| CONVERTIBLE NOTES PAYABLE |
| 14. |
CONVERTIBLE NOTES PAYABLE
|
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Convertible Notes Payable
(short-term) $Nil (2019: $2,758,578) and Convertible Notes Payable (long-term) $Nil (2019: $1,874,972) |
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Effective
April 8, 2020, the Company exchanged an aggregate of approximately $6.95 million of all its outstanding Notes, representing
principal and accrued interest through April 7, 2020, for 1,391 shares Series A Preferred Stock. As the debt was convertible
to shares of common stock, whereas shares of Series A Preferred Stock were issued, the Company evaluated Accounting Standards
Codification (“ASC”) 405-20, Extinguishments of Liabilities. Pursuant to ASC 405-20-40-1, a liability has been
extinguished if either of the following conditions is met (a) the debtor pays the creditor and is relieved of its obligation
for the liability and (b) the debtor is legally released from being the primary obligor under the liability, either judicially
or by the creditor. As both conditions were met, the transaction was accounted for as a debt extinguishment and the Company
recorded a $6,026,657 loss on extinguishment of debt which represented the difference between: |
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(i) the carrying value of the notes, net of unamortized discounts, of $5,430,082 plus accrued interest of $374,631 and |
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(ii) the fair value of the consideration transferred (Series A Preferred Stock and Warrants) of $11,831,370. See Note 8 for additional
information. |
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At the
closing, in accordance with the Amendment and the Security Purchase Agreements pursuant to which the Notes were issued, the
Company also issued 1,498,418 warrants to the holders reflecting 4,000 warrants for each $1,000 of unpaid interest accrued
on the Notes. See Note 8 for additional information. |
|
The
Company has outstanding $Nil of convertible notes, net of debt discounts, originally due April 15, 2020 which accrued interest
at a rate of 10%. The effective interest rate on the liability component, inclusive of the contractual rate and the accretion
of the discount, was 72.35% during the six months ended May 31, 2020. |
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The
Company has outstanding $Nil of convertible notes, net of debt discounts, originally due April 15, 2020 which accrued interest
at a rate of 10%. The effective interest rate on the liability component, inclusive of the contractual rate and the accretion
of the discount, was 50.54% during the six months ended May 31, 2020. |
| |
September
2019 Notes
The
Company has outstanding $Nil of convertible notes, net of debt discounts, originally due June 30, 2021 which accrued interest
at a rate of 10%. The effective interest rate on the liability component, inclusive of the contractual rate and the accretion
of the discount, was 47.40% during the six months ended May 31, 2020.
July
2019 Notes
The
Company has outstanding $Nil of convertible notes, net of debt discounts, originally due June 30, 2021 which accrued interest
at a rate of 10%. The effective interest rate on the liability component, inclusive of the contractual rate and the accretion
of the discount, was 45.79% during the six months ended May 31, 2020.
The
Company did not have any financial or non-financial covenants under its financing arrangements as of May 31, 2020.
See
Note 15, “Convertible Notes Payable and Derivative Liabilities,” in the Notes to Consolidated Financial
Statements included in Item 8 of the Company’s Annual Report on Form 10-K for the year ended November 30, 2019 for
further discussion of the Company’s notes payable.
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