NOTE 5: DEBT
|9 Months Ended|
Sep. 30, 2017
|Debt Disclosure [Abstract]|
|Debt Disclosure [Text Block]||
NOTE 5: DEBT
During the nine months ended September 30, 2017, the Company borrowed an aggregate of $1,817,105, net of original issue discounts and fees of $32,385, under convertible notes payable. Additional discounts of $1,105,486 were recognized during the nine months ended September 30, 2017 due to derivative liabilities. As of September 30, 2017 and December 31, 2016, the Company had outstanding convertible notes payable of $8,524,288 and $6,650,484, net of unamortized discounts of $2,547,189 and $1,920,571, respectively. The outstanding convertible notes of the Company are unsecured, bear interest between 6% and 12% per annum, mature between November 2018 and September 2020 and are convertible at fixed rates between $0.06 and $0.15 per share and at rates between 60% and 65% of the quoted market price of the Company's common stock. All notes that were convertible during the nine months ended September 30, 2017 were accounted for as derivative liabilities until the final resolution of outstanding variable conversion debt instruments on June 30, 2017 (see Note 6). Aggregate amortization of the debt discounts on convertible debt for the nine months ended September 30, 2017 and 2016 was $956,321 and $1,142,865, respectively.
Three of the above referenced convertible notes payable are convertible at $0.06 per share, which was a discount to the market price on the date of issuance. As such, a total of $445,083 was recognized as a beneficial conversion feature and is being amortized to interest expense over the life of the respective convertible notes payable. Amortization expense related to the beneficial conversion features was $20,421 during the nine months ended September 30, 2016.
During the nine months ended September 30, 2017, the Company incurred loan default and standstill expenses added to debt principal of $98,849.
During the nine months ended September 30, 2017, holders of convertible notes payable elected to convert a total of $1,889,616 in principal and $47,071 in accrued interest into a total of 29,403,968 shares of the Company's common stock.
As of September 30, 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.
During the nine months ended September 30, 2017, The Company recognized a gain on settlement of accounts payable of $529,132 due to the settlement of outstanding professional and service fees payable with third party vendors.
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