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NOTE 5 - CONVERTIBLE NOTES PAYABLE
12 Months Ended
Dec. 31, 2018
Disclosure Text Block [Abstract]  
Short-term Debt [Text Block]

NOTE 5 – CONVERTIBLE NOTES PAYABLE


On August 6, 2018, the Company issued a convertible preferred note for $253,000. The note incurs interest at 10% per year and the outstanding principal and accrued interest are due on August 6, 2019, the maturity date. The note includes a conversion feature where, beginning 180 days after the issuance date, the lender may convert all or a portion of the outstanding principal and accrued interest balance into shares of the Company’s common stock determined by dividing the conversion amount by the conversion price. During the first 180 days, the Company is allowed to prepay the note and all accrued interest in full by paying an increasing prepayment percentage, which starts at 110% of the outstanding principal and interest and increasing by 5% every 30 days (110% from 0-30 days, 115% from 31-60 days, 120% from 61-90 days, 125% from 91-120, 130% from 121-150 days, and 135% from 151-180 days). After this period, the Company is no longer allowed to prepay the note and the conversion feature becomes active. The conversion price is determined by multiplying the market value of the Company’s common stock, as defined, by 65%. This represents a beneficial conversion feature that is not a derivative but must have its value recorded as a discount on the related note. The value of the conversion feature was calculated using the intrinsic value method, whereby the amount of the discount was calculated as the difference between the conversion price and the market price of the underlying stock at the date of issuance multiplied by the number of shares issuable. The Company recognized a debt discount of $131,787 on the convertible promissory note related to the beneficial conversion feature upon issuance, which is being amortized to interest expense over the one-year term of the note. For the year months ended December 31, 2018, the Company recognized $43,381 in amortization of the debt discount. 


The Company paid $3,000 as loan origination fees on August 6, 2018 in obtaining the loan. The loan origination fee was recorded as deferred financing cost against the loan balance. For the year ended December 31, 2018, approximately $1,000 in deferred financing cost was amortized.


As of December 31, 2018, the principal balance of the Convertible Note was $253,000, and accrued interest on the Convertible Note was $10,259. During the period ended December 31, 2018, the Company recognized $31,238 in interest expense related to the Convertible Notes.