Note Payable

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Note Payable

Note 8- Notes Payable

Notes payable at September 30, 2019 and December 31, 2018 consist of the following:

	September 30,			December 31,
	2019			2018
RWJ acquisition note	$	2,600,000		$	2,600,000
ECS acquisition note		—			100,000
Promissory note to investor		2,325,000			—
Promissory notes to investor		528,817			—
Total notes payable		5,453,817			2,700,000
Unamortized debt discount		(123,287	)		(744	)
Notes payable	$	5,330,530		$	2,699,256

RWJ Acquisition Note

In connection with the acquisition of RWJ in September 2017, the Company issued a note payable. The note accrues interest at 3.5% per annum, is due on December 31, 2019 and is secured by the assets purchased in the acquisition. (See Note 12)

ECS Acquisition Note

In connection with the acquisition of ECS, the Company issued a note payable. The note is to be repaid in monthly installment payments of $100,000 with the final payment due on January 15, 2019. The Company imputed interest of 9% on this note payable. The balance of this note payable was paid in full in January 2019.

Promissory Notes

On February 27, 2019, the Company entered into a note purchase agreement with a third party investor, pursuant to which the Company issued a promissory note for the original principal amount of $2,325,000. The promissory note had an original issue discount of $300,000 and the inventor paid consideration of $2,025,000 to the Company. The outstanding balance of the promissory note is to be paid on the one-year anniversary of the issuance of the note. Interest on the note accrues at the rate of 10% per annum compounding daily. Subject to the terms and conditions set forth in the note, the Company may prepay all or any portion of the outstanding balance of the note at any time in an amount in cash equal to 120% of the amount repaid. In connection with transactions that generate less than $1,000,000 in proceeds, the Company has agreed to not issue any debt instrument or incurrence of any debt other than trade payables in the ordinary course of business, any securities or agreements to sell common stock with anti-dilution or price reset/reduction features or any securities that are or may be become convertible or exercisable into common stock with a price that varies with the market price of the common stock (collectively, “Restricted Issuance Transaction”). The outstanding balance of the Note will be increased by 5% in the event the Company enters into a Restricted Issuance Transaction that is approved by Iliad. The original issue discount in being amortized to interest expense over the term of the promissory note.

The Company issued promissory notes for $528,817 to a third party for funds received as working capital during the nine months ended September 30, 2019. The notes accrues interest at 10% per annum, are due on February 9, 2020 and are unsecured. (See Note 14 for stock pledge securing this note).

Discounts on Promissory Note

The Company recognized interest expense of $176,712 and $0 during the nine months ended September 30, 2019 and 2018, respectively, related to the amortization of the debt discount on promissory notes. The unamortized debt discount at September 30, 2019 was $123,287.

A roll-forward of the promissory notes from December 31, 2018 to September 30, 2019 is below:

Notes payable, December 31, 2018	$	2,699,256
Issued for cash		2,553,818
Original issue discount		300,000
Repayment of note payable		(99,256	)
Debt discount related to new promissory notes		(300,000	)
Amortization of debt discounts		176,712
Notes payable, September 30, 2019	$	5,330,530