Convertible Debentures

6 Months Ended

Jun. 30, 2020

Convertible Debt [Abstract]

Convertible Debentures

Note 4. Convertible Debentures

At June 30, 2020, our Company had convertible debentures totaling $97,900 outstanding, which are due during the third quarter of 2020. The convertible debentures bear interest at 7%. At the option of the lender, the debentures and accrued interest are convertible in whole or part into common stock of our Company at $0.025 per share. During the third quarter of 2020, holders of all $97,900 of convertible debentures elected to convert the debentures plus approximately $46,000 of accrued interest into 5,758,992 shares of common stock of our Company.

Our Company also granted warrants in the third quarter of 2013 and 2014 to purchase a total of 691,365 shares of our Company’s common stock at $0.02 per share to the holders of the debentures. The warrants are currently exercisable and expire at various dates in the third quarter of 2020 and the third quarter of 2021. The fair value of the warrants was determined using the Black-Scholes pricing model. The relative fair value of the warrants was recorded as a discount to the notes payable with an offsetting credit to additional paid-in capital since our Company determined that the warrants were an equity instrument in accordance with FASB ASC 815. The debt discount related to the warrant issuances has been accreted through interest expense over the term of the notes payable. During the third quarter of 2020, holders of 550,000 warrants exercised their options to purchase a total of 550,000 shares of our Company’s common stock.

The following table summarizes our Company’s warrant position at June 30, 2020 and December 31, 2019:

				Weighted Average
	Number		Exercise	Exercise
	of Shares		Price	Price
Outstanding warrants -
December 31, 2019		691,365	$0.02	$0.02
Outstanding warrants -
June 30, 2020		691,365	$0.02	$0.02
Weighted average remaining
contractual life (years)		.33
Currently exercisable warrants -
June 30, 2020		691,365	$0.02	$0.02

The aggregate intrinsic value of warrants outstanding and exercisable as of June 30, 2020 was approximately $69,100. The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.12 for the Company’s common stock on June 30, 2020.