Convertible Notes Payable | Note 7 – Convertible Notes Payable Convertible notes payable at September 30, 2021 and December 31, 2020 consist of the following: Summary of Convertible notes payable September 30, December 31, 2021 2020 Convertible note payable to GBT Technologies (IGOR 1) $ 8,255,400 $ 10,000,000 Convertible notes payable to Redstart Holdings 350,700 347,400 Convertible note payable to Stanley Hills 448,121 1,009,469 Convertible note payable to Iliad — 2,431,841 Total convertible notes payable 9,054,221 13,788,710 Unamortized debt discount (316,372 ) (362,004 ) Convertible notes payable 8,737,849 13,426,706 Less current portion (482,449 ) (13,426,706 ) Convertible notes payable, long-term portion $ 8,255,400 $ — $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 20,000 500.00 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 nine months ended September 30, 2021, IGOR 1 converted $1,084,600 of the convertible note into 1,600,000 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/Converted 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 153,600 226,532 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 for a purchase price of $ 78,000 September 15, 2021 6 th 93,600 89,169 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 for a purchase price of $ 83,500 December 9, 2021 6 th 100,200 135,582 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 for a purchase price of $ 153,500 February 5, 2022 6 th 184,200 386,146 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 for a purchase price of $ 88,500 June 15, 2022 6 th 106,200 317,837 Outstanding Notes 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 for a purchase price of $ 88,500 August 26, 2022 6 th On September 21, 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. 7”) in the aggregate principal amount of $244,500 for a purchase price of $ 203,750 December 22, 2022 2.5 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 1,550,718 697,386 800,000 424,731 448,121 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 8) 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 1,000 2,508,737 4,053,069 0 2,431,841 Discounts on convertible notes The Company recognized interest expense of $686,732 and $3,833,752 during the nine months ended September 30, 2021 and 2020, respectively, related to the amortization of the debt discount on convertible notes. The unamortized debt discount at September 30, 2021 and December 31, 2020 was $ 316,372 362,004 A roll-forward of the convertible notes payable from December 31, 2020 to September 30, 2021 is below: Rollfoward of convertible note Debt discount related to new convertible notes Principal Debt Amortization of debt discounts Balance Discount Net Convertible notes payable, December 31, 2020 $ 13,788,710 $ (362,004 ) $ 13,426,706 Issued for cash 1,231,636 — 1,231,636 Convertible note issued for accounts payable 424,731 — 424,731 Accrued interest added to convertible note 202,899 — 202,899 Payment with marketable securities (1,460,000 ) — (1,460,000 ) Original issue discount 106,850 — 106,850 Conversion to common stock (5,240,605 ) — (5,240,605 ) Debt discount related to new convertible notes — (641,100 ) (641,100 ) Amortization of debt discounts — 686,732 686,732 Convertible notes payable, September 30, 2021 $ 9,054,221 $ (316,372 ) $ 8,737,849 |