On January 15, 2014, the Company issued 3,401,360 shares of unregistered common stock in a private placement to Lone Star Value Investors, LP, an entity controlled by a former director and officer of the Company, for cash proceeds of $50,000
. The proceeds of this issuance were used to assist in funding the Company's operating expenses.
4. LOANS FROM STOCKHOLDER AND AFFILIATE
On June 6, 2014, a shareholder, Lone Star Value Investors, LP was issued a promissory note by the Company in the amount of $50,000 (2014 Note). The proceeds of the note are being used for ongoing operating expenses. The loan bears interest at 10% per annum. Interest on the loan and the full amount of the principal is to be repaid on June 30, 2019.
On August 2, 2016, the Company issued a promissory note to an affiliate of Lone Star Value Investors, LP in the amount of $40,000 (2016 Note). The proceeds of the Note will be used for ongoing operating expenses. The 2016 Note bears interest at 10% per annum. Interest and principal on the 2016 Note is to be repaid on August 31, 2021, and all payments are subordinate to the payment of all outstanding amounts due under the 2014 Note.
During the six months ended June 30, 2017 and June 30, 2016, the Company recognized interest aggregate interest expense in the amount of
$4,451
and $2,486 respectively. Total accrued interest on the 2014 Note and 2016 Note is
$18,975 and $14,524 as of the June 30, 2017 and December 31, 2016 respectively. During the three months ended June 30, 2017 and 2016, the Company recognized interest expense in the amount of $2,238 and $1,243, respectively.
5. SUBSEQUENT EVENTS
No material subsequent events have occurred since June 30, 2017 that require recognition or disclosure in the financial statements