Convertible Debentures | 8. Convertible Debentures As of December 31, 2019 and 2018, the Company had outstanding the following convertible debentures: December 31, December 31, 2019 2018 Convertible promissory note, Barn 11, 6% interest, unsecured, matured June 1, 2019, net of debt discount of $0 and $55,000 $ 594,362 $ 445,000 Convertible promissory note, Dominion Capital, 12% interest, unsecured, matures October 17, 2020, net of debt discount of $105,752 and $0 1,461,265 - Convertible promissory note, Michael Roeske, 6% interest, unsecured, due on demand, net of debt discount of $3,512 and $0 112,488 - Convertible promissory note, Joel Raven, 6% interest, unsecured, due on demand, net of debt discount of $8,658 and $0 355,342 - Convertible promissory note, GS Capital Partners, LLC, 8% interest, secured. matures August 2, 2020, net of debt discount of $24,819 98,181 - Convertible promissory note, SCS, LLC, 8% interest, unsecured, matured March 30, 2020, due on demand, net of debt discount of $13,005 38,025 - Convertible promissory note, Power Up Lending Group LTD., 8% interest, unsecured, matures September 17, 2020, net of debt discount of $113,674 34,326 - Convertible promissory note, Power Up Lending Group LTD., 8% interest, unsecured, matures January 22, 2021, net of debt discount of $53,051 15,449 - Convertible promissory note, Power Up Lending Group LTD., 8% interest, unsecured, matures February 26, 2021, net of debt discount of $45,125 12,875 - Convertible promissory note, GS Capital Partners, LLC, 8% interest, secured. matures October 24 2020, net of debt discount of $23,986 99,014 - Convertible promissory note, Crown Bridge Partners, LLC, 10% interest, unsecured, matures November 21, 2020, net of debt discount of $58,648 16,352 - Convertible promissory note, Dominion Capital, 18% interest, secured, matures October 23, 2019, net of debt discount of $0 and $1,009,630 - 240,370 Convertible promissory note, Dominion Capital, 12% interest, unsecured, matures May 18, 2019, net of debt discount of $0 and $172,570 - 123,176 Convertible promissory note, Silverback, 8% interest, unsecured, matures December 4, 2019, net of debt discount of $0 and $24,140 - 3,367 Convertible promissory note, RDW Capital, February 21, 2018 assignment - 50,000 Convertible promissory note, RDW Capital, June 7, 2018 assignment - 39,375 Convertible promissory note, Silverback Capital, December 3, 2018 assignment - 50,000 Convertible promissory note, M2B Funding, 12% interest, unsecured, matures March 15, 2019, net of debt discount of $0 and $9,087 - 69,860 Convertible promissory note, M2B Funding, 12% interest, unsecured, matures March 15, 2019, net of debt discount of $0 and $41,395 - 37,552 Total 2,837,679 1,058,700 Less: Long-term portion of convertible debentures, net of debt discount (28,324 ) - Convertible debentures, current portion, net of debt discount $ 2,809,355 $ 1,058,700 Convertible promissory note, Barn 11, 6% interest, unsecured, matured June 1, 2019 On February 21, 2018, the Company issued a convertible note with a principal amount of $500,000 and a warrant with a term of three years to purchase up to 417 shares of common stock of the Company at an exercise price of $480.00 per share to Barn 11. The exercise price of the warrant was to reduce to 85% of the closing price of the Company's common stock if the closing price of the Company's common stock was less than $480.00 on July 31, 2018. The note was due on January 15, 2019, and in February 2019, the maturity date was extended to June 1, 2019, and bears interest at 6% per annum. The note is convertible into common shares of the Company at a conversion price equal to the lower of 80% of the lowest volume-weighted average price during the 5 trading days immediately preceding the date of conversion and $300.00 (the "Floor"), unless the note is in default, at which time the Floor terminates. The embedded conversion option and warrant qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion feature of $571,079 and the warrant of $158,772 resulted in a discount to the note payable of $500,000 and an initial derivative expense of $229,851. On June 1, 2019, the Company was in default on the note. As a result of the default, a 15% premium was added to the balance owed, including all accrued interest. Subsequent to the default, the new principal balance of the note is $619,362, with interest now accruing at 18% per annum. Additionally, $466,000 was added to the derivative liability balance in connection with the default. During the year ended December 31, 2019, the Company paid $25,000 of principal. The Company owed $594,362 as of December 31, 2019. Convertible promissory note, Dominion Capital, 18% interest, secured, matures October 23, 2019 On April 23, 2018, the Company entered into and closed on a Securities Purchase Agreement with an institutional investor, pursuant to which the Company issued to the lender a senior secured convertible promissory note in the aggregate principal amount of $1,578,947 for an aggregate purchase price of $1,500,000. The interest on the outstanding principal due under the secured note accrued at a rate of 12% per annum. All principal and accrued interest under the secured note was originally due on October 23, 2019 and was convertible into shares of the Company's common stock at a fixed conversion price of $300.00. While during the first three months that the secured note is outstanding, only interest payments were due to the lender, beginning in month four, and on each monthly anniversary thereafter until maturity, amortization payments were due for principal and interest due under the secured note. The secured note included customary events of default, including non-payment of the principal or accrued interest due on the secured note. Upon an event of default, all obligations under the secured note would become immediately due and payable. If the Company issued any common stock or common stock equivalents at an effective price per share less than $300.00 then the conversion price of the note would be reduced to the lower price. As long as the note was not in default the Company could repay the note at 110% of the outstanding principal amount. If the Company defaulted upon the note it would accrue interest at 18% per annum. In connection with the Purchase Agreement, the Company entered into a security agreement, dated as of April 23, 2018, with the Lender (the "Security Agreement") and an intellectual property security agreement, dated as of April 23, 2018, with the Lender pursuant to which the Company granted a security interest in substantially all of the assets of the Company, but for those assets over which Prestige Capital Corporation holds a lien, to secure the Company's obligations under the secured note. In addition, all of the Company's subsidiaries are guarantors of the Company's obligations to the Lender pursuant to the Secured Note. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion feature of $3,325,000 resulted in a discount to the note payable of $1,500,000 and an initial derivative expense of $1,825,000. On April 17, 2019, the holder of the note exchanged this note for a new note (refer to the "Convertible promissory note, Dominion Capital, 12% interest, unsecured, matures October 17, 2020" section of this note for additional detail). Convertible promissory note, Dominion Capital, 12% interest, unsecured, matures May 18, 2019 On May 18, 2018, the Company entered into and closed on a Securities Purchase Agreement with an institutional investor, pursuant to which the Company issued to the investor a senior secured convertible promissory note in the aggregate principal amount of $295,746 for an aggregate purchase price of $280,959. The interest on the outstanding principal due under the secured note accrued at a rate of 12% per annum. All principal and accrued but unpaid interest under the secured note was originally due on May 18, 2019. The secured note was convertible into shares of the Company's common stock at a fixed conversion price of $300.00 per share. Interest was payable monthly on the 18th of each month. While interest payments were to be made in cash during the first six months that the secured note was outstanding, beginning in month seven, and on each monthly anniversary thereafter until maturity, the Company had the option to pay interest payments in stock, subject to certain equity conditions being satisfied. Any payment of interest or principal scheduled after December 1, 2018 that was made in cash would be subject to a 5% prepayment premium. Any other prepayment is subject to a 10% premium. The secured note included customary events of default, including non-payment of the principal or accrued interest due on the secured note and cross default to other notes owing to the investor. Upon an event of default, all obligations under the secured note and other notes owing to the investor would become immediately due and payable. In connection with the issuance of the secured note, the Company issued the investor 496,101 shares of Series A Preferred Stock with a fair value of $193,509 which was expensed. The investor was granted a right to participate in future financing transactions of the Company while the secured note remains outstanding. If the Company issued any common stock or common stock equivalents at an effective price per share less than $300.00 then the conversion price of the note would be reduced to the lower price. As long as the note is not in default the Company could repay the note at 110% of the outstanding principal amount. If the Company defaulted upon the note it would accrue interest at 18% per annum. In connection with the Securities Purchase Agreement, the Company entered into an amendment to the existing Security Agreement described in Note 10(o). Pursuant to the amendment, the Company agreed that obligations under the secured note and related documents will be secured pursuant to the existing security interest in substantially all of the assets of the Company securing other notes issued to the Investor (except for those assets over which Prestige Capital Corporation holds a lien). In addition, all of the Company's subsidiaries are guarantors of the Company's obligations to the Investor pursuant to the Secured Note and have granted a similar security interest over substantially their assets. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion feature of $468,000 resulted in a discount to the note payable of $280,959 and an initial derivative expense of $187,041. On April 17, 2019, the holder of the note exchanged this note for a new note (refer to the "Convertible promissory note, Dominion Capital, 12% interest, unsecured, matures October 17, 2020" section of this note for additional detail). Convertible promissory note, Dominion Capital, 12% interest, unsecured, matures October 17, 2020 On April 17, 2019, Dominion Capital exchanged the notes described in the "Convertible promissory note, Dominion Capital, 18% interest, secured, matures October 23, 2019" and "Convertible promissory note, Dominion Capital, 12% interest, unsecured, matures May 18, 2019" sections above into a new note (the "Exchange Note") with a principal amount of $1,571,134. Interest accrues on the new note at 12% per annum. All principal and accrued interest under the Exchange Note is due on October 17, 2020 and is convertible into shares of the Company's common stock. The conversion price in effect on the date such conversion is effected shall be equal to (i) initially, $30.00 or (ii) on or after the date of the closing of the next public or private offering of equity or equity-linked securities of the Company in which the Company receives gross proceeds in an amount greater than $100,000, one hundred and five percent (105%) of the price of the common stock issuable in the offering. While during the first six months that the Exchange Note is outstanding, only interest payments are due to the holder, beginning in October 2019, and on each monthly anniversary thereafter until maturity, amortization payments are due for principal and interest due under the Exchange Note. The Exchange Note includes customary events of default, including non-payment of the principal or accrued interest due on the Exchange Note. Upon an event of default, all obligations under the Exchange Note will become immediately due and payable. The Holder was granted a right to participate in future financing transactions of the Company while the Exchange Note remains outstanding. As a result of the beneficial conversion feature associated with the Dominion notes, $314,228 was added to additional paid-in capital during the year ended December 31, 2019. In connection with the exchange, the Company recorded a loss on settlement of debt of $904,469 on the consolidated statement of operations for the year ended December 31, 2019. The Company was to begin making principal payments in equal installments beginning on October 1, 2019. On October 22, 2019, the Company reached an agreement with Dominion Capital to postpone the principal payments. In exchange for the extension, the Company will pay to Dominion Capital an extension fee equal to 14% of the postponed payments. As a result of this agreement, the Company added $47,731 of principal to note during the year ended December 31, 2019. During the year ended December 31, 2019, the Company paid $51,848 of principal. The Company owed $1,567,017 as of December 31, 2019 and will record accretion equal to the debt discount of $105,752 over the remaining term of the note. Convertible promissory note, Silverback, 8% interest, unsecured, matures December 4, 2019 On December 4, 2018, the Company entered into and closed on a Securities Purchase Agreement with an institutional investor, pursuant to which the Company issued to the investor a senior secured convertible promissory note in the aggregate principal amount of $27,500 for an aggregate purchase price of $25,000. The interest on the outstanding principal due under the secured note accrues at a rate of 8% per annum. All principal and accrued but unpaid interest under the secured note is due on December 4, 2019. The secured note is convertible into shares of the Company's at 65% of lowest trading price for the fifteen trading days prior to the conversion date. The Company may repay the note at 150% of the outstanding principal amount. If the Company defaults upon the note it bears interest at 18% per annum. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion feature of $30,000 resulted in a discount to the note payable of $25,000 and an initial derivative expense of $5,000. During the year ended December 31, 2019, Silverback converted $27,500 of principal into shares of the Company's common stock (refer to Note 10, Common Stock, for additional information). As a result of these conversions, the balance of the note was $0 as of December 31, 2019. Convertible promissory note issued in connection with the acquisition of TNS, Inc. On January 4, 2019, as part of the acquisition described in Note 3, Acquisition of TNS, Inc., the Company issued to InterCloud a convertible promissory note in the aggregate principal amount of $620,000 (the "Note"). The interest on the outstanding principal due under the Note accrued at a rate of 6% per annum. All principal and accrued interest under the Note was due January 30, 2020, and was convertible, at any time at InterCloud's election, into shares of common stock of the Company at a conversion price equal to the greater of 75% of the lowest volume-weighted average price during the 10 trading days immediately preceding the date of conversion and $30.00. The embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion feature of $189,000 resulted in a discount to the note payable of $144,000. On January 28, 2019, the holder of the convertible promissory note entered into agreement to sell and assign a total of $620,000 of the $620,000 outstanding principal to two third parties, with $186,000 and $434,000 of principal assigned to each party (refer to the "Convertible promissory note, Michael Roeske, 6% interest, unsecured, matures, January 30, 2020" and "Convertible promissory note, Joel Raven, 6% interest, unsecured, matures January 30, 2020" sections of this note for further detail). The Company approved and is bound by the assignment and sale agreement. Convertible promissory note, Michael Roeske, 6% interest, unsecured, matures, January 30, 2020 On January 28, 2019, InterCloud assigned $186,000 of the note issued in connection with the acquisition of TNS to Michael Roeske. The note accrues interest at a rate of 6% per annum and had a maturity date of January 30, 2020. During the year ended December 31, 2019, Mr. Roeske converted $70,000 of principal of the note into shares of the Company's common stock (refer to Note 10, Common Stock, for additional information). At December 31, 2019, the Company owed $116,000 pursuant to this agreement and will record accretion equal to the debt discount of $3,512 over the remaining term of the note. The note matured on January 30, 2020 and is now due on demand. Convertible promissory note, Joel Raven, 6% interest, unsecured, matures January 30, 2020 On January 28, 2019, InterCloud assigned $434,000 of the note issued in connection with the acquisition of TNS to Joel Raven. The note accrues interest at a rate of 6% per annum and had a maturity date of January 30, 2020. During the year ended December 31, 2019, Mr. Raven converted $70,000 of principal of the note into shares of the Company's common stock (refer to Note 10, Common Stock, for additional information). At December 31, 2019, the Company owed $364,000 pursuant to this agreement and will record accretion equal to the debt discount of $8,658 over the remaining term of the note. The note matured on January 30, 2020 and is now due on demand. Convertible promissory note, GS Capital Partners, LLC, 8% interest, secured, matures August 2, 2020 On August 2, 2019, the Company entered into and closed on a Securities Purchase Agreement with GS Capital Partners, LLC, pursuant to which the Company issued to GS Capital Partners, LLC a senior secured convertible promissory note in the aggregate principal amount of $123,000 for an aggregate purchase price of $112,000. The interest on the outstanding principal due under the secured note accrued at a rate of 8% per annum. All principal and accrued but unpaid interest under the secured note was originally due on August 2, 2020. The secured note was convertible into shares of the Company's common stock at 71% of the average of the three lowest VWAPs in the 12 trading days prior to and including the conversion date. The conversion price had a floor of $3.00 per share. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion feature of $28,000 resulted in an additional discount to the note payable of $28,000, for a total debt discount of $39,000. At December 31, 2019, the Company owed $123,000 pursuant to this agreement and was to record accretion equal to the debt discount of $24,819 over the remaining term of the note. Between January 1, 2020 and May 8, 2020, the holder of the note converted the full principal amount of the note along with the accrued interest (refer to Note 17, Subsequent Events, for additional detail). Convertible promissory note, GS Capital Partners, LLC, 8% interest, unsecured, matures October 24, 2020 On October 24, 2019, the Company entered into and closed on a Securities Purchase Agreement with GS Capital Partners, LLC, pursuant to which the Company issued to GS Capital Partners, LLC a convertible promissory note in the aggregate principal amount of $123,000 for an aggregate purchase price of $112,000. The interest on the outstanding principal due under the note accrues at a rate of 8% per annum. All principal and accrued but unpaid interest under the note is due on October 24, 2020. The note is convertible into shares of the Company's common stock at 71% of the average of the three lowest VWAPs in the 12 trading days prior to and including the conversion date. The conversion price has a floor of $3.00 per share. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion feature of $20,000 resulted in an additional discount to the note payable of $20,000, for a total debt discount of $31,000. At December 31, 2019, the Company owed $123,000 pursuant to this agreement and will record accretion equal to the debt discount of $23,986 over the remaining term of the note. Convertible promissory note, SCS, LLC, 8% interest, unsecured, matured March 30, 2020 On September 1, 2019, the Company entered into and closed on a Securities Purchase Agreement with SCS, LLC, pursuant to which the Company issued to SCS, LLC an unsecured convertible promissory note in the aggregate principal amount of $51,030 in exchange for rent. The interest on the outstanding principal due under the unsecured note accrues at a rate of 8% per annum. All principal and accrued but unpaid interest under the secured note and has a maturity date of March 30, 2020. The secured note is convertible into shares of the Company's common stock at 75% of the lowest average VWAP in the 15 trading days prior to the conversion date. The conversion price has a floor of $1.50 per share. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion feature of $29,000 resulted in a discount to the note payable of $29,000. At December 31, 2019, the Company owed $51,030 pursuant to this agreement and will record accretion equal to the debt discount of $13,005 over the remaining term of the note. The note matured on March 30, 2020 and is now due on demand. Convertible promissory note, Power Up Lending Group LTD., 8% interest, unsecured, matures September 17, 2020 On September 17, 2019, the Company entered into and closed on a Securities Purchase Agreement with Power Up Lending Group LTD. ("Power Up Lending"), pursuant to which the Company issued to Power Up Lending a convertible promissory note in the aggregate principal amount of $148,000 for an aggregate purchase price of $135,000. The Company received the cash on October 1, 2019. The interest on the outstanding principal due under the note accrues at a rate of 8% per annum. All principal and accrued but unpaid interest under the note is due on September 17, 2020. The note is convertible into shares of the Company's common stock at 70% of the average of the three lowest VWAPs in the 15 trading days prior to and including the conversion date. The conversion price has a floor of $1.50 per share. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion feature of $159,000 resulted in an additional discount to the note payable of $135,000, for a total debt discount of $148,000. The remaining $24,000 of the initial fair value of the conversion feature was recorded as initial derivative expense on the consolidated statement of operations for the year ended December 31, 2019. At December 31, 2019, the Company owed $148,000 pursuant to this agreement and will record accretion equal to the debt discount of $113,674 over the remaining term of the note. Convertible promissory note, Power Up Lending Group LTD., 8% interest, unsecured, matures January 22, 2021 On October 22, 2019, the Company entered into and closed on a Securities Purchase Agreement with Power Up Lending Group LTD. ("Power Up Lending"), pursuant to which the Company issued to Power Up Lending a convertible promissory note in the aggregate principal amount of $68,500 for an aggregate purchase price of $60,000. The interest on the outstanding principal due under the note accrues at a rate of 8% per annum. All principal and accrued but unpaid interest under the note is due on January 22, 2021. The note is convertible into shares of the Company's common stock at 70% of the average of the three lowest VWAPs in the 15 trading days prior to and including the conversion date. The conversion price has a floor of $1.50 per share. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion feature of $56,000 resulted in an additional discount to the note payable of $56,000, for a total debt discount of $64,500. At December 31, 2019, the Company owed $68,500 pursuant to this agreement and will record accretion equal to the debt discount of $53,051 over the remaining term of the note. Convertible promissory note, Power Up Lending Group LTD., 8% interest, unsecured, matures February 26, 2021 On November 27, 2019, the Company entered into and closed on a Securities Purchase Agreement with Power Up Lending Group LTD. ("Power Up Lending"), pursuant to which the Company issued to Power Up Lending a convertible promissory note in the aggregate principal amount of $58,000 for an aggregate purchase price of $50,000. The interest on the outstanding principal due under the note accrues at a rate of 8% per annum. All principal and accrued but unpaid interest under the note is due on February 26, 2021. The note is convertible into shares of the Company's common stock at 70% of the average of the three lowest VWAPs in the 15 trading days prior to and including the conversion date. The conversion price has a floor of $1.50 per share. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion feature of $43,000 resulted in an additional discount to the note payable of $43,000, for a total debt discount of $51,000. At December 31, 2019, the Company owed $58,000 pursuant to this agreement and will record accretion equal to the debt discount of $45,126 over the remaining term of the note. Convertible promissory note, Crown Bridge Partners, LLC, 10% interest, unsecured, matures November 21, 2020 On November 12, 2019, the Company entered into and closed on a Securities Purchase Agreement with Crown Bridge Partners, LLC, pursuant to which the Company issued to Crown Bridge Partners, LLC a convertible promissory note in the aggregate principal amount of $225,000 for an aggregate purchase price of $202,500. The Company received the first tranche of $75,000 on November 21, 2019 for an aggregate purchase price of $65,500. The Company also issued a warrant equal to the face amount of the note with a term of three years to purchase 2,500 shares of common stock at an exercise price of $30.00 per share. The interest on the outstanding principal due under the first tranche of the note accrues at a rate of 10% per annum. All principal and accrued but unpaid interest under the first tranche of the note is due on November 21, 2020. The first tranche of the note is convertible into shares of the Company's common stock at 60% of the average of the three lowest VWAPs in the 20 trading days prior to and including the conversion date. The embedded conversion option and warrant qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion option feature of $138,000 and warrant feature of $20,138 resulted in an additional discount to the note payable of $65,500, for a total debt discount of $75,000. The remaining $92,638 of the initial fair value of the conversion feature was recorded as initial derivative expense on the consolidated statement of operations for the year ended December 31, 2019. At December 31, 2019, the Company owed $75,000 pursuant to this agreement and will record accretion equal to the debt discount of $58,648 over the remaining term of the note. Convertible promissory note, M2B Funding, 12% interest, unsecured, matures March 15, 2019 On July 3, 2018, the Company entered into and closed on a Securities Purchase Agreement with an institutional investor, pursuant to which the Company issued to the investor a senior secured convertible promissory note in the aggregate principal amount of $78,947 for an aggregate purchase price of $75,000. The interest on the outstanding principal due under the secured note accrued at a rate of 12% per annum. All principal and accrued but unpaid interest under the secured note was due on March 15, 2019. The secured note was convertible into shares of the Company's common stock at the greater of $240.00 or 75% of the lowest VWAP in the 10 trading days prior to conversion. The Company was allowed to repay the note at 115% of the outstanding principal amount. If the Company defaulted upon the note it would have accrued interest at 18% per annum. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion feature of $23,000 resulted in a discount to the note payable of $23,000. During the year ended December 31, 2019, the Company repaid the note in full and recognized a loss on settlement of debt of $2,300 in the consolidated statement of operations. Convertible promissory note, M2B Funding, 12% interest, unsecured, matures March 15, 2019 On July 31, 2018, the Company entered into and closed on a Securities Purchase Agreement with an institutional investor, pursuant to which the Company issued to the investor a senior secured convertible promissory note in the aggregate principal amount of $78,947 for an aggregate purchase price of $75,000. The interest on the outstanding principal due under the secured note accrued at a rate of 12% per annum. All principal and accrued but unpaid interest under the secured note was due on March 15, 2019. The secured note was convertible into shares of the Company's common stock at the greater of $300.00 or 75% of the lowest VWAP in the 10 trading days prior to conversion. The Company was allowed to repay the note at 115% of the outstanding principal amount. If the Company defaulted upon the note it would have accrued interest at 18% per annum. The embedded conversion option qualified for derivative accounting and the conversion option qualified for bifurcation under ASC 815-15 "Derivatives and Hedging". The initial fair value of the conversion feature of $103,000 resulted in a discount to the note payable of $75,000 and an initial derivative expense of $28,000. During the year ended December 31, 2019, the Company repaid the note in full and recognized a loss on settlement of debt of $90,000 in the consolidated statement of operations. Assignments of Convertible Related Party Debt to RDW Capital LLC On February 21, 2018, the holder of the convertible promissory note described in Note 6, Related Party Transactions, entered into agreements to sell and assign a total of $105,000 of the outstanding principal to a third party. During the year ended December 31, 2018, $55,000 of the note was converted. During the year ended December 31, 2019, the remaining $50,000 was converted into shares of the Company's common stock (refer to Note 10, Common Stock, for additional information). On June 7, 2018, the holder of the convertible promissory note described in Note 6, Related Party Transactions, entered into agreements to sell and assign a total of $39,375 of the outstanding principal to a third party. During the year ended December 31, 2019, the full $39,375 was converted into shares of the Company's common st |