Convertible Notes Payable | Note 8 – Convertible Notes Payable Convertible notes payable at June 30, 2021 and December 31, 2020 consist of the following: Summary of Convertible notes payable June 30, December 31, 2021 2020 Convertible note payable to GBT Technologies (IGOR 1) $ 9,000,000 $ 10,000,000 Convertible notes payable to Redstart Holdings 396,600 347,400 Convertible note payable to Stanley Hills 346,116 1,009,469 Convertible note payable to Iliad 489,361 2,431,841 Total convertible notes payable 10,232,077 13,788,710 Unamortized debt discount (291,967 ) (362,004 ) Convertible notes payable 9,940,110 13,426,706 Less current portion (940,110 ) (13,426,706 ) Convertible notes payable, long-term portion $ 9,000,000 $ — $10,000,000 for GBT Technologies S. A. acquisition In accordance with the acquisition of GBT-CR the Company issued a convertible note in the principal amount of $ 10,000,000 December 31, 2021 20,000 10.00 On May 19, 2021, the Company, Gonzalez, GBT-CR and IGOR 1 Corp entered into a Mutual Release and Settlement Agreement and Irrevocable Assignment of outstanding balance plus accrued interest (the “Gonzalez Agreement”). Pursuant to the Gonzalez Agreement, without any party admission of liability and to avoid litigation, the parties has agreed to (i) extend the GBT convertible note maturity date to December 31, 2022, (ii) amend the GBT convertible note terms to include a beneficial ownership blocker of 4.99% and a modified conversion feature to the GBT convertible note with 15% discount to the market price during the 20 trading day period ending on the latest complete trading day prior to the conversion date and (iii) provided for an assignment of the GBT convertible note by Gonzalez to a third party. As a result of the change in terms of this convertible note, the Company took a charge related to the modification of debt of $ 13,777,480 During the six months ended June 30, 2021, IGOR 1 converted $340,000 of the convertible note into 20,000,000 shares of the Company’s common stock. Also, on June 24, 2021, the Company transferred 5,500,000 SURG shares received as repayment of $660,000 of this convertible note (See Note 4). Redstart Holdings Corp. Paid Off Notes On August 4, 2020, the Company entered into a Securities Purchase Agreement with Redstart Holdings Corp., an accredited investor (“Redstart”) pursuant to which the Company issued to Redstart a Convertible Promissory Note (the “Redstart Note No. 1”) in the aggregate principal amount of $ 153,600 128,000 November 3, 2021 6 th 153,600 11,326,619 On September 15, 2020, the Company entered into a Securities Purchase Agreement with Redstart pursuant to which the Company issued to Redstart a Convertible Promissory Note (the “Redstart Note No. 2”) in the aggregate principal amount of $ 93,600 78,000 September 15, 2021 6 th On December 9, 2020, the Company entered into a Securities Purchase Agreement with Redstart pursuant to which the Company issued to Redstart a Convertible Promissory Note (the “Redstart Note No. 3”) in the aggregate principal amount of $ 100,200 83,500 December 9, 2021 6 th Outstanding Notes On February 10, 2021, the Company entered into a Securities Purchase Agreement with Redstart pursuant to which the Company issued to Redstart a Convertible Promissory Note (the “Redstart Note No. 4”) in the aggregate principal amount of $ 184,200 153,500 February 5, 2022 6 th On March 15, 2021, the Company entered into a Securities Purchase Agreement with Redstart pursuant to which the Company issued to Redstart a Convertible Promissory Note (the “Redstart Note No. 5”) in the aggregate principal amount of $ 106,200 88,500 June 15, 2022 6 th On May 26, 2021, the Company entered into a Securities Purchase Agreement with Redstart pursuant to which the Company issued to Redstart a Convertible Promissory Note (the “Redstart Note No. 6”) in the aggregate principal amount of $ 106,200 88,500 August 26, 2022 6 th Stanley Hills LLC The Company entered into a series of loan agreements with Stanley Hills LLC (“Stanley”) pursuant to which it received more than $1,000,000 in loans (the “Debt”) since May 2019 up to December 2019. On February 26, 2020, in order to induce Stanley to continue to provide funding, the Company and Stanley entered into a letter agreement providing that the current note payable balance due to Stanley in the amount of $ 1,214,900 1,009,468 77,535,880 521,385 600,000 424,731 346,116 1,009,469 Iliad Research and Trading, L.P. On February 27, 2019, the Company entered into a note purchase agreement with a third-party investor - Iliad Research and Trading, L.P.(“Iliad”), pursuant to which the Company issued a promissory note for the original principal amount of $ 2,325,000 300,000 2,025,000 25,000 On February 27, 2020, the Company and Iliad entered into an Amendment to the Iliad Note (See Note 9) pursuant to which the maturity date of the Iliad Note was extended to August 27, 2020, provided that the Debt may be converted into shares of common stock of the Company at a conversion price equal to 80% multiplied by the lowest trading daily VWAP for the common stock during the 20 trading day period ending on the latest complete trading day prior to the conversion date, provided for the payment by the Company to Iliad of an extension fee equal to 7.5% of the outstanding balance of the Iliad Note resulting in a new balance of the Iliad Note of $2,765,983 and provided that the Company’s failure to deliver shares of common stock within three trading days of a conversion would result in an event of default. Since the conversion price will vary based on the Company’s stock price, the beneficial conversion feature associated with this note is accounted for as a derivative liability. Iliad has agreed to restrict its ability to convert the Iliad Note and receive shares of common stock such that the number of shares of common stock held by it and its affiliates after such conversion or exercise does not exceed 9.99% of the then issued and outstanding shares of common stock. On July 20, 2020 the Company and Iliad entered into agreement to extend the maturity of the Iliad Note until February 27, 2021 in consideration of an extension fee of $ 1,000 2,010,000 140,101,351 489,361 2,431,841 Discounts on convertible notes The Company recognized interest expense of $466,637 and $2,717,518 during the six months ended June 30, 2021 and 2020, respectively, related to the amortization of the debt discount on convertible notes. The unamortized debt discount at June 30, 2021 and December 31, 2020 was $ 291,967 362,004 A roll-forward of the convertible notes payable from December 31, 2020 to June 30, 2021 is below: Rollfoward of convertible note Principal Debt Balance Discount Net Convertible notes payable, December 31, 2020 $ 13,788,710 $ (362,004 ) $ 13,426,706 Issued for cash 851,884 — 851,884 Convertible note issued for accounts payable 424,731 — 424,731 Accrued interest added to convertible note 67,520 — 67,520 Payment with marketable securities (1,260,000 ) — (1,260,000 ) Original issue discount 66,100 — 66,100 Conversion to common stock (3,706,868 ) — (3,706,868 ) Debt discount related to new convertible notes — (396,600 ) (396,600 ) Amortization of debt discounts — 466,637 466,637 Convertible notes payable, June 30, 2021 $ 10,232,077 $ (291,967 ) $ 9,940,110 |