CONVERTIBLE NOTES

9 Months Ended

Sep. 30, 2020

Long-term Debt, Unclassified [Abstract]

CONVERTIBLE NOTES

19. CONVERTIBLE NOTES

Convertible Notes Payable at September 30, 2020 and December 31, 2019, are comprised of the following:

	September 30,			December 31,
	2020			2019
8% Convertible promissory note	$	—		$	935,772
12% Convertible promissory note		—			815,218
4% Convertible promissory note		660,000			660,000
12% November 2019 convertible promissory note		—			350,000
12% August 2020 convertible promissory note		330,000			—
April 2020 convertible promissory note		100,000			—
Total convertible notes payable		1,090,000			2,760,990
Less:
Unamortized debt discounts		(332,162	)		(355,227	)
Total convertible notes payable, net of financing cost	$	757,838		$	2,405,763
Less: current portion		(392,044	)		(2,100,990	)
Convertible notes payable, net of financing cost – long-term portion	$	365,794		$	304,773

8% Convertible Promissory Note

On November 15, 2019, the Company entered into an exchange agreement with a lender pursuant to which the Company issued to the lender a convertible promissory note in the principal amount of $935,772 with an interest rate of 8% per annum. The 8% convertible promissory note is convertible into shares of the Company’s common stock at conversion price of $1.80. During the nine months ended September 30, 2020, the Company issued 529,425 shares of common stock upon the conversion of principal and interest of $952,965. Since the proceeds received by the investor from the sales of common stock were less than the amount of principal and accrued interest, the investor was due a true up payment in the amount of $210,049, which was recognized as additional interest expense.

12% Convertible Promissory Note

On February 5, 2020 the Company entered into an exchange agreement (the “February 2020 Exchange Agreement”) with an institutional investor pursuant to which the Company issued to the investor a 12% convertible promissory note in the principal amount of $295,000 with a conversion price of $1.45 per share of common stock and a 12% promissory note in the principal amount of $585,919. These two notes were issued upon the exchange of the 12% Convertible Promissory Note, in the principal amount of $815,218, issued on September 26, 2019. On February 25, 2020, the Company issued to the investor 203,448 shares of the Company’s common stock upon the conversion of principal of $295,000. Since the exchange provided the institutional investor with a substantive conversion feature, the debt instruments were determined to be substantially different and a loss on extinguishment of $20,345 was recognized. During the three months ended September 30, 2020, Esousa purchased the 12% promissory note in the principal amount of $585,919 from the institutional investor (See Note 17).

April 2020 Convertible Promissory Note

On April 13, 2020, the Company issued a convertible promissory note in the principal amount of $100,000 with an interest rate of 10% per annum and a five-year warrant to purchase shares of the Company’s common stock equal to 50% of the number of shares of common stock issuable pursuant to the convertible promissory note, at an exercise price equal to $1.17 per share of common stock. The number of shares to be issued upon conversion of the note shall be equal to (x) the principal and accrued but unpaid interest due on the note being exchanged multiplied by 1.35, divided by (y) the closing bid price effective on date of conversion, provided, however, that the Company shall theretofore have obtained the approval of the issuance of the shares of common stock by the NYSE American. The total number of shares of the Company’s common stock to be issued to creditor in connection with the conversion of the note shall be adjusted based upon the VWAP of the Company’s common stock over the applicable pricing period. The amount of the adjustment shall be determined by dividing (x) the aggregate amount of principal and interest converted multiplied by 1.1, by (y) the greater of (I) seventy-five percent (75.0%) of the VWAP of the Company’s common stock over the applicable pricing period, or (II) $0.35 per share.

May 2020 Convertible Promissory Note

On May 28, 2020, the Company entered into a securities purchase and exchange agreement with an institutional investor. Pursuant to the agreement, the Company exchanged a 12% short-term promissory note in the principal amount of $235,796 for a new note due and payable on June 30, 2020 (the “Exchanged Note”) that would become convertible into common stock of the Company should the Company be in default under the terms of the Exchanged Note. In addition, pursuant to the agreement, the Company issued to the investor a note due and payable on November 28, 2020 in the principal amount of $200,000 that became convertible into the Company’s common stock commencing June 30, 2020 with an original issue discount of twenty percent (20%). In conjunction with the issuance of the Convertible Note, the Company also issued to the investor a warrant to purchase an aggregate of 400,000 shares of Common Stock at an exercise price of $1.07. The exercise of the warrant is subject to approval of the NYSE American. During the three months ended September 30, 2020, Esousa purchased both the Exchanged Note and the Convertible Note from the institutional investor (See Note 17).