ViaDerma Inc (VDRM)

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(K) Convertible Notes Payable – Brewer

On January 3, 2018, the Company entered into a services agreement with a consultant for business development and marketing services, pursuant to which the Company agreed to issue the consultant total 20,000,000 shares of common stock of the Company and a convertible promissory note in amount of $48,000 for services rendered (“Brewer Note”).

Brewer Note bears interest at a rate of 10% per annum with 20% default charge and 20% default rate. Brewer Note is convertible at the Note Holder’s option into the shares of the common stock of the Company at a conversion price of 70% of the market, and the Note Holder should be reimbursed for the conversion cost by adding $500 to the Principal of Brewer Note for each note conversion effected by Note Holder.


VIADERMA, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2018 (UNAUDITED)

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NOTE 6 – CONVERTIBLE NOTES PAYABLE (CONTINUED)

(K) Convertible Notes Payable – Brewer (continued)

The Company determined that the conversion features contained in Brewer Note carrying value represents a freestanding derivative instrument that meets the requirements for liability classification under ASC 815. As a result, the fair value of the derivative financial instrument in the note is reflected in the Company’s balance sheet as a liability. The fair value of the derivative financial instrument of the convertible note was measured using the Black-Scholes valuation model at the inception date of the note and will do so again on each subsequent balance sheet date. Any changes in the fair value of the derivative financial instruments are recorded as non-operating, non-cash income or expense at each balance sheet date. The derivative liabilities will be reclassified into additional paid in capital upon conversion.

The table below sets forth the assumptions for Black-Scholes valuation model on March 31, 2018.

Reporting Date
Fair Value Term (Years)
Assumed Conversion Price
Market Price on Issuance Date
Volatility Percentage
Risk-free Rate
03/31/2018 $ 56,690 0.76 $0.006 $0.0106 168% 0.0209

As a result, Brewer Note was discounted in the amount of $60,000 and amortized over the remaining life of this Note. During the three months ended March 31, 2018, the Company recorded interest expenses related to Brewer Note in amount of $1,160, and amortization of debt discounts in amount of $11,441. This resulted in accrued interest of $1,160 and an unamortized debt discount of $36,559 as of March 31, 2018.

https://backend.otcmarkets.com/otcapi/company/financial-report/193710/content