NOTES PAYABLE | 6 Months Ended |
Dec. 31, 2013 |
NOTES PAYABLE | ' |
NOTES PAYABLE | ' |
3. NOTES PAYABLE |
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Notes payable – related parties and a third parties consist of the following: |
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| | December 31, | | June 30, |
2013 | 2013 |
Note payable – former Managing Member | | $ | 27,750 | | $ | 27,750 |
Note payable – related corporation | | | 4,300 | | | 4,300 |
Notes payable – stockholders | | | 13,000 | | | 13,000 |
Convertible notes payable | | | 805,355 | | | 500,308 |
Total | | | 850,405 | | | 545,358 |
Convertible notes payable, discount | | | -181,629 | | | -43,619 |
Total, net of discount | | | 668,776 | | | 501,739 |
Less current portion | | | 668,776 | | | 384,785 |
Long-term debt | | $ | -0- | | $ | 116,954 |
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Maturities of notes payable for the years ending June 30, 2014 and 2015 are $634,003 and $216,402 respectively. |
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On March 4, 2011, AccelPath entered into a resignation and repurchase agreement with one of its Managing Members. The Managing Member resigned on March 4, 2011 and AccelPath agreed to repurchase 10,498,120 shares of $0.001 par value common stock for $74,000. To complete the repurchase, AccelPath issued a $74,000 note payable due in eight monthly installments of $9,269 including interest at 0.54% per annum. At December 31, 2013, AccelPath has not paid $27,750 of principal payments due for August through October 2011. During a default, unpaid principal bears interest at 12% per annum. In addition, AccelPath entered into a consulting agreement with the Managing Member requiring payments of $750 per month for a period of eight months in consideration for continuing services. Included in accrued expenses at the Balance sheet date are $2,250 of consulting payments due for August through October 2011. |
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On August 18, 2011, the Company borrowed $3,300 from a corporation controlled by our Chief Executive Officer. The Company borrowed an additional $1,000 on January 12, 2012. The note is payable on demand and accrues interest at a rate of 0.32% per annum. |
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During the three months ended September 30, 2012, the Company borrowed $15,000 from a stockholder. On February 27, 2012, the Company repaid $2,000 of the note payable - stockholder. The balance of this note is payable on demand and accrues interest at 0.19% per annum. On October 1, 2012, the Company borrowed $100,000 from a stockholder. The loan will be repaid with three monthly payments of $23,000 beginning May 1, 2014 and ending on October 1, 2014 for a total payment amount of $138,000. |
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During the three months ended September 30, 2012, the Company borrowed $5,000 from our Chief Executive Officer. During the three months ended September 30, 2013, the Company borrowed an additional $34,700 from our Chief Executive Officer. The balance of these notes are payable on demand and accrue interest at 0.19% per annum. |
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On February 10, 2012, the Company borrowed $40,000 from a third party under a promissory note which matured on August 31, 2012. The note bears interest at 8% per annum and includes a redemption premium of $6,000 due on the maturity date. The redemption premium is being accrued over the term of the note as additional interest. |
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On February 10, 2012, the Company borrowed $50,000 from a a third party. The Company repaid $5,000 of the note on March 12, 2012. The convertible promissory note bears interest at 5% per annum and matured on August 10, 2012. The Company has the option to pay the interest with its common stock at the closing bid price immediately prior to the due date and the investor has the option to convert the promissory note into shares of common stock at the closing bid price (but not less than $0.01 per share) immediately prior to the conversion date. The Company also issued the investor a five-year warrant to purchase 500,000 shares of common stock at an exercise price of $0.01 per share. The warrant includes a cashless net exercise provision and has piggyback registration rights for the shares of common stock underlying the warrant and the shares of common stock issuable pursuant to the note. The Company allocated $8,037 of the proceeds to the warrant and $41,963 of the proceeds to the discounted value of the note based on their relative fair values. On October 2, 2012, the Company entered into an amendment to the agreement to extend the maturity date to November 10, 2012 in exchange for a payment of $2,000 and the issuance of a warrant to purchase 250,000 shares of common stock at an exercise price of $0.01 per share. The Company evaluated the modification of the note and determined that it did not qualify as a debt extinguishment. Consequently, the $3,431 fair value of the warrant was recognized as an additional debt discount and fully amortized to interest expense during the three months ended September 30, 2013. The $2,000 payment was made in January 2013. |
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On February 17, 2012, the Company borrowed $100,000 from a a third party. The convertible promissory note bears interest at 5% per annum and matures on August 16, 2013. The Company has the option to pay the interest with its common stock at the closing bid price immediately prior to the due date. The investor has the option to convert the promissory note into shares of common stock at the closing bid price (but not less than $0.01 per share) immediately prior to the conversion date. In addition, the Company has the option to convert the promissory note into shares of common stock at the closing bid price 30 days prior to the maturity date if the price per share is at least $0.01. The Company also issued the investor a five-year warrant to purchase 1,000,000 shares of common stock at an exercise price of $0.01 per share. The warrant includes a cashless net exercise provision. The Company granted piggyback registration rights for the shares of common stock underlying the warrant and the shares of common stock issuable pursuant to the note. The Company allocated $32,743 of the proceeds to the warrant and $67,257 of the proceeds to the discounted value of the note based on their relative fair values. |
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On April 18, 2012, the Company borrowed $50,000 from a a third party. The convertible promissory note bears interest at 5% per annum and matures on October 17, 2013. The Company has the option to pay the interest with its common stock at the closing bid price immediately prior to the due date. The investor has the option to convert the promissory note into shares of common stock at the closing bid price (but not less than $0.01 per share) immediately prior to the conversion date. In addition, the Company has the option to convert the promissory note into shares of common stock at the closing bid price 30 days prior to the maturity date if the price per share is at least $0.01. The Company also issued the investor a five-year warrant to purchase 500,000 shares of common stock at an exercise price of $0.01 per share. The warrant includes a cashless net exercise provision and the investor has piggyback registration rights for the shares of common stock underlying the warrant and the shares of common stock issuable pursuant to the note. The Company allocated $8,225 of the proceeds to the warrant and $41,775 of the proceeds to the discounted value of the note based on their relative fair values. |
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On July 18, 2012, the Company entered into a subscription agreement with a third party ("a third party") for the purchase of a convertible promissory note in the aggregate principal amount of $100,000. The note accrues interest at a rate of 5% per annum and became due on January 31, 2013. The Company is in default of this note. a third party has the option to convert all or a portion of the note plus accrued interest into common stock at a conversion price of $0.0075 per share. The Company recorded a beneficial conversion discount of $29,333 based on the fair value of the common stock into which the note was convertible to on the commitment date and allocated $70,667 of the proceeds to the discounted value of the note. |
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On July 18, 2012, the Company entered into an agreement with a third party to exchange 100 shares of Series E Preferred Stock and accrued dividends of $5,834 into a convertible promissory note in the principal amount of $105,834. The note accrues interest at a rate of 5% per annum and is due on September 1, 2013. a third party has the option to convert all or a portion of the note plus accrued interest into common stock at a conversion price equal to 60% of the current market price. The Company recorded a beneficial conversion discount of $70,556 based on the fair value of the common stock into which the note is convertible to and allocated $35,278 of the proceeds to the discounted value of the note. During the three months ended September 30, 2013, a third party converted the entire principal value of the note plus $1,692 of accrued interest into 48,770,841 shares of common stock. |
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On July 31, 2012, the Company borrowed a total of $7,000 from two individuals. The convertible promissory notes bear interest at 5% per annum and mature on January 31, 2014. The Company has the option to pay the interest with its common stock at the closing bid price immediately prior to the due date. The investors have the option to convert the promissory note into shares of common stock at the closing bid price (but not less than $0.01 per share) immediately prior to the conversion date. In addition, the Company has the option to convert the promissory notes into shares of common stock at the closing bid price 30 days prior to the maturity date if the price per share is at least $0.01. The Company also issued the investors a five-year warrant to purchase a total of 70,000 shares of common stock at an exercise price of $0.01 per share. The warrants include a cashless net exercise provision and the investors have piggyback registration rights for the shares of common stock underlying the warrant and the shares of common stock issuable pursuant to the notes. The Company allocated $443 of the proceeds to the warrants and $6,557 of the proceeds to the discounted value of the note based on their relative fair values. In August 2012, the investors converted their notes into a total of 700,000 shares of common stock. |
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On September 14, 2012, the Company borrowed $25,000 from a stockholder. The convertible promissory note bears interest at 5% per annum and matures on March 14, 2014. The Company has the option to pay the interest with its common stock at the closing bid price immediately prior to the due date. The investor has the option to convert the promissory note into shares of common stock at the closing bid price (but not less than $0.01 per share) immediately prior to the conversion date. In addition, the Company has the option to convert the promissory notes into shares of common stock at the closing bid price 30 days prior to the maturity date if the price per share is at least $0.01. The Company also issued the investor a five-year warrant to purchase a total of 250,000 shares of common stock at an exercise price of $0.01 per share. The warrant includes a cashless net exercise provision and the investor has piggyback registration rights for the shares of common stock underlying the warrant and the shares of common stock issuable pursuant to the note. The Company allocated $1,536 of the proceeds to the warrants and $23,464 of the proceeds to the discounted value of the note based on their relative fair values. |
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On March 22, 2013, the Company borrowed $35,000 from a a third party. The convertible promissory note bears interest at 5% per annum and matures on December 31, 2014. The third party has the option to convert all or a portion of the note plus accrued interest into common stock at a conversion price equal to 50% of the lowest closing bid price for the ten days prior to the converison. The Company recorded a beneficial conversion discount of $23,333 based on the fair value of the common stock into which the note is convertible to and allocated $11,667 of the proceeds to the discounted value of the note. As of the date of this filing, there have been no conversions of this Note and the entire amount is outstanding. |
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On May 13, 2013, the Company borrowed $10,000 from a third party. The convertible promissory note bears interest at 5% per annum and matures on December 31, 2014. The third party has the option to convert all or a portion of the note plus accrued interest into common stock at a conversion price equal to 50% of the lowest closing bid price for the ten days prior to the conversion. The Company recorded a beneficial conversion discount of $10,000 based on the fair value of the common stock into which the note is convertible to and allocated $-0- of the proceeds to the discounted value of the note. As of the date of this filing, there have been no conversions of this Note and the entire amount is outstanding. |
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On July 1, 2013, the Company issued a note for $30,000 for consulting services. The convertible promissory note bears no interest and matures on January 31, 2014. The third party has the option to convert all or a portion of the note plus accrued interest into common stock at a conversion price equal to 50% of the lowest closing bid price for the twenty days prior to the conversion. The Company recorded a beneficial conversion discount of $30,000 based on the fair value of the common stock into which the note is convertible to and allocated $-0- of the proceeds to the discounted value of the note. As of the date of this filing, there have been no conversions of this Note and the entire amount is outstanding. |
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On August 1, 2013, the Company issued a note for $30,000 for consulting services. The convertible promissory note bears no interest and matures on February 28, 2014. The third party has the option to convert all or a portion of the note plus accrued interest into common stock at a conversion price equal to 50% of the lowest closing bid price for the twenty days prior to the conversion. The Company recorded a beneficial conversion discount of $30,000 based on the fair value of the common stock into which the note is convertible to and allocated $-0- of the proceeds to the discounted value of the note. As of the date of this filing, there have been no conversions of this Note and the entire amount is outstanding. |
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On September 1, 2013, the Company issued a note for $30,000 for consulting services. The convertible promissory note bears no interest and matures on March 31, 2014. The third party has the option to convert all or a portion of the note plus accrued interest into common stock at a conversion price equal to 50% of the lowest closing bid price for the twenty days prior to the conversion. The Company recorded a beneficial conversion discount of $30,000 based on the fair value of the common stock into which the note is convertible to and allocated $-0- of the proceeds to the discounted value of the note. As of the date of this filing, there have been no conversions of this Note and the entire amount is outstanding. |
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On September 5, 2013, an Investor advanced the Company $15,000 in a Promissory Note. The Promissory Note has a one year term, an interest rate of ten percent and a ten percent original issue discount (“OID”). An OID represents the difference between the amount received and the face value of the note. The Promissory Note has a face value of $17,500, and the OID will be amortized into expense pro-rata over the term of the Note. Shares of Common Stock to be issued upon conversion of each tranche shall be determined by dividing (a) the conversion amount by (b) the Market Price. The “Market Price” is defined as 50% of the lowest closing bid price for the thirty (30) days immediately preceding the conversion date. |
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On September 20, 2013, an Investor exchanged its remaining interest,$100,000, in the Series E 5% convertible Preferred stock plus accrued dividends of $14,282 into a new Secured Note for $114,282. The Secured Note matures on September 30, 2014 and has an interest rate of five percent. Shares of Common Stock to be issued upon conversion of each tranche shall be determined by dividing (a) the conversion amount by (b) the Market Price. The “Market Price” is defined as 50% of the lowest closing bid price for the thirty (30) days immediately preceding the conversion date. |
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On October 1, 2013, the Company issued a note for $30,000 for consulting services. The convertible promissory note bears no interest and matures on April 30, 2014. The third party has the option to convert all or a portion of the note plus accrued interest into common stock at a conversion price equal to 50% of the lowest closing bid price for the twenty days prior to the conversion. The Company recorded a beneficial conversion discount of $30,000 based on the fair value of the common stock into which the note is convertible to and allocated $-0- of the proceeds to the discounted value of the note. As of the date of this filing, there have been no conversions of this Note and the entire amount is outstanding. |
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On October 9, 2013, the Company issued a note for $79,000 for fees. The Promissory Note matures on July 9, 2014 ,has an interest rate of ten percent and a ten percent original issue discount (“OID”). An OID represents the difference between the amount received and the face value of the note. The Promissory Note has a face value of $86,900, and the OID will be amortized into expense pro-rata over the term of the Note. Shares of Common Stock to be issued upon conversion of each tranche shall be determined by dividing (a) the conversion amount by (b) the Market Price. The “Market Price” is defined as 50% of the lowest closing bid price for the thirty (30) days immediately preceding the conversion date |
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On November 1, 2013, the Company issued a note for $30,000 for consulting services. The convertible promissory note bears no interest and matures on May 31, 2014. The third party has the option to convert all or a portion of the note plus accrued interest into common stock at a conversion price equal to 50% of the lowest closing bid price for the twenty days prior to the conversion. The Company recorded a beneficial conversion discount of $30,000 based on the fair value of the common stock into which the note is convertible to and allocated $-0- of the proceeds to the discounted value of the note. As of the date of this filing, there have been no conversions of this Note and the entire amount is outstanding. |
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On December 1, 2013, the Company issued a note for $30,000 for consulting services. The convertible promissory note bears no interest and matures on June 30, 2014. The third party has the option to convert all or a portion of the note plus accrued interest into common stock at a conversion price equal to 50% of the lowest closing bid price for the twenty days prior to the conversion. The Company recorded a beneficial conversion discount of $30,000 based on the fair value of the common stock into which the note is convertible to and allocated $-0- of the proceeds to the discounted value of the note. As of the date of this filing, there have been no conversions of this Note and the entire amount is outstanding. |
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Beneficial Conversion Feature on Notes Payable |
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The Company evaluated whether the convertible promissory notes contain a beneficial conversion feature (BCF) and determined that certain of the notes contained a BCF. The Company also evaluated the terms of the convertible promissory notes and the related warrants issued with the notes under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 815-15 and determined that these instruments do not require derivative accounting treatment. |
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Interest Expense |
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Interest expense on notes payable, including amortization of the discount on the convertible notes and the accrual of the Original Issue Discount, was $101,709 and $68,543for the three months ended Deceember 31, 2013 and 2012, respectively. Interest expense on notes payable, including amortization of the discount on the convertible notes and the accrual of the redemption premium, was $167,932 and $133,468 for the six months ended December 31, 2013 and 2012, respectively. |
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