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Convertible Notes Payable
3 Months Ended
Mar. 31, 2013
Debt Disclosure [Abstract]  
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:

 

     March 31,     December 31,  
     2013     2012  
     (Unaudited)        

Convertible note payable to unrelated parties, issuance date of October 2011

   $ —        $ 10,000   

Convertible note payable to unrelated parties, issuance date of April 2012

     —          5,000   

Convertible note payable to unrelated parties, issuance date of August 2012

     —          10,000   

Convertible note payable to unrelated parties, issuance date of September 2012

     —          10,000   

Convertible note payable to unrelated parties, issuance date of September 2012

     —          12,500   

Convertible note payable to unrelated parties, issuance date of September 2012

     25,000        25,000   

Convertible note payable to unrelated parties, issuance date of October 2012

     25,000        25,000   

Convertible note payable to unrelated parties, issuance date of October 2012

     —          10,000   

Convertible note payable to unrelated parties, issuance date of October 2012

     25,000        25,000   
  

 

 

   

 

 

 

Total convertible notes payable - short term

     75,000        132,500   

Less: unamortized discounts due to beneficial conversions features

     (1,393     (33,394
  

 

 

   

 

 

 

Total convertible notes payable - short term, net of discounts

   $ 73,607      $ 99,106   
  

 

 

   

 

 

 

Further details for the outstanding notes payable are as follows:

 

   

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.

 

   

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.

 

   

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.

 

   

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.

 

   

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.

 

   

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.

 

   

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.

 

   

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.

 

   

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.