|9 Months Ended|
Sep. 30, 2019
|Subsequent Events [Abstract]|
NOTE 13 SUBSEQUENT EVENTS
On October 10, 2019, the Company entered into a Securities Purchase Agreement the (SPA) with Labrys Fund, LP (the Investor) pursuant to which the Investor purchased a 15% Convertible Promissory Note (the Note) from the Company. Unless there is a specific Event of Default (as such term is defined in the Note) or the Note remains unpaid by April 16, 2020 (the Maturity Date), then the Investor shall have the ability to convert the principal and interest under the Note into shares of the Company's common stock.
If the Note is not repaid prior to the Maturity Date, the per share
conversion price into which the principal amount and interest under the Note may be converted is equal to the lesser of (i) 60%
multiplied by the lowest Trade Price (as such term is defined in the Note) of the common stock during the 25 consecutive trading
days ending on the latest complete trading day prior to the date of issuance of the Note, and (ii) 60% multiplied by the lowest
Market Price (as such term is defined in the Note) of the common stock during the 25 trading day period ending on the latest complete
trading day prior to the Conversion Date (as such term is defined in the Note).
Pursuant to the SPA, the Company agreed to issue and sell to the Investor the Note, in the principal amount of $338,000. The Company received net proceeds from the Note of $300,000 after an original issue discount of $33,800 and a reduction for Investors legal counsel fees of $4,200. Additionally, the Company issued 1,300,000 shares of common stock to the Investor as a commitment fee (the Returnable Shares). The Returnable Shares must be returned to the Company in the event the Note is fully paid and satisfied prior to the Maturity Date. The proceeds from the Note will be used for general working capital purposes.
The Company is also subject to certain customary negative covenants under the SPA, including but not limited to, the requirement to maintain its corporate existence and assets subject to certain exceptions, and to not to make any offers or sales of any security under circumstances that would have the effect of establishing rights or otherwise benefitting other investors in a manner more favorable in any material respect than those rights and benefits established in favor of the Investor under the terms of the SPA and the Notes.
The Company agreed at all times to have authorized and reserved 5 times the number of shares of common stock that are issuable upon full conversion of the Note. Initially, the Company instructed its transfer agent to reserve 21,666,666 shares of common stock in the name of the Investor for issuance upon conversion.
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://fasb.org/us-gaap/role/ref/legacyRef