Quarterly report pursuant to Section 13 or 15(d)

Convertible Notes

v3.10.0.1
Convertible Notes
9 Months Ended
Sep. 30, 2018
Debt Disclosure [Abstract]  
Convertible Notes

NOTE 5 – CONVERTIBLE NOTES

 

On April 20, 2018, (modified May 22, 2018) the Company issued a $165,000 (originally $158,000) convertible note with original issue discount (OID) of $15,000 and bearing interest at 8% per annum. The note matures on April 20, 2019 and is convertible on or after October 17, 2018 into the Company’s restricted common stock at $0.20 per share at the holder’s request. The OID is recorded as a discount to the debt agreement. The Company has determined the note to contain a beneficial conversion feature valued as $104,000 based on the intrinsic per share value of the conversion feature. This beneficial conversion feature is recorded as a discount to the debt agreement. The noteholder was also granted detachable 3-year warrants to purchase 200,000 shares of the company’s restricted common stock at an exercise price of $0.375 per share, 200,000 shares of the company’s restricted common stock at an exercise price of $0.50 per share, and 100,000 shares of the company’s restricted common stock at an exercise price of $0.625 per share. The warrants were valued at $126,000 using the Black-Scholes pricing model and were recorded as a discount to the debt agreement. The noteholder was also issued 116,000 shares of the company’s restricted common stock valued at $34,000 based upon the closing price of the Company stock on the date of the modified agreement and recorded as a discount to the debt agreement. During the nine months ended September 30, 2018 the Company has accrued interest for this note in the amount of $6,000. At September 30, 2018, the principal balance together with total accrued interest of $6,000 is recorded on the Company’s consolidated balance sheets net of discounts of $80,000.

 

On May 22, 2018, the Company issued a $275,000 convertible note with original issue discount (OID) of $25,000 and bearing a one-time interest charge at 8%. The note matures on January 22, 2019 and is convertible into the Company’s restricted common stock at $0.25 per share at the holder’s request. The OID is recorded as a discount to the debt agreement. The Company has determined the note to contain a beneficial conversion feature valued as $40,000 based on the intrinsic per share value of the conversion feature. This beneficial conversion feature is recorded as a discount to the debt agreement. The noteholder was also granted detachable 5-year warrants to purchase 500,000 shares of the company’s restricted common stock at an exercise price of $2.00 per share. The warrants were valued at $45,000 using the Black-Scholes pricing model and were recorded as a discount to the debt agreement. The noteholder was also issued 200,000 shares of the company’s restricted common stock valued at $58,000 based upon the closing price of the Company stock on the date of the agreement and recorded as a discount to the debt agreement. During the nine months ended September 30, 2018 the Company has accrued interest for this note in the amount of $12,000. At September 30, 2018, the principal balance together with total accrued interest of $12,000 is recorded on the Company’s consolidated balance sheets net of discounts of $222,000.

 

The following table summarized the Company's convertible notes payable as of September 30, 2018 and December 31, 2017:

 

    September 30, 2018   December 31, 2017
Beginning Balance   $ —       $ —    
Proceeds from the issuance of convertible notes, net of issuance discounts     137,000       —    
Repayments     —         —    
Conversion of notes payable into common stock     —         —    
Amortization of discounts     147,000       —    
Accrued Interest     18,000       —    
Ending Balance   $ 302,000     $ —    
                 
Convertible notes, short term   $ 440,000     $ —    
                 
Debt discounts   $ 156,000     $ —