Quarterly report pursuant to Section 13 or 15(d)

NOTES PAYABLE

v3.7.0.1
NOTES PAYABLE
6 Months Ended
Jun. 30, 2017
Notes Payable [Abstract]  
NOTES PAYABLE

NOTE 8 – NOTES PAYABLE.


Long Term Debt to Related Parties, net


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 a related party, who is our Chief Executive Officer.  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 June 30, 2017 is as follows:


Issuance Date

 

 

Maturity Date

 

 

Principal

 

 

Discount
Recognized

 

 

Amortization
Expense
2016

 

 

Carry
Amount at
December 31,
2016

 

 

Amortization
Six Months Ended
June 30,
2017

 

 

Carry
Amount at
June 30,
2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

09/26/16

 

 

09/26/21

 

 

$

100,000

 

 

$

70,000

 

 

$

3,692

 

 

$

33,692

 

 

$

7,000

 

 

$

40,692

 

10/14/16

 

 

10/14/21

 

 

 

100,000

 

 

 

70,000

 

 

 

3,024

 

 

 

33,024

 

 

 

7,000

 

 

 

40,024

 

10/31/16

 

 

10/31/21

 

 

 

100,000

 

 

 

70,000

 

 

 

2,372

 

 

 

32,372

 

 

 

7,000

 

 

 

39,372

 

11/03/16

 

 

11/03/21

 

 

 

50,000

 

 

 

35,000

 

 

 

1,120

 

 

 

16,120

 

 

 

3,500

 

 

 

19,620

 

11/11/16

 

 

11/11/21

 

 

 

100,000

 

 

 

70,000

 

 

 

1,934

 

 

 

31,934

 

 

 

7,000

 

 

 

38,934

 

11/21/16

 

 

11/21/21

 

 

 

50,000

 

 

 

35,000

 

 

 

775

 

 

 

15,775

 

 

 

3,500

 

 

 

19,275

 

12/15/16

 

 

12/15/21

 

 

 

75,000

 

 

 

52,500

 

 

 

488

 

 

 

22,988

 

 

 

5,250

 

 

 

28,238

 

01/19/17

 

 

01/19/22

 

 

 

100,000

 

 

 

70,000

 

 

 

 

 

 

 

 

 

6,323

 

 

 

36,323

 

02/06/17

 

 

02/06/22

 

 

 

100,000

 

 

 

70,000

 

 

 

 

 

 

 

 

 

5,561

 

 

 

35,561

 

02/24/17

 

 

02/24/22

 

 

 

50,000

 

 

 

35,000

 

 

 

 

 

 

 

 

 

1,958

 

 

 

16,958

 

03/07/17

 

 

03/07/22

 

 

 

100,000

 

 

 

70,000

 

 

 

 

 

 

 

 

 

4,441

 

 

 

34,441

 

04/03/17

 

 

04/03/22

 

 

 

75,000

 

 

 

45,000

 

 

 

 

 

 

 

 

 

2,250

 

 

 

32,250

 

04/10/17

 

 

04/10/22

 

 

 

75,000

 

 

 

45,000

 

 

 

 

 

 

 

 

 

2,000

 

 

 

32,000

 

04/19/17

 

 

04/19/22

 

 

 

50,000

 

 

 

30,000

 

 

 

 

 

 

 

 

 

1,183

 

 

 

21,183

 

05/01/17

 

 

05/01/22

 

 

 

50,000

 

 

 

30,000

 

 

 

 

 

 

 

 

 

1,000

 

 

 

21,000

 

05/11/17

 

 

05/11/22

 

 

 

75,000

 

 

 

22,500

 

 

 

 

 

 

 

 

 

617

 

 

 

53,117

 

05/24/17

 

 

05/24/22

 

 

 

75,000

 

 

 

45,000

 

 

 

 

 

 

 

 

 

1,234

 

 

 

31,234

 

06/08/17

 

 

06/08/22

 

 

 

100,000

 

 

 

30,000

 

 

 

 

 

 

 

 

 

383

 

 

 

70,383

 

06/27/17

 

 

06/27/22

 

 

 

100,000

 

 

 

30,000

 

 

 

 

 

 

 

 

 

68

 

 

 

70,068

 

 

 

 

  

 

 

$

1,525,000

 

 

$

925,000

 

 

$

13,405

 

 

$

185,905

 

 

$

67,268

 

 

$

680,673

 


Amortization of debt discount totaled $67,268 and $18,715 at June 30, 2017 and 2016, respectively.


Note Payable


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 $73,958 at June 30, 2017.