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Convertible Notes Payable
9 Months Ended
Sep. 30, 2019
Debt Disclosure [Abstract]  
CONVERTIBLE NOTES PAYABLE

NOTE 4 – CONVERTIBLE NOTES PAYABLE

 

In January 2018, the Company issued three convertible promissory notes in the principal amounts of $8,000, $40,000 and $15,000. The notes are due one year from date of issuance and accrue interest at 6%. The notes are convertible into common shares of the Company at a conversion price of $0.05, with no adjustments to the conversion price. The conversion feature meets the definition of conventional convertible debt and therefore qualifies for the scope exception in Accounting Standards Codification (“ASC”) 815-10-15-74(a) and would not be bifurcated and accounted for separately as a derivative liability. The Company analyzed the conversion feature under ASC 470-20, “Debt with conversion and other options”, and based on the market price of the common stock of the Company on the date of funding as compared to the conversion price, determined there was a $38,000 beneficial conversion feature to recognize, which will be amortized over the term of the note using the effective interest method. Amortization expense of $38,000 was recognized related to these discounts in the nine months ended September 30, 2018, including the accelerated amortization upon conversion of two of these notes, as discussed below.

 

On January 29, 2018, five of the outstanding convertible promissory notes payable issued in the year ending December 31, 2017 and two of the January 2018 convertible promissory notes payable, totaling principal of $144,796 and accrued interest of $3,385, were converted into 2,693,978 shares of restricted common stock, at conversion prices ranging from $0.025 to $0.075. Upon conversion the related unamortized debt discount of $46,250 (including the $38,000 mentioned previously) was immediately expensed.

 

During May 2018 and June 2018, two of the convertible promissory notes outstanding as of the year ending December 31, 2017, and two notes that were issued in May 2018 totaling principal of $105,000 together with accrued interest of $2,387, were converted into an aggregate of 2,051,864 shares of restricted common stock, at conversion prices ranging from $0.05 to $0.09. Upon conversion the related unamortized debt discount of $16,277 was expensed and is included in the $71,860 amortization expense for the nine months ended September 30, 2018.   

 

On June 14, 2018, the Company settled an outstanding account payable through the issuance and subsequent conversion of a convertible promissory note in the principal amount of $10,000. The note, which was issued December 29, 2017, was due December 29, 2018 and accrued interest at 6%. The note was convertible into common shares of the Company at a conversion price of $0.025. The note was issued as a settlement in exchange for a $91,463 account payable, that the noteholder purchased from a vendor on December 29, 2017. Upon conversion of the note into 411,046 shares of restricted common stock of the Company, the noteholder signed a debt settlement and release agreement for the outstanding account payable, resulting in a gain on settlement to be recognized in the nine months ending September 30, 2018, of $81,463.

 

During the nine months ended September 30, 2019 a related party advanced $109,055 in direct payments on the Company’s behalf, to reduce certain accounts payable by $51,055 and outstanding convertible promissory notes by $58,000. The advance was made by Granite Peak Resources, LLC, a related party, and was subsequently included in a line of credit evidenced by a convertible promissory note. See Note 9. Accordingly, the $109,055 advance has been classified as such at September 30, 2019.

 

After the foregoing note conversions and advance received, there was $219,055 of principal and $81,251   of accrued interest outstanding on convertible debentures, and a related unamortized discount of $0 at September 30, 2019. With exception of the $109,055 of principal advanced by a related party during the nine months ended September 30, 2019, the pre-existing convertible notes are in default.