CONVERTIBLE NOTES PAYABLE (Tables)

9 Months Ended

Sep. 30, 2021

Convertible notes payable consisted of the following:

SCHEDULE OF CONVERTIBLE NOTES PAYABLE

	September 30, 2021			December 31, 2020
Unsecured
(a) Convertible notes with fixed discount percentage conversion prices	$	264,500		$	180,200
Put premiums on stock settled debt		113,294			127,866

(b) Convertible notes with fixed conversion prices		1,845,000			936,944
Default penalty principal added		-			369,086
Total convertible notes principal outstanding		2,222,794			1,614,096
Debt discount		(204,230	)		(539,282	)

Convertible notes, net of discount and premium	$	2,018,564		$	1,074,814
Less; Current portion		2,018,564			1,074,814
Long-term portion	$	-		$	-

(a)

At December 31, 2020, the balance due on convertible notes with fixed discount percentage conversion prices was $180,200, with related put premium of $117,866. During the nine months ended September 30, 2021, the Company issued three convertible notes with fixed discount percentage conversion prices aggregating $264,500. At the option of the holders, the notes were convertible into shares of the Company’s common stock at a price per share discount of 25% to 35% of the lowest bid price of the Company’s common stock within twenty-five days prior to conversion. The notes were treated as stock settled debt under ASC 480-Distinguishing Liabilities from Equity, and a put premium of $113,294 was recognized and charged to interest expense when the notes were recorded in 2021. Also during the nine months ended September 30, 2021, note holders converted $180,200 principal and accrued interest of $18,266 (total of $198,466) into 7,492,676 shares of the Company’s common stock. Upon conversion the related put premiums of $127,866 associated with these notes were reclassified to additional paid-in capital. As of September 30, 2021, the balance due on convertible notes with fixed discount percentage conversion prices was $264,500, and the related put premium was $113,294.

(b)

As of December 31, 2020, the balance due on convertible notes with fixed conversion prices was $1,306,030 (including default penalties of $369,086). During the nine months ended September 30, 2021, the Company issued nine convertible notes with fixed conversion prices aggregating $1,565,000. In addition, convertible notes with fixed conversion prices totaling $1,030,345 of principal and $43,349 of accrued interest (total of $1,073,694) were converted into 81,640,514 shares of the Company’s common stock. At September 30, 2021, the balance of the due on convertible notes with fixed conversion prices was $1,845,000. The notes are unsecured, convertible into common stock at prices ranging from $0.015 per share to $0.04 per share, bear interest at 4% to 10% per annum, and mature through September 14, 2022.

At December 31, 2020, the net unamortized balance of debt discounts was $539,282, consisting of debt discount related to beneficial conversion features ($823,655 less accumulated amortization of $320,602, or net of $503,053) and other debt discounts for fees and original issue discounts (OID) ($52,360 less accumulated amortization of $16,096, or net of $36,229). The Company early adopted ASU No. 2020-06 (See Note 1) effective January 1, 2021 using the modified retrospective approach. The adoption of ASU 2020-06 on January 1, 2021, resulted in a decrease in addition paid in capital of $823,655, a decrease to accumulated deficit of $320,602, and an increase in total stockholders’ deficit of $503,053.

The debt discounts related to fees and OID are amortized over the life of the related notes or are amortized in full upon the conversion of the corresponding note to common stock. During the nine months ended September 30, 2021, debt discounts of $295,600 were added related to the twelve convertible notes issued above, and amortization of $146,472 was recorded. At September 30, 2021, the net unamortized balance of other debt discounts was $204,230.

On May 4, 2021 (“Effective Date”), the Company entered into a securities purchase agreement (the “SPA”) with Clifton Royale Apartments, LLC (the “Investor”) pursuant to which the Company issued a 4% unsecured convertible promissory note (the “Note”) in the principal amount of $80,000. On this date, the Company received proceeds of $80,000.

The maturity date of the Note was November 4, 2021. The Note bears interest at a rate of four percent (4%) per annum, which interest shall be paid by the Company to the Investor in Common Stock at any time the Investor sends a notice of conversion to the Company. The Investor is entitled to, at its option, convert all or any amount of the principal amount and any accrued but unpaid interest of the Investor Note into Common Stock, at any time, at a fixed conversion price for each share of Common Stock equal to $0.01 (as defined in the Note) of the Common Stock as reported on the OTC Marketplace exchange upon which the Company’s shares are traded during the twenty (20) consecutive Trading Day period immediately preceding (i) the applicable Effective Date; or (ii) the conversion date. The Company also issued a common stock purchase warrant for 15,000,000 shares (the “Warrant”).

QUANTA INC 10-Q