Quarterly report pursuant to Section 13 or 15(d)

Notes Payable and Long-Term Debt (Tables)

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Notes Payable and Long-Term Debt (Tables)
3 Months Ended
Mar. 31, 2018
Debt Disclosure [Abstract]  
Schedule of Notes Payable and Long-Term Debt

As of March 31, 2018 and December 31, 2017, notes payable and long-term debt consists of:  

 

    3/31/18     12/31/17  
On October 26, 2011, the Company entered into a note payable in the amount of $362,257, relating to a Unit redemption agreement bearing interest at 6% per annum and is payable in equal monthly installments of $7,003, inclusive of interest, past due ¹   $ -     $ 68,973  
Note payable to former officer and director due in four equal annual installments of $26,875 beginning April 28, 2016; past due in 2016 and 2017; accruing interest at 6% per annum since April 28, 2016 on the past due portion     107,500       107,500  
Note payable to former officer due in four equal annual installments of $25,313 on April 28 of each year; past due in 2016 and 2017; accruing interest at 6% per annum since April 28, 2016 on the past due portion     101,250       101,250  
Notes payable to seller of DigitizeIQ, LLC due as noted below²     485,000       485,000  
Convertible note payable to River North Equity LLC dated July 13, 2016 with interest at 10% per annum; due April 13, 2017; convertible into common stock 5     27,500       27,500  
                 
      721,250       790,223  
Current portion of long-term debt     669,062       738,035  
Long-term debt   $ 52,188     $ 52,188  

 

¹The remaining balance due on the Unit redemption agreement note was settled with a payment of $10,000 in cash, which resulted in a net gain of $66,723 including accrued interest of $7,750.

 

² Notes due seller of DigitizeIQ, LLC includes a series of notes as follows:

 

  ●  A non-interest bearing Promissory Note made payable to the Seller in the amount of $250,000, which was due on November 12, 2015; (Paid February 26, 2016).
     
  A second non-interest bearing Promissory Note made payable to the Seller in the amount of $250,000, which was due on January 12, 2016; (Balance at March 31, 2017 - $235,000)
     
  A third non-interest bearing Promissory Note made payable to the Seller in the amount of $250,000, which was due on March 12, 2016 (Unpaid).

 

The Company is renegotiating the terms of the notes. The notes bear interest at 5% per annum when in default (after the due date). The notes were non-interest bearing until due. Accordingly, a debt discount at 5% per annum was calculated for the notes and was amortized to interest expense until the due date of the notes.

 

5Convertible note payable to River North Equity, LLC (“RNE”)- The Company evaluated the embedded conversion for derivative treatment and recorded an initial derivative liability and debt discount of $23,190. The debt discount is fully amortized.

 

The Company has entered into a number of agreements with RNE wherein RNE has agreed to invest up to $3,000,000 in the common stock of the Company. These agreements require an effective Registration Statement to be on file by the Company and would allow the Company to require RNE to purchase the Company’s common stock at 90% of the lowest trading price of the Company’s common stock during the previous five trading days. The Company has not yet filed a Registration Statement with the SEC.

Schedule of Estimated Fair Value Assumptions Used in Black-Scholes Option Pricing Model

The estimated fair value of the derivative instruments was valued using the Black-Scholes option pricing model, using the following assumptions during the three months ended March 31, 2018:

 

Estimanted dividends   None
Expected volatility   164.32%
Risk free interest rate   2.85%
Expected term   .01-36 months