NOTE 12: CONVERTIBLE NOTES PAYABLE

2018

During the year ended December 31, 2018, the Company entered into 39 convertible notes payable, borrowing an aggregate of $17,307, net of original issuance discounts of $1,556 and deferred financing costs of $526. Additionally, as inducement, the Company issued a total of 198,746 shares of the Company’s common stock valued at $2,563. During the year ended December 31, 2018, the Company repaid $5,231 of the convertible notes in cash and issued a total of 1,889,144 shares of the Company’s common stock for the conversion of $6,668 in convertible debt principal and $242 in accrued interest.

As of December 31, 2018, the Company had 25 outstanding convertible notes payable totaling $9,042, net of unamortized original issuance discounts and deferred financing costs of $4,544. The outstanding convertible notes of the Company are unsecured, bear interest between 4% and 12% per annum or require a one-time payment of 4% of principal in the form of shares of the Company’s common stock. The convertible notes have original maturity terms between six months and one year and are convertible at variable rates between 50% and 75% of the quoted market price of the Company’s common stock. All notes that contained convertible terms during the year ended December 31, 2018 were evaluated for derivative accounting (see Note 16). Aggregate amortization of the debt discounts and deferred financing costs on convertible debt for the year ended December 31, 2018 was $17,304.

During February 2018, the Company entered into an amendment to extend two past due convertible promissory notes held by one holder with an outstanding principal balance of $900. The amendment extended the maturity date and provided a conversion standstill for 72 days in exchange for a principal payment of $150. During February 2018, the Company entered into a second amendment to the convertible promissory notes extending the maturity date another 89 days in exchange for imposing a floor price of no less than 50% of the closing trade price of the Company’s common stock and a cash payment right to elect to pay conversion notices in cash, for a 10% cash payment premium.

During August 2018, the Company entered into a settlement agreement with a holder of a convertible promissory note in the amount of $556, whereby, the Company agreed to a $44 increase in the principal balance and allowing immediate conversion by the holder in the exchange for waivers of certain events of default and a leak-out provision, limiting the holder’s sale of the Company’s common stock to 10% of the average daily share trading volume. As a result of the modification, the Company recognized a derivative liability of $99 as a result of the conversion allowance and a loss on debt modification of $408.

2017

During the year ended December 31, 2017, the Company entered into 29 convertible notes payable, borrowing an aggregate of $5,153, net of original issuance discounts of $543 and deferred financing costs of $115. Additionally, as inducement, the Company granted a total of 250,771 warrants to purchase common stock with an aggregate issuance value of $11,642 and issued a total of 27,970 shares of the Company’s common stock valued at $418. During the year ended December 31, 2017, the Company repaid $1,426 of the convertible notes in cash and issued a total of 250,771 shares of the Company’s common stock for the conversion of $643 in convertible debt principal and $11 in accrued interest.

As of December 31, 2017, the Company had 14 outstanding convertible notes payable totaling $3,205, net of unamortized original issuance discounts and deferred financing costs of $814. The outstanding convertible notes of the Company are unsecured, bear interest between 4% and 12% per annum or require a one-time payment of 4% of principal in the form of shares of the Company’s common stock. The convertible notes have original maturity terms between three months and three years and are convertible at variable rates between 50% and 80% of the quoted market price of the Company’s common stock. All notes that contained convertible terms during the year ended December 31, 2017 were evaluated for derivative accounting (see Note 16). Aggregate amortization of the debt discounts and deferred financing costs on convertible debt for the year ended December 31, 2017 was $564.

During February 2017, the Company entered into an amendment to a convertible promissory note whereby, in exchange for the issuance of 2,000 shares of the Company’s common stock valued at $35, the holder agreed to waive certain events of default under the note. The value of the issued common stock was accounted for as additional debt discount on the convertible promissory note.

During May 2017, the Company entered into a second amendment to the above mentioned convertible promissory note, whereby, in exchange for the payment of $50 in cash, a $50 principal addition and the issuance of 2,000 shares of the Company’s common stock valued at $42, the holder agreed to waive certain events of default under the note. The amendment was accounted for as a debt modification, resulting in the recognition of a $137 increase in note principal value, $11 increase in debt discount and the recognition of $199 loss on extinguishment of debt.

Outstanding convertible notes payable consist of the following at December 31, 2018 and 2017: