|3 Months Ended|
Mar. 31, 2020
|Subsequent Events [Abstract]|
On April 29, 2020 the Company signed a binding letter of intent to acquire Cannaworx, Inc. (USA). The planned acquisition is subject to certain closing conditions, including completion of all due diligence and acquisition financing.
From April 1, 2020 through June 27, 2020 the Company issued loans convertible into common stock at $2.50/share for $2.94 million. The loans carry 10% interest rates and one-year terms. To secure these loans, the Company issued warrants exercisable into 1,175,340 common shares (five-year life and a $3.50 exercise price). The Company also issued 30,000 shares of common stock to two lenders for loans issued during the quarter ended March 31,2020. Additionally, the Company issued two loans for $575,000 to its pending merger partner, Cannaworx who agreed to repay the loans directly to the lender, on the Company’s behalf. The Cannaworx loans have one-year terms and interest (12% for a $325,000 note and 18% for a $250,000 note) is only payable upon an event of default. During the same period the Company also paid off seven convertible loans totaling $885,707. These loans were issued July 8, 2019, September 11, 2019, October 24, 2019, October 30, 2019, March 5, 2020, March 13, 2020 and March 13, 2020.
From April 1, 2020 through June 27, 2020, the Company also borrowed $377,039 under government programs sponsored for the COVID-19 crisis (principally $367,039 from the Payroll Protection Program or “PPP”). PPP loans have a two- year term and bear interest at 1% per annum. Under the PPP, the Company can be granted forgiveness for all or a portion of these loans based on the Company’s spending on payroll, mortgage interest, rent and utilities. Additionally, the Company sold $120,000 of Series AA Convertible Preferred Stock with warrants exercisable into 48,000 common shares (10-year life and a $3.50 exercise price) and issued a $110,000 loan which is convertible into Series AA Convertible Preferred Stock (one year term and 10% interest rate). The Company also issued 314,706 shares of common stock to settle $786,766 of convertible loan principal and 96,041 shares of common stock to settle $240,102 of convertible loan interest and fees. Finally, in this period the Company agreed to pay $100,000 and issued 25,000 shares of common stock to a vendor for services rendered.
On April 6, 2020 the Company entered into a extension of the Standstill and Forbearance Agreements with lenders who hold convertible notes with a total principal of approximately $2.9 million through April 30, 2020. During the second quarter, the Company incurred fees of approximately $275,000 in connection with the extension.
On April 6, 2020, the Company and its Merchant lenders agreed to extend the term of the reduction to $2,500 of its Daily Payment Rate to its Merchant lenders to April 30, 2020. The Company issued 187,500 warrants to the Merchant lenders as compensation for this agreement. The warrants have a three-year life and a $3.50 exercise price. After April 30, 2020 the Company and its lenders agreed to increase the Daily Payment Rate to $7,670.
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef