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Notes Payable
 9 Months Ended
Sep. 30, 2016
Notes Payable [Abstract]  
Notes Payable
3. Notes Payable

 

The Company periodically borrows from officers, directors, other related individuals and from commercial lenders. In November 2015 the Company borrowed $100,000 from a commercial lender. The loan incurs interest at 11% and is payable on November 1, 2016 (See Note 9). Interest expense related to this loan for the three and nine months ended September 30, 2016 amounted to $2,750 and $8,250, respectively. During the three and nine months ended September 30, 2015 interest expense related to a loan from a second commercial lender amounted to $5,175 and $23,517, respectively.

 

In the third quarter of 2016 the Company commenced an offering pursuant to which it offered 11% subordinated promissory notes due in six (6) months in fifty thousand ($50,000) dollar increments combined with 62,500 shares of the Company’s Common Stock for a maximum offering amount of $200,000 (the “Offering”). In August and September 2016, the Company sold promissory notes totaling $150,000 to three unrelated individuals. Two of the promissory notes totaling $100,000 are payable in February 2017 and one promissory note for $50,000 is payable in March 2017. In connection with these promissory notes sold pursuant to the Offering, the Company issued 187,500 shares of common stock valued at $41,875 which was recorded as a debt discount and will be amortized over the term of these notes. Amortization of the debt discounts for the three and nine months ended September 30, 2016 was $5,990. As of September 30, 2016, the outstanding balance of these notes were $150,000. Interest expense related to these notes for the three months ended September 30, 2016 amounted to $1,253.

 

Interest expense related to loans from officers, directors and other related individuals amounted to $313 and $9,531 for the nine month periods ended September 30, 2016 and 2015, respectively. Interest expense amounted to $0 and $9,247 for the three months ended September 30, 2016 and 2015, respectively.

 

Total interest expense on notes payable, inclusive of amortization of debt discount of $5,990 and $0, amounted to $15,805 and $33,048 for the nine months ended September 30, 2016 and 2015, respectively. Total interest expense, inclusive of amortization of debt discount of $5,990 and $0, amounted to $9,992 and $14,422 for the three months ended September 30, 2016 and 2015, respectively.