Financing | NOTE 7 FINANCING Convertible Notes Convertible Notes Series A: 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 companys 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. 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. During the year ended December 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. A summary of the carrying value of the notes outstanding for the years ended December 31, 2014 and 2013 is as follows: Series A Notes Note F Note G Note H Note I Total Issuance Date May-08-12 July-18-12 April-12-13 March-07-14 Carrying Value: Face Value at January 1, 2013 $ 280,000 $ 18,000 $ - $ - $ 298,000 Unamortized Discount at January 1, 2013 (116,667) (9,750) - - (126,417) Proceeds thru December 31, 2013 - - - - - Convertible note assigned thru December 31, 2013 - - 175,000 - 175,000 Discount recorded on note thru December 31, 2013 - - (175,000) - (175,000) Discount amortization thru December 31, 2013 116,667 9,750 174,579 - 300,996 Conversions to shares thru December 31, 2013 (280,000) (18,000) (149,500) - (447,500) Payments thru December 31, 2013 - - - - - Face Value at December 31, 2013 - - 25,500 - 25,500 Unamortized Discount at December 31, 2013 - - (421) - (421) Carrying value at December 31, 2013 $ - $ - $ 25,079 $ - $ 25,079 Proceeds thru September 30, 2014 - - - - - Convertible note assigned thru December 31, 2014 - - - 100,000 100,000 Discount recorded on note thru December 31, 2014 - - - (100,000) (100,000) Discount amortization thru December 31, 2014 - - 421 100,000 100,421 Conversions to shares thru December 31, 2014 - - (25,500) (100,000) (125,500) Payments thru December 31, 2014 - - - - - Face Value at December 31, 2014 - - - - - Unamortized Discount at December 31, 2014 - - - - - Carrying value at December 31, 2014 $ - $ - $ - $ - $ - Accrued Interest: Accrued Interest at January 1, 2013 39,161 918 - - 40,079 Interest accrued thru December 31, 2013 4,390 573 6,546 - 11,509 Conversions to shares thru December 31, 2013 (43,551) (1,491) - - (45,042) Payments thru December 31, 2013 - - - - - Accrued Interest Balance at December 31, 2013 $ - $ - $ 6,546 $ - $ 6,546 Interest accrued thru December 31, 2014 - - 424 2,115 2,539 Conversions to shares thru December 31, 2014 - - (6,970) (2,115) (9,085) Payments thru December 31, 2014 - - - - - Accrued Interest Balance at December 31, 2014 $ - $ - $ - $ - $ - Series A Notes (continued) Note F Note G Note H Note I Total Issuance Date May-08-12 July-18-12 April-12-13 March-07-14 Derivative Liability: Derivative Liability at January 1, 2013 9,927,273 638,182 - - 10,565,455 Derivative Liability added - - 254,545 - 254,545 Accelerated amortization on conversions and payments (9,722,614) (32,727) (238,646) - (9,993,987) Change in fair value of derivative liability thru December 31, 2013 (204,659) (605,455) 42,055 - (768,059) Derivative Liability at December 31, 2013 $ - $ - $ 57,954 $ - $ 57,954 Derivative Liability added - - - 165,575 165,575 Accelerated amortization on conversions and payments - - (44,702) (164,959) (209,661) Change in fair value of derivative liability thru December 31, 2014 - - (13,252) (616) (13,868) Derivative Liability at December 31, 2014 $ - $ - $ - $ - $ - Convertible Notes Series B: 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. 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 December 31, 2014 the investor has converted $77,800 of debt obligations into 69,623,819 shares of common stock of the Company. As of December 31, 2014 the remaining balance of the note issued on March 19, 2013, Note L of $32,200 was paid. 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. A summary of the carrying value of the notes outstanding for the years ended December 31, 2014 and 2013 is as follows: Series B Notes Note A Note C Note E Note F Note I Issuance Date July-27-12 August-29-12 September-10-12 November-02-12 December-05-12 Carrying Value: Face Value at January 1, 2013 $ 53,000 $ 35,000 $ 78,500 $ 37,500 $ 40,000 Unamortized Discount at January 1, 2013 - - - - (40,000) Proceeds thru December 31, 2013 - - - - Convertible note assigned thru December 31, 2013 - - - - Discount recorded on note thru December 31, 2013 (53,000) (18,286) (41,432) (27,709) - Discount amortization thru December 31, 2013 53,000 18,286 41,432 27,709 40,000 Conversions to shares thru December 31, 2013 (53,000) (35,000) (74,300) - (40,000) Payments thru December 31, 2013 - - (4,200) (37,500) - Face Value at December 31, 2013 - - - - - Unamortized Discount at December 31, 2013 - - - - - Carrying value at December 31, 2013 $ - $ - $ - $ - $ - Series B Notes (continued) Note A Note C Note E Note F Note I Issuance Date July-27-12 August-29-12 September-10-12 November-02-12 December-05-12 Proceeds thru December 31, 2014 - - - Convertible note assigned thru December 31, 2014 - - - - - Discount recorded on note thru December 31, 2014 - - - - - Discount amortization thru December 31, 2014 - - - - - Conversions to shares thru December 31, 2014 - - - - - Payments thru December 31, 2014 - - - - - Face Value at December 31, 2014 - - - - - Unamortized Discount at December 31, 2014 - - - - - Carrying value at December 31, 2014 $ - $ - $ - $ - $ - Accrued Interest: Accrued Interest at January 1, 2013 1,767 933 2,093 500 - Interest accrued thru December 31, 2013 353 467 707 2,212 - Conversions to shares thru December 31, 2013 (2,120) (1,400) - - - Payments thru December 31, 2013 - - (2,800) (2,712) - Accrued Interest Balance at December 31, 2013 $ - $ - $ - $ - $ - Interest accrued thru December 31, 2014 - - - - - Conversions to shares thru December 31, 2014 - - - - - Payments thru December 31, 2014 - - - - - Accrued Interest Balance at December 31, 2014 $ - $ - $ - $ - $ - Derivative Liability: Derivative Liability at January 1, 2013 - - - - 40,000 Derivative Liability added 164,483 18,286 41,432 27,709 - Accelerated amortization on conversions and payments (164,483) (18,286) (93,787) (64,655) (40,000) Change in fair value of derivative liability thru December 31, 2013 - - 52,355 36,946 - Derivative Liability at December 31, 2013 $ - $ - $ - $ - $ - Derivative Liability added - - - - - Accelerated amortization on conversions and payments - - - - - Change in fair value of derivative liability thru December 31, 2014 - - - - - Derivative Liability at December 31, 2014 $ - $ - $ - $ - $ - Series B Notes (Continued) Note J Note K Note L Total Issuance Date December-11-12 February-05-13 March-19-13 Carrying Value: Face Value at January 1, 2013 $ 32,500 $ - $ - $ 276,500 Unamortized Discount at January 1, 2013 - - - (40,000) Proceeds thru December 31, 2013 - - - - Convertible note assigned thru December 31, 2013 - 60,000 50,000 110,000 Discount recorded on note thru December 31, 2013 (32,500) (60,000) (45,283) (278,210) Discount amortization thru December 31, 2013 32,500 60,000 45,283 318,210 Conversions to shares thru December 31, 2013 - (60,000) (7,800) (270,100) Payments thru December 31, 2013 (32,500) - - (74,200) Face Value at December 31, 2013 - - 42,200 42,200 Unamortized Discount at December 31, 2013 - - - - Carrying value at December 31, 2013 $ - $ - $ 42,200 $ 42,200 Proceeds thru December 31, 2014 - - - - Convertible note assigned thru December 31, 2014 - - - - Discount recorded on note thru December 31, 2014 - - - - Discount amortization thru December 31, 2014 - - - - Conversions to shares thru December 31, 2014 - - (10,000) (10,000) Payments thru December 31, 2014 - - (32,200) (32,200) Face Value at December 31, 2014 - - - - Unamortized Discount at December 31, 2014 - - - - Carrying value at December 31, 2014 $ - $ - $ - $ - Accrued Interest: Accrued Interest at January 1, 2013 217 - - 5,510 Interest accrued thru December 31, 2013 1,917 - 3,657 9,313 Conversions to shares thru December 31, 2013 - - - (3,520) Payments thru December 31, 2013 (2,134) - - (7,646) Accrued Interest Balance at December 31, 2013 $ - $ - $ 3,657 $ 3,657 Series B Notes (Continued) Note J Note K Note L Total Issuance Date December-11-12 February-05-13 March-19-13 Interest accrued thru December 31, 2014 - - 934 934 Conversions to shares thru December 31, 2014 - - - - Payments thru December 31, 2014 - - (4,592) (4,592) Accrued Interest Balance at December 31, 2014 $ - $ - $ - $ - Derivative Liability: Derivative Liability at January 1, 2013 - - - 40,000 Derivative Liability added 56,034 254,717 45,283 607,944 Accelerated amortization on conversions and payments - (237,736) (618,947) Change in fair value of derivative liability thru December 31, 2013 (56,034) (16,981) 34,340 50,626 Derivative Liability at December 31, 2013 $ - $ - $ 79,623 $ 79,623 Derivative Liability added - - - - Accelerated amortization on conversions and payments - - (37,099) (37,099) Change in fair value of derivative liability thru December 31, 2014 - - (42,524) (42,524) Derivative Liability at December 31, 2014 $ - $ - $ - $ - Convertible Notes Series C: 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 have been fully converted into shares at December 31, 2014. On May 12, 2014 and June 25, 2014 a holder of $60,000 and $30,000, 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 50% discount to the market price calculated as the lowest VWAP for the common stock during the ten trading day period ending the latest complete trading day prior to conversion date. Both convertible notes have been fully converted into shares at December 31, 2014. On August 20, 2014 a holder of $20,000, in principal amount of debt issued by Pacific Gold Corp. transferred the obligation 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 50% discount to the market price calculated as the lowest VWAP for the common stock during the ten trading day period ending the latest complete trading day prior to conversion date. The convertible note has been fully converted into shares at December 31, 2014. A summary of the carrying value of the notes is as follows: Series C Notes Note A Note B Note C Note D Note E Total Issuance Date September-25-13 October-02-13 May-12-14 June-25-14 August-20-14 Carrying Value: Face Value at January 1, 2013 $ - $ - $ - $ - $ - $ - Unamortized Discount at January 1, 2013 - - - - - - Proceeds thru December 31, 2013 - - - - - - Convertible note assigned thru December 31, 2013 80,000 40,000 - - - 120,000 Discount recorded on note thru December 31, 2013 (80,000) (40,000) - - - (120,000) Discount amortization thru December 31, 2013 41,492 6,667 - - - 48,159 Conversions to shares thru December 31, 2013 (28,656) - - - - (28,656) Payments thru December 31, 2013 - - - - - - Face Value at December 31, 2013 51,344 40,000 - - - 91,344 Unamortized Discount at December 31, 2013 (38,508) (33,333) - - - (71,841) Carrying value at December 31, 2013 $ 12,836 $ 6,667 $ - $ - $ - $ 19,503 Series C Notes (continued) Note A Note B Note C Note D Note E Total Issuance Date September-25-13 October-02-13 May-12-14 June-25-14 August-20-14 Proceeds thru December 31, 2014 - - - - - - Convertible note assigned thru December 31, 2014 - - 60,000 30,000 20,000 110,000 Discount recorded on note thru December 31, 2014 - - (60,000) (30,000) (20,000) (110,000) Discount amortization thru December 31, 2014 38,508 33,333 60,000 30,000 20,000 181,841 Conversions to shares thru December 31, 2014 (51,344) (40,000) (60,000) (30,000) (20,000) (201,344) Payments thru December 31, 2014 - - - - - Face Value at December 31, 2014 - - - - - - Unamortized Discount at December 31, 2014 - - - - - - Carrying value at December 31, 2014 $ - $ - $ - $ - $ - $ - Accrued Interest: Accrued Interest at January 1, 2013 - - - - - - Interest accrued thru December 31, 2013 1,834 986 - - - 2,820 Conversions to shares thru December 31, 2013 - - - - - - Payments thru December 31, 2013 - - - - - - Accrued Interest Balance at December 31, 2013 $ 1,834 $ 986 $ - $ - $ - $ 2,820 Interest accrued thru December 31, 2014 (1,834) (920) - - - (2,754) Conversions to shares thru December 31, 2014 - (66) - - - (66) Payments thru December 31, 2014 - - - - - - Accrued Interest Balance at December 31, 2014 $ - $ - $ - $ - $ - $ - Derivative Liability: Derivative Liability at January 1, 2013 - - - - - - Derivative Liability added 88,496 93,559 - - - 182,055 Accelerated amortization on conversions and payments (33,582) - - - - (33,582) Change in fair value of derivative liability thru December 31, 2013 64,956 (174) - - - 64,782 Derivative Liability at December 31, 2013 $ 119,870 $ 93,385 $ - $ - $ - $ 213,255 Derivative Liability added - - 134,053 51,534 73,086 258,673 Accelerated amortization on conversions and payments (104,946) (72,882) (181,650) (59,811) (73,086) (492,375) Change in fair value of derivative liability thru December 31, 2014 (14,924) (20,503) 47,597 8,277 - 20,447 Derivative Liability at December 31, 2014 $ - $ - $ - $ - $ - $ - Series C Notes (continued) Note E Note f Total Issuance Date August-20-14 October-16-14 Carrying Value: Face Value at January 1, 2013 $ - $ - $ - Unamortized Discount at January 1, 2013 - - - Proceeds thru December 31, 2013 - - - Convertible note assigned thru December 31, 2013 - - 120,000 Discount recorded on note thru December 31, 2013 - - (120,000) Discount amortization thru December 31, 2013 - - 48,159 Conversions to shares thru December 31, 2013 - - (28,656) Payments thru December 31, 2013 - - - Face Value at December 31, 2013 - - 91,344 Unamortized Discount at December 31, 2013 - - (71,841) Carrying value at December 31, 2013 $ - $ - $ 19,503 Proceeds thru December 31, 2014 - - - Convertible note assigned thru December 31, 2014 20,000 17,500 127,500 Discount recorded on note thru December 31, 2014 (20,000) (17,500) (127,500) Discount amortization thru December 31, 2014 20,000 17,500 199,341 Conversions to shares thru December 31, 2014 (20,000) (17,500) (218,844) Payments thru December 31, 2014 - - - Face Value at December 31, 2014 - - - Unamortized Discount at December 31, 2014 - - - Carrying value at December 31, 2014 $ - $ - $ - Accrued Interest: Accrued Interest at January 1, 2013 - - - Interest accrued thru December 31, 2013 - - 2,820 Conversions to shares thru December 31, 2013 - - - Payments thru December 31, 2013 - - - Accrued Interest Balance at December 31, 2013 $ - $ - $ 2,820 Series C Notes (continued) Note E Note f Total Issuance Date August-20-14 October-16-14 Interest accrued thru December 31, 2014 - - (2,754) Conversions to shares thru December 31, 2014 - - (66) Payments thru December 31, 2014 - - - Accrued Interest Balance at December 31, 2014 $ - $ - $ - Derivative Liability: Derivative Liability at January 1, 2013 - - - Derivative Liability added - - 182,055 Accelerated amortization on conversions and payments - - (33,582) Change in fair value of derivative liability thru December 31, 2013 - - 64,782 Derivative Liability at December 31, 2013 $ - $ - $ 213,255 Derivative Liability added 73,086 65,726 324,399 Accelerated amortization on conversions and payments (73,086) (65,726) (558,101) Change in fair value of derivative liability thru December 31, 2014 - - 20,447 Derivative Liability at December 31, 2014 $ - $ - $ - |