NOTE 19 – SUBSEQUENT EVENTS

Extension of Promissory Notes

As previously discussed in Note 9 – Debt, (i) in September 2018, the Company issued a secured promissory note in the amount of $3.0 million to an unaffiliated party bearing interest at a rate of 12% per annum, due in September 2020 and secured by the Company’s Maryland property (the “2018 Note”), and (ii) in March 2019, the Company issued a secured promissory note in the amount of $6.0 million to the same party bearing interest at a rate of 13% per annum, due in March 2020 and secured by the certain GenCanna receivables (the “2019 Note”). In connection with the 2019 Note issuance, the Company incurred a service fee in the amount of $900,000 (the “Service Fee”). In April 2020, the Company and the holder of the 2018 Note and the 2019 Note entered into a note extension agreement pursuant to which (i) the due date of the 2018 Note was extended to December 31, 2020, (ii) the due date of the 2019 Note was extended to September 30, 2020 and modified to include unpaid accrued interest of $845,000 through the modification date, and (iii) a new convertible note in the amount of $900,000 was issued evidencing the Service Fee bearing interest at a rate of 12% per annum, due June 30, 2020, and with up to 50% of the principal and accrued and unpaid interest payable, at the option of either party, in shares of the Company’s common stock at a per share conversion price equal to the average closing price of the common stock on the twenty consecutive trading days prior to the maturity date.

In consideration of the extension, the Company (i) paid the holder of the notes a fee of $50,000, (ii) extended the security interest in the Company’s properties in Maryland to secure each note held by the holder of the notes, and (iii) granted the holder of the notes certain security interests in equity interests held by the Company in Chooze Corp., Terrace Inc., and CVP Worldwide LLC. Each of the notes provides for cross-default and imposes certain covenants on the Company.

Issuance of Promissory Note

In April 2020, in exchange for proceeds of $700,000, the Company issued an interest-free promissory note in the principal amount of approximately $719,000 to an unaffiliated third-party that matures in September 2020.

Option Grants

In April 2020, the Company granted certain employees five-year options to purchase an aggregate of up to 564,500 shares of common stock with an exercise price of $0.30 per share. The fair value of the options on grant date of approximately $67,000 will be amortized to compensation expense over the anticipated three-year average holding term.

Conversion of Debentures Payable

In April and May 2020, the holder of the $21M Debentures converted an aggregate of $1.5 million of principal into 12,764,615 shares of common stock at conversion prices of $0.11 and $0.13 per share.

Common Stock Issuance Obligations

In May 2020, the Company issued 30,307 shares of common stock in connection with the stock grant to a current employee previously disclosed in Note 12 – Stockholders’ Equity.