| Convertible Notes Payable |
NOTE 8 – CONVERTIBLE NOTES PAYABLE
Convertible notes payable consisted
of the following as of December 31:
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2019 |
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2018 |
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| Convertible note 2019-01. On April 18, 2019, the Company issued a convertible note payable in the amount $150,000. This note accrues interest at 10% per annum and originally matured on December 31, 2019, which was subsequently extended to March 31, 2020. This note and accrued interest may convert into shares of common stock at the conversion price then in effect (initially $24 per share, subject to adjustment, which resulted in a beneficial conversion feature) any time at the holder’s option or automatically upon maturity provided the 20-day volume weighted average price per share of the Company’s common stock upon maturity is at least $24 per share. The conversion price is subject to adjustment upon the issuance of the Company’s common stock or securities convertible into common stock at a price per share less than the then prevailing conversion price, other than specified exempt issuances; accordingly, on November 8, 2019, the conversion price was adjusted to $14 per share, which resulted in a beneficial conversion feature. (The conversion price was further adjusted after December 31, 2019 in connection with subsequent issuances and was equal to $4.27 per share as of March 30, 2020.) This note was also issued with a detachable warrant to purchase 2,500 shares of stock at $40 per share. The valuation of the conversion feature and detachable warrants and intrinsic value of the beneficial conversion feature resulted in the recognition of an additional $199,012 discount on this note. This note was fully repaid as of March 17, 2020. |
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$ |
150,000 |
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$ |
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2019 |
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2018 |
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| Convertible note 2019-03. On September 4, 2019, the Company issued a convertible note payable in the amount $108,696, with an original issue discount of $8,696 in exchange for $100,000. This note accrues interest at 8% per annum and matures on June 30, 2020. This note and accrued interest may convert into shares of common stock at $24 per share any time at the holder’s option, which resulted in a beneficial conversion feature. If this note, or any portion thereof, has not been repaid or converted in full on or prior to the maturity date, then repayment of the unpaid principal balance plus any accrued and unpaid interest thereon, shall be amortized over the following thirty-six (36) months. This note was also issued with a detachable warrant to purchase 1,000 shares of stock at $24 per share. The valuation of the detachable warrants resulted in the recognition of an additional $18,326 discount on this note. This note requires monthly interest payments. |
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108,696 |
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| Convertible note 2019-04. On September 25, 2019, the Company issued a convertible note payable in the amount $54,348, with an original issue discount of $4,348 in exchange for $50,000. This note accrues interest at 8% per annum and matures on June 30, 2020. This note and accrued interest may convert into shares of common stock at $24 per share any time at the holder’s option. If this note, or any portion thereof, has not been repaid or converted in full on or prior to the maturity date, then repayment of the unpaid principal balance plus any accrued and unpaid interest thereon, shall be amortized over the following thirty-six (36) months. This note was also issued with a detachable warrant to purchase 500 shares of stock at $24 per share. The valuation of the detachable warrants resulted in the recognition of an additional $4,190 discount on this note. This note requires monthly interest payments. |
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54,348 |
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| Convertible note 2019-05. On October 3, 2019, the Company issued a convertible note payable in the amount $27,174, with an original issue discount of $2,174 in exchange for $25,000. This note accrues interest at 8% per annum and matures on June 30, 2020. This note and accrued interest may convert into shares of common stock at $24 per share any time at the holder’s option. If this note, or any portion thereof, has not been repaid or converted in full on or prior to the maturity date, then repayment of the unpaid principal balance plus any accrued and unpaid interest thereon, shall be amortized over the following thirty-six (36) months. This note was also issued with a detachable warrant to purchase 250 shares of stock at $24 per share. The valuation of the detachable warrants resulted in the recognition of an additional $2,705 discount on this note. This note requires monthly interest payments. |
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27,174 |
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2019 |
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2018 |
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| Convertible note 2019-06. On October 10, 2019, the Company issued a convertible note payable in the amount $27,174, with an original issue discount of $2,174 in exchange for $25,000. This note accrues interest at 8% per annum and matures on June 30, 2020. This note and accrued interest may convert into shares of common stock at $24 per share any time at the holder’s option. If this note, or any portion thereof, has not been repaid or converted in full on or prior to the maturity date, then repayment of the unpaid principal balance plus any accrued and unpaid interest thereon, shall be amortized over the following thirty-six (36) months. This note was also issued with a detachable warrant to purchase 250 shares of stock at $24 per share. The valuation of the detachable warrants resulted in the recognition of an additional $2,505 discount on this note. This note requires monthly interest payments. |
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27,174 |
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- |
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| Convertible note 2019-08. On October 23, 2019, the Company issued a convertible note payable in the amount $108,696, with an original issue discount of $8,696 in exchange for $100,000. This note accrues interest at 8% per annum and matures on June 30, 2020. This note and accrued interest may convert into shares of common stock at $24 per share any time at the holder’s option. If this note, or any portion thereof, has not been repaid or converted in full on or prior to the maturity date, then repayment of the unpaid principal balance plus any accrued and unpaid interest thereon, shall be amortized over the following thirty-six (36) months. This note was also issued with detachable warrants to purchase 1,250 shares of stock at $30 per share and 1,250 shares of stock at $40 per share. The valuation of the detachable warrants resulted in the recognition of an additional $21,363 discount on this note. This note requires monthly interest payments. |
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108,696 |
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| Convertible note 2019-09. On October 29, 2019, the Company issued a convertible note payable in the amount $27,174, with an original issue discount of $2,174 in exchange for $25,000. This note accrues interest at 8% per annum and matures on June 30, 2020. This note and accrued interest may convert into shares of common stock at $24 per share any time at the holder’s option. If this note, or any portion thereof, has not been repaid or converted in full on or prior to the maturity date, then repayment of the unpaid principal balance plus any accrued and unpaid interest thereon, shall be amortized over the following thirty-six (36) months. This note was also issued with a detachable warrant to purchase 250 shares of stock at $24 per share. The valuation of the detachable warrants resulted in the recognition of an additional $2,295 discount on this note. This note requires monthly interest payments. |
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27,174
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2019 |
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2018 |
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| Convertible note 2019-10. On November 8, 2019, the Company issued a convertible note payable in the amount $16,304, with an original issue discount of $1,304 in exchange for $15,000. This note accrues interest at 8% per annum and matures on June 30, 2020. This note and accrued interest may convert into shares of common stock at $14 per share any time at the holder’s option, which resulted in a beneficial conversion feature. If this note, or any portion thereof, has not been repaid or converted in full on or prior to the maturity date, then repayment of the unpaid principal balance plus any accrued and unpaid interest thereon, shall be amortized over the following thirty-six (36) months. This note was also issued with a detachable warrant to purchase 150 shares of stock at $14 per share. The valuation of the conversion feature and detachable warrants and intrinsic value of the beneficial conversion feature resulted in the recognition of an additional $3,279 discount on this note. This note requires monthly interest payments. |
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16,304
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| Total notes payable |
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519,566 |
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| Less original issue discounts |
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(29,566 |
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| Convertible notes payable, net |
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490,000 |
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| Less conversion rights, warrant, and beneficial conversion feature discounts |
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(253,675 |
) |
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| Plus amortization of discounts |
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121,964 |
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| Total convertible notes payable, net |
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$ |
358,289 |
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$ |
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Discounts
Total discounts of $283,241 are
amortized using the interest method, which resulted in amortization recorded as interest expense of $121,964 for the year ended
December 31, 2019, respectively.
Interest expense
The Company incurred interest charges
of $17,877 and $0 during the years ended December 31, 2019 and 2018, respectively, on these notes payable of which $13,114 was
accrued and payable as of December 31, 2019.
Maturities
Future maturities of notes payable
are as follows as of December 31:
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