Promissory Notes | 9 Months Ended |
Jun. 30, 2014 |
Notes to Financial Statements | ' |
Note 4 - Promissory Notes | ' |
Convertible Promissory Notes ("CPN") |
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As of June 30, 2014, the Company had the following CPNs: |
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Date of: | | Conversion | | | | | | | Accrued | | | Total | |
Issuance | | Maturity | | Price | | Status | | Principle | | | Interest | | | Outstanding | |
1/28/11 | | 7/28/11 | | $ | 0.1 | | In default - Assumed in merger | | $ | 5,000 | | | | 1,368 | | | $ | 6,368 | |
6/21/11 | | 1/21/12 | | $ | 0.1 | | In default - Assumed in merger | | | 2,500 | | | | 605 | | | | 3,105 | |
6/24/11 | | 1/24/12 | | $ | 0.1 | | In default - Assumed in merger | | | 10,000 | | | | 2,415 | | | | 12,415 | |
7/14/11 | | 2/14/12 | | $ | 0.1 | | In default - Assumed in merger | | | 10,000 | | | | 2,372 | | | | 12,372 | |
7/28/11 | | 2/28/12 | | $ | 0.1 | | In default - Assumed in merger | | | 10,000 | | | | 2,341 | | | | 12,341 | |
8/10/11 | | 2/10/12 | | $ | 0.1 | | In default - Assumed in merger | | | 15,263 | | | | 3,529 | | | | 18,792 | |
8/19/11 | | 2/19/12 | | $ | 0.1 | | In default - Assumed in merger | | | 10,000 | | | | 2,295 | | | | 12,295 | |
9/21/11 | | 3/21/12 | | $ | 0.1 | | In default - Assumed in merger | | | 21,500 | | | | 4,778 | | | | 26,278 | |
10/12/11 | | 4/12/12 | | $ | 0.1 | | In default - Assumed in merger | | | 2,900 | | | | 623 | | | | 3,523 | |
10/19/11 | | 4/19/12 | | $ | 0.1 | | In default - Assumed in merger | | | 7,500 | | | | 1,588 | | | | 9,088 | |
11/9/11 | | 5/9/12 | | $ | 0.1 | | In default - Assumed in merger | | | 11,950 | | | | 2,444 | | | | 14,394 | |
1/3/12 | | 7/3/12 | | $ | 0.1 | | In default - Assumed in merger | | | 11,817 | | | | 2,354 | | | | 14,171 | |
2/27/12 | | 8/27/12 | | $ | 0.1 | | In default - Assumed in merger | | | 15,392 | | | | 2,881 | | | | 18,273 | |
1/9/13 | | 6/9/13 | | $ | 0.2 | | In default - Assumed in merger | | | 75,021 | | | | 8,830 | | | | 83,851 | |
2/8/13 | | 8/8/13 | | $ | 0.2 | | In default - Assumed in merger | | | 41,928 | | | | 4,659 | | | | 46,587 | |
3/18/13 | | 9/15/13 | | $ | 0.2 | | In default - Assumed in merger | | | 35,185 | | | | 3,617 | | | | 38,802 | |
5/22/13 | | 11/22/13 | | $ | 0.2 | | In default - Assumed in merger | | | 33,853 | | | | 2,998 | | | | 36,851 | |
6/4/13 | | 12/4/13 | | $ | 0.2 | | In default - Assumed in merger | | | 25,000 | | | | 2,142 | | | | 27,142 | |
4/30/14 | | 10/30/14 | | $ | 0.2 | | Current | | | 12,600 | | | | 168 | | | | 12,768 | |
5/10/14 | | 11/10/14 | | $ | 0.2 | | Current | | | 55,669 | | | | 622 | | | | 56,291 | |
5/27/14 | | 11/27/14 | | $ | 0.2 | | Current | | | 75,000 | | | | 559 | | | | 75,559 | |
| | | | | | | | | $ | 488,078 | | | $ | 53,188 | | | $ | 541,266 | |
Number of shares issuable upon exercise of the above debt upon default | | | | | | | | | | | 3,523,405 | |
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From time to time the Company has issued CPNs all with identical terms, including a maturity date six to seven months from the date of issuance, eight percent (8%) per annum interest rate, no requirement for any payments prior to maturity, and the right to convert the outstanding principle and interest in to into fully paid and non-assessable shares of the Company's common stock at a fixed conversion price of $0.10 or $0.20 per share upon default. The conversion privilege provides for net share settlement only. Pursuant to ASC 470-20-25-5, the Company determined that due to the market price of the Company's common stock being greater than the conversion price contained in each CPN on the commitment date, each CPN contained a beneficial conversion feature (“BCF”) with an intrinsic value in excess of the face amount of each CPN. The resulting discount to the Loan is recorded to interest expense upon default. The Company has not received notice from the holder of the defaulted notes to enforce collection. The Company communicates regularly with the holder who has not expressed a desire to force collection at this time. |
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During the three and nine months ended June 30, 2014, the Company entered into three CPNs on April 30, May 10 and May 27, 2014 totaling $143,269 on the terms as described above. During the three and nine months ended June 30, 2014, the Company recognized $8,227 and $11,930, respectively, of interest expense related to the stated interest rate contained in the Company CPNs. |
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Non-Convertible Promissory Notes Assumed in Merger |
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$100,000 |
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On March 19, 2012, the Company entered into a Securities Purchase Agreement, Guaranty and Note (the "Note") with Gemini Master Fund, Ltd. under which the Company issued a promissory note with a face amount of $280,000 and received net proceeds of $245,000. The Note matured six months from the date of issue, bears interest of twelve percent (12%) per annum on the face amount and is payable in full upon maturity. |
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On each of September 27, 2012 and October 3, 2012, the Company paid $100,000 against the principle balance of the Note and issued 20,000 shares of restricted common stock to Gemini Master Fund, Ltd. in exchange for their not exercising the default terms of the Note. On December 31, 2012, Gemini sold and Amalfi Coast Capital purchased the $100,000 balance remaining under the Note. |
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During the three and nine months ended June 30, 2014, the Company recognized $2,992 and $4,603, respectively, of interest expense related to the Note. |
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Non-Convertible Promissory Notes |
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$29,506 |
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On January 15, 2014, the Company entered into a Loan Agreement (the “Loan Agreement”) with Gemini Finance Group (the “Gemini”), a private corporation. Pursuant to the Loan Agreement, the Company received proceeds of $29,506 and issued a 24% Secured Promissory Note (the “Secured Note”) due on April 30, 2014, with interest compounded daily. The Note is secured by substantially all Company assets. The Company assigned all interest and right to the $34,200 receivable from our sale of 600 BiggiFi units to Gemini as repayment of the Secured Note. On June 2, 2014, Gemini collected the amount due from the sale in full satisfaction of the Secured Note. During the three and nine months ended June 30, 2014, the Company recorded $2,516 and $3,875 of interest expense on the Secured Note. |