Quarterly report pursuant to Section 13 or 15(d)

Notes Payable and Long-Term Debt

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Notes Payable and Long-Term Debt
6 Months Ended
Jun. 30, 2020
Debt Disclosure [Abstract]  
Notes Payable and Long-Term Debt
8 NOTES PAYABLE AND LONG-TERM DEBT

 

As of June 30, 2020 and December 31, 2019, notes payable and long-term debt consists of:

 

    June 30, 2020     December 31, 2019  
Notes payable to seller of DigitizeIQ, LLC due as noted below 1     -       485,000  
Convertible note payable to River North Equity LLC dated July 13, 2016 with interest at 10% per annum; due April 13, 2017; convertible into Common Stock 2     -       27,500  
Promissory note payable to a lender dated November 4, 2019; accruing interest at 18% per annum; due November 3, 2020; 100,000 shares of restricted Common Stock granted on execution recorded as a debt discount – net of debt discount of $10,770 3     239,230       223,672  
Promissory note payable to Bank3 dated April 17, 2020; accruing interest at 1% per annum, due October 17, 2021.     498,082       -  
Note payable to US Small Business Administration dated May 25, 2020; accruing interest at 3.75% per annum; due May 25, 2050.     150,000       -  
    $ 887,312     $ 736,172  

 

 

  1 Notes due seller of DigitizeIQ, LLC includes a series of notes as follows:

 

  A second non-interest-bearing promissory note made payable to the seller in the amount of $250,000, which was due on January 12, 2016; (Balance at June 30, 2020 and December 31, 2019 - $0 and $235,000).
     
  A third non-interest-bearing promissory note made payable to the seller in the amount of $250,000, which was due on March 12, 2016 and was repaid as of June 30, 2020.

 

In January 2020, the Company and the sellers settled the outstanding promissory notes and a gain on settlement for the outstanding principal balance $485,000 and related accrued interest of $97,806, was recorded on the condensed consolidated statements of operations.

 

2 Convertible note payable to River North Equity, LLC (“RNE”) - The Company evaluated the embedded conversion for derivative treatment and recorded an initial derivative liability and debt discount of $23,190. The debt discount is fully amortized. In February 2020, the Company and RNE settled the outstanding debt.

 

3 Promissory note – The Company evaluated the 100,000 restricted shares of the Company’s Common Stock granted with the note and recorded a debt discount of $31,200. The debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the effective interest method. The amortization of debt discount is included as a component of interest expense in the consolidated statements of operations. There was unamortized debt discount of $10,770 and $26,328 as of June 30, 2020 and December 31, 2019, respectively. During the six months ended June 30, 2020, the Company recorded amortization of debt discount totaling $15,558.