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Bonds Payable

9 Months Ended

Sep. 30, 2020

Bonds Payable [Abstract]

13.

BONDS PAYABLE

Bonds payable consists of the following as of:

		September 30,				December 31,
		2020				2019
Bonds were originally issued by Func Food Group, Oyj and were reinstated as part of the purchase consideration to acquire the European Operations (see Note 10). The Bonds are Euro-denominated, unregistered, and were issued on October 25, 2019 at an initial nominal amount of approximately $9.1 million, less discount and issuance costs of approximately $0.7 million. The Bonds accrue interest at a stated interest rate of 6.00% per annum, due semi-annually in arrears, with the first interest payment due on April 30, 2020. The maturity date of the Bonds is October 30, 2020. The Bonds are carried at the nominal amount, less any unamortized discount and issuance costs. The original issuance discount amounted to approximately $381,000. The discount is amortized using the effective interest rate method. As of September 30, 2020, the unamortized balance of the discount is approximately $42,000. Amortization of the discount was approximately $339,000 for the nine months ended September 30, 2020. The bond issuance costs amounted to $188,000. The issuance costs are being amortized over a straight-line basis, given the short-term nature and that it does not result in a material difference from applying the effective interest rate method. Amortization of the total bond discounts for the nine months ended September 30, 2020 was $506,100. Fluctuations in currency resulted in a translation loss of $399,628, for the nine months ended September 30, 2020.

Upon maturity of the Bonds, Func Food Group, Oyj may, at its own election, convert up to 50% of the outstanding nominal amount of the Bonds into shares of common stock, at a conversion price relative to the 30-day weighted-average trading price of the Company’s common shares prior to the Acquisition.

At Func Food Group, Oyj’s election, the Bonds are callable at 103% at any time. Additionally, mandatory prepayments would be required in the event of either i) a capital raise consummated by the Company or ii) the sale of a certain product line of Func Food. To the fullest extent possible, the net proceeds derived from either event must first be applied towards prepayment of the bonds at 103%, plus any accrued but unpaid interest on the repaid amount.

The Bonds are unsubordinated and are guaranteed by Func Food and its direct and indirect subsidiaries. The Bonds are secured by substantially all the assets of Func Food. The Bonds contain certain financial covenants that are specific to Func Food, mainly related to minimum cash requirements at the end of each quarter. As of September 30, 2020, Func Food is in compliance with these covenants.		$	9,540,007			$	8,634,279

Total Bonds Payable		$	9,540,007			$	8,634,279