Note 8 - Convertible Credit Line Payable - Related Party

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Convertible Debt Disclosure [Text Block]

NOTE

8–

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, 2019,

the Company recognized an additional debt discount of

$7,567

and amortized

$39,515

of the discount as interest expense leaving an unamortized discount of

$17,396

as of

December 31, 2019.

During the year ended

December 31, 2020,

the Company recognized an additional debt discount of

$5,851

and amortized

$20,493

of the discount as interest expense leaving an unamortized discount of

$2,754

as of

December 31, 2020.

See discussion of derivative liability in Note

9

– Derivative Liability.

During the year ended

December 31, 2020,

the Company received

$8,500

in cash proceeds from the credit line and made

$4,250

in cash payments to the outstanding balance on the credit line. The outstanding principal balance on the convertible credit line was

$148,328

and

$31,295

of accrued interest outstanding as of

December 31, 2020.

As of

December 31, 2020,

there was an unamortized debt discount of

$2,754

resulting in a net balance represented on the consolidated balance sheet of

$145,574.

During the year ended

December 31, 2019,

the Company recorded

$13,000

in non-cash increase to the outstanding balance on the credit line. The advances were made directly to settle outstanding liabilities of the Company. The Company repaid

$22,868

during the year with

$130,578

of principal and

$21,603

of accrued interesting outstanding as of

December 31, 2019.

As of

December 31, 2019,

there was an unamortized debt discount of

$17,396

resulting in a net balance represented on the balance sheet of

$113,182.

 

The maturity date on the credit line was extended from

March 1, 2019

to

March 1, 2021. 

Subsequent to

December 31, 2020,

the maturity date on the credit line was extended from

March 1, 2021

to

March 1, 2023.