Convertible Note Payable
|12 Months Ended|
Dec. 31, 2019
|Debt Disclosure [Abstract]|
|Convertible Note Payable||
Note 12 – Convertible Note Payable
Convertible note payable consists of the following at December 31, 2019 and 2018, respectively:
In addition, the Company recognized and measured the embedded beneficial conversion feature present in the convertible notes by allocating a portion of the proceeds equal to the intrinsic value of the feature to additional paid-in-capital. The intrinsic value of the feature was calculated on the commitment date using the effective conversion price of the convertible notes. This intrinsic value is limited to the portion of the proceeds allocated to the convertible debt.
The aforementioned accounting treatment resulted in a total debt discounts equal to $332,332 and $75,000 for the year ended December 31, 2019 and the period from inception (March 27, 2018) to December 31, 2018, respectively. The Company recorded finance expense in the amount of $332,332 for the year ended December 31, 2019.
The convertible note limits the maximum number of shares that can be owned by the note holder as a result of the conversions to common stock to 4.99% of the Company’s issued and outstanding shares.
The Company recorded interest expense pursuant to the stated interest rates on the convertible notes in the amount of $24,751 and $1,529 for the year ended December 31, 2019 and the period from inception (March 27, 2018) to December 31, 2018, respectively. In addition, the Company recognized $332,332 of interest expense related to the debt discount for the year ended December 31, 2019.
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef