NOTE 5 - CONVERTIBLE NOTE PAYABLE |
9 Months Ended |
|---|---|
Sep. 30, 2016 | |
| Disclosure Text Block [Abstract] | |
| Long-term Debt [Text Block] | NOTE 5 – CONVERTIBLE NOTE PAYABLE On July 20, 2015, the Company issued a senior convertible note (the “July 2015 Note”), in the principal amount of $550,000 due one year from the date of issuance. The total net proceeds the Company received from this note were $415,123, net of fees and original issuance discount (“OID”) of $50,000. At any time commencing one hundred and eighty one days from issuance, the July 2015 Note was convertible into shares of the Company’s common stock at the option of the holder at a conversion price of $7.6335 with certain reset provisions should certain default conditions occur. These certain default conditions were deemed to be outside the Company’s control. If the $550,000 principal amount of the July 2015 Note and all accrued but unpaid interest thereof was not paid in full on or before January 16, 2016, the July 2015 Note would have amortized in four equal payments payable on January 20, 2016, February 20, 2016, March 20, 2016 and April 20, 2016. These payments would have been paid (i) in cash at a 120% premium, and/or (ii) in shares of the Company’s common stock at a 20% discount to the average of the three daily volume weighted average prices of the Company’s common stock for the prior three trading days, provided the Company is in compliance with certain equity conditions as defined in the July 2015 Note. The Company identified an embedded derivative related to a conversion option in the July 2015 Note. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivative as of the inception date of the July 2015 Note and to fair value the derivative as of each subsequent reporting date. At the inception of the July 2015 Note, the Company determined the aggregate fair value of the embedded derivatives to be $302,287. The Company has issued debt for which total proceeds were allocated to individual instruments based on the fair value of each instrument at the time of issuance. Such value of the debt was recorded as discount on debt and is being amortized over the term of the respective debt. On December 18, 2015, the Company modified certain terms of the July 2015 Note. Pursuant to the modification, the Company agreed to repay the lender $300,000 in consideration for the extinguishment of $250,000 of the principal amount outstanding as of the December 18, 2015. The Company and the lender also agreed to reduce the guaranteed interest on the note from 10% to 5%, to delay the guaranteed interest start date by thirty days until February 20, 2016 and to delay the first installment payment by thirty days until February 20, 2016. In addition, the Company and the lender also agreed reduce the conversion price from $7.6335 to $4.25 per share, modify certain equity conditions (as defined in the July 2015 Note) and modify certain events of default (as defined in the July 2015 Note). In accordance with ASC 470-20, the change in fair value of the debt modification was recognized as an expense on the date it was accepted by the holder. In connection with the modification, in 2015, the Company recorded a loss of $41,434 representing the difference between the fair value of the conversion feature under the new conversion price and under the original conversion feature. On February 16, 2016, the Company paid off the remaining balance of the July 2015 Note of $300,000. For the three and nine months ended September 30, 2016, amortization of debt discount was $119,115. The July 2015 Note balance was $180,885 net of discount of $119,115 at December 31, 2015. |