and reported as a loss on issuance of convertible debt.

During the period ended March 31, 2021, $16,684 of regular interest, $19,776 of original issue discount and $40,446 of derivative liability discount was expensed. There was no corresponding expense during the period ended March 31, 2020.

NOTE 8 – COMMON AND PREFERRED STOCK 

On May 13, 2019, the Company filed a Definitive Information Statement on Schedule 14 C for the purpose of increasing the authorized shares of common stock, par value $0.001 (“Common Stock”) from 100,000,000 shares to 900,000,000 shares of Common Stock.

Preferred Stock

Series B Super Voting Preferred Stock

On March 21, 2019, the Company, while under the control of former CEO, Chairman and principal shareholder, Sheldon Karasik, filed a Certificate of Designation amending the Articles of Incorporation and designating the rights and restrictions of one (1) share of newly authorized Series B Super Voting Preferred Stock, par value $0.10 per share (the “Series B Preferred Stock”), pursuant to resolutions approved by the Board of Directors (the “Board”) on November 5, 2018. On March 21, 2019, the Company issued to Sheldon Karasik, the Chief Executive Officer, President and Chairman of the Board, the one (1) share of Series B Preferred Stock for $0.16, which price was based on the closing price of the Company’s Common Stock of $0.16 as of November 5, 2018, the date of the issuance, which was approved by the Company’s then Board. Sheldon Karasik, as the holder of the Series B Preferred Stock, was entitled to vote together with the holders of the Company’s Common Stock upon all matters that may be submitted to holders of Common Stock for a vote, and on all such matters, the share of Series Voting Preferred Stock shall be entitled to that number of votes equal to 51% of the total number of votes that all issued and outstanding shares of Common Stock and all other securities of the Company are entitled to, as of any such date of determination, on a fully diluted basis. The Company filed the Certificate of Designation with the Secretary of State of Idaho on March 21, 2019. In connection with the closing of the SEAs and the MBO Agreement, Mr. Karasik transferred and assigned the Series B Preferred Stock to Pat Dileo, the Company’s newly appointed CEO and Chairman.

Series C and Series D Convertible Preferred Stock

On April 2, 2019, the Company filed two Certificates of Designation amending the Articles of Incorporation and the Certificates of Designation of the rights and restrictions of 400,000 shares of Series C Convertible Preferred Stock par value $0.10 and 400,000 shares of Series D Convertible Preferred Stock par value $0.10, which were originally issued pursuant to two separate Share Exchange Agreements, see Note 5. The shares of Series C Preferred Stock may convert into a number of shares of the Company’s Common stock equal to a total of 67.5% of the Company’s outstanding shares of Common Stock on the date of closing on a fully diluted basis provided the beneficial ownership of the holder of Series C Stock does not exceed 4.99% of the outstanding shares of the Company’s Common Stock upon said conversion and subject to the preference, rights, limitations, qualifications and restrictions of the Series C Convertible Preferred Stock as described in the Certificate of Designation. The Series C Holders will not have any voting rights.

During the quarter ended September 30, 2020, a total of 2,080 shares of the Series C Preferred Stock were converted into 950,000 shares of common stock.

During the quarter ended December 31, 2020, 3,275 shares of Series C Preferred Stock were converted into 2,000,000 shares of common stock.

During the quarter ended March 31, 2021, a total of 3,646 shares of Series C Preferred Stock were converted into 3,650,000 shares of common stock.

The shares of Series D Preferred Stock may convert into a number of shares of the Company’s Common stock equal to a total of 25% of the Company’s outstanding shares of Common Stock on the date of closing on a fully diluted basis provided the beneficial ownership of the holder of Series D Stock does not exceed 4.99% of the outstanding shares of the Company’s Common Stock upon said conversion and subject to the preference, rights, limitations, qualifications and restrictions of the Series C Convertible Preferred Stock as described in the Certificate of Designation. The Series D Holders will not have any voting rights.

Series E Convertible Preferred Stock

On April 8, 2019, the Company filed a Certificates of Designation amending the Articles of Incorporation and the Certificates of Designation of the rights and restrictions of 25,000 shares of Series E Convertible Preferred Stock with par value $0.10 and stated value $10. The shares of Series E Preferred Stock may convert into a number of shares of the Company’s Common stock equal to a total of thirty-three thousandths of a percent (0.00033%) of the Company’s outstanding shares of Common Stock on the date of closing on a fully diluted basis provided the beneficial ownership of the holder of Series E Stock does not exceed 4.99% of the outstanding shares of the Company’s Common Stock upon said conversion and subject to the preference, rights, limitations, qualifications and restrictions of the Series E Convertible Preferred Stock as described in the Certificate of Designation. The Series E Holders will not have any voting rights.

On April 8, 2019, the Company issued 18,182 shares of Series E Convertible Preferred Stock (“Series E Preferred”) to an institutional investor in consideration for funding the $100,000 payment made to Aurum pursuant to the MBO Agreement.

During the quarter ended March 31, 2021, a total of 1,365 shares of Series E Convertible Preferred stock were converted into 2,150,000 shares of common stock.

Series F Convertible Preferred Stock

On March 9, 2019, the Company filed a Certificates of Designation amending the Articles of Incorporation and the Certificates of Designation of the rights and restrictions of 20,750 shares of Series F Convertible Preferred Stock with par value $0.10 and stated value $10. The shares of Series F Preferred Stock may convert into a number of shares of the Company’s Common stock based on a Conversion Rate calculated as the “Conversion Amount divided by Conversion Price” where Conversion Amount is the sum of the Stated Value of Series F Preferred shares to be converted and $1,250 worth of Common Stock to cover the Preferred Shareholder’s transaction expenses and the Conversion Price is the lower of (i) the lowest Closing Bid Price , or (ii) the Fixed Price equal to $.04 per share, on the date of closing on a fully diluted basis provided the beneficial ownership of the holder of Series F Stock does not exceed 4.99% of the outstanding shares of the Company’s Common Stock upon said conversion and subject to the preference, rights, limitations, qualifications and restrictions of the Series F Convertible Preferred Stock as described in the Certificate of Designation. The Series F Holders will not have any voting rights.