Convertible Notes Payable to Related Parties

3 Months Ended

Mar. 31, 2020

Notes Payable to Related Parties

Convertible Notes Payable to Related Parties

Note 8 – Convertible Notes Payable to Related Parties

In 2019, the Company issued Convertible Promissory Notes totaling $300,000 to stockholders. The notes are to be paid in one principal payment, along with any unpaid interest by December 31, 2021. Interest is payable semiannually at 10%. The notes are convertible into common stock at a price of $.20 per share through December 31, 2019, $.30 per share from January 1, 2020 through December 31, 2020, and $.40 per share from January 1, 2021 through the maturity date of December 31, 2021.

In December 2019, the Company issued a Convertible Promissory Note in the principal amount of $25,000 to a stockholder in connection with a loan in the same amount. The note is to be paid in one principal payment, along with any unpaid interest by December 31, 2022. Interest is payable semiannually at 10%. The notes are convertible into common stock at a price of $.20 per share through December 31, 2020, $.30 per share from January 1, 2021 through December 31, 2021, and $.40 per share from January 1, 2022 through the maturity date of December 31, 2022.

In March 2020, the Company issued a Convertible Promissory Note in the principal amount of $100,000 to a stockholder in connection with a loan in the same amount. The note is to be paid in one principal payment, along with any unpaid interest by December 31, 2022. Interest is payable semiannually at 10%. The note is convertible into common stock at a price of $.20 per share through December 31, 2020, $.30 per share from January 1, 2021 through December 31, 2021, and $.40 per share from January 1, 2022 through the maturity date of December 31, 2022.

Consequently, Convertible Promissory Notes have been issued in an aggregate principal amount of $425,000 in 2019 and the first quarter of 2020.

Convertible Notes Payable at March 31, 2020 consisted of the following:

	March 31, 2020
Note payable to stockholders	$	425,000
Less: Unamortized debt issuance costs		23,814
Total long-term debt	$	401,186

Amortization of the debt issuance costs is reported as interest expense in the income statement.