Note 9 - Convertible Credit Line Payable - Related Party

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

Long-term Debt [Text Block]

NOTE

9

– CONVERTIBLE CREDIT LINE PAYABLE – RELATED PARTY

On

September 1, 2017,

the Company entered into a convertible credit line agreement to borrow up to

$500,000.

On the same date, the outstanding balance on a note payable of

$87,366

was exchanged as a draw on the credit line. The loan modification is considered substantial under ASC

470

-

50.

The outstanding balance accrues interest at a rate of

7%

per annum and the outstanding balance is convertible to common stock of the Company at the lesser of the close price of the common stock as quoted on the OTCBB on the day interest is due and payable immediately preceding the conversion or

$1.50.

The Company analyzed the conversion options in the convertible line of credit for derivative accounting consideration under ASC

815,

Derivative and Hedging, and determined that the transaction does qualify for derivative treatment. The Company measured the derivative liability and recorded a debt discount of

$87,366

upon initial measurement. During the year ended

December 31, 2017,

the Company amortized

$19,361

of the discount as interest expense leaving an unamortized discount of

$68,005

as of

December 31, 2017.

See discussion of derivative liability in Note

10

– Derivative Liability.

The Company made payments of

$2,000

on the credit line during the year ended

December 31, 2017

and received additional advances of

$5,500.

There was

$90,866

of principal and

$3,192

of accrued interest outstanding as of

December 31, 2017.

As of

December 31, 2017

there was an unamortized debt discount of

$68,005

resulting in a net balance represented on the balance sheet of

$22,861.

In

2018,

the Company received additional advances of

$49,580.

The Company measured the derivative liability and recorded a debt discount of

$49,580

upon initial measurement. During the year ended

December 31, 2018,

the Company amortized

$88,091

of the discount as interest expense leaving an unamortized discount of

$29,494

as of

December 31, 2018.

There was

$140,446

of principal and

$11,479

of accrued interest outstanding as of

December 31, 2018.

The balance, net of the unamortized discount was

$110,952

on the

December 31, 2018

balance sheet.

The credit line has a maturity date of

March 1, 2019.

On

March 1, 2019

the credit line was extended to

March 1, 2021

with

no

changes.