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Note 14 - Convertible Notes Payable | 9 Months Ended
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Sep. 30, 2020
Notes to Financial Statements |
Debt Disclosure [Text Block] |
14. | Convertible NOTES PAYABLE
Convertible notes payable as of September 30, 2020 and December 31, 2019 consist of the following:
|  | September 30, |  |  | December 31, |
|  | 2020 |  |  | 2019 |
Securities Purchase Agreement dated July 10, 2019 |  | $ | - |  |  | $ | 2,255,454 |
January 2020 Note |  |  | - |  |  |  | - |
February 2020 Note |  |  | - |  |  |  | - |
May 2020 Note |  |  | - |  |  |  | - |
June 2020 Note |  |  | - |  |  |  | - |
Convertible notes payable, net |  | $ | - |  |  | $ | 2,255,454 |
Securities Purchase Agreement dated July 10, 2019 On July 10, 2019, the Company issued a $3,060,000 principal amount senior secured convertible note (the “Original Note”). At closing, a total of $2,550,000 was funded. The original issue discount was $510,000. The principal amount due of the Original Note was due and payable as follows: $918,000 was due 180 days after funding, $1,071,000 was due 270 days after funding, and the remaining balance due 12 months after the date of funding. The Original Note was secured by a lien on substantially all of the Company's assets and properties and was convertible at the option of the Investor in shares of common stock at a fixed conversion price of $1.50 per share. In connection with the closing of the Original Note, the Company issued a five -year warrant to the Investor to purchase 2,000,000 shares of common stock at a fixed exercise price of $1.50 per share, paid a $50,000 commitment fee, and issued 266,667 shares of common stock in payment of a $400,000 due diligence fee. The Company also paid banker fees of $193,500 and legal fees of $71,330. The valuation of the warrant of $595,662 was recorded to debt discount and was amortized over the life of the Original Note. The fees associated with the agreement were allocated to debt issuance costs and additional paid-in capital based on the respective ratio of the valuation of the note and warrant. Amortization of the debt issuance costs and debt discount are included in interest expense on the statement of operations. On March 12, 2020, the Company issued a $3,789,000 principal amount senior secured convertible note (the “Amended Note”), which replaced the Original Note and included an additional $729,000 in interest due to the debt restructuring. The principal amount was due and payable in full on April 13, 2020. The Amended Note was secured by a lien on substantially all of the Company's assets and properties and was convertible at the option of the Investor into shares of common stock at a fixed conversion price of $0.65 per share. The Company accounted for the transaction as a debt extinguishment, and therefore, the balance of the fees and unamortized discount associated with the Original Note were written off and included as loss on extinguishment of debt. On the day of the conversion, the closing stock price for the day was $0.76, which resulted in a beneficial conversion of $0.11 per share outstanding or $641,215 to be amortized to interest expense over the term of the Amended Note, as adjusted for any debt conversion. On April 12, 2020, and May 6, 2020, the Company entered into amendments (the “Amendments”) to the Amended Note. The Amendments extended the maturity date to June 12, 2020 and extended the Investor's right to convert the Amended Note into shares of the Company's common stock at a price of $0.65 per share through June 12, 2020. All other provisions of the Amended Note remained the same. Until the second anniversary of the closing, the investor has the right to purchase up to 20% of the securities the Company issues in any future private placement, subject to certain exceptions for, among other things, strategic investments. On June 10, 2020, the investor converted the last of the remaining principal into shares of common stock for payment in full, and the remaining principal balance was $0. The Amended Note amount of $3,789,000 was converted into 5,829,225 shares of common stock.
|  | September 30, |  |  | December 31, |
|  | 2020 |  |  | 2019 |
Principal amount |  | $ | 3,789,000 |  |  | $ | 3,060,000 |
Less: conversion of principal into shares of common stock |  |  | (3,789,000 | ) |  |  | - |
Net Principal amount |  |  | - |  |  |  | 3,060,000 |
Less: unamortized debt discount and beneficial conversion feature |  |  | - |  |  |  | (574,330 | )
Less: unamortized debt issuance costs |  |  | - |  |  |  | (230,216 | )
Notes payable, net of unamortized debt discount and debt issuance costs |  | $ | - |  |  | $ | 2,255,454 |
January 2020 Note On January 13, 2020, the Company issued a $157,000 principal amount secured 10% convertible redeemable note (the “January 2020 Note”) to an institutional investor with a maturity date of June 13, 2020 which was convertible into common stock at a conversion price of $1.50 per share. The January 2020 Note was redeemable at any time by payment of a premium to the principal balance starting at 10% and increasing to 30%. At the closing, the Company agreed to issue 650,000 shares of common stock in lieu of payment of a $75,000 commitment fee which would be reduced to 50,000 shares if the January 2020 Note was repaid prior to the maturity date. The Company paid $7,000 of legal fees for the January 2020 Note. On June 12, 2020, the January 2020 Note was paid in full for $211,984. The 600,000 shares were returned to the Company in July 2020. February 2020 Note On February 13, 2020, the Company issued a $126,000 principal amount secured 10% convertible redeemable note (the “February 2020 Note”) to an institutional investor with a maturity date of July 13, 2020 which was convertible into common stock at a conversion price of $1.15 per share. On March 12, 2020, the Original Note was amended to reduce the conversion price to $0.65 per share, which reduced the conversion price of the February Note to $0.65 and resulted in an additional deemed dividend expense of $70,998. The February 2020 Note was redeemable at any time by payment of a premium to the principal balance starting at 10% and increasing to 30%. The Company issued 50,000 shares of common stock to the investor in lieu of payment of a $57,500 commitment fee. The Company paid $6,000 of legal fees in connection with the issuance of February 2020 Note. This February 2020 Note was paid in full on July 10, 2020 by payment of $170,442. May 2020 Note On May 6, 2020, the Company issued a $2,415,000 principal amount senior secured convertible note (the “May 2020 Note”). At closing, $2,100,000 was funded. The principal amount was due and payable in five equal monthly installments of $268,333 beginning seven months after the funding date with the remaining balance due on the twelfth month after the date of funding. The May 2020 Note was convertible at a fixed convertible price of $1.16 per share. In connection with the issuance of the May 2020 Note, the Company paid a $133,333 due diligence fee by issuing 114,943 shares of common stock to the Investor priced at $1.16 per share. The Company also paid a placement fee of 7% of the gross proceeds to a placement agent. In connection with the closing of the May 2020 Note, the Company issued a five -year warrant to the investor to purchase 1,900,000 shares of common stock at a fixed exercise price of $1.16 and was immediately exercisable. The valuation of the warrant of $876,937 was recorded to debt discount and was amortized over the life of the May 2020 Note. The fees associated with the agreement were allocated to debt issuance costs and additional paid-in-capital based on the respective ratio of the valuation of the note and warrant. Amortization of the debt issuance costs and debt discount were included in the interest expense on the statement of operations. Following the completion of the underwritten offering consummated in July 2020, the principal balance of $2,415,000 was paid in full during the quarter. As a result of the repayment, the Company expensed the remaining debt discounts and issuance costs of $1,218,163 in July 2020. June 2020 Note On June 29, 2020, the Company issued a $1,811,250 principal amount senior secured convertible note (the “June 2020 Note”). At closing, $1,575,000 was funded. The principal amount was due and payable in nine equal monthly installments of $201,250 beginning four months after the funding date with the remaining balance due on the twelfth month after the date of funding. The June 2020 Note was convertible at a fixed convertible price of $1.16 per share. In connection with the issuance of the June 2020 Note, the Company paid a $100,000 due diligence fee by issuing 136,575 shares to the Investor priced at $0.7322 per share. The Company also paid a placement fee of 7% of the gross proceeds to a placement agent. In connection with the closing of the June 2020 Note, the Company issued a five -year warrant to the Investor to purchase 1,425,000 shares of common stock at a fixed exercise price of $1.16 per share, and was immediately exercisable. The valuation of the warrant of $511,402 was recorded to debt discount and is being amortized over the life of the June 2020 Note. The fees associated with the agreement were allocated to debt issuance costs and additional paid-in capital based on the respective ratio of the valuation of the note and warrant. Amortization of the debt issuance costs and debt discount are included in interest expense on the statement of operations. Following the completion of the underwritten offering consummated in July 2020, the principal balance of $1,811,250 was paid in full during the quarter. As a result of the repayment, the Company expensed the remaining debt discounts and issuance costs of $957,919 in July 2020.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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