| CONVERTIBLE NOTES PAYABLE TO RELATED PARTIES |
13.
CONVERTIBLE NOTES PAYABLE TO RELATED PARTIES
The
Company entered into a series of Convertible Promissory Note Purchase Agreements (the “Agreements”) with certain investors
between March 2020 and January, 2021. Pursuant to the Agreements, the Company issued certain Convertible Promissory Notes (the “Notes”)
to the investors in a total principal amount of $900,000. A summary of the major terms of the Agreements are presented as follows:
SCHEDULE OF CONVERTIBLE NOTES PAYABLE
| | |
Principal amount | | |
Issue date | | |
Maturity date | | |
Interest rate | |
| Jui-Chin Chen (a) | |
| 100,000 | | |
| March 18, 2020 | | |
| March 18, 2022 | | |
| 6 | % |
| Teh-Ling Chen (b) | |
| 100,000 | | |
| November 2, 2020 | | |
| November 2, 2022 | | |
| 6 | % |
| Chin-Ping Wang (c) | |
| 200,000 | | |
| November 25, 2020 | | |
| November 25, 2022 | | |
| 6 | % |
| Chin-Nan Wang (d) | |
| 200,000 | | |
| November 25, 2020 | | |
| November 25, 2022 | | |
| 6 | % |
| Chin-Chiang Wang (d) | |
| 200,000 | | |
| November 25, 2020 | | |
| November 25, 2022 | | |
| 6 | % |
| Teh-Ling Chen (e) | |
| 100,000 | | |
| January 15, 2021 | | |
| January 15, 2023 | | |
| 6 | % |
| | |
$ | 900,000 | | |
| | | |
| | | |
| | |
| (a) |
On
March 18, 2020, the Company issued an unsecured note in the principal amount of $100,000, which accrues interest at the rate of 6%
per annum, to a shareholder – Jui-Chin Chen. On August 17, 2020, the Company amended the Note and the Agreement, wherein, at
the sole option of the applicable noteholder, all or part of the unpaid outstanding principal of such noteholder’s Note would
be convertible into shares of restricted common stock of the Company at a conversion price equal to $0.40 per share. On March 23,
2022, the Company further amended the Note and the Agreement with the noteholder, mutually agreed to cancel the conversion option
and to repay the principal in two installments and accrued interest during that period before October 31, 2022. The balance was classified
as 6% short-term loan on the same date (Note 10(b)). On May 29, 2022, the Company further amended the Note and the Agreement with
the noteholder, mutually agreed to repay the principal and interests in five installments before November 30, 2022. It was later
extended to November 30, 2023. Up to the date of this report, the Company repaid $nil to Jui-Chin Chen. |
| |
|
| (b) |
On
November 2, 2020, the Company issued a Note in the principal amount of $100,000, which accrues interest at the rate of 6% per annum,
to a shareholder – Teh-Ling Chen. The note is due on November 2, 2022 and unsecured. On May 10, 2022, the Company entered into
an amendment to the Note with the shareholder, wherein, at the sole option of the applicable noteholder, all or part of the unpaid
outstanding principal of such noteholder’s Note would be convertible into shares of restricted common stock of the Company
at a conversion price equal to $0.10 per share. On May 12, 2022, the shareholder submitted conversion notice to the Company converting
all of the outstanding balance of his Note into an aggregate of 1,000,000 shares of the Company’s common stock. The conversion
was approved by the Company on May 17, 2022 and the shares were issued on May 19, 2022. |
| (c) |
On
November 25, 2020, the Company issued a Note in the principal amount of $200,000, which accrues interest at the rate of 6% per annum,
to a shareholder – Chin-Chiang Wang. The Note is due on November 25, 2022 and unsecured. On May 3, 2022, the Company entered
into an amendment to the Note and the convertible promissory note purchase agreement with Chin-Chiang Wang, mutually agreed to extend
the maturity date to November 25, 2024 and cancel the conversion option. The balance was classified as non-current 6% loan on the
same date (Note 10(c)). |
| |
|
| (d) |
On
November 25, 2020, the Company issued several Notes in the total principal amount of $400,000, which accrues interest at the rate
of 6% per annum, to shareholders – Chin-Ping Wang and Ching-Nan Wang. The notes are due on November 25, 2022 and unsecured.
On January 24, 2022, the Company entered into an amendment to the Notes with these two shareholders, wherein, at the sole option
of the applicable noteholder, all or part of the unpaid outstanding principal of such noteholder’s Notes would be convertible
into shares of restricted common stock of the Company at a conversion price equal to $0.25 per share. On January 26, 2022, the shareholders
submitted conversion notices to the Company converting all of the outstanding balances of their Notes into an aggregate of 1,600,000
shares of the Company’s common stock. The conversion was approved by the Company on January 31, 2022 and the shares were issued
on March 15, 2022. |
| |
|
| (e) |
On
January 15, 2021, the Company issued a Note in the principal amount of $100,000, which accrues interest at the rate of 6% per annum,
to a shareholder – Teh-Ling Chen. The note is due on January 15, 2023 and unsecured. On May 10, 2022, the Company entered into
an amendment to the Note with the shareholder, wherein, at the sole option of the applicable noteholder, all or part of the unpaid
outstanding principal of such noteholder’s Note would be convertible into shares of restricted common stock of the Company
at a conversion price equal to $0.10 per share. On May 12, 2022, the shareholder submitted conversion notice to the Company converting
all of the outstanding balance of his Note into an aggregate of 1,000,000 shares of the Company’s common stock. The conversion
was approved by the Company on May 17, 2022 and the shares were issued on May 19, 2022. |
For
each of the Notes, the Company is entitled to a one-year extension. The outstanding principal amounts of the notes are convertible at
any time at the option of the holders into common stock at a conversion price of $0.40 per share. Each of the noteholders may convert
part of the principal outstanding in increments of $10,000 or multiples of $10,000 at any time. Accrued interest, if any, will be forfeited
on any principal amount being converted.
The
conversion feature is dual indexed to the Company’s stock, and is considered an embedded derivative which needs to be bifurcated
from the host instrument in accordance with ASC 815.
ASC
815-15-25 provides that if an entity has a hybrid financial instrument that would require bifurcation of embedded derivatives under ASC
815, the entity may irrevocably elect to initially and subsequently measure a hybrid financial instrument in its entirety at fair value
with changes in fair value recognized in earnings. The fair value election can be made instrument by instrument and shall be supported
by concurrent documentation or a preexisting documented policy for automatic election.
The
Company elected to measure the Notes in their entirety at fair value with changes in fair value recognized as non-operating income or
loss at each balance sheet date in accordance with ASC 815-15-25.
During
the three months ended November 30, 2022 and 2021, interest of $nil and $13,500 were incurred on the Notes, respectively.
|