Financing | 3 Months Ended |
Mar. 31, 2014 |
Other Liabilities Disclosure [Abstract] | ' |
Financing | ' |
NOTE 8 – FINANCING |
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Convertible Notes |
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Convertible Notes Series A: |
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Series A notes (i) have a conversion rate of a 45% discount to the daily VWAP (volume – weighted average price, which is a measure of the average price the stock has traded over the trading horizon) price of the common stock based on a five day period prior to the date of conversion, the rate is subject to certain adjustments, (ii) have an annual interest rate of 12%, due at maturity, (iii) have a new maturity date of 1 year from issuance date, (iv) prepayment is permitted only with a premium of 50% of the amount being repaid, (v) have a ratchet protection of the conversion anti-dilution provisions for all future issuances or potential issuances of securities by the company at less than the then conversion rate, and (vi) have additional default provisions, including additional events of default and an default interest rate of 24.99%. The company has also agreed that the assigned debt will not be subordinate to new debt, other than purchase money and similar debt, which may have the effect of limiting the company’s access to additional debt capital while the notes are outstanding. Based on the above and without taking into account the conversion of any of the interest to be earned or converted, the principal if fully converted represents the potential issuance of 50,000,000 shares, limited to a maximum conversion right at any one time to 4.99% of the then outstanding shares of common stock of the company. |
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During the year ended December 31, 2013, the company agreed to the assignment of an additional $175,000 in principal of outstanding promissory note to a third party under the same terms as discussed above. |
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During the three months ended March 31, 2014, the company agreed to the assignment of an additional $100,000 in principal of outstanding promissory note to a third party under the same terms as discussed above. |
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A summary of the carrying value of the notes outstanding for the three months ended March 31, 2014 and year ended December 31, 2013 is as follows: |
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| Note F | | Note G | | Note H | | Note I | | Total |
| May 08, | | July 18, | | April 12, | | March 7, | | |
Issuance Date | 2012 | | 2012 | | 2013 | | 2014 | | |
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Carrying amount of convertible notes, net on January 1, 2013 | 10,129,767 | | 647,350 | | - | | - | | 10,777,117 |
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Add: Face Value – Convertible Notes assigned | - | | - | | 175,000 | | - | | 175,000 |
Add: Relative fair value of: | | | | | | | | | |
Derivative Liability | -204,659 | | -605,455 | | 296,600 | | - | | -513,514 |
Change in and accelerated amortization of derivative liability on conversions | -9,722,614 | | -32,727 | | -238,645 | | - | | -9,993,986 |
Discount on Note | - | | - | | -175,000 | | - | | -175,000 |
Discount amortization thru December 31 | 116,667 | | 9,750 | | 174,579 | | - | | 300,996 |
Interest Accrued thru December 31 | 4,390 | | 573 | | 6,545 | | - | | 11,508 |
Conversions to shares thru December 31, 2013 | -323,551 | | -19,491 | | -149,500 | | - | | -492,542 |
Carrying amount of convertible notes, net on December 31, 2013 | - | | - | | 89,579 | | - | | 89,579 |
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Add: Face Value – Convertible Notes assigned | - | | - | | - | | 100,000 | | 100,000 |
Add: Relative fair value of: | - | | - | | - | | 165,575 | | 165,575 |
Derivative Liability | - | | - | | -13,253 | | -27,458 | | -40,711 |
Change in and accelerated amortization of derivative liability on conversions | - | | - | | -44,702 | | -34,771 | | -79,473 |
Discount on Note | - | | - | | - | | -100,000 | | -100,000 |
Discount amortization thru March 31 | - | | - | | 421 | | 27,583 | | 28,004 |
Interest Accrued thru March 31 | - | | - | | 424 | | 715 | | 1,139 |
Conversions to shares thru March 31, 2013 | - | | - | | -32,469 | | -21,000 | | -53,469 |
Carrying amount of convertible notes, net on March 31, 2014 | - | | - | | - | | 110,644 | | 110,644 |
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Inputs used in computation of Black-Scholes were as follows: |
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| Note I | | | |
| At | | | Initial Valuation | | | |
March 31, | (March 7, | | |
2014 | 2014) | | |
Input Variables: | | | | | | | | | |
Stock Price @ grant date | $ | 0.0005 | | | $ | 0.0007 | | | |
Exercise Price (3) | $ | 0.00032 | | | $ | 0.0000385 | | | |
Expected Life of the Option (4) | | 0.92 | | | | 1 | | | |
Volatility (5) | | 264 | % | | | 309 | % | | |
Annual Rate of Quarterly Dividends (6) | | 0 | % | | | 0 | % | | |
Risk-Free Rate (7) | | 0.12 | % | | | 0.13 | % | | |
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Convertible Notes Series B: |
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On August 2, 2012, September 10, 2012, October 25, 2012, November 9, 2012, and December 5, 2012 a holder of $354,000 in principal amount of debt issued by Pacific Gold Corp. transferred these obligations to a third party. In connection with the transfer, the Company agreed to modify the rate of conversion of principal and interest into shares of common stock to a formula based on the market value of a share of common stock, from time to time. As a result of the modifications the notes had a conversion rate of 47% discount to the market price calculated as the average of the lowest three (3) trading prices for the common stock during the twenty trading day period ending the latest complete trading day prior to conversion date. As of December 31, 2013, the investor has converted $354,000 of debt obligations into 333,970 shares of common stock of the Company. The notes were converted in full at December 31, 2013 year end. |
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On February 5, 2013, and March 19, 2013 a holder of $110,000 in principal amount of debt issued by Pacific Gold Corp. transferred these obligations to a third party. In connection with the transfer, the Company agreed to modify the rate of conversion of principal and interest into shares of common stock to a formula based on the market value of a share of common stock, from time to time. As a result of the modifications the notes had a conversion rate of 47% discount to the market price calculated as the average of the lowest three (3) trading prices for the common stock during the twenty trading day period ending the latest complete trading day prior to conversion date. As of March 31, 2014 the investor has converted $76,800 of debt obligations into 64,861,914 shares of common stock of the Company. As of March 31, 2014 the note issued on March 19, 2013, “Note L”, has a balance owing of $33,200. |
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On July 27, 2012, August 29, 2012, September 10, 2012, November 2, 2012, and December 11, 2012 the company issued $53,000, $35,000, $78,500, $37,500, and $32,500, respectively, in convertible notes to the same third party discussed above. The notes are convertible beginning at a date which is one hundred and eighty (180) days following the issuance dates and have a conversion rate of 42% discount to the market price calculated as the average of the lowest three (3) trading prices for the common stock during the ten trading day period ending the latest complete trading day prior to conversion date. Interest at an annual rate of 8% from the issuance date is due at maturity or upon acceleration or by prepayment. As of December 31, 2013 the investor has converted $165,820 of debt obligations into 6,283,323 shares of common stock of the Company. As of December 31, 2013 the company has made payments of $81,847 towards the balance owing on the notes. The notes were converted in full at December 31, 2013 year end. |
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A summary of the carrying value of the notes outstanding for the three months ended March 31, 2014 and year ended December 31, 2013 is as follows: |
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| Note A | | | Note C | | | Note E | |
| July 27, | | | August 29, | | | September 10, | |
Issuance Date | 2012 | | | 2012 | | | 2012 | |
Carrying amount of convertible notes, net on January 1, 2013 | $ | 54,767 | | | 35,933 | | | 80,593 | |
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Add: Relative fair value of: | | | | | | | | | |
Derivative Liability | | 164,483 | | | 18,286 | | | 93,787 | |
Accelerated amortization of derivative liability on conversions | | -164,483 | | | -18,286 | | | -93,787 | |
Discount on Note | | -53,000 | | | -18,286 | | | -41,432 | |
Discount amortization thru December 31, 2013 | | 53,000 | | | 18,286 | | | 41,432 | |
Interest Accrued thru December 31, 2013 | | 353 | | | 467 | | | 707 | |
Payments thru December 31, 2013 | | - | | | - | | | -7,000 | |
Conversions to shares thru December 31, 2013 | | -55,120 | | | -36,400 | | | -74,300 | |
Carrying amount of convertible notes, net on December 31, 2013 | $ | - | | | - | | | - | |
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Carrying amount of convertible notes, net on March 31, 2014 | $ | - | | | - | | | - | |
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| Note F | | | Note I | | Note J | | |
| November 02, | | | December 05, | | December 11, | | |
Issuance Date | 2012 | | | 2012 | | 2012 | | |
Carrying amount of convertible notes, net on January 1, 2013 | $ | 38,000 | | | 40,000 | | 32,717 | | |
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Add: Relative fair value of: | | | | | | | | | |
Derivative Liability | | 64,655 | | | | | 56,034 | | |
Accelerated amortization of derivative liability on conversions | | -64,655 | | | -40,000 | | -56,034 | | |
Discount on Note | | -27,709 | | | - | | -32,500 | | |
Discount amortization thru December 31, 2013 | | 27,709 | | | 40,000 | | 32,500 | | |
Interest Accrued thru December 31, 2013 | | 2,212 | | | - | | 1,917 | | |
Payments thru December 31, 2013 | | -40,212 | | | - | | -34,634 | | |
Conversions to shares thru December 31, 2013 | | - | | | -40,000 | | - | | |
Carrying amount of convertible notes, net on December 31, 2013 | $ | - | | | - | | - | | |
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Carrying amount of convertible notes, net on March 31, 2014 | $ | - | | | - | | - | | |
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| | Note K | | Note L | | | | | |
| | February 05, | | March 19, | | | | | |
| | 2013 | | 2013 | | Total | | |
Carrying amount of convertible notes, net on January 1, 2013 | $ | - | | - | | $ | 282,010 | | |
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Face Value – Convertible Note | | 60,000 | | 50,000 | | | 110,000 | | |
Add: Relative fair value of: | | | | | | | | | |
Derivative Liability | | 237,736 | | 173,963 | | | 808,944 | | |
Accelerated amortization of derivative liability on conversions | | -237,736 | | -94,340 | | | -769,321 | | |
Discount on Note | | -60,000 | | -45,283 | | | -278,210 | | |
Discount amortization thru December 31, 2013 | | 60,000 | | 45,283 | | | 318,210 | | |
Interest Accrued thru December 31, 2013 | | - | | 3,657 | | | 9,313 | | |
Payments thru December 31, 2013 | | - | | - | | | -81,846 | | |
Conversions to shares thru December 31, 2013 | | -60,000 | | -7,800 | | | -273,620 | | |
Carrying amount of convertible notes, net on December 31, 2013 | $ | - | | 125,480 | | $ | 125,480 | | |
Derivative Liability | | - | | -42,524 | | | -42,524 | | |
Accelerated amortization of derivative liability on conversions | | - | | -19,191 | | | -19,191 | | |
Discount on Note | | - | | - | | | - | | |
Discount amortization thru March 31, 2014 | | - | | 935 | | | 935 | | |
Interest Accrued thru March 31, 2014 | | - | | - | | | - | | |
Payments thru March 31, 2014 | | - | | - | | | - | | |
Conversions to shares thru March 31, 2014 | | - | | -9,000 | | | -9,000 | | |
Carrying amount of convertible notes, net on March 31, 2014 | $ | - | | 55,700 | | $ | 55,700 | | |
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Inputs used in computation of Black-Scholes were as follows: |
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| Note L | | | |
| At | | | Initial Valuation | | | |
March 31, | (March 19, 2013) | | |
2014 | | | |
Input Variables: | | | | | | | | | |
Stock Price @ grant date | $ | 0.0005 | | | $ | 0.084 | | | |
Exercise Price (3) | $ | 0.000328 | | | $ | 0.053 | | | |
Expected Life of the Option (4) | | 0.25 | | | | 0.25 | | | |
Volatility (5) | | 107 | % | | | 458 | % | | |
Annual Rate of Quarterly Dividends (6) | | 0 | % | | | 0 | % | | |
Risk-Free Rate (7) | | 0.03 | % | | | 0.07 | % | | |
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Convertible Notes Series C: |
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On September 25, 2013 and October 2, 2013 a holder of $80,000 and $40,000, respectively, in principal amount of debt issued by Pacific Gold Corp. transferred these obligations to a third party. In connection with the transfer, the Company agreed to modify the rate of conversion of principal and interest into shares of common stock to a formula based on the market value of a share of common stock, from time to time. As a result of the modifications, the notes had a conversion rate of 45% discount to the market price calculated as the average of the lowest three (3) market prices (VWAP) for the common stock during the twenty trading day period ending the latest complete trading day prior to conversion date. Both convertible notes mature within a year of the notes issuance date. |
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A summary of the carrying value of the notes is as follows: |
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| Note A | | Note B | | | |
| September 25, | | October 2, | | | |
| 2013 | | 2013 | | Total | |
Carrying amount of convertible notes, net on January 1, 2013 | $ | - | | $ | - | | $ | - | |
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Face Value – Convertible Note | | 80,000 | | | 40,000 | | | 120,000 | |
Add: Relative fair value of: | | | | | | | | | |
Derivative Liability | | 153,452 | | | 93,385 | | | 246,837 | |
Accelerated amortization of derivative liability on conversions | | -33,582 | | | - | | | -33,582 | |
Discount on Note | | -80,000 | | | -40,000 | | | -120,000 | |
Discount amortization thru December 31, 2013 | | 41,492 | | | 6,667 | | | 48,159 | |
Interest Accrued thru December 31, 2013 | | 1,834 | | | 986 | | | 2,820 | |
Payments thru December 31, 2013 | | - | | | - | | | - | |
Conversions to shares thru December 31, 2013 | | -28,656 | | | - | | | - | |
Carrying amount of convertible notes, net on December 31, 2013 | $ | 134,540 | | $ | 101,038 | | $ | 235,578 | |
Derivative Liability | | -14,924 | | | -40,030 | | | -54,954 | |
Accelerated amortization of derivative liability on conversions | | -104,946 | | | -44,478 | | | -149,424 | |
Discount amortization thru March 31, 2014 | | 38,508 | | | 21,934 | | | 60,442 | |
Interest Accrued thru March 31, 2014 | | 601 | | | 930 | | | 1,531 | |
Payments thru March 31, 2014 | | - | | | - | | | - | |
Conversions to shares thru March 31, 2014 | | -51,344 | | | -21,761 | | | -73,105 | |
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Carrying amount of convertible notes, net on March 31, 2014 | | 2,435 | | | 17,633 | | | 20,068 | |
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Inputs used in computation of Black-Scholes were as follows: |
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| Note B | | | |
| At | | | Initial Valuation | | | |
March 31, | (October 2, | | |
2014 | 2013) | | |
Input Variables: | | | | | | | | | |
Stock Price @ grant date | $ | 0.0005 | | | $ | 0.024 | | | |
Exercise Price (3) | $ | 0.000341 | | | $ | 0.010175 | | | |
Expected Life of the Option (4) | | 0.08 | | | | 1 | | | |
Volatility (5) | | 107 | % | | | 380 | % | | |
Annual Rate of Quarterly Dividends (6) | | 0 | % | | | 0 | % | | |
Risk-Free Rate (7) | | 0.03 | % | | | 0.11 | % | | |
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