Notes Payable and Convertible Notes Payable | Note 3 – Notes Payable and Convertible Notes Payable Convertible Notes Issue Date Interest March 31, 2021 Principal March 2, 2020 12 % $ 845,000 September 30, 2020 6 % $ 155,000 October 3, 2020 6 % $ 155,000 October 23, 2020 9 % $ 68,000 November 16, 2020 9 % $ 48,000 January 20, 2021 9 % $ 48,000 Total $ 1,319,000 The weighted average interest rate and remaining term of the fixed rate convertible notes payable is 10% and 4.74 months as of March 31, 2021. Notes Payable Issue Date Interest March 31, 2021 Principal March 24, 2021 3.75 % $ 150,000 Total $ 150,000 The movement in notes payable and convertible notes payable is as follows: Original Amount Unamortized Discount Guaranteed Interest Accrued Total Issued: March 2, 2020 (ii) 845,000 - 142,368 $ 987,368 Issued: September 30, 2020 (ii) 155,000 (37,917 ) 4,612 $ 121,695 Issued October 3, 2020 (ii) 155,000 (52,241 ) 4,612 $ 107,371 Issued: October 23, 2020 (iii) 68,000 (1,693 ) 2,210 $ 68,517 Issued: November 16, 2020 (iii) 48,000 (1,890 ) 2,025 $ 48,135 Issued: January 20, 2021 (iii) 48,000 (2,425 ) 1,053 $ 46,628 Issued: March 24, 2021 (iv) 150,000 - - $ 150,000 Ending as of March 31,2021 $ 1,469,000 (96,166 ) 156,880 $ 1,529,714 (i) Securities Purchase Agreement and Convertible Notes Issued to Calvary Fund I, LP; Oasis Capital, LLC and SBI Investments LLC On March 2, 2020 (the “Issue Date”), the Company entered into an unsecured promissory note purchase agreement with SBI, on behalf of itself and the other note purchasers (the “Note Purchasers”), pursuant to which the Note Purchasers purchased from the Company (a) 12% convertible promissory notes of the Company in an aggregate principal amount of $845,000 (the “12% Notes”) of which $75,000 were related to original issuance discount and $20,000 were related to deferred finance costs (with the understanding that the initial six months of such interest shall be guaranteed) (together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, the “Notes”, and each, a “Note”), convertible into shares (the “Conversion Shares”) of common stock of the Company (the “Common Stock”) and (b) warrants (the “Warrants”) to acquire up to 1,111,842 Shares subject to a beneficial ownership cap of no greater than 4.99% in the case of each Purchaser (the “Warrant Shares”). The maturity date of the 12% Notes shall be on that day that is nine (9) months after the Issue Date (the “Maturity Date”) and is the date upon which the principal amount of the 12% Notes, as well as all accrued and unpaid interest and other fees, shall be due and payable. The notes are currently in Default status at a rate of 24% which has been accrued. As at March 31, 2021 the Company owed $845,000 in principal and the accrued interest was $142,368, which consisted of accrued interest and default interest. (ii) On September 30, 2020 (the “Issue Date”), the Company entered into an unsecured promissory note purchase agreement with SBI, on behalf of itself and the other note purchasers (the “Note Purchasers”), pursuant to which the Note Purchasers purchased from the Company (a) two 6% convertible promissory notes ($155,000 each) of the Company in an aggregate principal amount of $310,000 (the “6% Notes”) convertible into Shares (the “Conversion Shares”) subject to a beneficial ownership cap of no greater than 4.99% in the case of each Purchaser. Pursuant to the agreement, each note was issued with an original issue discount of $5,000 and as such the purchase price was $150,000. The proceeds of one note was received on October 3, 2020. The maturity date of the 6% Notes shall be on that day that is nine (9) months after the Issue Date (the “Maturity Date”) and is the date upon which the principal amount of the 6% Notes, as well as all accrued and unpaid interest and other fees, shall be due and payable. The notes also carry a default rate of 18%. As at March 31, 2021 the Company owed $310,000 in principal and the accrued interest was $9,224. The debenture is convertible into common shares of the Company at a conversion price $0.16. The convertible debt was not considered tainted due to 5,812,500 shares of common stock held on reserve for issuance upon full conversion of this debenture. The Company evaluated the convertible notes for a beneficial conversion feature in accordance with ASC 470-20 “Debt with Conversion and Other Options.” The Company determined that the conversion price was below the closing stock price on the commitment date, and the convertible notes contained a beneficial conversion feature. The Company recognized the intrinsic value of the embedded beneficial conversion feature of $258,750 as additional paid-in capital and reduced the carrying value of the convertible notes to $41,250. The carrying value will be accreted over the term of the convertible notes up to their face value of $310,000. As at March 31, 2021, the carrying value of the 6% Note was $219,842 and had an unamortized discount of $90,158 ($86,806 beneficial conversion feature and $3,352 OID). (iii) Securities Purchase Agreement and Convertible Notes Issued to Geneva Roth Remark Holdings, Inc. On October 23, 2020 (the “Issue Date”), the Company entered into an unsecured promissory note purchase agreement with Geneva Roth Remark Holdings, Inc. (the “Note Purchaser”), pursuant to which the Note Purchaser purchased from the Company (a) the 9% convertible promissory note of the Company in an aggregate principal amount of $68,000 ($3,000 OID) (the “9% Note”) convertible into Shares (the “Conversion Shares”) subject to a beneficial ownership cap of no greater than 4.99% in the case of the Purchaser (the “Maximum Share Amount”). The maturity date of the 9% Note shall be on October 23, 2021 (the “Maturity Date”) and is the date upon which the principal amount of the 9% Note, as well as all accrued and unpaid interest and other fees, shall be due and payable. The Note also has a 22% default interest rate. The “Conversion Price” shall be equal to the Variable Conversion Price (as defined below) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Company relating to the Company’s securities or the securities of any subsidiary of the Company, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The “Variable Conversion Price” shall mean 65% multiplied by the Market Price (as defined below) (representing a discount rate of 35%). “Market Price” means the average of the three (3) lowest trading prices) for the shares during the fifteen (15) trading day period ending on the latest complete trading day prior to the Conversion Date As at March 31, 2021 the Company owed $68,000 in principal and the accrued interest was $2,210 with unamortized debt discount of $1,693. On November 16, 2020 (the “Issue Date”), the Company entered into an unsecured promissory note purchase agreement with Geneva Roth Remark Holdings, Inc. (the “Note Purchaser”), pursuant to which the Note Purchaser purchased from the Company (a) the 9% convertible promissory note of the Company in an aggregate principal amount of $48,000 ($3,000 OID) (the “9% Note II”) convertible into Shares (the “Conversion Shares”) subject to a beneficial ownership cap of no greater than 4.99% in the case of the Purchaser (the “Maximum share Amount”). The maturity date of the 9% Note II shall be on November 16, 2021 (the “Maturity Date”) and is the date upon which the principal amount of the 9% Note, as well as all accrued and unpaid interest and other fees, shall be due and payable. The Note also has a 22% default interest rate. The “Conversion Price” shall be equal to the Variable Conversion Price (as defined below) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Company relating to the Company’s securities or the securities of any subsidiary of the Company, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The “Variable Conversion Price” shall mean 65% multiplied by the Market Price (as defined below) (representing a discount rate of 35%). “Market Price” means the average of the three (3) lowest trading prices) for the shares during the fifteen (15) trading day period ending on the latest complete trading day prior to the Conversion Date As at March 31, 2021 the Company owed $48,000 in principal and the accrued interest was $2,025 with unamortized debt discount of $1,890. On January 20, 2021 (the “Issue Date”), the Company entered into an unsecured promissory note purchase agreement with Geneva Roth Remark Holdings, Inc. (the “Note Purchaser”), pursuant to which the Note Purchaser purchased from the Company (a) the 9% convertible promissory note of the Company in an aggregate principal amount of $48,000 ($3,000 OID) (the “9% Note III”) convertible into Shares (the “Conversion Shares”) subject to a beneficial ownership cap of no greater than 4.99% in the case of the Purchaser (the “Maximum share Amount”). The maturity date of the 9% Note III shall be on January 20, 2022 (the “Maturity Date”) and is the date upon which the principal amount of the 9% Note, as well as all accrued and unpaid interest and other fees, shall be due and payable. The Note also has a 22% default interest rate. The “Conversion Price” shall be equal to the Variable Conversion Price (as defined below) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Company relating to the Company’s securities or the securities of any subsidiary of the Company, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The “Variable Conversion Price” shall mean 65% multiplied by the Market Price (as defined below) (representing a discount rate of 35%). “Market Price” means the average of the three (3) lowest trading prices) for the shares during the fifteen (15) trading day period ending on the latest complete trading day prior to the Conversion Date As at March 31, 2021 the Company owed $48,000 in principal and the accrued interest was $1,053 with unamortized debt discount of $2,425. (iv) Notes issued to the Small Business Administration On March 24, 2021, Bridgeway was approved for a SBA Loan-2 in the amount of $150,000. SBA Loan-2, interest will accrue at the rate of 3.75% per annum with installment payments, including principal and interest, of $731.00 per month beginning on the twelve (12) month anniversary of the funding date. The balance of principal and interest will be payable on the thirty (30) year anniversary of the funding date. |