ACCRUED LIABILITIES

3 Months Ended

Mar. 31, 2020

Other Liabilities Disclosure [Abstract]

ACCRUED LIABILITIES

NOTE 5 – ACCRUED LIABILITIES

Accrued liabilities as of March 31, 2020 and December 31, 2019 consist of the following:

	March 31, 2020		December 31, 2019
Accrued interest – related parties	$	951,559	$	943,356
Accrued interest – third parties		1,275,129		1,215,699
Accrued residuals		36,251		39,064
Accrued merchant equity		91,023		91,023
Other		45,251		45,338
Total accrued liabilities	$	2,399,213	$	2,334,480

Accrued Interest

Notes payable and convertible notes payable incur interest at rates between 10% and 15%, per annum. The accrued interest in most cases is currently in technical default due to the notes being past their maturity date.

Accrued Residuals

The Company pays commissions to independent agents which refer merchant accounts. The amounts payable to these independent agents is based upon a percentage of the amounts processed on a monthly basis by these merchant accounts.

Accrued Merchant Equity Liability

The Company provided all merchants the opportunity to earn shares of the Company’s common stock through their Merchant Equity Program (the “Program”). Under the Program, the merchant earned 1% of their total Visa/MasterCard volume processed during the first year of their contract. For example, if a merchant processes $1.0 million in credit card charges, the merchant will receive 10,000 shares of the Company’s common stock. The merchant must process with the Company for a period of three years for the shares to vest. All merchants became fully vested when the Company ended the program effective December 31, 2015.

For merchants in which the shares of common stock are not known as they are within the one-year period, the Company estimates on a quarterly basis as to the estimated amount of shares based upon the expected amount to be processed by the merchant on an annual basis. At the end of the first year, when the number of shares issuable is known, the Company makes an adjustment to the value of the shares, if needed.

The Company accounts for the value of the shares under the program as a sales incentive and thus the amounts in connection with the Program are recorded as a reduction to revenues. As of March 31, 2020, the Company has an obligation to issue approximately 776,000 shares of the Company’s common stock issuable under the Program. During the year ended December 31, 2019, the Company issued 37,193 shares of common stock relieving $14,877 in liability under the program.

See accompanying notes to the consolidated financial statements.