| Convertible Promissory Notes Payable and Notes Payable | NOTE 7 – CONVERTIBLE PROMISSORY
NOTES PAYABLE AND NOTES PAYABLE Red Diamond Partners LLC and RDW Capital,
LLC On April 25, 2017, the Company entered into
a Securities Purchase Agreement with RedDiamond Partners LLC (“RedDiamond”) pursuant to which the Company would issue
to RedDiamond Convertible Promissory Notes in an aggregate principal amount of up to $355,000, which includes a purchase price
of $350,000 and transaction costs of $5,000. Pursuant to this securities purchase agreement, on April 25, 2017, the Company entered
into a convertible promissory note in the aggregate principal amount of $100,000 and the Company received $95,000 after giving
effect to the original issue discount of $5,000. This note matured on April 25, 2018 and each tranche matured one year after the
date of such funding. The second Tranche was received on June 2, 2017 for $85,000 and the third Tranche for $85,000 was received
on August 8, 2017 upon filing of the Registration Statement. The fourth Tranche was to be for $85,000, however, as of the date
of this filing, the fourth tranche has not yet been received. The Purchaser is not required to fund any Tranche subsequent to the
first Tranche if there is an event of default as described in the promissory notes. Through date of default, the RedDiamond Notes
bore interest at a rate of 12% per annum and were convertible into shares of the Company’s common stock at RedDiamond’s
option at 65% of the lowest VWAP for the previous ten trading days preceding the conversion. During 2018, the Company failed to
make its required maturity date payments of principal and interest on Convertible Promissory Notes of $270,000. In accordance with
these notes, the Company entered into default in 2018, which increased the interest rate to 18.0% per annum. These convertible
promissory notes contain cross default provisions whereby a default in any one note greater than $25,000 will cause a default in
all the notes, however, this provision is only effective if there is a formal notice of default by the lender. On June 30, 2017,
the Company issued RDW Capital, LLC a senior convertible note in the aggregate principal amount of $240,000, for an aggregate purchase
price of $30,000 of which $15,000 had been recorded as advance from lender as of March 31, 2017 and the remaining $15,000 received
on June 30, 2017. Through date of default, the principal due under the Note accrued interest at a rate of 12% per annum. All principal
and accrued interest under the Note was due six months following the issue date of the Note, and is convertible into shares of
the Company’s common stock, at a conversion price equal to fifty (50%) of the lowest volume-weighted average price for the
previous ten trading days immediately preceding the conversion. The Note includes anti-dilution protection, including a down-round
provision under which the conversion price could be affected by future equity offerings undertaken by the Company, as well as customary
events of default, including non-payment of the principal or accrued interest due on the Note. Upon an event of default, all obligations
under the Note will become immediately due and payable and the Company will be required to make certain payments to the Lender.
On December 31, 2017 the Company failed to make its required maturity date payment of principal and interest. In accordance with
the note, the Company entered into default on January 3, 2018, which increased the interest rate to 24% per annum. In connection with the issuance of these Convertible
Promissory Notes above, the Company determined that the terms of these Convertible Promissory Notes included a down-round provision
under which the conversion price could be affected by future equity offerings undertaken by the Company. The Company evaluated these convertible promissory
note transactions in accordance with ASC Topic 815, Derivatives and Hedging. Through December 31, 2018, the Company determined
that the conversion feature of the convertible promissory notes was not afforded the exemption for conventional convertible instruments
due to their respective variable conversion rate and price protection provision. Accordingly, through December 31, 2018, under
the provisions of FASB ASC Topic No. 815-40, “Derivatives and Hedging – Contracts in an Entity’s Own Stock”,
the embedded conversion option contained in the convertible instruments were accounted for as derivative liabilities at the date
of issuance and shall be adjusted to fair value through earnings at each reporting date. On January 1, 2019, the Company adopted
ASU No. 2017-11, Earnings Per Share Distinguishing Liabilities from Equity Derivatives
and Hedging Accounting for Certain Financial Instruments with Down Round Features, On April 9, 2019, the Company entered into
agreements with RedDiamond, holding these convertible notes representing an aggregate principal amount of $510,000, and agreed
with such holder to:
● extend the maturity date of the notes to December 31, 2020;
● remove all convertibility features of the notes; and
● if the Company completes an offering of equity or equity linked securities (including warrants, convertible preferred stock, convertible debentures or convertible promissory note) which results in gross proceeds to the Company of at least $4,000,000, then the Company shall use a portion of the proceeds thereof to repay not less than half of the obligations then outstanding pursuant to the notes. The aggregate principal amounts due as of September
30, 2019 and December 31, 2018 amounted to $510,000 and $510,000, respectively. At December 31, 2018, the principal balance of
$510,000 was included in convertible notes payable, a current liability, on the accompanying consolidated balance sheet. At September
30, 2019, the principal balance of $510,000 was included in notes payable – related party, a long-term liability, on the
accompanying consolidated balance sheet since on April 9, 2019, the conversion features on the notes were removed and RedDiamond
became a principal shareholder of the Company when they converted their preferred shares to common stock (See Note 9). In connection
with this debt modification, the Company recorded a gain on debt extinguishment of $432,589, which consists of the removal of debt
put premium of $385,385 since the debt is no longer convertible, and $47,205 related to the reversal of default interest payable. Bellridge Capital, LLC On June 18, 2018, the Company entered into
a securities purchase agreement (the “Purchase Agreement”), whereby it issued to an institutional investor (the “Lender”)
a senior secured convertible note in the aggregate principal amount of $2,497,503 (the “Note”), for an aggregate purchase
price of $1,665,000, net of an original issue discount of $832,503. In addition, the Company paid issue costs of $177,212. The
original issue discount and issue costs were recorded as a debt discount to be amortized over the Note term. The principal due
under the Note accrues interest at a rate of 10% per annum. Principal and interest payments of $232,940 were payable monthly beginning
on December 18, 2018 and were due monthly over the term of the Note in cash or common stock of the Company, at the Lender’s
discretion. In connection with the Purchase Agreement,
the Lender was issued a warrant, with a term of two years, to purchase up to 4.75% of the fully-diluted outstanding Common Stock
of the Company, for an aggregate purchase price of $100. Additionally, the placement agent was issued a warrant, with a term of
two years, to purchase up to 4.75% of the fully-diluted outstanding Common Stock of the Company, for an aggregate purchase price
of $100. In August 2018, the Company defaulted on its
convertible note payable with Bellridge due to (i) default on the payment of monthly interest payments due, (ii) default caused
by the late filing of the Company’s report on Form 10-Q for the periods ended June 30, 2018 and September 30, 2018 and (iii)
default of filing of a registration statement. Upon an event of default, all principal, accrued interest, and liquating damages
and penalties were due upon request of the lender at 125% of such amounts. On December 27, 2018, the lender waived any
and all defaults in existence on the Note and the Company agreed to issue a warrant that is convertible into 2% of the issued and
outstanding shares existing as the time the Company files a registration statement or makes an application to up list to a national
stock exchange. Pursuant to this warrant, at any time on or before the date that the Company files a registration statement on
form S-l or applies for up-listing to a National Exchange, and on or prior to the close of business on the early of the first year
anniversary of the issuance of December 27, 2018 (the “Termination Date”), Bellridge could have chosen to subscribe
for and purchase from the Company up to 2% in shares of common stock for an aggregate exercise price of $100. Additionally, the
principal interest amount due under the Note was modified with a monthly payment of principal and interests due beginning on January
18, 2019 of $156,219 with all remaining principal and interest amounts on the Note due on December 18, 2019. This modification
was not considered a debt extinguishment. On April 9, 2019, the Company entered into
a new agreement with this lender that modified these Notes and cancelled these warrants (see below). Through April 9, 2019, all principal and accrued
interest under the Note was convertible into shares of the Company’s common stock, at a conversion price equal to the lower
of $1.50 and 65% of the lowest traded price during the fifteen trading days immediately prior to the conversion date. The Note
includes anti-dilution protection, as well as customary events of default, including, but not limited to, non-payment of the principal
or accrued interest due on the Note and cross default provisions on other Company obligations or contracts. Upon an event of default,
all obligations under the Note will become immediately due and payable and the Company will be required to make certain payments
to the Lender. The Lender was granted a right of first refusal
on future financing transactions of the Company while the Note remains outstanding, plus an additional three months thereafter.
In connection with the issuance of the Note, the Company entered into a security agreement with the Lender (the “Security
Agreement”) pursuant to which the Company agreed that obligations under the Note and related documents will be secured by
all of the assets of the Company. In addition, all of the Company’s subsidiaries are guarantors of the Company’s obligations
to the Lender pursuant to the Note and have granted a similar security interest over substantially all of their assets. A portion
of the proceeds of the Note were used to acquire 100% of the membership interests of Prime. During the term of this Note, in the event
that the Company consummates any public or private offering or other financing or capital raising transaction of any kind (each
a “Subsequent Offering”), in which the Company receives, in one or more contemporaneous transactions, gross proceeds
of at least $5,000,000, at any time upon ten (10) days written notice to the Holder, but subject to the Holder’s conversion
rights set forth in the Purchase Agreement, then the Company shall use 20% of the gross proceeds of the Subsequent Offering and
shall make payment to the Holder of an amount in cash equal to the product of (i) the sum of (x) the then outstanding principal
amount of this Note and (y) all accrued but unpaid interest, multiplied by (ii) (x) 110%, if the Prepayment Date is within 90 days
of the date hereof the Closing Date (as defined in the Purchase Agreement), or (y) 125%, if the Prepayment Date is after the 90th
day following the Closing Date, to which calculated amount the Company shall add all other amounts owed pursuant to this Note,
including, but not limited to, all Late Fees and liquidated damages. In connection with the Purchase agreement,
the Company entered into a registration rights agreement which, among other things, required the Company to file a registration
statement with the Securities and Exchange Commission no later than 120 days after June 18, 2018. The Company failed to file such
registration statement. Accordingly, in addition to any other rights the Holders may have hereunder or under applicable law, on
the default date and on each monthly anniversary of each such default date (if the applicable event shall not have been cured by
such date) until the ninetieth day from such Event Date, the Company shall pay to each Holder an amount in cash, as partial liquidated
damages and not as a penalty, equal to the product of one percent (1%) multiplied by the aggregate subscription amount paid by
the Holder pursuant to the Purchase Agreement. Subsequent to the ninetieth day from such default date, the one percent (1%) penalty
shall increase to two percent (2%), with an aggregate cap of twenty percent (20%) per annum. If the Company fails to pay any of
these partial liquidated damages in full within seven days after the date payable, the Company will pay interest thereon at a rate
of 18% per annum to the Holder, accruing daily from the date such partial liquidated damages are due until such amounts, plus all
such interest thereon, are paid in full. On December 27, 2018, the lender waived any and all defaults. In connection with this Purchase Agreement,
the Company paid a placement agent $120,000 in cash which is included in issue costs previously discussed above and this placement
agent was issued a warrant, with a term of two years, to purchase up to 4.75% of the fully-diluted outstanding Common Stock of
the Company, for an aggregate purchase price of $100 (the “Placement Warrant”). On April 9, 2019, the Company entered
into an agreement with this placement agent that cancelled the Placement Warrant. In connection with the issuance of this Note,
Warrants, and Placement Warrant, the Company determined that this Note and the Warrants contains terms that are not fixed monetary
amounts at inception. Accordingly, under the provisions of ASC Topic No. 815-40, “Derivatives and Hedging – Contracts
in an Entity’s Own Stock”, the embedded conversion option contained in the convertible instrument and the Warrant and
Placement Warrant were accounted for as derivative liabilities at the date of issuance and shall be adjusted to fair value through
earnings at each reporting date. The fair value of this embedded conversion option derivative, and the Warrant and Placement Warrant
were determined using the Binomial valuation model and Monte-Carlo simulation model, respectively. Convertible debt modifications and warrant
cancellations On April 9, 2019 (the “Modification Date”),
the Company entered into an agreement with Bellridge Capital, L.P. (“Bellridge”) that modifies its existing obligations
to Bellridge as follows:
● the overall principal amount of that certain Convertible Promissory Note, dated June 18, 2018, issued by the Company in favor of Bellridge (the “Note”) was reduced from the original principal amount of $2,497,502 (principal amount was $2,223,918 at April 9, 2019) to $1,800,000, in exchange for the issuance to Bellridge of 800,000 shares of restricted common stock, which shall be delivered to Bellridge, either in whole or in part, at such time or times as when the beneficial ownership of such shares by Bellridge will not result in Bellridge’s beneficial ownership of more than the Beneficial Ownership Limitation and such shares will be issued within three business days of the date the Bellridge has represented to the Company that it is below the Beneficial Ownership Limitation. Such issuances will occur in increments of no fewer than the lesser of (i) 50,000 shares and (ii) the balance of the 800,000 shares owed. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the issuance of shares of common stock issuable pursuant to this Agreement. As of August 19, 2019, 100,000 of these shares have been issued and on August 16, 2019, the Company issued 700,000 shares of Series B Preferred shares upon settlement of 700,000 shares of issuable common shares as discussed in Note 9.
● the maturity date of the Note was extended to August 31, 2020;
● the interest rate was reduced from 10% to 5% per annum;
● if the Company completes an offering of equity or equity linked securities (including warrants, convertible preferred stock, convertible debentures or convertible promissory note) which results in gross proceeds to the Company of at least $4,000,000, then the Company shall use a portion of the proceeds thereof to repay not less than half of the obligations then outstanding pursuant to the Note;
● if the Company completes an offering of debt which results in gross proceeds to the Company of at least $3,000,000, then the Company shall use a portion of the proceeds thereof to repay any remaining obligations then outstanding pursuant to the Note;
● the convertibility of the Note will now be amended such that the Note shall only be convertible at a conversion price to be mutually agreed upon between the Company and the Holder. As of the date of this report, the Company and Holder have not mutually agreed on a conversion price, Since the conversion terms are unknown, the Company will account for this conversion feature when the contingency is resolved;
● the registration rights previously granted to Bellridge have now been eliminated; and
● those certain Warrants, dated June 18, 2018 and December 27, 2018, respectively, issued by the Company in favor of Bellridge shall be cancelled and of no further force or effect. In exchange, the Company issued Bellridge 360,000 shares of restricted common stock. In addition, on the Modification Date, warrant
holders holding warrants exercisable into an aggregate of 4.75% of the outstanding common stock of the Company all agreed to exercise
such warrants for an aggregate of 240,000 shares of common stock of the Company. In connection with the modification of the
Bellridge Note and the cancellation of the related warrants, under the provisions of ASC Topic No. 815-40, “Derivatives and
Hedging – Contracts in an Entity’s Own Stock”, the embedded conversion option contained in the convertible instrument
and the Warrant and Placement Warrant were adjusted to fair value through earnings on the Modification Date. The fair value of
this embedded conversion option derivative, and the Warrant and Placement Warrant were determined using the Binomial valuation
model and Monte-Carlo simulation model, respectively. For the period from April 1, 2019 to April 9, 2019, the change of fair value
of derivative liabilities associated with these instruments amounted to $41,653,345, which was recorded as derivative expense on
the Modification date. The increase in derivative liabilities was caused by an increase in the Company’s stock price, as
quoted on OTC Markets. Additionally, on the Modification Date, the Company analyzed the Bellridge Note modification and the cancellation
of the warrants and pursuant to ASC 470-50, the modifications were treated as a debt extinguishment. August 30, 2019 convertible debt and
related warrants On August 30, 2019, the Company closed Securities
Purchase Agreements (the “Purchase Agreement”) with accredited investors. Pursuant to the terms of the Purchase Agreements,
the Company issued and sold to investors convertible promissory notes in the aggregate principal amount of $2,469,840 (the “Notes”),
and warrants to purchase up to 987,940 shares of the Company’s common stock (the “Warrant”). The Company received
net proceeds of $295,534, which is net of a 10% original issue discounts of $246,984 and origination fees of $61,101, and is net
of $1,643,367 for the repayment of notes payable (See Note 8), and net of $222,854 related to the conversion of existing notes
payable already outstanding to these lenders into these August 30, 2019 convertible notes (see Note 8). The Notes bears interest
at 10% per annum and becomes due and payable on November 30, 2020. During the existence of an Event of Default, interest shall
accrue at the lesser of (i) the rate of 18% per annum, or (ii) the maximum amount permitted by law. Commencing on the four month
anniversary of these Notes, monthly payments of interest and monthly principal payments, based on a 12 month amortization schedule
(each, an “Amortization Payment”), shall be due and payable, until the Maturity Date, at which time all outstanding
principal, accrued and unpaid interest and all other amounts due and payable hereunder shall be immediately due and payable. The
Amortization Payments shall be made in cash unless the investor requests it to be issued in the Company’s common stock in
lieu of a cash payment (“Stock Payment”). If the investor requests a Stock Payment, the number of shares of common
stock issued shall be based on the amount of the applicable Amortization Payment divided by 80% of the lowest VWAP during the five
Trading Day period prior to the due date of the Amortization Payment. The Notes may be prepaid, provided that equity
conditions, as defined in the Notes, have been met (or any such failure to meet the Equity Conditions have been waived): (i) from
Original Issuance Date until and through the day that falls on the third month anniversary of the Original Issue Date (the “3
Month Anniversary”) at an amount equal to 105% of the aggregate of the outstanding principal balance of the Note and accrued
and unpaid interest, and (ii) after the 3 Month Anniversary at an amount equal to 115% of the aggregate of the outstanding principal
balance of the Note and accrued and unpaid interest. In the event that the Company closes a registered public offering of securities
for its own account (a “Public Offering”), the Holder may elect to: (x) have its principal and accrued interest prepaid
directly from the Public Offering Proceeds at the prices set forth above, or (y) exchange its Note at the closing of the Public
Offering for the securities being issued in the Public Offering at the Public Offering prices based upon the outstanding principal,
accrued interest and other charges, or (z) continue to hold the Note. Except for a Public Offering and Amortization Payments, in
order to prepay the Note, the Company shall provide at least 20 days’ prior written notice to the Holder, during which time
the Holder may convert the Note in whole or in part at the Conversion Price. For avoidance of doubt, the Amortization Payments
shall be prepayments and are subject to prepayment penalties equal to 115% of the Amortization payment. In the event the Company
consummates a Public Offering while the Notes are outstanding, then 25% of the net proceeds of such offering shall, within two
business days of the closing of such public offering, be applied to reduce the outstanding obligations pursuant to the Notes. In connection with the Debt Offering, the Company
entered into a Registration Rights Agreement, pursuant to which the Company agreed to file a registration statement on Form S-1
to register the resale of the shares issuable to the Debt Investors in the Debt Offering. After the original issue date until the Notes
are no longer outstanding, the Notes shall be convertible, in whole or in part, at any time, and from time to time, into shares
of Common Stock at the option of the investor. The “Conversion Price” in effect on any Conversion Date means, as of
any Conversion Date or other date of determination, the lower of: (i) $2.50 per share and (ii) the price per share paid by investors
in the contemplated equity offering of up to $1,000,000. If an Event of Default has occurred, regardless of whether such Event
of Default has been cured or remains ongoing, these Notes shall be convertible at the lower of: (i) $2.50 and (ii) 70% of the second
lowest closing price of the Common Stock as reported on the Trading Market during the 20 consecutive Trading Day period ending
and including the Trading Day immediately preceding the delivery or deemed delivery of the applicable Notice of Conversion (the
“Default Conversion Price”). All such Conversion Price determinations are to be appropriately adjusted for any stock
dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the
Common Stock. The Warrants are exercisable at any time on
or after the date of the issuance and entitles the investors to purchase shares of the Company’s common stock for a period
of five years from the initial date the warrants become exercisable. Under the terms of the Warrant, the investors are entitled
to exercise the Warrants to purchase up to 987,840 shares of the Company’s common stock at an initial exercise price of $3.50,
subject to adjustment as detailed in the respective Warrant. These Notes and related Warrants include a
down-round provision under which the Note conversion price and warrant exercise price could be affected, on a full-ratchet basis,
by future equity offerings undertaken by the Company. On September 6, 2019, the Company sold its common shares at $2.50 per share
and accordingly, the warrant down-round provisions were triggered. As a result, the number of warrants was increased to 1,383,116
warrants and the exercise price was lowered to $2.50. As a result, the Company recorded a deemed dividend of $981,548 which represents
the fair value transferred to the Warrant holders from the Down Round feature being triggered. The Company calculated the difference
between the warrants fair value on the date the down round feature was triggered using the original exercise price and the new
exercise price and the new number of warrants. The deemed dividend was recorded as a reduction of accumulated deficit and increase
in paid-in capital and increased the net loss to common shareholders by the same amount. Gain on debt extinguishment In connections with the RedDiamond and Bellridge
debt modifications and warrants cancellations discussed above and other debt modifications as discussed below, on the Modification
Dates or repayment dates, for the nine months ended September 30, 2019, the Company recorded an aggregate gain on debt extinguishment
of $39,203,017 which consists of the following.
Gain on Other Total gain (loss)
Gain from reversal of derivative liabilities on Modification Date or repayment date $ 61,841,708 $ 246,111 $ 61,841,708
Fair value of common shares issued on Modification Date (17,934,000 ) - (17,934,000 )
Fair value of warrants issued on modification dates - (3,550,531 ) (3,550,531 )
Conversion inducement expense - (1,164,220 ) (1,164,220 )
Write-off of remaining debt discount (1,013,118 ) (152,240 ) (1,165,359 )
Reversal of put premium on stock-settled debt related to cancellation of conversion terms 385,385 - 385,385
Reduction of principal and interest balances due 543,922 -
Gain (loss) of debt extinguishment $ 43,823,897 $ (4,620,880 ) $ 39,203,017 Summary of derivative liabilities Through April 9, 2019, the Company revalued
the embedded conversion option and warrant derivative liabilities related to the RedDiamond and Bellridge debt. In connection with
these revaluations, the Company recorded derivative expense of $55,037,605 and $9,505,352 for the nine months ended September 30,
2019 and 2018, respectively. In connection with the issuance of the August
30, 2019 Notes, the Company determined that various terms of the Note, including the Stock Payment terms discussed above, caused
derivative treatment of the embedded conversion options. Accordingly, under the provisions of ASC 815-40 - Derivatives and Hedging
– Contracts in an Entity’s Own Stock In connection with the warrants issued in connection
with the August 30, 2019 Notes, the Company determined that the terms of the warrants contain terms that are fixed monetary amounts
at inception and, accordingly, the warrants were not considered derivatives. The fair value of the warrants was determined using
the Binomial valuation model. In connection with the issuance of the warrants, on the initial measurement date, the relative fair
value of the warrants of $1,225,109 was recorded as a debt discount and an increase in paid-in capital. During the nine months ended September 30,
2019 and 2018, the fair value of the derivative liabilities, warrants and conversion option was estimated using the Black-Sholes
valuation model, Binomial valuation model, and the Monte-Carlo simulation model with the following assumptions:
2019 2018
Expected dividend rate - -
Expected term (in years) 0.05 to 5.00 0.01 to 2.00
Volatility 217.6% to 228.7 % 261.2% to 307.75 %
Risk-free interest rate 1.39% to 2.40 % 1.32% to 2.11 % Convertible note payable – related
parties On March 13, 2019, the Company entered into
a convertible note agreement with an individual, who is affiliated to the Company’s chief executive officer, in the amount
of $500,000. Commencing on April 11, 2019, and continuing on the eleventh day of each month thereafter, payments of interest only
on the outstanding principal balance of this Note of $7,500 shall be due and payable. Commencing on October 11, 2019 and continuing
on the eleventh day of each month thereafter through April 11, 2021, payments of principal and interest of $31,902 shall be made,
if not sooner converted as provided in the note agreement. The payment of all or any portion of the principal and accrued interest
may be paid prior to the April 11, 2021. Interest shall accrue with respect to the unpaid principal sum identified above until
such principal is paid or converted as provided below at a rate equal to 18% per annum compounded annually. All past due principal
and interest on this Note shall bear interest from maturity of such principal or interest (in whatever manner same may be brought
about) until paid at the lesser of (i) 20% per annum, or (ii) the highest non-usurious rate allowed by applicable law. This Note
may be converted by Holder at any time in principal amounts of $100,000 in accordance with the terms by delivery of written notice
to the Company, into that number of shares of common stock equal to the amount obtained by dividing the portion of the aggregate
principal amount of this Note that is being converted by $1.37. In connection with the issuance of this Note, the Company determined
that this Note contains terms that are fixed monetary amounts at inception. Since the conversion price of $1.37 was equal to the
quoted closing of the Company’s common shares on the note date, no beneficial feature conversion was recorded. On July 12,
2019, the Company entered into a Note Conversion Agreement with this individual. In connection with this Note Conversion Agreement,
the Company issued 203,000 shares of its common stock at $2.50 per share for the conversion of convertible note payable of $500,000
and accrued interest payable of $7,500. In connection with the conversion of this convertible notes, the Company issued the entity
warrants to purchase 203,000 shares of the Company’s common stock at an exercise price of $1.81 per share for a period of
five years. On April 11, 2019, the Company entered into
a convertible note agreement with an entity affiliated with the Company’s chief executive officer in the amount of $2,000,000.
Commencing on May 11, 2019, and continuing on the eleventh day of each month thereafter, payments of interest only on the outstanding
principal balance of this Note of $30,000 shall be due and payable. Commencing on November 11, 2019 and continuing on the eleventh
day of each month thereafter through April 11, 2021, payments of principal and interest of $117,611 are due, if the note is not
sooner converted as provided in the note agreement. The payment of all or any portion of the principal and accrued interest may
be prepaid prior to April 11, 2021. Interest shall accrue with respect to the unpaid principal sum identified above until such
principal is paid or converted as provided below at a rate equal to 18% per annum compounded annually. All past due principal and
interest on this Note shall bear interest from maturity of such principal or interest until paid at the lesser of (i) 20% per annum,
or (ii) the highest non-usurious rate allowed by applicable law. This Note may be converted by Holder at any time in principal
amounts of $100,000 in accordance with the terms by delivery of written notice to the Company, into that number of shares of common
stock equal to the amount obtained by |
