| Notes Payable |
The Company has the following
notes payable as of September 30, 2016 and December 31, 2015:
| Note |
|
Note Date |
|
Maturity
Date
|
|
Interest Rate |
|
|
Original Borrowing |
|
|
Balance at
September 30, 2016
|
|
|
Balance at
December 31, 2015
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| Note payable 1 |
|
September 30, 2014 |
|
Due upon demand |
|
|
5.0 |
% |
|
$ |
100,000 |
|
|
$ |
- |
|
|
$ |
100,000 |
|
| Note payable 2 |
|
February 26, 2015 |
|
Due upon demand |
|
|
12.0 |
% |
|
$ |
200,000 |
|
|
|
- |
|
|
|
200,000 |
|
| Note payable 3 |
|
March 21, 2015 |
|
March 20, 2017 |
|
|
12.0 |
% |
|
$ |
125,000 |
|
|
|
125,000 |
|
|
|
125,000 |
|
| Note payable 4 |
|
April 2, 2015 |
|
Due upon demand |
|
|
12.0 |
% |
|
$ |
200,000 |
|
|
|
- |
|
|
|
200,000 |
|
| Note payable 5 |
|
April 15, 2015 |
|
Due upon demand |
|
|
12.0 |
% |
|
$ |
50,000 |
|
|
|
- |
|
|
|
50,000 |
|
| Note payable 6 |
|
April 30, 2015 |
|
Due upon demand |
|
|
12.0 |
% |
|
$ |
50,000 |
|
|
|
- |
|
|
|
50,000 |
|
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| Total notes payable |
|
|
|
|
|
|
|
|
|
$ |
125,000 |
|
|
$ |
725,000 |
|
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● |
September 30, 2014 The Company entered into a Demand Promissory Note with a third party lender for total borrowings of $100,000. The outstanding principal is due on demand. |
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● |
February 26, 2015 The Company entered into an unsecured loan agreement with a third party lender in the principal amount of $200,000. The loan bears interest at the rate of 12% per annum and is due on demand. |
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● |
March 21, 2015 The Company entered into an agreement with DelMorgan Group LLC (DelMorgan), pursuant to which DelMorgan agreed to act as the Companys exclusive financial advisor. In connection with the agreement, the Company paid DelMorgan $125,000, which was advanced by a third party lender in exchange for an unsecured note payable issued by the Company bearing interest at the rate of 12% per annum payable monthly beginning on April 20, 2015. The note payable is due on the earlier of March 20, 2017, or upon completion of a private placement transaction, as defined in the agreement. The Company expects this transaction to take place in the next twelve months. As a result, the $125,000 note payable has been classified as a current liability as of September 30, 2016 and December 31, 2015 in the accompanying condensed consolidated financial statements. |
On April 4, 2016. the Company
issued an unsecured convertible note payable to Oceanside Strategies, Inc. (Oceanside) in the amount of $680,268.
This note supersedes and replaces all previous notes and current liabilities due to Oceanside for sums Oceanside loaned to the
Company in 2014 and 2015 which amounted to $600,000 of principal balance and $80,268 of accrued interest as of April 4, 2016. This
note bears interest at the rate of 12% per annum, compounded annually. In consideration for Oceansides agreement to convert
the prior notes from current demand notes and extend the maturity date to December 4, 2016, the Company granted Oceanside the right
to convert up to 30% of the amount of such note into shares of the Companys common stock at $0.07 per share and issued 2,429,530
share purchase warrants, exercisable at $0.07 per share until April 4, 2019 (see note 5).
Total notes payable outstanding
as of September 30, 2016 and December 31, 2015 amounted to $125,000 and $725,000, respectively. All outstanding amounts are either
due on demand, or expected to become due in the next 12 months, and have therefore all been classified as current liabilities.
Total interest expense for
notes payable for the nine months ended September 30, 2016 and 2015 was $26,219 and $46,025, respectively. Total interest expense
for notes payable for the three months ended September 30, 2016 and 2015 was $3,781 and $23,945, respectively.
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