Quarterly report pursuant to Section 13 or 15(d)

Convertible Notes

v3.19.1
Convertible Notes
3 Months Ended
Mar. 31, 2019
Debt Disclosure [Abstract]  
Convertible Notes

NOTE 4 – 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 amended maturity date of the note is June 1, 2019 and was 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 year ended December 31, 2018 the Company has accrued interest for this note in the amount of $9,000. During the three months ended March 31, 2019 the Company has accrued interest for this note in the amount of $4,000. At March 31, 2019, the principal balance together with total accrued interest is recorded on the Company’s consolidated balance sheet net of discounts at $169,000. On May 10, 2019, the Company amended the note to extend the due dates to June 1, 2019, provide for a partial conversion of $25,000 of the outstanding principal balance into common shares of the Company at a conversion price of $0.10 per share for a total of 250,000 shares, and waive any prior alleged or actual defaults under the note.

 

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 amended maturity date of the note is June 1, 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. At March 31, 2019, the principal balance together with total accrued interest of $22,000 and liquidated damages of $25,000 is recorded on the Company’s consolidated balance sheet net of discounts at $322,000. On May 10, 2019, the Company amended the note to extend the due dates to June 1, 2019, provide for a partial conversion of $25,000 of the outstanding principal balance into common shares of the Company at a conversion price of $0.10 per share for a total of 250,000 shares, and waive any prior alleged or actual defaults under the note.

 

The following table summarized the Company's convertible notes payable as of March 31, 2019 and December 31, 2018:

  

    March 31,
2019
  December 31,
2018
Beginning Balance   $ 432,000     $ —    
Proceeds from the issuance of convertible notes, net of issuance discounts     —         137,000  
Repayments     —         —    
Conversion of notes payable into common stock     —         —    
Amortization of discounts     53,000       241,000  
Liquidated damages     —         25,000  
Accrued Interest     6,000       29,000  
Ending Balance   $ 491,000     $ 432,000  
                 
Convertible notes, short term   $ 440,000     $ 440,000  
                 
Debt discounts   $ 9,000     $ 62,000