Note 4 – Convertible Advance Payable

The Company’s advances payable are as follows:

Schedule of convertible advance payable

The Company has a $310,000 advance payable to a former Chief Financial Officer of the Company. The advance was originally issued with no formal terms. Pursuant to a prior settlement, the creditor holds the option of repayment in either cash or shares of the Company’s common stock, at a 45% discount to the current market price of the common stock. 

The Company has accounted for the advance payable under FASB ASC 480-10-25-14, given the obligation to issue a variable number of shares based solely or predominately on a fixed monetary amount, and recorded the liability at its fixed monetary amount of $563,000 representing the holder’s discount to market on its common shares expected upon settlement.