Convertible Notes payable

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Convertible Notes payable

Note 5: CONVERTIBLE NOTES PAYABLE AND PROMISSORY NOTES PAYABLE

As of March 31, 2019, and December 31, 2018 the company had the following convertible notes and promissory notes outstanding:

	March 31, 2019				December 31, 2018
	Principal		Accrued Interest		Principal		Accrued Interest
Convertible Notes Payable (a)
July 2014 $75,000 Note convertible into common stock at $5.00 per share, 10% interest, currently in default	$	66,172	$	18,749	$	66,172	$	17,095
July 2014 $15,000 Note convertible into common stock at $5.00 per share, 10% interest, currently in default		15,000		8,000		15,000		7,625
Total Convertible Notes Payable	$	81,172			$	81,172
Promissory Notes Payable
November 2014 $300,000 Note, 10% interest, due February 2019, currently in default (b)	$	298,959		32,387	$	298,959		24,913
August 2015 $75,000 Note, with a one-time interest charge of $75,000, currently in default (c)		75,000		75,000		75,000		75,000
Total Promissory Notes Payable	$	373,959			$	373,959
Total Accrued Interest Payable			$	134,136			$	124,633

a. Tthe Company entered into a series of promissory note conversion agreements in the aggregate amount of $90,000. Payments of $8,828 have been made on these notes as of March 31, 2019. These notes are convertible into shares of the Company’s common stock at a conversion price of $5.00 per share. The loans under these agreements are noninterest-bearing and have no stated maturity date however the Company is accruing interest at a 10% nominal annual rate.

b. On November 3, 2014, the Company made a promissory note in the principal amount of $300,000 in favor of an unrelated person (the “Old Note”). On February 22, 2018, the Company repaid $100,000 on the principal of the Old Note and made a new promissory note, dated February 22, 2018, in the principal amount of $298,959 in favor of said party (the “New Note”) in satisfaction of the Old Note, which principal amount comprised the unpaid principal amount of $200,000 due on the Old Note after the repayment, and $98,958.90 of accrued interest on the Old Note. At March 31, 2019, accrued interest on this note was $32,387. The outstanding balance of this note was $298,959 at March 31, 2019, and December 31, 2018. The New Note was due on February 22, 2019. This note is in default and the Company is negotiating an extension. The company made interest payments in the amount of $20,182 and $3,394 to the note holder during the twelve months ended December 31, 2019 and the three months ended March 31, 2020, respectively.

c. On August 15, 2015, the Company made a promissory note in the amount of $150,000 in favor of an unrelated party. The note bears interest at 0.48% per annum, provided that the note is paid on or before maturity date, or 2 percentage points over the Wall Street Journal Prime Rate, if it is not repaid on or before the maturity date. This note matured on August 11, 2016. Upon an event of default, as defined in the note, interest shall be compounded daily. The Company is currently negotiating an extension of the maturity date for the balance. During the year ended December 31, 2017, the holder of this note agreed to exchange $75,000 of principal and $663 of interest accrued on this note for 500,000 shares of common stock. This exchange was accounted for as an extinguishment of debt resulting in a loss of $683,337. In connection with this exchange, the Company agreed to pay the holder a fee of $75,000 in consideration of his waiving the default under the promissory note, as additional consideration for his agreeing to the exchange and as compensation for his foregoing the interest that would have accrued on the promissory note at the default rate but for the waiver. At March 31, 2019 and December 31, 2018, the note had a balance of $75,000 in addition to the $75,000 fee included in accrued interest.