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Convertible Notes (Related and Unrelated Party)
 12 Months Ended
Dec. 31, 2021
Debt Disclosure [Abstract]  
Convertible Notes (Related and Unrelated Party)

Note 7. Convertible Notes (Related and Unrelated Party)

 

In 2018, the Company issued Milestone I and Milestone II Convertible Notes.

 

On March 20, 2020, the Company obtained a 24-month extension on $1,071,000 in principal, and conversion of $720,000 of principal of the Milestone I Convertible Notes at a conversion price of $6.50 per share. The remaining $110,166 was extended for thirty days. The interest rate on the principal balance of the extended Milestone I Convertible Notes was amended to 15%. Furthermore, the Company obtained a 12-month extension on $168,000 in principal, and conversion of $1,128,000 in principal of the Milestone II Convertible Notes. The Convertible Noteholders of the Milestone I and II Convertible Notes were granted additional interest depending upon their election to convert or extend their Convertible Notes. The Company accounted for the modification in accordance with ASC 470-50, Modifications and Extinguishments (“ASC 470-50”), which states that for all extinguishments of debt, the difference between the reacquisition price (including any premium) and the net carrying amount of the debt being extinguished (including any deferred debt issuance costs) should be recognized as a gain or loss when the debt is extinguished. Accordingly, the Company recorded a net gain on extinguishment of debt of $379,200 which was comprised of a gain of $437,201 related to notes that were converted to 366,925 shares of common stock and a loss of $58,001 related to convertible notes that were extended by either 24 months for Milestone I Convertible Notes, or 12 months for Milestone II Convertible Notes.

 

During the year ended December 31, 2021, the Company settled the remaining Milestone I Convertible Notes by issuing 89,173 shares of common stock in exchange for $231,000 ($30,000 related party) and $192,663 ($37,689 related party) in principal and interest, respectively, and repaying $840,000 ($180,000 related party) in cash. Additionally, the Company settled the remaining amounts due under Milestone II Convertible Notes by issuing 44,818 shares of common stock in exchange for $168,000 and $41,747 of principal and interest, respectively. In accordance with ASC 470-50, the Company recorded a loss of $193,562 upon extinguishment of the Milestone I and Milestone II Convertible Notes.

 

Convertible note balances outstanding consisted of the following components:

 

   December 31,   December 31, 
   2021   2020 
Milestone I Convertible Notes, net of unamortized discount of $60,097 at December 31, 2020  $         -   $1,010,904 
Milestone II Convertible Notes, net of unamortized discount of $11,862 at December 31, 2020   -    156,138 
Convertible notes, net   -    1,167,042 
Less: current portion convertible notes, net   -    (158,243)
Less: related party convertible notes, net   -    (197,804)
Long term convertible notes, net  $-   $810,995 

 

 

Barfresh food Group Inc.

Notes to Consolidated Financial Statements