| Convertible Debentures | 8. Convertible Debentures As of September 30,
2020 and December 31, 2019, the Company had outstanding the following convertible debentures:
September 30, December 31,
2020 2019
Convertible promissory note, Barn 11, 18% interest, unsecured, matured June 1, 2019 $ 594,362 $ 594,362
Convertible promissory note, Dominion Capital, 12% interest, unsecured, matures October 17, 2020, net of debt discount of $0 and 105,752 285,442 1,461,265
Convertible promissory note, SCS, LLC, 24% interest, unsecured, matured March 30, 2020, due on demand, net of debt discount of $0 and $13,005 51,788 38,025
Convertible promissory note, GS Capital Partners, LLC, 8% interest, secured. matures October 24 2020, net of debt discount of $1,773 and $23,986 78,331 99,014
Convertible promissory note, Crown Bridge Partners, LLC, 10% interest, unsecured, matures November 21, 2020, net of debt discount of $7,939 and $58,648 36,713 16,352
Convertible promissory note, Michael Roeske, 24% interest, unsecured, due on demand, net of debt discount of $0 and $3,512 - 112,488
Convertible promissory note, Joel Raven, 24% interest, unsecured, due on demand, net of debt discount of $0 and $8,658 - 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, 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
Total 1,046,636 2,837,679
Less: Long-term portion of convertible debentures, net of debt discount - (28,324 )
Convertible debentures, current portion, net of debt discount $ 1,046,636 $ 2,809,355 The Company’s
convertible debentures have an effective interest rate range of 23.0% to 115.4%. Convertible promissory note, Barn 11, 18% 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 September 30, 2020. Convertible promissory note, Dominion
Capital, 12% interest, unsecured, matures October 17, 2020 On April 17, 2019,
Dominion Capital exchanged two notes 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 the note during the year ended December 31, 2019 and $108,146 of principal to the note during the nine months ended September
30, 2020. These amounts are included in default and debt extension fees in the unaudited condensed consolidated statement of operations
for the three and nine months ended September 30, 2020 and 2019. On April 2, 2020 the
Company paid a $20,000 modification fee in order to avoid an event of default under the note and receive payment forbearance for
a period of 30 days. On September 30, 2020,
in connection with the stock purchase agreement described in Note 3, Disposals of Subsidiaries, the Company entered into an amendment
with Dominion and WaveTech Group, Inc. The parties agreed that as of the date of the amendment the outstanding principal and accrued
interest was $1,141,769. The Company and WaveTech Group Inc. each agreed that the final payment of $1,141,769 due on October 1,
2020 be amended so that the Company and WaveTech Group Inc. be required to make payments of $570,885 on or before each of October
1, 2020 and November 1, 2020. As a result of this amendment, the amount owed by the Company to Dominion was reduced by the $570,885
of payments that WaveTech Group Inc. is responsible for. On September 30, 2020, the Company made the first payment of $285,442
under the terms of the amendment. On October 30, 2020, Dominion agreed to accept a payment of $35,000 from the Company and postpone
the final payment until December 1, 2020. During the year ended
December 31, 2019 the Company paid $51,848 of principal. During the nine months ended September 30, 2020 the Company paid $818,537
of principal. The Company owed $285,442 as of September 30, 2020. Convertible promissory note issued in
connection with the acquisition of TNS, Inc. On January 4, 2019,
as part of the TNS acquisition, 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, December 31, 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. On February 14, 2020,
the Company and Mr. Roeske entered into an amendment which revised the maturity date to December 31, 2020. Additional, per the
amendment, as cash deposits were received by TNS in the ordinary course of business, a portion of such cash deposits could have
been be directed to Mr. Roeske. These payments would reduce the outstanding obligations of the Company to Mr. Roeske. During the nine months
ended September 30, 2020, the Company remitted $37,200 to Mr. Roeske in accordance with the amendment. On September 8, 2020,
Mr. Roeske returned the shares issued in 2019. These shares were then canceled and $70,000 was added back to the outstanding principal
of the note. The Company recorded a loss on return of common stock of $69,820 to the unaudited condensed consolidated statement
of operations for the three and nine months ended September 30, 2020. On September 30, 2020,
the Company entered into a stock purchase agreement (refer to Note 3, Disposals of Subsidiaries, for further detail). The outstanding
balance of $148,800 was assigned to the purchaser. Convertible promissory note, Joel Raven,
6% interest, unsecured, matures December 31, 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 accrued 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. On February 14, 2020,
the Company and Mr. Raven entered into an amendment which revised the maturity date to December 31, 2020. Additional, per the amendment,
as cash deposits were received by TNS in the ordinary course of business, a portion of such cash deposits could have been be directed
to Mr. Raven. These payments would reduce the outstanding obligations of the Company to Mr. Raven. During the nine months
ended September 30, 2020, the Company remitted $86,800 to Mr. Raven in accordance with the amendment. On September 8, 2020,
Mr. Raven returned the shares issued in 2019. These shares were then canceled and $70,000 was added back to the outstanding principal
of the note. The Company recorded a loss on return of common stock of $69,821 to the unaudited condensed consolidated statement
of operations for the three and nine months ended September 30, 2020. On September 30, 2020,
the Company entered into a stock purchase agreement (refer to Note 3, Disposals of Subsidiaries, for further detail). The outstanding
balance of $347,200 was assigned to the purchaser. 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 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. During the nine months
ended September 30, 2020, the holder of the note converted $123,000 of principal and $6,769 of accrued interest into shares of
the Company’s common stock (refer to Note 11, Common Stock, for additional information). As a result of these conversions,
the amount owed at September 30, 2020 was $0. The Company recorded a loss on settlement of debt of $784,531 to the unaudited condensed
consolidated statement of operations for the nine months ended September 30, 2020. 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 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. During the nine months
ended September 30, 2020, the holder of the note converted $42,896 of principal and $3,631 of accrued interest into shares of the
Company’s common stock (refer to Note 11, Common Stock, for additional information). As a result of these conversions, the
Company recorded a loss on settlement of debt of $106,147 to the unaudited condensed consolidated statement of operations for the
three and nine months ended September 30, 2020. At September 30, 2020,
the Company owed $80,105 pursuant to this agreement and will record accretion equal to the debt discount of $1,773 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 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. The note matured on
March 30, 2020 and is in default. As a result of the default, the note balance was increased by 25% of outstanding principal, resulting
in additional principal of $12,758. The interest also increased from 8% per annum to 24% per annum. During the nine months
ended September 30, 2020, the holder of the note converted $12,000 of principal and $720 of accrued interest into shares of the
Company’s common stock (refer to Note 11, Common Stock, for additional information). As a result of these conversions, the
Company recorded a loss on settlement of debt of $7,013 to the unaudited condensed consolidated statement of operations for the
nine months ended September 30, 2020. At September 30, 2020,
the Company owed $51,788 pursuant to this agreement. 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 accrued at a rate of 8% per annum. All principal and accrued but unpaid interest under
the note was originally due on September 17, 2020. The note was 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 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. During the nine months
ended September 30, 2020, the holder of the note converted $148,000 of principal and $5,520 of accrued interest into shares of
the Company’s common stock (refer to Note 11, Common Stock, for additional information). As a result of these conversions,
the amount owed at September 30, 2020 was $0. The Company recorded a loss on settlement of debt of $262,732 to the unaudited condensed
consolidated statement of operations for the nine months ended September 30, 2020. 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 accrued at a rate of 8% per annum. All principal and accrued but unpaid interest under
the note was originally due on January 22, 2021. The note was 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 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. During the nine months
ended September 30, 2020, the holder of the note converted $68,500 of principal and $2,540 of accrued interest into shares of the
Company’s common stock (refer to Note 11, Common Stock, for additional information). As a result of these conversions, the
amount owed at September 30, 2020 was $0. The Company recorded a loss on settlement of debt of $42,342 to the unaudited condensed
consolidated statement of operations for the nine months ended September 30, 2020. 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 accrued at a rate of 8% per annum. All principal and accrued but unpaid interest under
the note was due on February 26, 2021. The note was 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 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. During the nine months
ended September 30, 2020, the holder of the note converted $58,000 of principal and $3,656 of accrued interest into shares of the
Company’s common stock (refer to Note 11, Common Stock, for additional information). As a result of these conversions, the
amount owed at September 30, 2020 was $0. The Company recorded a loss on settlement of debt of $69,438 to the unaudited condensed
consolidated statement of operations for the three and nine months ended September 30, 2020. 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. During the nine months
ended September 30, 2020, the holder of the note converted $30,348 of principal and $5,000 of accrued interest into shares of the
Company’s common stock (refer to Note 11, Common Stock, for additional information). As a result of these conversions, the
Company recorded a loss on settlement of debt of $95,203 to the unaudited condensed consolidated statement of operations for the
three and nine months ended September 30, 2020. At September 30, 2020,
the Company owed $44,652 pursuant to this agreement and will record accretion equal to the debt discount of $7,939 over the remaining
term of the note. Convertible promissory note, CCAG Investments,
LLC, 20% interest, secured, matures June 30, 2020 On February 7, 2020,
the Company entered into and closed on a Securities Purchase Agreement with CCAG Investments, LLC, pursuant to which the Company
issued to CCAG Investments, LLC a secured convertible redeemable note in the aggregate principal amount of $175,000 for an aggregate
purchase price of $157,500, resulting in an original issue discount of $17,500. The Company also issued a warrant equal to 50%
of the face amount of the note with a term of three years to purchase 9,723 shares of common stock at an initial exercise price
of $9.00 per share. The interest on the
outstanding principal due under the note accrued at a rate of 20% per annum. All principal and accrued but unpaid under the secured
note was originally due on June 30, 2020. The note was convertible into shares of the Company’s common stock at 70% of the
average of the three lowest VWAPs in the 12 trading days prior to and including the conversion date. In connection with
the issuance of the note, the Company also issued to CCAG Investments, LLC 9,755 shares of common stock (refer to Note 11, Common
Stock, for additional detail). The embedded conversion
option and warrants issued qualified for derivative accounting and bifurcation under ASC 815-15 “Derivatives and Hedging”.
The initial fair value of the conversion feature and warrants issued was $42,000 and $64,000, resulting in an additional discount
to the note payable of $106,000. The shares issued with the note were valued at $51,500, for a total debt discount of $175,000. The Company had the
option of repaying 120% of the principal balance if paid within 90 days of issuance, or 125% of the principal if paid greater than
90 days after issuance. During the nine months
ended September 30, 2020, the Company repaid 120% of the principal balance. The total payment was $218,534, which included accrued
interest of $8,534. The Company recorded a loss on settlement of debt of $127,654 to the unaudited condensed consolidated statement
of operations for the nine months ended September 30, 2020. Under the terms of
the agreement, if the shares issued upon execution of the note are no longer worth $87,500 at the time of the shares becoming eligible
for resale pursuant to Rule 144, the Company shall issue additional shares to the holder in an amount holding a market value to
equal the difference between the value of these shares and $87,500. The 9,755 shares became eligible for resale pursuant to Rule
144 during the three months ended September 30, 2020 and the value was less than $87,500. As a result, the Company began issuing
additional shares to the holder during the period (refer to Note 11, Common Stock, for additional detail). During the three months
ended September 30, 2020, the Company issued an aggregate of 900,000 shares to the holder and recorded a loss on fair value of
additional shares of $68,040 to the unaudited condensed consolidated statement of operations for the three and nine months ended
September 30, 2020. Convertible promissory note, FJ Vulis
and Associates LLC, 20% interest, secured, matures June 30, 2020 On February 7, 2020,
the Company entered into and closed on a Securities Purchase Agreement with FJ Vulis and Associates, LLC, pursuant to which the
Company issued to FJ Vulis and Associates, LLC a secured convertible redeemable note in the aggregate principal amount of $175,000
for an aggregate purchase price of $157,500, resulting in an original issue discount of $17,500. The Company also issued a warrant
equal to 50% of the face amount of the note with a term of three years to purchase 9,723 shares of common stock at an initial exercise
price of $9.00 per share. The interest on the
outstanding principal due under the note accrued at a rate of 20% per annum. All principal and accrued but unpaid under the secured
note was originally due on June 30, 2020. The note was convertible into shares of the Company’s common stock at 70% of the
average of the three lowest VWAPs in the 12 trading days prior to and including the conversion date. In connection with
the issuance of the note, the Company also issued to FJ Vulis and Associates, LLC 9,755 shares of common stock (refer to Note 11,
Common Stock, for additional detail). The embedded conversion
option and warrants issued qualified for derivative accounting and bifurcation under ASC 815-15 “Derivatives and Hedging”.
The initial fair value of the conversion feature and warrants issued was $42,000 and $64,000, resulting in an additional discount
to the note payable of $106,000. The shares issued with the note were valued at $51,500, for a total debt discount of $175,000. The Company had the
option of repaying 120% of the principal balance if paid within 90 days of issuance, or 125% of the principal if paid greater than
90 days after issuance. During the nine months
ended September 30, 2020, the Company repaid 120% of the principal balance. The total payment was $218,247, which included accrued
interest of $8,247. The Company recorded a loss on settlement of debt of $127,654 to the unaudited condensed consolidated statement
of operations for the nine months ended September 30, 2020. Under the terms of
the agreement, if the shares issued upon execution of the note are no longer worth $87,500 at the time of the shares becoming eligible
for resale pursuant to Rule 144, the Company shall issue additional shares to the holder in an amount holding a market value to
equal the difference between the value of these shares and $87,500. The 9,755 shares became eligible for resale pursuant to Rule
144 during the three months ended September 30, 2020 and the value was less than $87,500. As a result, the Company began issuing
additional shares to the holder during the period (refer to Note 11, Common Stock, for additional detail). During the three months
ended September 30, 2020, the Company issued an aggregate of 900,000 shares to the holder and recorded a loss on fair value of
additional shares of $68,040 to the unaudited condensed consolidated statement of operations for the three and nine months ended
September 30, 2020. |
