|3 Months Ended|
Mar. 31, 2017
|Notes Payable [Abstract]|
NOTE 8 NOTES PAYABLE.
Beneficial Conversion Feature
Following the conversion of outstanding notes in August 2016, the Company issued a series of 12% convertible promissory notes that have conversion prices that create a beneficial conversion to related parties. This note mature five years from issuance and are convertible at the option of the holder into shares of common stock at any time prior to maturity at a conversion price of $0.50 per share. A beneficial conversion feature exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the face value of the note. In accordance with this guidance, the intrinsic value of the beneficial conversion features is recorded as a debt discount with a corresponding amount to additional paid in capital. The debt discount is amortized to interest over the five-year life of the note using the effective interest method.
A summary of these note issuances at December 31, 2016 and March 31, 2017 is as follows:
Amortization of debt discount totaled $26,159 and $5,049 at March 31, 2017 and 2016, respectively.
On November 30, 2016, the Company entered into a promissory note agreement with an unaffiliated party in the principal amount of $500,000. The note is unsecured, carries an interest rate of 25% per annum payable in arrears at maturity. The note matures November 30, 2017 and may be prepaid at any time without notice or prepayment penalty. In the event of default of any loan provision, the lender can declare all or any portion of the unpaid principal and interest immediately due and payable. Accrued interest on this note totaled $42,361 at March 31, 2017.
The entire disclosure for long-term debt.
Reference 1: http://www.xbrl.org/2003/role/presentationRef