Leet Technology Inc. - 10-K filing on 2019-06-07

Notes Payable

12 Months Ended

Dec. 31, 2017

8.	NOTES PAYABLE

Notes payable consist of the following:

	*As of December 31, 2017*									*As of December 31, 2016*
	*Amount*			*Discount*			*Net Balance*			*Amount*			*Discount*			*Net Balance*

*January 2016 ($65,000)* - 0% interest with payment of $937 per month for 4 months, $1,250 per month for 8 months, and $3,531 per month until fully paid.	$	4,482		$	(3,889	)	$	593		$	46,876		$	(45,903	)	$	973
*April 2016 ($50,000)* - 18% interest at payment of $750 per month with unpaid balance due at March 31, 2018 including issuance of 50,000 common shares.		50,000			(7,292	)		42,708			50,000			(32,292	)		17,708
*September 2016 ($10,000)* - 24% interest with outstanding balance with accrued interest due at October 31, 2018 with an option of accrued interest to be converted to common stock with 25% discount of trading price		10,000			-			10,000			10,000			(7,308	)		2,692
*October 2016 ($20,000)* - 10% interest payable daily of $204 per day until fully paid.		-			-			-			13,278			(3,510	)		9,768
*December 2017 ($50,000)* - 15% interest due in December 2020 including issuance of 100,000 shares of common stock with exercise price at $0.25 per share.		50,000			(22,021	)		27,979			-			-			-
Others		-			-			-			990			-			990

Total notes payable		114,482			(33,202	)		81,280			121,144			(89,013	)		32,131

Less: non-current portion		(35,747	)		14,473			(21,274	)		(96,876	)		78,195			(18,681	)

Notes payable, current portion	$	78,735		$	(18,729	)	$	60,006		$	24,268		$	(10,818	)	$	13,450

January 2016 - $65,000

On January 20, 2016, the Company entered into a non-interest bearing note payable and royalty agreement with a third party. Under the note, the Company borrowed $65,000 and began to repay the principal amount at a rate of approximately $937 per month with escalations to approximately $3,531 per month as of February 2017 until the note is paid in full. In addition, starting in February 2018, the Company will pay the lender a royalty fee of five ($5) dollars per month for every ignition interlock devise that the Company has on the road in customers’ vehicles up to eight hundred (800) in perpetuity, and for every unit over 800, the Company will owe the lender $1 per month per device in perpetuity. In connection with this note, the Company recorded a debt discount of $65,000 relating to the future royalty payments, to be amortized over the life of the note.

On September 30, 2016, the Company entered into Amendment No. 1 to Royalty note #1 in order to remove a security interest in the Company’s assets to secure repayment of the original note and amend the royalty provisions of the original note to be $1 for each Device on the road beginning in the 25th month after the date of the original note. In connection with this amendment, the Company issued 425,000 shares of restricted common stock. Pursuant to ASC 470 this amendment is a deemed extinguishment of the debt and the resulting revised debt is set up as a new note. In connection therewith, the Company recorded a loss on extinguishment of $116,541 during the year ended December 31, 2016.

Total interest expense was $42,639 and $33,681 for the years ended December 31, 2017 and 2016, respectively.

April 2016 - $50,000

On March 30, 2016, the Company entered into a borrowing agreement with a third party. The note was for a principal balance of $50,000 and included 50,000 restricted common shares. The promissory note has a maturity date of June 30, 2018 and bears interest at 18% per annum. The purchaser did not sign the agreement nor deliver the proper consideration prior to March 31, 2016. The exchange of the $50,000 in cash consideration by the purchaser and the issuance of the 50,000 restricted common shares by the Company was made in conjunction with delivery of the signed purchase agreement and promissory note on April 5, 2016. The Company recorded a debt discount of $50,000 related to the relative fair value of the issued shares associated with the note to be amortized over the life of the note.

Total interest expense was $34,000 and $24,458 for the years ended December 31, 2017 and 2016, respectively.

September 2016 - $10,000

On September 23, 2016, the Company provided an agreement to a third party to obtain a $10,000 promissory note in exchange for 100,000 restricted common shares and $10,000 in cash. The promissory note had a maturity date of October 31, 2017 and bears interest at 24% per annum. On October 31, 2017, the note was amended to extend the maturity date to October 31, 2018. There are no other changes to the note. The Company recorded a debt discount of $10,000 related to the relative fair value of the issued shares associated with the note to be amortized over the life of the note.

Total interest expense was $9,708 and $3,292 for the years ended December 31, 2017 and 2016, respectively.

October 2016 - $20,000

In October 2016, the Company entered into a term loan with 10% interest payable of $204 per day until fully paid. Total interest expense was $3,533 and $26,114 for the years ended December 31, 2017 and 2016, respectively.

December 2017 - $50,000

On December 1, 2017, the Company provided an agreement to a third party to obtain a $50,000 promissory note in exchange for $50,000 in cash. The promissory note had a maturity date of December 1, 2020 and bears interest at 15% per annum. The note required total payments of $1,733 per month. The Company recorded a debt discount of $22,650 related to the value of the issued shares associated with the process of obtaining the note to be amortized over the life of the note.

Total interest expense was $1,879 and $0 for the years ended December 31, 2017 and 2016, respectively.