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NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE
12 Months Ended
Dec. 31, 2019
Debt Disclosure [Abstract]  
NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE

NOTE 6 – NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE

 

The Company funds operations through cash flows generated from operations and the issuance of loans and notes payable. The following is a summary of loans and notes payable outstanding as of December 31, 2019 and 2018. Related parties noted below are either members of management, board of directors, significant shareholders or individuals in which have significant influence over the Company.

 

Loans Payable – Related Parties

 

In 2019 and 2018, the Company obtained $39,319 and $41,047 loans payable from related parties, net. As of December 31, 2019 and 2018, the balance of the loans payable was $93,401 and $54,082, respectively. The loans payable are due on demand, unsecured and non-interest bearing as there are no formal agreements executed.

 

Subordinated Notes Payable

 

In 2016, the Company issued $350,000 in subordinated notes payable to third parties. The subordinated notes payable were due in 30 to 180 days and incurred interest at 10% per annum. As of December 31, 2019 and 2018, accrued interest related to the subordinated notes was $118,545 and $83,545, respectively. The Company is currently in default of the subordinated note agreements.

 

Convertible Notes Payable

 

In 2017, the Company received $222,000 in convertible notes payable from related parties. The convertible notes payable are unsecured, were due in 180 days, incur interest at 10% per annum and are convertible at $0.10 per share. As of December 31, 2019 and 2018, accrued interest related to the convertible notes was $53,988 and $31,787, respectively. On the date of the agreement, Management calculated the beneficial conversion feature in connection with the convertible notes payable and recorded a discount of $222,000. The Company amortized the discount over the term of the convertible notes payable of 180 days. During the years ended December 31, 2019 and 2018, the Company amortized $-0- and $100,258 to interest expense related to the discount, respectively. The Company is currently in default on the convertible notes payable.

 

In 2015, the Company issued $50,000 in convertible notes payable. The convertible notes payable are unsecured, were due in nine months, incur interest at 10% per annum and are convertible at $1.00 per share. As of December 31, 2019 and 2018, the accrued interest related to the convertible notes was $20,833 and $15,833, respectively. The Company is currently in default on the convertible note payable.

 

In 2014, the Company issued $400,000 in convertible notes payable. The convertible notes payable are unsecured, due in periods ranging up to one year, incurring interest between 10% to 12% per annum and are convertible at prices ranging from $0.33 to $1.00 per share. In addition, the Company issued 400,000 shares of common stock in connection with the convertible notes payable. The Company had the obligation to repurchase the 400,000 shares of common stock at $1.00 per share within one year of the note issuance date. As of December 31, 2019 and 2018, the Company held the obligation to repurchase the shares for $400,000. As of December 31, 2019 and 2018, the accrued interest related to the convertible notes was $186,083 and $145,083, respectively. The Company is currently in default of the note agreements.

 

In 2008 and 2009, the Company issued $320,000 in convertible notes payable, of which $150,000 was from related parties. The convertible notes payable are currently due on demand, incur interest at 15% per annum, and convertible at $0.60 per share. As of December 31, 2019 and 2018, accrued interest related to the convertible notes was $516,013 and $468,012 of which $243,375 and $220,875, respectively, was due to related parties. The Company is currently in default of the notes payable agreements.

 

Notes Payable

 

In 2016, the Company issued $143,000 in notes payable to third parties. The notes payable were due in ninety days or less. During 2019, the Company paid $36,000 in notes payable. The Company is currently in default of the note agreements.

 

In 2007 and 2008, the Company entered into notes payable with a related party for $46,000 in proceeds. The notes payable were due on demand and incurred interest at 12% per annum. These were combined into a single note agreement in 2014. As of December 31, 2019 and 2018, the balance on the note payable was $88,136 and accrued interest related to the note payable was $49,243 and $39,921, respectively. The Company is currently in default of the note payable agreement.

 

In 2007, the Company entered into note payable with a third party for $128,000 in proceeds. Under the terms of the agreement the holder received a flat interest amount of $37,496. The Company is currently in default of the note payable agreement and the entire amount of $37,496 has been included within accrued interest. Since the note payable did not incur interest, the Company imputed interest at $12,800 and $12,800, respectively, which represented an interest rate of 10% per annum during the years ended December 31, 2019 and 2018.

 

In 2008, the Company entered into a note payable with a third party for $10,000 in total proceeds. The note payable is currently in default and have a flat interest amount due of $21,000. As of December 31, 2019 and 2018, the Company was in default of the note agreement and the entire amount of $21,000 has been included within accrued interest. Since the notes payable do not incur interest, the Company imputed interest at $1,000 and $1,000, respectively, which represented an interest rate of 10% per annum during the years ended December 31, 2019 and 2018.

 

In 2008, the Company entered into notes payable with a third party for $26,000 in total proceeds. The notes payable have a flat interest amount due of $80,000. During 2015, the Company received another $50,000 from the third party. During 2017, the Company entered into an agreement whereby they would repay the principal and accrued interest in the amount of $145,000 by April 4, 2018 and issue the holders 800,000 shares of common stock. The Company recorded the fair market value of the common stock issued at $336,000 based on the date of issuance as interest expense. Other than the issuance of shares of common stock, the Company did not perform under the agreement. The Company is currently in default of the note agreement.

 

In 2007, the Company entered into note payable with a third party for $221,800 in proceeds. The note payable is currently in default and incurs interest at 10% per annum. On September 30, 2013, the holder received an arbitration settlement for the principal and accrued interest. As of December 31, 2019 and 2018, the Company was in default of the arbitration settlement. As of December 31, 2019 and 2018, accrued interest related to the note payable was $429,861 and $389,580, respectively.

 

In 2007, the Company entered into note payable with a significant shareholder for $58,600 in proceeds. The note payable is currently due on demand and incurs interest at 10% per annum. As of December 31, 2019 and 2018, accrued interest related to the note payable was $70,513 and $64,653, respectively. The Company is currently in default of the note agreement.

 

Two significant shareholders funded the Company’s operations through notes payable in primarily 2009 and 2010 and continue to support operations on a limited basis. The notes payable incur interest at 10% per annum and were due on December 31, 2016. The Company is currently in default of the note agreements. As of December 31, 2019 and 2018, the aggregate balance of the notes payable was $620,356 and accrued interest was $575,480 and $512,945, respectively.