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Note Payables, Net
3 Months Ended
Mar. 31, 2020
Convertible Note Payable Net [Abstract]  
NOTE PAYABLES, NET

12. NOTE PAYABLES, NET


Convertible Notes / Promissory Notes in January and February 2019


On  January 31, 2019, the Company entered into a Securities Purchase Agreement with Iliad Research and Trading, L.P., a Utah limited partnership (the “Purchaser”), pursuant to which the Company sold and issued to the Purchaser a Convertible Promissory Note of $1,050,000. The Purchaser purchased the Note with an original issue discount of $50,000. The Note bears interest at 8%. All outstanding principal and accrued interest on the Note will become due and payable on January 30, 2021, subject to a potential one-year extension period during which interest would not accrue. The Company’s obligations under the Note may be prepaid at any time, provided that in such circumstance the Company would pay 125% of any amounts outstanding under the Note and being prepaid. Amounts outstanding under the Note may be converted at any time, at the Lender’s option, into shares of the Company’s common stock at a conversion price of $3.00 per share, subject to certain adjustments as discussed in the July 2018 Note above. The conversion feature did not require bifurcation and derivative accounting as the conversion price was greater than the market price of the Company common shares, there was no beneficial conversion feature to recognize.


On February 27, 2019, the Company entered into a Securities Purchase Agreement with Iliad Research and Trading, L.P., a Utah limited partnership (the “Purchaser”), pursuant to which the Company sold and issued to the Purchaser a Convertible Promissory Note of $1,050,000. The Purchaser purchased the Note with an original issue discount of $50,000. The Note bears interest at 8%. All outstanding principal and accrued interest on the Note will become due and payable on February 26, 2021, subject to a potential one-year extension period during which interest would not accrue. The Company’s obligations under the Note may be prepaid at any time, provided that in such circumstance the Company would pay 125% of any amounts outstanding under the Note and being prepaid. Amounts outstanding under the Note may be converted at any time, at the Lender’s option, into shares of the Company’s common stock at a conversion price of $3.00 per share, subject to certain adjustments as discussed above in the July 2018 Note. The conversion feature did not require bifurcation and derivative accounting and as the conversion price was greater than the market value of the Company common shares, there was no beneficial conversion feature to recognize.


Pursuant to an Exchange Agreement dated April 14, 2019 (the “Exchange Agreement”), the Company and Iliad Research and Trading, L.P. agreed to exchange the above two notes (the “Original Notes”) with two new promissory notes (the “Exchange Notes”). Upon execution of the agreement, the notes holder surrendered the Convertible Notes to the Company and the Company issued to the holder the Exchange Notes. Upon surrender, the two Convertible Notes were cancelled and the remaining amount owed to Holder hereafter be evidenced solely by the Exchange Notes ($1,173,480 and $ 1,165,379 for the January and February 2019 notes, respectively). All outstanding principal and accrued interest on the Exchange Notes will become due and payable on January 31, 2021 and February 27, 2021, respectively. The Exchange Notes bore interest at 8% and did not grant conversion options to the Purchaser. The Company’s obligations under the Exchange Notes could be prepaid at any time, provided that in such circumstance the Company would have paid 125% of any amounts outstanding under the Exchange Notes. Beginning on the date that is six months from the issue date of the respective Original Notes (the “Issue Dates”) and at any time thereafter until the Exchange Notes are paid in full, Purchaser shall have the right to redeem up to $750,000 of the outstanding balance during months six to eight following the respective Issue Date and any amount thereafter. The exchange of the Convertible Notes with Promissory Notes did not cause substantially different terms, and did not meet the conditions described in ASC 405-20-40-1, and therefore was accounted for as a modification and not an extinguishment; accordingly, the Company did not recognize any gain or loss for the exchange of the notes under ASC 470-50-40-8.


During the three months ended March 31, 2020, the Company amortized OID of $12,500 and recorded $35,127 interest expense.


As a result of default in the redemption request by the lender made on August 1, 2019, the Company and the lender entered into a forbearance agreement in which the lender agreed not to enforce its rights under the agreement and agreed not to make any Redemptions pursuant to the Section 4 of the Note before October 1, 2019. Under the term of the forbearance agreement, in the event Lender delivers after October 1, 2019 a Redemption Notice to Borrower and the Redemption Amount set forth therein is not paid in cash to Lender within three Trading Days, then the applicable Redemption Amount shall be increased by 25% (the “First Adjustment,” and such increase to the Redemption Amount, the “First Adjusted Redemption Amount”). In the event the First Adjusted Redemption Amount is not paid within three Trading Days after the date of First Adjustment, then the First Adjusted Redemption Amount shall be increased in accordance with the following formula: $0.50 divided by the lowest Closing Trade Price of the Common Stock during the 20 Trading Days prior to the date of the Second Adjustment and the resulting quotient multiplied by the First Adjusted Redemption Amount (the “Second Adjustment,” and such increase to the First Adjusted Redemption Amount, the “Second Adjusted Redemption Amount”), provided, however, that such formula shall only be applied if the resulting quotient is greater than one and such formula shall in no event be used to reduce the First Adjusted Redemption Amount.


On September 19, 2019, the Company entered into an Exchange Agreement with Iliad Research and Trading, L.P (“Lender”). Pursuant to the Agreement, the Company and Lender agreed to partition a new Promissory Note in the original principal amount of $202,000 (the “Partitioned Note”) from a Promissory Note (the “Note”) issued by the Company on April 14, 2019, which was exchanged from a Convertible Note originally issued by Company on January 31, 2019, whereupon the outstanding balance of the Note was reduced by an amount equal to the initial outstanding balance of the Partitioned Note. The Company and Lender further agreed to settle the Partitioned Note by the issuance of 40,400 shares (post-reverse stock split) of the Company’s Common Stock. The Company recorded $24,240 gain on this partitioned note settlement, which was the difference between the market price and the conversion price.


On October 16, 2019, the Company entered into two Exchange Agreements with Iliad Research and Trading, L.P. Pursuant to the Agreements, the Company and Lender agreed to partition two new Promissory Notes in the original principal amounts of $125,000 and $200,000 from a Promissory Note issued by the Company on April 14, 2019. The Company and Lender agreed to settle the Partitioned Notes by the issuance of 25,000 shares and 40,000 shares (post-reverse stock split) of the Company’s Common Stock. The Company recorded gain on conversion of $22,500 and $36,000, respectively.


On November 11, 2019, the Company entered into an Exchange Agreement with Iliad Research and Trading, L.P. Pursuant to the Agreement, the Company and Lender agreed to partition a new Promissory Note in the original principal amount of $150,000 from a Promissory Note issued by the Company on April 14, 2019. The Company and Lender agreed to settle the Partitioned Note by the issuance of 30,000 shares (post-reverse stock split) of the Company’s Common Stock. The Company recorded $45,000 gain on conversion of this portion of note.


On December 16, 2019, the Company entered into an Exchange Agreement with Iliad Research and Trading, L.P. Pursuant to the Agreement, the Company and Lender agreed to partition a new Promissory Note in the original principal amount of $120,000 from a Promissory Note issued by the Company on April 14, 2019. The Company and Lender agreed to exchange the Partitioned Note for the delivery of 40,000 shares (post-reverse stock split) of the Company’s Common Stock. The Company recorded $4,000 gain on conversion of this portion of note. On the same date, the Company and the lender amended the September 11, 2019 forbearance agreement to increase the adjustment ratio described above from $0.50 to $0.30 (pre-reverse stock split price).


The outstanding balance of the Note shall be reduced by an amount equal to the total outstanding balance of the Partitioned Note. The investor made adjustments of $305,626 to increase the principle of the notes during the year ended December 31, 2019 under the term of the September 11th forbearance agreement and the amendment to forbearance agreement dated on December 16, 2019.


On January 3, 2020, Company entered into an Exchange Agreement with Iliad Research and Trading, L.P. Pursuant to the Agreement, the Company and Lender agreed to partition a new Promissory Note in the original principal amount of $150,000 from a Promissory Note issued by the Company on April 14, 2019. The Company and Lender exchanged the Partitioned Note for the delivery of 50,000 shares (post-reverse stock split) of the Company’s Common Stock. The Company recorded $25,000 loss on conversion of this portion of note.


On January 13, 2020, the Company entered into an Exchange Agreement with Iliad Research and Trading, L.P. Pursuant to the Agreement, the Company and Lender agreed to partition a new Promissory Note in the original principal amount of $135,000 from a Promissory Note issued by the Company on April 14, 2019. The Company and Lender exchanged the Partitioned Note for the delivery of 45,000 shares (post-reverse stock split) of the Company’s Common Stock. The Company recorded $54,000 loss on conversion of this portion of note.


On March 6, 2020, the Company entered into an Exchange Agreement with Iliad Research and Trading, L.P. Pursuant to the Agreement, the Company and the Lender agreed to partition a new Promissory Note in the original principal amount of $145,000 from a Promissory Note issued by the Company on April 14, 2019. The Company and the Lender exchanged the Partitioned Note for 48,333 shares (post-reverse stock split) of common stock of the Company. The Company recorded $24,167 loss on conversion of this portion of note.