Quarterly report pursuant to Section 13 or 15(d)

NOTES PAYABLE - RELATED PARTIES

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NOTES PAYABLE - RELATED PARTIES
3 Months Ended
Mar. 31, 2020
Debt Disclosure [Abstract]  
NOTES PAYABLE - RELATED PARTIES

During October 2019, the Company entered into two short-term promissory notes (the “Notes”) for an aggregate principal amount of $94,056 and gross cash proceeds of $85,000 (original issue discount of $9,056). A note with principal amount of $55,556 was subscribed by Andrew Johnson, an officer of the Company. The Notes became due and payable between October 18, 2019 and December 16, 2019 and bear interest at a rate of twelve (12%) percent per annum prior to the maturity date, and eighteen (18%) per annum if unpaid following the maturity date. The Notes are unsecured obligations of the Company. In addition, the Notes carry a 10% original issue discount of $9,056 which have been amortized and recorded in interest expense on the accompanying consolidated statements of operations. In December 2019, the Company repaid one of the notes with principal amount of $38,500 and accrued interest of $770. The Company is currently negotiating to extend the maturity date of the related party note with principal amount of $55,556.

During February 2020, the Company entered into a short-term promissory note for principal amount of $22,461 and gross cash proceeds of $20,419 (original issue discount of $2,042) with a certain stockholder of the Company. The note became due and payable on March 8, 2020 and bear interest at a rate of eighteen (18%) percent per annum prior to the maturity date, and eighteen (18%) per annum if unpaid following the maturity date. The note is unsecured obligation of the Company. In addition, the note carries a 10% original issue discount of $2,042 which have been amortized and recorded in interest expense on the accompanying unaudited condensed consolidated statements of operations. As of March 31, 2020, the principal balance of this note amounted to $22,461.

 

During the three months ended March 31, 2020 and 2019, the Company recognized $2,239 and $524, respectively, of interest expense. As of March 31, 2020 and December 31, 2019, the notes had accrued interest balances of $3,517 and $1,278, respectively. As of March 31, 2020 and December 31, 2019, the principal balance under the notes was $78,017 and $55,556, respectively.