| NOTES PAYABLE AND NOTES PAYABLE - RELATED PARTIES |
NOTE 7 – NOTES PAYABLE AND NOTES PAYABLE
- RELATED PARTIES
At December 31, 2018 and December 31, 2017, notes payable consisted
of the following categories:
| |
December 31, 2018 |
December 31, 2017 |
| Notes payable |
$328,783 |
$328,783 |
| Notes payable, convertible |
25,000 |
25,000 |
| Notes payable, related parties |
926,475 |
27,000 |
| Notes payable, related parties, convertible |
1,327,450 |
2,059,425 |
| Total |
$2,607,708 |
$2,440,208 |
Notes Payable
Notes payable consisted of two unsecured notes.
The first note payable in the amount of $28,783 as of December 31, 2018 and 2017, respectively, is to a former shareholder with
a due date of January 2012, together with accrued interest at 5% APR and interest on overdue principal accruing at 10% APR. The
second note payable in the amount of $300,000 as of December 31, 2018 and 2017, respectively, is to a shareholder with a due date
of August 1, 2015, together with accrued interest at 10% APR.
At December 31, 2018, the Company was in default
for both unsecured notes payable and all related accrued interest.
Notes Payable, Convertible
Notes payable, convertible consisted of one
note payable in the amount of $25,000 as of December 31, 2018 and 2017, respectively, to an investor with a due date of January
20, 2018, together with accrued interest at 10% APR and is convertible at $0.01 per share of common stock.
At December 31, 2018, the Company was in default
for this secured note payable and all related accrued interest.
Notes Payable, Related Parties
Notes payable, related parties consisted of
the following:
| |
|
December 31, 2018 |
December 31, 2017 |
| Note payable to the Company’s general counsel (also a shareholder), due November 10, 2017. |
(a) |
$7,000 |
$7,000 |
| |
|
|
|
| Note payable to an independent contractor (also a shareholder), which note payable was due December 3, 2017. |
(b) |
10,000 |
10,000 |
| |
|
|
|
| Note payable to an independent contractor (also a shareholder), which note payable was due December 20, 2017. |
(c) |
10,000 |
10,000 |
| |
|
|
|
| Note payable to an independent contractor (also a shareholder), which note payable was due March 16, 2018. |
(d) |
10,000 |
--- |
| |
|
|
|
| Note payable to an independent contractor (also a shareholder), which note payable was due June 22, 2018. |
(e) |
10,000 |
--- |
| |
|
|
|
| Two notes payable ($150,000 and $120,000) each to the Company’s general counsel (also a shareholder), due on demand together with accrued interest at 4.5% APR. |
(f) |
270,000 |
--- |
| |
|
|
|
| Note payable to the Company’s general counsel (also a shareholder), due on demand together with accrued interest at 12% APR. |
(g) |
10,000 |
--- |
| |
|
|
|
| Two notes payable ($349,329 and $87,532) each to the Company’s president and chief executive officer (also a shareholder), due on demand together with accrued interest at 4.5% APR. |
(h) |
436,861 |
--- |
| |
|
|
|
| Two notes payable ($134,604 and $28,010) each to the Company’s controller (also a shareholder), due on demand together with accrued interest at 4.5% APR. |
(i) |
162,614 |
--- |
| |
|
|
|
| Total |
|
$926,475 |
$27,000 |
At December 31, 2018, the Company was in default
with the contractual payment terms with the unsecured term note payable (a) to the Company’s general counsel, also a shareholder,
and on the unsecured term note payables (b), (c), (d) and (e) to an independent contractor, also a shareholder.
Note (f) reflects two unsecured notes payable
for payment obligations owed to the Company’s general counsel for legal services incurred by the Company for the years ended
December 31, 2015 and 2014. In addition, note (g) reflects a debt investment made by the Company’s general counsel to the
Company.
Note (h) reflects two unsecured notes payable
for amounts due to the Company’s president and chief executive officer, who is also a shareholder, for previously accrued
base salary.
Note (i) reflects two unsecured notes payable
for amounts due to the Company’s controller, who is also a shareholder, for previously accrued base salary.
On December 24, 2018, and in connection with
the Company’s acquisition of Advanced Cement Sciences LLC, each holder of notes (f), (h) and (i) agreed to relinquish their
previous respective rights of conversion on the Company promissory notes held by them.
Notes Payable, Related Parties, Convertible
Notes payable, related parties, convertible
consisted of the following:
| |
|
December 31, 2018 |
December 31, 2017 |
| Note payable to a company controlled by an outside director (also a shareholder), due on demand together with accrued interest at 4.5% APR, and convertible at $0.01 per share of common stock. |
(a) |
$60,000 |
$60,000 |
| |
|
|
|
| Note payable to the Company’s general counsel (also a shareholder), due on demand together with accrued interest at 4.5% APR, and convertible at $0.01 per share of common stock. |
(b) |
--- |
150,000 |
| |
|
|
|
| Note payable to the Company’s general counsel (also a shareholder), due on demand together with accrued interest at 4.5% APR, and convertible at $0.008 per share of common stock. |
© |
--- |
120,000 |
| |
|
|
|
| Note payable to the Company’s general counsel (also a shareholder), due on demand together with accrued interest at 4.5% APR, and convertible at $0.007 per share of common stock. |
(d) |
--- |
10,000 |
| |
|
|
|
| Three notes payable ($30,000, $55,500 and $28,500) each to an outside director (also a shareholder), due on demand together with accrued interest at 4.5% APR, and convertible at $0.01, $0.007 and $0.015, respectively, per share of common stock. |
(e) |
114,000 |
114,000 |
| |
|
|
|
| Note payable to a related party investor (by virtue of shareholding percentage, both actual and on an as-converted basis), due November 13, 2018 together with accrued interest at 10% APR, and convertible at $0.01 per share of common stock. |
(f) |
100,000 |
100,000 |
| |
|
|
|
| Note payable to a related party investor (by virtue of shareholding percentage, both actual and on an as-converted basis), due March 4, 2017 together with accrued interest at 10% APR, and convertible at $0.01 per share of common stock. |
(g) |
50,000 |
50,000 |
| |
|
|
|
| Note payable to a related party investor (by virtue of shareholding percentage, both actual and on an as-converted basis), due March 18, 2019 together with accrued interest at 10% APR, and convertible at $0.01 per share of common stock. |
(h) |
100,000 |
100,000 |
| |
|
|
|
| Note payable to a related party investor (by virtue of shareholding percentage, both actual and on an as-converted basis), due May 12, 2019 together with accrued interest at 10% APR, and convertible at $0.01 per share of common stock. |
(i) |
50,000 |
50,000 |
| |
|
|
|
| Note payable to a related party investor (by virtue of shareholding percentage, both actual and on an as-converted basis), due June 7, 2019 together with accrued interest at 10% APR, and convertible at $0.01 per share of common stock. |
(j) |
200,000 |
200,000 |
| |
|
|
|
| Note payable to a related party investor (by virtue of shareholding percentage, both actual and on an as-converted basis), due July 28, 2019 together with accrued interest at 10% APR, and convertible at $0.01 per share of common stock. |
(k) |
300,000 |
300,000 |
| |
|
|
|
| Two notes payable ($20,500 and $9,500) each to an outside director (also a shareholder), due on demand together with accrued interest at 4.5% APR, and convertible at $0.007 and $0.015, respectively, per share of common stock. |
(l) |
30,000 |
30,000 |
| |
|
|
|
| Note payable to the Company’s president and chief executive officer (also a shareholder), due on demand together with accrued interest at 4.5% APR, and convertible at $0.007 per share of common stock. |
(m) |
--- |
349,329 |
| |
|
|
|
| Note payable to the Company’s controller (also a shareholder), due on demand together with accrued interest at 4.5% APR, and convertible at $0.007 per share of common stock. |
(n) |
--- |
134,604 |
| |
|
|
|
| Note payable to the Company’s former vice president of research and development (also a shareholder), due on demand together with accrued interest at 4.5% APR, and convertible at $0.007 per share of common stock. |
(o) |
49,000 |
49,000 |
| |
|
|
|
| Note payable to an independent contractor (also a shareholder), due on demand together with interest at 4.5% APR, and convertible at $0.007 per share of common stock. |
(p) |
25,700 |
25,700 |
| |
|
|
|
| Note payable in the name of a son of an outside director (also a shareholder), due on demand together with accrued interest at 4.5% APR, and convertible at $0.05 per share of common stock. |
(q) |
20,000 |
20,000 |
| |
|
|
|
| Note payable to the Company’s president and chief executive officer (also a shareholder), due on demand together with accrued interest at 4.5% APR, and convertible at $0.015 per share of common stock. |
(r) |
--- |
87,532 |
| |
|
|
|
| Note payable to the Company’s controller (also a shareholder), due on demand together with accrued interest at 4.5% APR, and convertible at $0.015 per share of common stock. |
(s) |
--- |
28,010 |
| |
|
|
|
| Two notes payable ($81,250 and $77,500) each to an independent contractor (also a shareholder), due on demand together with interest at 4.5% APR, and convertible at $0.01 per share of common stock. |
(t) |
158,750 |
81,250 |
| |
|
|
|
| Note payable to an investor (also a shareholder), due on demand together with interest at 10% APR, and convertible at $0.01 per share of common stock. |
(u) |
20,000 |
--- |
| |
|
|
|
| Note payable to a related party investor (by virtue of shareholding percentage, both actual and on an as-converted basis), due June 15, 2018 together with accrued interest at 10% APR, and convertible at $0.01 per share of common stock. |
(v) |
50,000 |
--- |
| |
|
|
|
| Total |
|
$1,327,450 |
$2,059,425 |
Notes (a), (e) and (q) reflect amounts due
to a single outside director of the Company, who also is a shareholder, based on such director having (i) made certain vendor obligation
payments directly on behalf of and for the benefit of the Company, (ii) having advanced certain funds to the Company at various
dates for general working capital purposes, and (iii) having accrued director’s fees earned through June 30, 2017. In addition,
the Company has recorded accounts payable, related parties, in the amount of $18,426 to the holder of notes (a), (e), and (q).
Notes (f) through (k) and (v) reflect amounts
due to a certain related party investor and significant shareholder for convertible debt investments
made from time to time as indicated.
Notes (l) reflects two notes payable for amounts
due to an outside director, who is also a shareholder, for accrued director’s fees earned through June 30, 2017.
Note (o) reflects amounts due to the Company’s
former vice president of research and development, who is also a shareholder, for previously accrued wages.
Note (p) reflects amounts due to an independent
contractor who was President of one of EcoSmart’s divisions prior to the merger with EcoSmart and a current shareholder of
the Company, for past earnings. See Note 10.
Note (t) reflects two notes payable for amounts
due to an independent contractor, who is also shareholder, for previously accrued business development services. On October 31,
2018, the holder of one note with an original face value of $137,500 exercised the right to convert $60,000 of the note into six
million shares (6,000,000) of common stock at the conversion rate of $0.01 per share per the terms of the note.
On December 24, 2018, and in connection with
the Company’s acquisition of Advanced Cement Sciences LLC, each holder of notes (b), (c), (d), (m), (n), (r) and (s) agreed
to relinquish their previous respective rights of conversion on the Company promissory notes held by them.
For the year ended December 31, 2018, the Company
received proceeds from the issuance of notes payable to related parties in the amount of $20,000 and convertible notes payable
to related parties in the amount of $70,000 (total $90,000). For the year ended December 31, 2018, the
Company recognized debt discount of $39,700 associated with three note payables as they carried a beneficial conversion feature.
This debt discount has been fully amortized to interest expense for the year ended December 31, 2018. For the year ended December
31, 2017, the Company received proceeds from the issuance of notes payable to related parties in the amount of $27,000 and convertible
notes payable to related parties in the amount of $234,792 (total $261,792).
At December 31, 2018, the Company was in default
with the contractual payment terms with the convertible note payable (f), (g) and (v) to a related party investor.
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