Quarterly report pursuant to Section 13 or 15(d)

Convertible Promissory Notes

Convertible Promissory Notes
3 Months Ended
Mar. 31, 2021
Debt Disclosure [Abstract]  
Convertible Promissory Notes


As of March 31, 2021 and December 31, 2020, convertible promissory notes payable consists of:



March 31,




December 31,


Convertible note payable to Evergreen Capital Management dated March 8, 2021 with interest at 15% per annum; due March 8, 2022; convertible into shares of Common Stock 1     2,300,000               -  
      2,300,000       0  
Less: Debt discount     (2,155,068 )     -  
    $ 144,932     $ 0  


On March 8, 2021, the Company entered into a Securities Purchase Agreement (the “SPA”), with Evergreen Capital Management (“Buyer”). In connection with the SPA, the Company issued a note to the Buyer, and warrants to purchase the Company’s Common Stock. The aggregate purchase price of the notes is $2,000,000 and the aggregate principal amount of the notes is $2,300,000.


Pursuant to the SPA, the Buyer purchased from the Company, for a purchase price of $2,000,000, a convertible promissory note, in the principal amount of $2,300,000. The purchase of each note was accompanied by the Company’s issuance of a warrant to purchase 13,437,500 shares of the Company’s Common Stock.


The note became effective as of March 8, 2021 and is due and payable on March 8, 2022. The notes entitle the Buyer to 15% interest per annum. Upon an Event of Default (as defined in the notes), the notes entitle the Buyers to interest at the rate of 18% per annum. The notes may be converted into shares of the Company’s Common Stock at a conversion price equal to 0.75 (representing a 25% discount) multiplied by the lesser of (i) the lowest one day volume weighted average price (“VWAP”) for the Common Stock during the ten (10) trading day period ending on the latest complete trading day prior to the conversion date, and (ii) the lowest one day VWAP for the Common Stock during the ten (10) trading day period ending on the latest complete trading day prior to the issue date. In the event of a default, without demand, presentment or notice, the note shall become immediately due and payable. The Company recorded a $1,877,251 debt discount relating to the conversion feature of the notes. The debt discount is being accreted over the life of these notes to accretion of debt discount and issuance cost.


The warrants were issued to the Buyer by the Company on March 8, 2021 in connection with the SPA. The warrants entitle the Buyer to exercise purchase rights represented by the warrants up to 13,437,500 shares per warrant. The warrants permit the Buyer to exercise the purchase rights at any time on or after March 8, 2021 through March 7, 2022. Each warrant contains an exercise price per share of $0.16, subject to adjustment, and also contains a provision permitting the cashless exercise of such exercise rights as defined therein. The Company has maintained the right to redeem each warrant in full at any time following payment in full of the amounts owing under each respective note.


The Company valued the warrants using the Black-Scholes Option Pricing model and accounted for it as debt discount on the consolidated balance sheets. The debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the effective interest method. The amortization of debt discount is included as a component of interest expense in the consolidated statements of operations. There was unamortized debt discount of $1,778,218 as of March 31, respectively, related to the warrants issued. During the three months ended March 31, 2021, the Company recorded amortization of debt discount related to these warrants totaling $119,588. During the year ended December 31, 2020, the Company paid $95,000 for the cancellation of 250,000 warrants.


Future maturities of all debt (excluding debt discount discussed above in Notes 8 and 9) are as follows:


For the Years Ending December 31,      
2021 (remainder of year)   $ 7,582,861  
2022     2,300,000  
    $ 9,882,861