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Convertible Notes Payable and Convertible Notes Payable to Related Parties (FaceBank Group, Inc. Pre-Merger)

3 Months Ended

9 Months Ended

12 Months Ended

Mar. 31, 2020

Sep. 30, 2020

Dec. 31, 2019

Convertible Notes Payable and Convertible Notes Payable to Related Parties

15.

Convertible Notes Payable

As of September 30, 2020 there were no convertible notes outstanding, and as of December 31, 2019, convertible notes outstanding totaled $1.4 million. During the three and nine months ended September 30, 2020, the Company repaid $2.8 million and $3.9 million of principal balances, and approximately $0.9 million of related interest expense and prepayment penalties owed on its convertible notes.

FaceBank Group, Inc Pre-Merger [Member]

Convertible Notes Payable and Convertible Notes Payable to Related Parties

Note 11 – Convertible Notes Payable

At March 31, 2020 and December 31, 2019, the carrying amounts of the convertible notes including the remaining principal balance plus the fair value of the derivative liabilities associated with the variable share settlement feature and unamortized discounts is as follows (in thousands):

		Issuance Date		Stated Interest Rate				Maturity Date		Principal				Unamortized Discount				Variable Share Settlement Feature at Fair Value				Carrying amount
Convertible notes
JSJ Investments (2)		12/6/2019			10	%		12/6/2020		$	255			$	(174	)		$	443			$	524
Eagle Equities (3)		12/12/2019			12	%		12/12/2020			210				(147	)			297				360
BHP Capital (4)		12/20/2019			10	%		12/20/2020			125				(85	)			120				160
GS Capital Partners (5)		1/17/2020			10	%		1/17/2021			150				(120	)			210				240
EMA Financial, LLC (6)		2/6/2020			10	%		11/6/2020			125				(100	)			204				229
Adar Alef, LLC (7)		2/10/2020			12	%		2/10/2021			150				(129	)			220				241
BHP Capital (8)		3/24/2020			10	%		3/24/2020			100				(95	)			99				104
Jefferson Street Capital, LLC (9)		3/24/2020			10	%		3/24/2020			100				(95	)			99				104
Balance at March 31, 2020										$	1,215			$	(945	)		$	1,692			$	1,962

		Issuance Date		Stated Interest Rate				Maturity Date		Principal				Unamortized Discount				Variable Share Settlement Feature at Fair Value				Carrying amount
Convertible notes
Adar Bays – Alef (1)		7/30/2019			10	%		7/30/2020			275				(159	)			379				495
JSJ Investments (2)		12/06/2019			10	%		12/6/2020			255				(238	)			422				439
Eagle Equities (3)		12/12/2019			12	%		12/12/2020			210				(199	)			285				296
BHP Capital (4)		12/20/2019			10	%		12/20/2020			125				(114	)			117				128

Balance at December 31, 2019										$	865			$	(710	)		$	1,203			$	1,358

The derivative liability results from the variable share settlement provision featured within the convertible notes issued by the Company. The fair value of the derivative liabilities was estimated using a Binomial Lattice model on the dates that the notes were issued and were subsequently revalued at March 31, 2020 and December 31, 2019, using the Monte Carlo simulation model with the following weighted average assumptions:

		March 31, 2020				December 31, 2019

Stock Price		$	7.74 – 9.45			$	8.91 – 10.15
Risk Free Interest Rate			0.12 – 1.56	%			1.52 - 1.60	%
Expected life (years)			0.33 – 1.00				0.58 – 1.00
Expected dividend yield			0	%			0	%
Expected volatility			91.3 – 134.0	%			90.0 – 95.3	%

Fair Value – Note Variable Share Settlement Feature (in thousands)		$	1,692			$	1,203

	(1)	On July 30, 2019, the Company issued a convertible promissory note to Adar Alef, LLC in the amount of $275,000. The note accrues interest at a rate of 12% per annum and matures on July 30, 2020. The note is not convertible until the six month anniversary of the note, at which time if the note has not already been repaid by the Company, the note holder shall be entitled to convert all or part of the note into shares of the Company’s common stock, at a price per share equal to 53% of the lowest trading price of the common stock for the twenty prior trading days upon which the conversion notice is received by the Company. On January 20, 2020, the Company repaid the principal balance of $275,000 and accrued interest of approximately $16,000.

	(2)	On December 6, 2019, the Company issued a convertible promissory note to JSJ Investments with a principal balance of $255,000. The Company received net proceeds of $250,000. The note matures on December 6, 2020 and bears interest at 10% per annum. The Company may prepay this note and unpaid interest on or prior to July 3, 2020. The loan and any accrued interest may be converted into shares of the Company’s common stock at a rate of 47% multiplied by the lowest trading price during the previous twenty (20) day trading period ending on the latest complete trading day prior to the conversion date.

	(3)	On December 12, 2019, the Company issued a convertible promissory note to Eagle Equities, LLC with a principal balance of $210,000. The Company received net proceeds of $200,000. The note matures on December 12, 2020 and bears interest at 12% per annum. The loan and any accrued interest may be converted into shares of the Company’s common stock, at any time after the six month anniversary of the note, at a rate of 53% multiplied by the lowest trading price during the previous twenty (20) day trading period ending on the latest complete trading day prior to the conversion date.

	(4)	On December 20, 2019, the Company issued a convertible promissory note to BHP Capital NY Inc. with a principal balance of $125,000. The Company received net proceeds of $122,500. The note matures on December 20, 2020 and bears interest at 10% per annum. The loan and any accrued interest may be converted into shares of the Company’s common stock at a rate of 61% multiplied by the lowest trading price during the previous fifteen (15) day trading period ending on the latest complete trading day prior to the conversion date. In connection with the promissory note, the Company issued 5,000 shares of its restricted common stock with a fair value of approximately $47,000. The Company will have the option to buy back the shares 180 days from the issue date, for a one-time payment of $8.00 per share.

	(5)	On January 17, 2020, the Company issued a convertible promissory note to GS Capital Partners, LLC. with a principal balance of $150,000. The note matures on January 17, 2021 and bears interest at 10% per annum. The loan and any accrued interest may be converted into shares of the Company’s common stock at a rate of 53% multiplied by the lowest trading price during the previous twenty (20) day trading period ending on the latest complete trading day prior to the conversion date.

	(6)	On February 6, 2020, the Company issued a convertible promissory note to EMA Financial, LLC. with a principal balance of $125,000. The note matures on November 6, 2020 and bears interest at 10% per annum. The loan and any accrued interest may be converted into shares of the Company’s common stock equal to the lower of (i) the lowest closing price of the common stock during the preceding twenty (20) day trading period ending on the latest trading day prior to the note issuance date or (ii) at a rate of 50% multiplied by the lowest trading price during the previous twenty (20) day trading period ending on the latest complete trading day prior to the conversion date.

	(7)	On February 10, 2020, the Company issued a convertible promissory note to Adar Alef, LLC. with a principal balance of $150,000. The note matures on February 10, 2021 and bears interest at 12% per annum. The loan and any accrued interest may be converted into shares of the Company’s common stock at a rate of 53% multiplied by the lowest trading price during the previous twenty (20) day trading period ending on the latest complete trading day prior to the conversion date.

	(8)	On March 24, 2020, the Company issued a convertible promissory note to BHP Capital NY Inc. with a principal balance of $100,000. The note matures on demand and bears interest at 10% per annum. The loan and any accrued interest may be converted into shares of the Company’s common stock at a rate of 61% multiplied by the lowest trading price during the previous fifteen (15) day trading period ending on the latest complete trading day prior to the conversion date.

	(9)	On March 24, 2020, the Company issued a convertible promissory note to Jefferson Street Capital, LLC. with a principal balance of $100,000. The note matures on demand and bears interest at 10% per annum. The loan and any accrued interest may be converted into shares of the Company’s common stock at a rate of 61% multiplied by the lowest trading price during the previous fifteen (15) day trading period ending on the latest complete trading day prior to the conversion date. On January 29, 2020, the Company issued a convertible promissory note to Auctus Fund, LLC. with a principal balance of $275,000. The note matures on November 29, 2020 and bears interest at 10% per annum. The loan and any accrued interest may be converted into shares of the Company’s common stock at a rate of 50% multiplied by the lowest trading price during the previous twenty five (25) day trading period ending on the latest complete trading day prior to the conversion date. On March 19, 2020, the Company repaid the principal balance and interest of approximately $4,000.

Note 12 - Convertible Notes Payable and Convertible Notes Payable to Related Parties

At December 31, 2019 and 2018, the carrying amounts of the convertible notes including the remaining principal balance plus the fair value of the derivative liabilities associated with the variable share settlement feature and unamortized discounts is as follows (in thousands):

		Issuance Date				Stated Interest Rate				Maturity Date				Principal				Unamortized Discount				Variable Share Settlement Feature at Fair Value				Carrying amount
Convertible notes
Adar Bays - Alef (4)			11/28/2018				10	%			11/28/2019				275				(159	)			379				495
JSJ Investments (7)			12/6/2019				10	%			12/6/2020				255				(238	)			422				439
Eagle Equities (8)			12/12/2019				12	%			12/12/2020				210				(199	)			285				296
BHP Capital (9)			12/20/2019				10	%			12/20/2020				125				(114	)			117				128

Balance at December 31, 2019														$	865			$	(710	)		$	1,203			$	1,358

		Issuance Date				Stated Interest Rate				Maturity Date				Principal				Unamortized Discount				Variable Share Settlement Feature at Fair Value				Carrying Amount
Convertible notes

Power Up (1*)			8/24/18				8	%			8/24/19			$	203			$	(131	)		$	152			$	224
Birchwood Capital (2)			11/6/18				10	%			5/6/19				50				(35	)			-				15
Power Up (3)			11/26/18				8	%			11/26/19				128				(115	)			96				109
Adar Bays - Alef (4)			11/28/18				10	%			11/28/19				193				(175	)			221				239
Total														$	574			$	(456	)		$	469			$	587

Convertible notes- Related Parties

Chairman (5) in default			10/12/15				22	%			8/1/17			$	265				-			$	549				814
Shareholder (6) in default			12/28/16				3	%			3/24/17				50				-				-				50
Total														$	315				-			$	549			$	864

Balance at December 31, 2018														$	889			$	(456	)		$	1,018			$	1,451

* The (#) references the notes described below

The derivative liability results from the variable share settlement provision featured within the convertible notes issued by the Company. The fair value of the derivative liabilities was estimated using the Monte Carlo simulation model on the dates that the notes were issued and were subsequently revalued at December 31, 2019 and 2018, with the following weighted average assumptions:

		December 31, 2019				December 31, 2018

Stock Price		$	8.91 - 10.15			$	6.75
Risk Free Interest Rate			1.52 1.60	%			2.61	%
Expected life (years)			0.58 – 1.00				0.73
Expected dividend yield			0	%			0	%
Expected volatility			90.0 – 95.3	%			92.8	%

Fair Value - Note Variable Share Settlement Feature (in thousands)		$	1,203			$	1,018

	(1)	On February 20, 2019, the Company settled the August 24, 2018, convertible promissory note issued to Power Up, repaying the principal balance of $202,500 and $66,369 for interest and penalties.

	(2)	On November 6, 2018, the Company issued a convertible promissory note to Birchwood Capital, LLC in the amount of $50,000. The note was due on May 6, 2019 and bears interest at 10% per annum. The loan and any accrued interest may be converted into shares of the Company’s common stock at a rate of $3.00 per share. The Company recorded a beneficial conversion feature discount of $50,000 on this note as of December 31, 2018. The note is currently past due. Accrued interest was approximately $4,500 and $1,000 as of September 30, 2019 and December 31, 2018, respectively. On October 11, 2019, the principal balance of $50,000 was converted into 16,666 shares of the Company’s common stock at share price of $3.00. The Company and Birchwood Capital, LLC, have agreed that this conversion fully satisfies the outstanding principal and accrued interest related to this note. During the year ended December 31, 2019, the Company reversed accrued interest of approximately $4,500.

	(3)	On November 26, 2018, the Company issued a convertible promissory note to Power Up Lending Group, LLC in the amount of $128,000. The note is due on November 26, 2019 and bears interest at 8% per annum. The loan and any accrued interest may be converted into shares of the Company’s common stock at a rate of 61% multiplied by the average for the three lowest traded prices during the previous ten (10) day trading period ending on the latest complete trading day prior to the conversion date. On April 25, 2019, the Company settled the note, repaying the principal balance of $128,000 and $39,000 for interest and penalties.

(4)

On July 30, 2019, the Company issued a convertible promissory note to Adar Alef, LLC in the amount of $275,000. The note accrues interest at a rate of 12% per annum and matures on July 30, 2020. The note is not convertible until the six month anniversary of the note, at which time if the note has not already been repaid by the Company, the note holder shall be entitled to convert all or part of the note into shares of the Company’s common stock, at a price per share equal to 53% of the lowest trading price of the common stock for the twenty prior trading days upon which the conversion notice is received by the Company.

On November 28, 2018, the Company issued a convertible promissory note to Adar Bays - Alef, LLC in the amount of $192,500. The note is due on November 28, 2019 and bears interest at 6% per annum. The loan and any accrued interest may be converted into shares of the Company’s common stock at a rate of 53% multiplied by the lowest trading price during the previous twenty (20) day trading period ending on the latest complete trading day prior to the conversion date. On May 20, 2019, the Company settled the note, repaying the principal balance of $192,500 and $47,500 for interest and penalties.

	(7)	On December 6, 2019, the Company issued a convertible promissory note to JSJ Investments with a principal balance of $255,000. The Company received net proceeds of $250,000. The note matures on December 6, 2020 and bears interest at 10% per annum. The Company may prepay this note and unpaid interest on or prior to July 3, 2020. The loan and any accrued interest may be converted into shares of the Company’s common stock at a rate of 47% multiplied by the lowest trading price during the previous twenty (20) day trading period ending on the latest complete trading day prior to the conversion date.

	(8)	On December 12, 2019, the Company issued a convertible promissory note to Eagle Equities, LLC with a principal balance of $210,000. The Company received net proceeds of $200,000. The note matures on December 12, 2020 and bears interest at 12% per annum. The loan and any accrued interest may be converted into shares of the Company’s common stock, at any time after the six month anniversary of the note, at a rate of 53% multiplied by the lowest trading price during the previous twenty (20) day trading period ending on the latest complete trading day prior to the conversion date.

	(9)	On December 20, 2019, the Company issued a convertible promissory note to BHP Capital NY Inc. with a principal balance of $125,000. The Company received net proceeds of $122,500. The note matures on December 20, 2020 and bears interest at 10% per annum. The loan and any accrued interest may be converted into shares of the Company’s common stock at a rate of 61% multiplied by the lowest trading price during the previous fifteen (15) day trading period ending on the latest complete trading day prior to the conversion date. In connection with the promissory note, the Company issued 5,000 shares of its restricted common stock with a fair value of approximately $47,000. The Company will have the option to buy back the shares 180 days from the issue date, for a one-time payment of $8.00 per share.

Related Party Convertible Notes

	(5)	In July 2015, the Company issued convertible promissory notes to Mr. Bafer, Chairman, in exchange for the cancellation of previously issued promissory notes in the aggregate of $530,000 and accrued interest of $13,000 for a total of $543,000. The notes are unsecured, bear interest of 5% per annum, matured on October 1, 2015 and are convertible into shares of common stock at a conversion price equal to the lowest closing stock price during the 20 trading days prior to conversion with a 50% discount.

		In October 2015, the notes matured and became past due. As a result, the stated interest of 5% increased to 22% pursuant to the term of the notes. In July 2016, the Company and Mr. Bafer agreed to extend the maturity date of these notes to August 1, 2017 to cure the default. There were no other terms changed and no additional consideration was paid. On May 22, 2019, the Company issued a non-convertible promissory note to replace the convertible promissory notes (See Note 9).

	(6)	On December 28, 2016, the Company issued an unsecured convertible promissory note in the principal amount of $50,000 to a shareholder. The note bears interest at 3% per annum, was due on March 24, 2017, and is convertible into shares of common stock at a conversion price of $4,000 per share. The promissory note was converted into 250,000 shares of common stock.