NOTE 7. SHORT AND LONG TERM BORROWINGS

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

NOTE 7. SHORT AND LONG TERM BORROWINGS

NOTE 7.  SHORT AND LONG TERM BORROWINGS

On September 14, 2018, the Company issued a short-term convertible note payable for $50,000. The note was originally due on February 14, 2019 and bears interest at a rate of 15% per annum. The note is convertible into shares of common stock at $0.10 per share. The company is currently negotiating an extension with the noteholder, and has paid $5,000 as a principal payment during the quarter. This note is currently past due and is being negotiated to cure, nevertheless this note has no default provisions.

Short-term and Long-term borrowings, excluding acquisition related, consist of the following:	September 30,			December 31,
Short term debt;	2019			2018
Convertible Promissory Notes, bearing an annual interest rate of 15% secured, due 02/14/2019		45,000			50,000
Convertible Promissory Notes, bearing an annual interest rate of 12% secured, due 08/27/2019		199,181			250,000
Convertible Promissory Notes, bearing an annual interest rate of 15% secured, due 08/07/2020		1,517,063			-
Total short term debt		1,761,244			300,000
Long term debt;
Convertible Promissory Notes, bearing an annual interest rate of 15% secured, due 08/07/2020		-			717,391
Total short-term and long-term borrowings, before debt discount		1,761,244			1,017,391
Less debt discount		(872,101	)		(792,777	)
Total short-term and long-term borrowings, net	$	889,143		$	224,614

Short-term and Long-term borrowings, acquisition related, consist of the following:
Short-term borrowings – net of discount – acquisition related		1,571,840		81,136
Long-term borrowings – net of discount – acquisition related		2,100,000		143,478
Total short-term and long-term borrowings – acquisition related	$	3,671,840	$	224,614
Total short-term and long-term borrowings		889,143		224,614
Total short-term and long-term borrowings – Acquisition related		3,671,840		-
Total short-term and long-term borrowings	$	4,560,983	$	224,614

On August 7, 2018, we entered into a securities purchase agreement (“SPA”) with Discover Growth Fund, LLC (“Discover”), pursuant to which we issued a senior secured redeemable convertible debenture in the principal amount of $2,717,391 (of which $217,391 was retained by Discover as an original issue discount) (the “Debenture”), in exchange for $500,000 cash consideration and a promissory note issued to BYOC in the amount of $2,000,000 (the “Note”). Pursuant to the terms of the SPA, we issued to Discover a warrant to purchase up to 16,666,667 shares of our common stock, exercisable beginning on the six (6) month anniversary from the date of issuance for a period of three (3) years at an exercise price of $0.15 per share (the “Warrant”).

The Debenture is subject to interest at a rate of 8.0% per annum and can be converted into shares of the Company’s common stock at a price equal to the lower of (i) $0.15 per share of common stock, and (ii) if there has never been a trigger event (as defined in the Debenture), (A) the average of the 5 lowest individual trades of the shares of common stock, less $0.01 per share, or following any such trigger event, (B) 60% of the foregoing. However, at no time can the debenture be converted at a price below $0.001 per share.

During the first quarter 2019 Discover Growth Fund LLC issued the additional $2,000,000 to the Company and converted $1,060,486 of the aggregate debt. During the current quarter Discover Growth Fund LLC converted $77,020 of their outstanding debt.

On November 27, 2018, the Company received funding in conjunction with a convertible promissory note and a security purchase agreement dated November 27, 2018, in the amount of $250,000. The lender was Auctus Fund LLC. The notes have a maturity of August 27, 2019 and interest rate of 12% per annum and are convertible at a price of 60% of the lowest trading price on the primary trading market on which the Company’s Common Stock is then listed for the twenty-five (25) trading days immediately prior to conversion. The note may be prepaid, but carries a penalty in association with the remittance amount, as there is an accretion component to satisfy the note with cash. The Company is currently negotiating an extension with the noteholder as it is currently past due. As a result of a default provision, the interest rate has increased to 24%.