Convertible Notes Payable |
6. Convertible Notes
Payable
The activity from
December 31, 2012 to March 31, 2013 for convertible notes
payable related to Youchange is summarized below. During the period
ending March 31, 2013, $57,500 of principal and $3,961 of
interest was converted into 47,917 shares of common stock. As of
March 31, 2013, the outstanding convertible notes payable and
associated accrued interest described below were convertible into a
total of approximately 62,935 common shares. The intrinsic value of
a beneficial conversion feature inherent to a convertible note
payable, which is not bifurcated and accounted for separately from
the convertible note payable and may not be settled in cash upon
conversion, is treated as a discount to the convertible note
payable. This discount is amortized over the period from the date
of issuance to the date the note is due using the effective
interest method. If the note payable is retired prior to the end of
its contractual term, the unamortized discount is expensed in the
period of retirement to interest expense. In general, the
beneficial conversion feature is measured by comparing the
effective conversion price, after considering the relative fair
value of detachable instruments included in the financing
transaction, if any, to the fair value of the common shares at the
commitment date to be received upon conversion.
The following convertible
notes payable were outstanding as of March 31, 2013 and
December 31, 2012:
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March 31, |
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December 31, |
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2013 |
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2012 |
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(Unaudited) |
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Convertible note payable to
unrelated parties, issuance date of October 2011
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$ |
— |
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$ |
10,000 |
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Convertible note payable to
unrelated parties, issuance date of April 2012
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— |
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5,000 |
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Convertible note payable to
unrelated parties, issuance date of August 2012
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— |
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10,000 |
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Convertible note payable to
unrelated parties, issuance date of September 2012
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— |
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10,000 |
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Convertible note payable to
unrelated parties, issuance date of September 2012
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— |
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12,500 |
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Convertible note payable to
unrelated parties, issuance date of September 2012
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25,000 |
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25,000 |
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Convertible note payable to
unrelated parties, issuance date of October 2012
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25,000 |
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25,000 |
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Convertible note payable to
unrelated parties, issuance date of October 2012
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— |
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10,000 |
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Convertible note payable to
unrelated parties, issuance date of October 2012
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25,000 |
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25,000 |
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Total convertible notes
payable - short term
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75,000 |
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132,500 |
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Less: unamortized discounts
due to beneficial conversions features
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(1,393 |
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(33,394 |
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Total convertible notes
payable - short term, net of discounts
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$ |
73,607 |
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$ |
99,106 |
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Further details for the
outstanding notes payable are as follows:
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During October 2011, we issued a $10,000 convertible note to an
unrelated, accredited third party in exchange for cash. The note
matured three months from the date of issuance and was extended by
an additional 30 days. The note bears interest at a rate of
10.0% per annum and is convertible at any time, with accrued
interest, at the discretion of the investor into shares of our
common stock at a rate of $1.25 per share. Based on our share price
at the time the note agreement was entered into, we recognized a
beneficial conversion feature of $5,200 for this convertible note.
The holder converted the note and its accrued interest during the
period ended March 31, 2013 into 9,278 shares of common
stock.
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During April 2012, we issued a $5,000 convertible note to an
unrelated, accredited third party in exchange for cash. The note
matured six months from the date of issuance and was extended by an
additional 30 days. The note bears interest at a rate of
10.0% per annum and is convertible at any time, with accrued
interest, at the discretion of the investor into shares of our
common stock at a rate of $1.75 per share. Based on our share price
at the time the note agreement was entered into, we recognized a
beneficial conversion feature of $2,712 for this convertible note.
The holder converted the note and its accrued interest during the
period ended March 31, 2013 into 3,130 shares of common
stock.
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During August 2012, we issued a $10,000 convertible note to an
unrelated, accredited third party in exchange for cash. The note
matures six months from the date of issuance and may be extended by
an additional 30 days at our discretion. The note bears interest at
a rate of 10.0% per annum and is convertible at any time, with
accrued interest, at the discretion of the investor into shares of
our common stock at a rate of $1.25 per share. Based on our share
price at the time the note agreement was entered into, we
recognized a beneficial conversion feature of $6,400 for this
convertible note. The holder converted the note and its accrued
interest during the period ended March 31, 2013 into 8,460
shares of common stock.
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During September 2012, we issued a $10,000 convertible note to
an unrelated, accredited third party in exchange for cash. The note
matures six months from the date of issuance and may be extended by
an additional 30 days at our discretion. The note bears interest at
a rate of 10.0% per annum and is convertible at any time, with
accrued interest, at the discretion of the investor into shares of
our common stock at a rate of $1.25 per share. Based on our share
price at the time the note agreement was entered into, we
recognized a beneficial conversion feature of $8,600 for this
convertible note. The holder converted the note and its accrued
interest during the period ended March 31, 2013 into 8,339
shares of common stock.
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During September 2012, we issued a $12,500 convertible note to
an unrelated, accredited third party in exchange for cash. The note
matures six months from the date of issuance and may be extended by
an additional 30 days at our discretion. The note bears interest at
a rate of 10.0% per annum and is convertible at any time, with
accrued interest, at the discretion of the investor into shares of
our common stock at a rate of $1.25 per share. Based on our share
price at the time the note agreement was entered into, we
recognized a beneficial conversion feature of $10,750 for this
convertible note. The holder converted the note and its accrued
interest during the period ended March 31, 2013 into 10,418
shares of common stock.
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During September 2012, we issued a $25,000 convertible note to
an unrelated, accredited third party in exchange for cash. The note
matures six months from the date of issuance and may be extended by
an additional 30 days at our discretion. The note bears interest at
a rate of 10.0% per annum and is convertible at any time, with
accrued interest, at the discretion of the investor into shares of
our common stock at a rate of $1.25 per share. Based on our share
price at the time the note agreement was entered into, we
recognized a beneficial conversion feature of $17,500 for this
convertible note. Although this note is past its maturity in the
period ended March 31, 2013, the holder is expected to
exercise the conversion feature.
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During October 2012, we issued a $25,000 convertible note to an
unrelated, accredited third party in exchange for cash. The note
matures six months from the date of issuance and may be extended by
an additional 30 days at our discretion. The note bears interest at
a rate of 10.0% per annum and is convertible at any time, with
accrued interest, at the discretion of the investor into shares of
our common stock at a rate of $1.25 per share. Based on our share
price at the time the note agreement was entered into, we
recognized a beneficial conversion feature of $11,000 for this
convertible note. This note matured in the period subsequent to the
period ended March 31, 2013 and the holder converted the note
and its accrued interest subsequently into 21,031 shares of common
stock.
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During October 2012, we issued a $10,000 convertible note to an
unrelated, accredited third party in exchange for cash. The note
matures six months from the date of issuance and may be extended by
an additional 30 days at our discretion. The note bears interest at
a rate of 10.0% per annum and is convertible at any time, with
accrued interest, at the discretion of the investor into shares of
our common stock at a rate of $1.25 per share. Based on our share
price at the time the note agreement was entered into, we
recognized a beneficial conversion feature of $2,400 for this
convertible note. During the period ended March 31, 2013, the
holder converted the note and its accrued interest into 8,292
shares of common stock.
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During October 2012, we issued a $25,000 convertible note to an
unrelated, accredited third party in exchange for cash. The note
matures six months from the date of issuance and may be extended by
an additional 30 days at our discretion. The note bears interest at
a rate of 10.0% per annum and is convertible at any time, with
accrued interest, at the discretion of the investor into shares of
our common stock at a rate of $1.25 per share. Based on our share
price at the time the note agreement was entered into, we
recognized a beneficial conversion feature of $13,000 for this
convertible note. Although this note is past its maturity in the
period ended March 31, 2013, the holder is expected to
exercise the conversion feature.
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