XML 21 R12.htm IDEA: XBRL DOCUMENT v3.20.2
Convertible Note Payable and Notes Payable
9 Months Ended
Sep. 30, 2020
Debt Disclosure [Abstract]  
Convertible Note Payable and Notes Payable

NOTE 6 – CONVERTIBLE NOTE PAYABLE AND NOTES PAYABLE

 

Convertible Notes Payable

 

On April 1, 2018, the Company assumed a convertible promissory note in connection with the reverse acquisition. The funding was in tranches whereby the Company assumed the first tranche of $48,697. The Company received the remaining tranches totaling $57,395 during the year ended December 31, 2018. The Company received total funding of $106,092 as of December 31, 2018. The note had fees of $53,046 which were recorded as a discount to the convertible promissory note and are being amortized over the life of the loan using the effective interest method. The Company recorded interest expense of $0 during the nine months ended September 30, 2020.

 

The note is convertible into common stock at a price of 35% of the lowest three trading prices during the ten days prior to conversion. As of September 30, 2020, the convertible debt would convert to 5,511,273 common shares.

 

The note balance was $106,092 as of September 30, 2020 and December 31, 2019.

 

Derivative liabilities

 

The conversion features embedded in the convertible notes were evaluated to determine if such conversion feature should be bifurcated from its host instrument and accounted for as a freestanding derivative. In the convertible notes with variable conversion terms, the conversion feature was accounted for as a derivative liability. The derivatives associated with the term convertible notes were recognized as a discount to the debt instrument and the discount is amortized over the expected life of the notes with any excess of the derivative value over the note payable value recognized as additional interest expense at the issuance date.

  

The derivative liability was calculated using the Black-Scholes method over the expected terms of the convertible debt, with a risk-free rate of 0.17% and volatility of 100% as of September 30, 2020. Included in Derivative Income in the accompanying unaudited consolidated statements of operations is expense arising from the change in fair value of the derivatives of $2,193 during the nine months ended September 30, 2020.

 

Notes Payable

 

On April 5, 2020, the Company received a Small Business Administration (“SBA”) loan under the government’s assistance related to COVID-19. The SBA loan was for $169,495 with an interest rate of 0.98% and due in eight weeks. The SBA loan is to assist the Company in payroll during the COVID-19 time period. The SBA loan is forgivable if the Company payroll during this time utilizes all of the monies provided.

 

On April 29, 2020, the Company received the government assistance check of $10,000 related to the COVID-19 response by the government to assist companies during the pandemic.