Quarterly report pursuant to Section 13 or 15(d)

Notes Payable and Long Term Loan

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Notes Payable and Long Term Loan
9 Months Ended
Sep. 30, 2017
Debt Disclosure [Abstract]  
Notes Payable and Long Term Loan

Note 3 - Notes Payable and Long Term Loan

 

Notes Payable

 

During the nine months ended September 30, 2017, the Company issued eleven Convertible Notes (“Variable Notes”) totaling $1,667,500 with original terms ranging from six months to one year with interest rates equal to 10%, and a variable conversion rate with a discount of 30% of the Company’s common stock based on the terms included in the Variable Notes. The Variable Notes contain a prepayment option, which enables the Company to prepay the note subsequent to issuance at a premium of 125%.

 

During the nine months ended September 30, 2017, an investor in the Company’s Variable Notes purchased from another holder of the Company’s Variable Notes an aggregate of $920,000 principal and $39,570 of accrued interest with terms that extended the maturities to one-year and increased the interest rate from 6% to 10% and contains a prepayment option, which enables the Company to prepay the note subsequent to issuance. As a result of this modification, the Company recognized a gain on debt extinguishment of $2,358,919 during the nine months ended September 30, 2017.

 

During the nine months ended September 30, 2017, the Company entered into a settlement agreement with a holder of two $33,000 convertible promissory notes totaling $66,000 in principal and $11,400 accrued interest wherein the Company repaid in full the principal and accrued interest balance with a payment of $90,000. In accordance with FASB ASC 470-50, Debt modifications and Extinguishments, the Company recognized a $58,115 gain on extinguishment of debt in connection with this settlement agreement.

 

The gross amount of all Variable Notes outstanding at September 30, 2017 is $2,495,315.

 

Notes payable to a related party in the aggregate amount of $170,000 were extended.

 

As of September 30, 2017, other notes payable outstanding totaled $974,903, all of which are past maturity.

 

    September 30,     December 31,  
    2017     2016  
             
Notes payable at beginning of period   $ 3,193,956     $ 2,333,751  
Notes payable issued     1,667,500       1,776,895  
Default interest added to note payable     -       62,500  
Accrued interest payable added to note payable     39,570       -  
Settlements on note payable     -       (55,000 )
Repayments of notes payable in cash     (96,000 )     (241,500 )
Less amounts converted to stock     (1,164,808 )     (682,690 )
Notes payable at end of period     3,640,218       3,193,956  
Less debt discount     (920,773 )     (1,145,849 )
    $ 2,719,445     $ 2,048,107  
                 
Notes payable issued to related parties   $ 170,000     $ 170,000  
Notes payable issued to non-related parties   $ 2,549,445     $ 1,878,107  

 

The maturity dates on the notes payable are as follows:

 

    Notes to        
12 months ending,   Related parties     Non-related parties     Total  
                   
September 30, 2018   $ 170,000     $ 3,470,218     $ 3,640,218  
    $ 170,000     $ 3,470,218     $ 3,640,218  

 

Long Term Loan

 

The Company has financed the purchase of an automobile. The maturity dates on the loan are as follows:

 

Twelve months ending,      
September 30, 2018   $ 7,355  
    $ 7,355  
         
Current portion   $ 7,355  
Long term portion   $ -