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Convertible Notes Payable
12 Months Ended
Dec. 31, 2016
Notes Payable [Abstract]  
Convertible Notes Payable

Note 7 – Convertible Notes Payable

 

As of December 31, 2016, the Company has only one convertible note outstanding with a third party (“PTPI Note”). The current note balance is $53,852, which includes $13,112 of accrued interest. At December 31, 2015, the Company had only this note outstanding as well. The balance at that time was $38,924, which included accrued interest of $6,851, and was net of debt discount.

 

On January 22, 2015, the Company entered into an Exchange Agreement with the original holder of PTPI Note pursuant to which PTPI Note exchanged $75,273 in debt into a 10% Convertible Debenture in the principal amount of $75,273 (the “Note”). The PTPI Note matures January 21, 2017 (the “Maturity Date”) and interest associated with the Note I Note is 10% per annum, which is payable on the Maturity Date. The PTPI Note is convertible into shares of common stock of the Company, at the option of Note I, at a fixed conversion price of $0.00752734.

 

The holder of the PTPI Note has agreed to restrict its ability to convert the PTPI Note and receive shares of common stock such that the number of shares of common stock held by it in the aggregate and its affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock. The PTPI Note was issued in reliance upon exemptions from registration pursuant to Section 3(a)(9) under the Securities Act of 1933. PTPI Note’s holder is an accredited investor as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933. In addition, on March 2, 2015, the Company and the holder of the PTPI Note amended that certain 10% Convertible Debenture (the “PTPI Note I Debenture”) which debt underlying the PTPI Note I Debenture was initially incurred on October 6, 2009 and exchanged for the Note I Debenture on January 19, 2014. The parties agreed that the conversion price in the PTPI Note I Debenture would not be impacted by the 1:1,000 stock split implemented by the Company on February 24, 2015 and will remain $0.0075273.

 

The Company is under default per the terms of the PTPI Note, as at maturity in January 2017, the Company did not have sufficient free cash to pay off the note. The Company is in negotiations with the holder of the PTPI Note in good faith to resolve the situation. The Company cannot predict the result of such negotiations.