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Notes Payable

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Note 3. Notes Payable.

Notes payable and accrued interest as of March 31, 2018 and December 31, 2017 are as follows:

		March31, 2018				December 31, 2017

Principle		$	973,394			$	920,484
Discount			(786,982	)			-
Accrued interest			1,924				71,162
Total			188,336				991,646

Issuances of convertibles notes during the first quarter of 2018

From January 16,2018 through January 23, 2018, the Company received from certain third parties an aggregate amount of $100,000 as consideration for the Company’s issuance of convertible promissory notes in the aggregate principal amount of $100,000 (the “Notes”) (i) bearing interest at the rate of 1% per annum; (ii) with a conversion price of $0.01 per share of common stock; and (iii) repayable through to January 15, 2019. The beneficial conversion feature was valued at $100,000, which resulted in a $100,000 discount recorded as a reduction of debt and an increase to additional paid in capital in the Statement of Shareholders’ Equity (Deficit). The discount is amortized to finance expenses in the Statement of Comprehensive Loss over the term of the Notes. On January 23, 2018, $3,000 of the Notes was converted at $0.01 per share into 300,000 shares, based upon the Notes conversion price of $0.01 per share of common stock.

Transfer and change of ownership of convertible notes during the first quarter of 2018

On January 24, 2018, Alpha Anstalt Capital (“Alpha”), Chi Squared Capital (“Chi”), Firstfire Global Opportunities Fund LTC, Goldmed Ltd, Ilan Malca and Maz Partners (together the “Sellers”) sold their convertible notes totaling $956,209 (the “January 2018 Convertible Notes”) to certain new third-party investors (“New Investors”). On the same day, the Company and the New Investors agreed to(i) amend the conversion price of the January 2018 Convertible Notes from $0.014 to $0.01 (ii) to cancel the Class A warrants and Class B warrants issued together with the January 2018 Convertible Notes (the “Cancelled Warrants”) (see Note 4. Stockholders’ Equity. for accounting treatment of the Cancelled Warrants), (iii) to amend the interest rate from 8% to 1% per annum under the January 2018 Convertible Notes; (iv) to extend the repayment date to January 23, 2019, and (iv) to cancel the option granted to Alpha and Chi in July 2016 (“Alpha Chi Option”).

The change in terms of the January 2018 Convertible Notes, including the cancellation of the warrants was accounted for as an extinguishment of the convertible notes and the issuance of new convertible notes. The Company recorded a finance expense in the amount of 18,415,471in the Statement of Comprehensive Loss and an increase to Additional Paid-in Capital in the Statement of Shareholder’ Equity (Deficit) of $21.6 million as a result of the transaction.

The Company further concluded that the post amended convertible notes contain a beneficial conversion feature equal to the par value of the January 2018 Convertible Notes ($956,209) and accordingly recorded a discount on the January 2018 Convertible Notes, to be amortized to finance expense in the Statement of Comprehensive Loss over the term of the January 2018 Convertible Notes.

The Company accounted for the Alpha Chi Option as derivative liabilities that are measured at their far value at each period end, with changes in fair value recorded as finance expense or income. The fair value of the Alpha Chi Option at December 31, 2017 was nil, and at the date of cancellation was $2,186,629. The Company recorded a finance loss of $2,186,629 during the period from December 31, 2017 through the extinguishment date of the Alpha Chi Option as a result of the change in the fair value of the derivative liability.

On January 24, 2018, $73,000 of the January 2018 Convertible Notes were converted at a conversion price of $0.01 per share into 7,300,000 shares of the Company’s common stock and on March 19, 2018, a further $9,218 of the January 2018 Convertible Loans were converted at a conversion price of $0.01 per shares into 921,800 shares of the Company’s common stock.

Non-convertible note

On July 8, 2014, the Company issued a convertible note to Axel Springer Plug & Play Accelerator GmbH in the amount of $29,719. Accrued interest as of March 31, 2018 and December 31, 2017 amounted to $3,316. In terms of the original agreement, as of March 31, 2018 and December 31, 2017, the convertible note is no longer convertible.