NOTE 13 – SUBSEQUENT EVENT

Shares issued for services

On April 1, 2020 (the "Effective Date"), the Company entered into an employment agreement with an accounting manager. Pursuant to this employment agreement, the Company agreed to grant a restricted stock award of 200,000 common shares of the Company which will vest on May 1, 2021. If the employee's employment is terminated without cause or for good reason (both as defined in the employment agreement), or a change of control event (as defined in the employment agreement) occurs, these shares will immediately vest. For any other termination of employment, unvested restricted stock shall immediately terminate. These shares were valued on the date of grant at $8,000, or $0.04 per common share, based on contemporaneous common share sales. In connection with these shares, the Company shall record stock-based compensation over the vesting period.

On March 31, 2020 and effective April 1, 2020, the Company entered into two one-year advisory board agreements with two individuals for services to be rendered on the Company's medical advisory board. In connection with these advisory board agreements, the Company issued an aggregate of 500,000 restricted common shares of the Company to these advisory board members. These shares vest on April 1, 2021. These shares were valued at $20,000, or $0.04 per common share, based on contemporaneous common share sales by the Company. In connection with this consulting agreement Company shall record stock-based consulting fees over the vesting period. 

On April 28, 2020, the Company entered into restricted stock award agreements (the "Restricted Stock Award Agreements") with executive officers and employees. Pursuant to the Restricted Stock Award Agreements, the Company agreed to grant restricted stock awards for an aggregate of 6,750,000 common shares of the Company which were valued at $270,000, or $0.04 per common share, based on contemporaneous common share sales. These shares will vest on May 1, 2021. If the employee's employment is terminated for any reason, these shares will immediately be forfeited. In the event of a change of control, the employee shall be 100% vested in all shares of restricted shares subject to these Agreements. Each executive officer and employee shall have the right to vote the restricted shares awarded to them and to receive and retain all regular dividends paid in cash or property (other than retained distributions), and to exercise all other rights, powers and privileges of a holder of shares of the stock, with respect to such restricted shares, with the exception that (a) the employee shall not be entitled to delivery of the stock certificate or certificates or electronic book entries representing such restricted shares until the shares are vested, (b) the Company shall retain custody of all retained distributions made or declared with respect to the restricted shares until such time, if ever, as the restricted shares have become vested, and (c) the employee may not sell, assign, transfer, pledge, exchange, encumber, or dispose of the restricted shares. In connection with these shares, the Company shall record stock-based compensation over the vesting period.

Common stock issued for cash

On May 11, 2020, the Company closed a subscription agreement with an accredited investor (the "Investor") whereby the Investor purchased 7,000,000 unregistered shares of the Company's common stock for proceeds of $161,000, or $0.023 per share. 

Common stock issued for debt conversion

During April 2020, the Company issued an aggregate of 2,500,000 common shares upon conversion of convertible debt of $44,530, accrued interest of $10,470 and fees of $500. The conversion prices were based on contractual terms of the related debt.

Common stock issued for conversion of Series A preferred shares

During April 2020, the Company issued 1,782,097 common shares upon conversion of 67,406 shares of Series A preferred shares with a stated redemption value of $67,406 and related accrued dividend payable of $1,348. The conversion price was based on contractual terms of the related Series A preferred shares.

On May 4, 2020, the Company issued 618,182 common shares upon conversion of 12,000 shares of Series A preferred shares with a stated redemption value of $12,000 and related accrued dividend payable of $240. The conversion price was based on contractual terms of the related Series A preferred shares.

On May 15, 2020, the Company issued 593,023 common shares upon conversion of 10,000 shares of Series A preferred shares with a stated redemption value of $10,000 and related accrued dividend payable of $200. The conversion price was based on contractual terms of the related Series A preferred shares. 

Common shares issued for deferred compensation

On April 17, 2020, the Company issued 203,125 common shares upon conversion of deferred compensation of $16,250. 

Convertible debt

On April 23, 2020, the Company closed on a Securities Purchase Agreement (the "April 2020 SPA") with an accredited investor. Pursuant to the terms of the April 2020 SPA, the Company issued and sold to this investor a convertible promissory note in the aggregate principal amount of $57,750 and a warrant to purchase up to 144,375 shares of the Company's common stock. The Company received net proceeds of $50,000, net of original issue discount of $5,000 and origination fees of $2,750. The Note bears interest at 12% per annum and becomes due and payable on January 23, 2021.

In accordance with the April 2020 and this Note, subject to the adjustments as defined in the April 2020 SPA and Note, the conversion price (the "Conversion Price") shall equal the lesser of: (i) the lowest Trading Price (as defined below) during the previous twenty-five Trading Day period ending on the latest complete Trading Day prior to the date of this Note, and (ii) the Variable Conversion Price (as defined below) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Company). The "Variable Conversion Price" shall mean 60% multiplied by the Market Price (as defined herein) (representing a discount rate of 40%). "Market Price" means the lowest Trading Price (as defined below) for the Company's common stock during the twenty-five Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. "Trading Price" means, for any security as of any date, the lesser of: (i) the lowest trade price on the applicable trading market as reported by a reliable reporting service ("Reporting Service") designated by the Holder or (ii) the closing bid price on the applicable trading market as reported by a Reporting Service designated by the Holder. The Company may prepay the Note at any time prior to its six-month anniversary, subject to pre-payment charges as detailed in the Note.

The April 2020 SPA and Note contain customary representations, warranties and covenants, including certain restrictions on the Company's ability to sell, lease or otherwise dispose of any significant portion of its assets. The Investor also has the right of first refusal with respect to any future equity (or debt with an equity component) offerings conducted by the Company until the 12-month anniversary of the Closing. The April 2020 SPA and the Note also provide for certain events of default, including, among other things, payment defaults, breaches of representations and warranties, bankruptcy or insolvency proceedings, delinquency in periodic report filings with the Securities and Exchange Commission, and cross default with other agreements. Upon the occurrence of an event of default, this investor may declare the outstanding obligations due and payable at significant applicable default rates and take such other actions as set forth in the Note.

The Warrants are exercisable at any time on or after the date of the issuance and entitles this investor to purchase shares of the Company's common stock for a period of five years from the initial date the warrants become exercisable. Under the terms of the Warrant, the holder is entitled to exercise the Warrant to purchase up to an aggregate of 144,375 shares of the Company's common stock at an initial exercise price of $0.10, subject to adjustment as detailed in the Warrants.

The Note and related Warrants include a down-round provision under which the Note conversion price and warrant exercise price could be affected on a full-ratchet basis by future equity offerings undertaken by the Company.

In connection with the issuance of this Note, the Company determined that the terms of the Note contain terms that are not fixed monetary amounts at inception. Accordingly, under the provisions of ASC 815-40 - Derivatives and Hedging – Contracts in an Entity's Own Stock, the embedded conversion options contained in the convertible instruments were bifurcated and accounted for as derivative liability at the date of issuance and shall be adjusted to fair value through earnings at each reporting date. The fair value of the embedded conversion option derivatives was determined using the Binomial valuation model. At the end of each period and on the date that debt is converted into common shares, the Company revalues the embedded conversion option derivative liabilities. In connection with the issuance of the April 23, 2020 Note, on the initial measurement date, the fair values of the embedded conversion option derivative of $89,976 was recorded as a derivative liability and was allocated as a debt discount up to the net proceeds of the Note of $44,187, with the remainder of $35,789 charged to current period operations as initial derivative expense.

In connection with the warrants issued in connection with this Note, the Company determined that the terms of the warrant contain terms that are fixed monetary amounts at inception and, accordingly, the warrant was not considered a derivative. The fair value of the warrant was determined using the Binomial valuation model. In connection with the warrants issued in connection with the April 2020 Note, the Company determined that the terms of the warrant contain terms that are fixed monetary amounts at inception and, accordingly, the warrant was not considered a derivative. The fair value of the warrant was determined using the Binomial valuation model. In connection with the issuance of this warrant, on the initial measurement date, the relative fair value of the warrant of $5,813 was recorded as a debt discount and an increase in paid-in capital.

Executive bonus

On April 28, 2020, the Company's board of directors approved a bonus to officers and an employee of the Company in the aggregate amount of $280,000 which shall be deferred.

Paycheck Protection Program Promissory Note

On April 28, 2020, the Company entered into a Paycheck Protection Program Promissory Note (the "PPP Note") with respect to a loan of $156,200 (the "PPP Loan") from Comerica Bank. The PPP Loan was obtained pursuant to the Paycheck Protection Program (the "PPP") of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES act") administered by the U.S. Small Business Administration ("SBA"). The PPP Loan matures on April 28, 2022 and bears interest at a rate of 1.00% per annum. The PPP Loan is payable in 18 equal monthly payments of approximately $8,900 commencing November 1, 2020. The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. The Company may apply to have the loan forgiven pursuant to the terms of the PPP if certain criteria are met.