Quarterly report pursuant to Section 13 or 15(d)

Notes Payable and Convertible Notes Payable, Net of Unamortized Discount

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Notes Payable and Convertible Notes Payable, Net of Unamortized Discount
6 Months Ended
Jun. 30, 2017
Notes  
Notes Payable and Convertible Notes Payable, Net of Unamortized Discount

NOTE 8 - NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE, NET OF UNAMORTIZED DISCOUNT

 

During the three months ended March 31, 2017, we entered into three Bridge Note Agreements totaling $46,000 with one of our investors. These three Bridge Notes are interest free, are secured by the Company’s assets, are convertible to shares of the Company’s restricted stock at $0.10 per share and have maturity dates of April 30, 2017.  The Bridge Notes also include warrants to purchase two shares of the Company’s common stock, at a price of $0.135, for each dollar loaned to Spindle. The total discount attributable to these transactions is $32,716.  During the three and six months ended June 30, 2017, interest expense related to the warrants and the beneficial conversion feature totaled $14,142 and $32,716, respectively. During the three months ended June 30, 2017, two of these Bridge Notes totaling $31,000 were paid in full through conversion to Spindle stock.  The holder of the remaining $15,000 Bridge Note, which was due April 30, 2017, agreed to extend the maturity date for an additional 180 days. No warrants related to these three Bridge Notes have been exercised.

 

In December 2016, we entered into a $5,000 Bridge Note Agreement with one of our investors. The Bridge Note is secured by the Company’s assets and include warrants to purchase two shares of the Company’s common stock for each dollar loaned to Spindle. The total discount attributable to this transaction is $525.  During the three and six months ended June 30, 2017, interest expense related to the warrants and the beneficial conversion feature totaled $0 and $525, respectively. At June 30, 2017, no payments had been made on the $5,000 Bridge Note. The holder of the $5,000 Bridge Note, which was due 45 days from the date of the note, waived the 45-day term.  No warrants related to this Bridge Notes have been exercised.

 

On May 18, 2016, we converted a $182,000 payable to an investor in the Company and entered into a Convertible Promissory Note (“Note”) with that investor. The Note bears an interest rate of 6% per annum and has a maturity date of May 18, 2018. The total value of the note, if converted to stock, would be $404,444 and therefore a discount in the amount of $182,000 was recorded, as the conversion feature cannot be greater than the amount of the debt. This amount is amortized to interest expense over the term of the note. During the three and six months ended June 30, 2017, interest expense of $2,498 and $4,969, and interest expense related to amortization of the discount on the unpaid notes of $20,818 and $41,407 was recorded, respectively.  The balance of the unamortized discount at June 30, 2017, was $87,067. During the six months ended June 30, 2017, the Company made no payments to the Note’s principal balance. At June 30, 2017, the balance of the Note was $167,000 and is presented as a note payable on our Condensed Balance Sheets.

 

On December 15, 2011, we issued a Promissory Grid Note (“Grid Note”) to a former director of the Company which formalized various advances previously received from the former director in the amount of $51,300 and allowing for future advances of up to $250,000. The Grid Note was non-interest bearing, unsecured and matured on December 15, 2014. We imputed interest at a rate of 2% per annum and recorded a discount in the amount of $10,640. In connection with one of the previous advances in the amount of $25,000, we issued warrants to purchase up to 250,000 shares of our common stock at a price per share of $1.00 resulting in an additional discount of $17,709. The total discount attributable to the Grid Note totaled $28,349 and was amortized to interest expense over the term of the Grid Note. During the three and six months ended June 30, 2017, the Company repaid $4,000 of the principal balance of the Grid Note.  During the three and six months ended June 30, 2016, the Company repaid $4,500 and $7,500 of the principal balance of the Grid Note, respectively.  At June 30, 2017, the balance of the Grid Note was $44,552.