| Related Party Convertible Note Payable |
NOTE 7 – RELATED PARTY CONVERTIBLE NOTE
PAYABLE
Related party convertible note payable
consisted of the following as of:
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September 30, 2019 |
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December 31, 2018 |
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(Unaudited) |
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| Convertible note 2019-02. On July 19, 2019, the Company issued a convertible note payable in the amount $815,217, with an original issue discount of $65,217 in exchange for $750,000. This note accrues interest at 8% per annum and matures on June 30, 2020. This note and accrued interest may convert into shares of common stock at the conversion price then in effect (initially $0.12 per share, subject to adjustment) any time at the holder’s option or automatically upon a qualified financing of at least $5 million at the lower of the conversion price then in effect or a 25% discount to the offering price. The conversion price is subject to adjustment upon the issuance of the Company’s common stock or securities convertible into common stock at a price per share less than the then prevailing conversion price, other than specified exempt issuances; accordingly, on November 8, 2019, the conversion price was adjusted to $0.07 per share. This note was also issued with a detachable warrant to purchase 1,500,000 shares of stock at $0.12 per share, which shall be adjusted in accordance with any adjustment to the conversion price of this note; accordingly, on November 8, 2019, the exercise price was adjusted to $0.07 per share. The valuation of the conversion feature and detachable warrants resulted in the recognition of an additional $286,050 discount on this note. This note requires monthly interest payments. |
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$ |
815,217 |
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$ |
- |
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| Total notes payable |
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815,217 |
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| Less original issue discounts |
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(65,217 |
) |
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- |
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| Related party convertible note payable, net |
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750,000 |
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- |
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| Less conversion rights and warrant discounts |
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(286,050 |
) |
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- |
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| Plus amortization of discounts |
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73,898 |
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- |
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| Total convertible notes payable, net |
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$ |
537,848 |
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$ |
- |
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Discounts
Total discounts of $351,267 are
amortized using the interest method, which resulted in amortization recorded as interest expense of $73,898 for the three and nine-months
ended September 30, 2019.
Interest expense
The Company incurred interest charges
of $13,222 during the three and nine-months ended September 30, 2019, on this related party convertible note payable of which $5,360
was accrued and payable as of September 30, 2019.
Maturities
Future maturities of notes payable
are as follows as of September 30:
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