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8. Related-Party Transactions
9 Months Ended
Sep. 30, 2016
Related Party Transactions [Abstract]  
Related-Party Transactions

On March 19, 2015, we exchanged convertible notes issued in 2010, 2011, and 2012, payable to our former officers and directors, in the aggregate principal amount of $320,246, plus accrued but unpaid interest of $74,134, into a single, $394,380 consolidated convertible note. The consolidated convertible note was assigned to JPF Venture Group, Inc. (“JPF”), our principal stockholder and an investment entity that is majority-owned by Jeremy Feakins, our director, chief executive officer, and chief financial officer. The new consolidated note is convertible to common stock at $0.025 per share, the approximate market price of our common stock as of the date of issuance. The note bears interest at 6% per annum and is due and payable within 90 days after demand. As of September 30, 2016, accrued but unpaid interest on this note was $36,616.

 

On September 23, 2015, we borrowed $50,000 from our principal stockholder, JPF, pursuant to a promissory note. We received $25,000 on July 31, 2015, and the remaining $25,000 on August 18, 2015. The terms of the note are as follows: (i) interest is payable at 6% per annum; (ii) the note is payable 90 days after demand; and (iii) the payee is authorized to convert part or all of the note balance and accrued interest, if any, into shares of our common stock at the rate of one share each for $0.03 of principal amount of the note. As of September 30, 2016, the outstanding balance was $50,000, plus accrued interest of $3,484. We recorded a debt discount of $50,000 for the fair value of the beneficial conversion feature. As of September 30, 2016, we had amortized all of the debt discount.

 

On November 23, 2015, we borrowed $50,000 from our principal stockholder, JPF, pursuant to a promissory note. We received $37,500 before December 31, 2015, and the remaining $12,500 was received in 2016. The terms of the note are as follows: (i) interest is payable at 6% per annum; (ii) the note is payable 90 days after demand; and (iii) the payee is authorized to convert part or all of the note balance and accrued interest, if any, into shares of our common stock at the rate of one share each for $0.03 of principal amount of the note. As of September 30, 2016, the outstanding balance was $50,000, plus accrued interest of $2,336. We recorded a debt discount of $28,000 for the fair value of the beneficial conversion feature. As of September 30, 2016, we had amortized all of the debt discount.

 

On February 25, 2016, we borrowed $50,000 from our principal stockholder, JPF, pursuant to a promissory note. The terms of the note are as follows: (i) interest is payable at 6% per annum; (ii) the note is payable 90 days after demand; and (iii) the payee is authorized to convert part or all of the note balance and accrued interest, if any, into shares of our common stock at the rate of one share for each $0.03 of principal amount of the note. As of September 30, 2016, the outstanding balance was $50,000, plus accrued interest of $1,875. No beneficial conversion feature existed as the stock price on the date of issuance was equal to the conversion price.

 

On May 20, 2016, we issued a promissory note in the amount of $50,000 to our principal stockholder, JPF. The terms of the note are as follows: (i) interest is payable at 6% per annum; (ii) the note is payable 90 days after demand; and (iii) the payee is authorized to convert part or all of the note balance and accrued interest, if any, into shares of our common stock at the rate of one share for each $0.03 of principal amount of the note. As of September 30, 2016, the outstanding balance was $50,000, plus accrued interest of $967. No beneficial conversion feature existed as the stock price on the date of issuance was equal to the conversion price. In addition, we received an additional $10,000 from JPF during the third quarter of 2016, which became part of a new $50,000 promissory note issued in October 2016.

 

As of September 30, 2016, we had $604,380 in convertible notes payable due to related parties, with $45,296 of accrued interest, included in our accrued liabilities.

 

On March 1, 2015, we entered into a lease agreement with a company whose managing partner is our chief executive officer and rent space on a month-to-month basis with no long-term commitment. The monthly rent is $2,500 per month. Rent expense per this agreement is $7,500 and $22,500 for the three and nine months ended September 30, 2016, respectively.