Quarterly report pursuant to Section 13 or 15(d)

Notes Payable - Related Parties (Tables)

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Notes Payable - Related Parties (Tables)
6 Months Ended
Jun. 30, 2016
Debt Disclosure [Abstract]  
Schedule of Notes Payable to Related Parties

The Company has the following related parties notes payable as of June 30, 2016 and December 31, 2015:

 

Note   Issuance Date   Maturity Date   Interest Rate     Original Borrowing     Balance at June 30, 2016     Balance at
December 31, 2015
 
                                 
Note 1   Year 2015   April 1,2017     12.0 %   $ 1,203,242     $ 1,198,883     $ 1,248,883  
Note 2   December 2015   April 1, 2017     12.0 %     200,000       200,000       200,000  
Note 4   December 1, 2015   April 1,2017     12.0 %     189,000       189,000       189,000  
Note 5   December 1, 2015   April 1, 2017     12.0 %     111,901       111,901       111,901  
                                         
Total                             1,499,784       1,749,784  
                                         
Debt discount                         (239,852 )     (398,593 )
                                         
Total notes payable – related parties, net                   $ 1,259,932     $ 1,351,192  

 

 

●  On various dates during the year ended December 31, 2015, Rory J. Cutaia, the Company’s majority shareholder and Chief Executive Officer, loaned the Company total principal amounts of $1,203,242. The loans were unsecured and all due on demand, bearing interest at 12% per annum. On December 1, 2015, the Company entered into a Secured Convertible Note agreement with Mr. Cutaia whereby all outstanding principal and accrued interest owed to Mr. Cutaia from previous loans amounting to an aggregate total of $1,248,883 and due on demand, was consolidated under a note payable agreement, bearing interest at 12% per annum, and converted from due on demand to due in full on April 1, 2017. In consideration for Mr. Cutaia’s agreement to consolidate the loans and extend the maturity date, the Company granted Mr. Cutaia a senior security interest in substantially all current and future assets of the Company. Per the terms of the agreement, at Mr. Cutaia’s discretion, he may convert up to $374,665 of outstanding principal, plus accrued interest thereon, into shares of common stock at a conversion rate of $0.07 per share.
   
●  During December 2015, Mr. Cutaia loaned the Company an additional $200,000, which is also due on April 1, 2017 and earns interest at 12% per annum under the terms of the agreement. During the six months ended June 30, 2016, Mr. Cutaia loaned the Company an additional $82,446 under the same terms.
   
●  On December 1, 2015, the Company entered into an Unsecured Convertible Note with Mr. Cutaia in the amount of $189,000, bearing interest at 12% per annum, representing a portion of Mr. Cutaia’s unpaid salary for 2015. The note extends the payment terms of Mr. Cutaia’s accrued salary from on-demand to due in full on April 1, 2017. The outstanding principal and accrued interest may be converted at Mr. Cutaia’s discretion into shares of common stock at a conversion rate of $0.07.
   
●  On December 1, 2015, the Company entered into an Unsecured Note agreement with a consulting firm owned by Michael Psomas, a former member of the Company’s Board of Directors, in the amount of $111,901 representing unpaid fees earned for consulting services previously rendered but unpaid as of November 30, 2015. The outstanding amounts bear interest at 12% per annum, and are due in full on April 1, 2017.