XML 23 R12.htm IDEA: XBRL DOCUMENT

NOTE 6 - CONVERTIBLE LOANS

3 Months Ended

Mar. 31, 2021

NOTE 6 - CONVERTIBLE LOANS

At March 31, 2021 and December 31, 2020, convertible loans consisted of the following:

		March 31,		December 31,
		2021		2020
Promissory notes – Issued in fiscal year 2019, with variable conversion features	$	5,000	$	5,000
Promissory notes – Issued in fiscal year 2020, with variable conversion features		-		623,660
Total convertible notes payable		5,000		628,660
Less: Unamortized debt discount		(1,820)		(372,290)
Total convertible notes		3,180		256,370

Less: current portion of convertible notes		-		253,554
Long-term convertible notes	$	3,180	$	2,816

During the three months ended March 31, 2021 and 2020, the Company recorded interest expense of $33,430 and $295,903 and recognized amortization of discount, included in interest expense, of $370,470 and $457,177, respectively.

During the three months ended March 31, 2021 and 2020, the Company repaid notes of $250,000 and $334,500 and accrued interest including prepayment penalty of $6,027 and $151,542, respectively.

Conversion

During the three months ended March 31, 2021, the Company converted notes with principal amounts and accrued interest of $422,295 into 6,080,632 shares of common stock. The corresponding derivative liability at the date of conversion of $708,611 was settled through additional paid in capital.

Promissory Notes - Issued in fiscal year 2019

During the year ended December 31, 2019, the Company issued a total of $2,544,250 in notes with the following terms:

·Terms ranging from 6 months to 3 years.

·Annual interest rates ranging from of 8% to 12%.

·Convertible at the option of the holders at issuance or 180 days from issuance.

·Conversion prices are typically based on the discounted (39% or 0% discount) lowest trading prices of the Company’s shares during various periods prior to conversion.

The convertible notes were also provided with a total of 661,216 common shares and warrant to purchase up to 92,000 shares of common stock at exercise price of $2.5 per share for 3 years.

Certain notes allow the Company to redeem the notes at rates ranging from 110% to 150% depending on the redemption date provided that no redemption is allowed after the 180th day. Likewise, the notes include original issue discount and financing costs totaling $278,000 and the Company received cash of $2,266,250.

Derivative liabilities

The Company determined that the conversion option in the note met the definition of a liability in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity’s Own Stock. The Company will bifurcate the embedded conversion option in the note once the note becomes convertible and account for it as a derivative liability.

The Company valued the conversion features of convertible notes and warrant using the Black Scholes valuation model. During the three months ended March 31, 2021, the fair value of the derivative liability for new notes was $0, as there were no notes that became convertible.