NOTE 5: DEBT
|3 Months Ended|
Mar. 31, 2017
|Debt Disclosure [Abstract]|
|Debt Disclosure [Text Block]||
NOTE 5: DEBT
During the three months ended March 31, 2017, the Company borrowed an aggregate of $217,490, net of original issue discounts and fees of $182,856, under convertible notes payable. Additional discounts of $150,471 were recognized during the three months ended March 31, 2017 due to derivative liabilities. As of March 31, 2017 and December 31, 2016, the Company had outstanding convertible notes payable of $8,120,514 and $6,650,484, net of unamortized discounts of $1,871,710 and $1,920,571, respectively. The outstanding convertible notes of the Company are unsecured, bear interest between 6% and 12% per annum, mature between October 2017 and March 2020 and are convertible at variable rates between 60% and 65% of the quoted market price of the Company’s common stock. All notes that were convertible during the three months ended March 31, 2017 were accounted for as derivative liabilities (see Note 6). Aggregate amortization of the debt discounts on convertible debt for the three months ended March 31, 2017 and 2016 was $231,717 and $239,106, respectively.
During the three months ended March 31, 2017, the Company incurred loan standstill expenses added to debt principal of $73,849. The Company also incurred a gain on settlement of accounts payable of $51,835 due to the settlement of an outstanding professional fee. Therefore, the net debt extension and modification expense is $22,014 for the three months ended March 31, 2017.
During the three months ended March 31, 2017, holders of two convertible notes payable elected to convert a total of $763,390 principal into a total of 10,546,244 shares of the Company’s common stock.
As of March 31, 2017 and December 31, 2016, the Company had outstanding notes payable to former affiliates of the Company of $463,185. These notes payable of the Company are unsecured, bear no interest and are due on demand.
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
Reference 1: http://www.xbrl.org/2003/role/presentationRef