Note 10 - Notes Payable | 12 Months Ended |
Dec. 31, 2013 |
Notes | ' |
Note 10 - Notes Payable | ' |
Note 10 – Notes Payable |
|
A summary of notes payable as of December 31, 2013 and 2012 is as follows: |
|
| | | | | | | | | | | | | | |
| Interest | Maturity | December 31, | December 31, | | | | | | | | | | |
Creditor | Rate | Date | 2013 | 2012 | | | | | | | | | | |
Xing Investment Corp. (1) | 10.00% | 5/12/08 | $171,000 | $171,000 | | | | | | | | | | |
Salt Lake City Corporation (4) | 3.25% | 8/1/15 | 33,439 | 53,690 | | | | | | | | | | |
William and Nina Wolfson (5) | 11.00% | 2/27/16 | 30,858 | 42,279 | | | | | | | | | | |
Cyprus Credit Union (9) | 2.69% | 12/5/14 | 10,920 | 20,410 | | | | | | | | | | |
Salt Lake City Corporation (10) | 5.00% | 9/1/17 | 38,644 | 47,785 | | | | | | | | | | |
Total | | | 284,861 | 335,164 | | | | | | | | | | |
Less: Current portion | | | -225,191 | -222,179 | | | | | | | | | | |
Long-term portion | | | $59,670 | $112,985 | | | | | | | | | | |
|
A summary of capital leases payable as of December 31, 2013 and 2012 is as follows: | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
| Interest | Maturity | December 31, | December 31, | | | | | | | | | | |
Creditor | Rate | Date | 2013 | 2012 | | | | | | | | | | |
Castleton Equipment (7) (capital lease) | 16.96% | 4/23/16 | $35,289 | $46,651 | | | | | | | | | | |
Imaging Concepts (3) (capital lease) | 10.90% | 2/25/18 | 5,139 | - | | | | | | | | | | |
Time Payment Corp (8) (capital lease) | 17.75% | 9/5/16 | 12,589 | 15,851 | | | | | | | | | | |
Total | | | 53,017 | 62,502 | | | | | | | | | | |
Less: Current portion | | | -18,367 | -14,624 | | | | | | | | | | |
Long-term portion | | | $34,650 | $47,878 | | | | | | | | | | |
|
A summary of convertible notes payable as of December 31, 2013 and 2012 is as follows: | | | | | | | | | | | | | | |
|
| | Interest | Maturity | December 31, | December 31, | | | | | | | | | |
Creditor | Rate | Date | 2013 | 2012 | | | | | | | | | |
Asher Enterprises, Inc. (2)* | 8.00% | 3/16/12 | - | $3,000 | | | | | | | | | |
Asher Enterprises, Inc. (2)* | 8.00% | 4/25/12 | - | 25,000 | | | | | | | | | |
Asher Enterprises, Inc. (2)* | 8.00% | 9/12/12 | - | 22,500 | | | | | | | | | |
Asher Enterprises, Inc. (2)* | 8.00% | 11/6/12 | - | 42,500 | | | | | | | | | |
Southridge Partners II, LP (11) | 0% | 2/28/13 | 75,000 | 75,000 | | | | | | | | | |
Eastshore Enterprises, Inc. (12) | 8.00% | 8/17/14 | 35,000 | 35,000 | | | | | | | | | |
Debt discount - convertible notes, net | | | -10,979 | -38,105 | | | | | | | | | |
| Total, net | | | 99,021 | 164,895 | | | | | | | | | |
| Less: Current portion | | | -99,021 | -158,374 | | | | | | | | | |
| Long-term portion | | | - | $6,521 | | | | | | | | | |
* | All Asher notes were paid in full on October 11, 2013. | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
A summary of the related party note payable as of December 31, 2013 and 2012 is as follows: | | | | | | | |
|
| Interest | Maturity | December 31, | December 31, | | | | | | | | | | |
Creditor | Rate | Date | 2013 | 2012 | | | | | | | | | | |
Nexia Holdings, Inc. (related party) (6) | 10.00% | 4/15/15 | $27,250 | - | | | | | | | | | | |
Richard D. Surber (related party) (13) | 20.00% | 11/6/17 | 25,000 | 25,000 | | | | | | | | | | |
Total, net | | | 52,250 | 25,000 | | | | | | | | | | |
Less: Current portion | | | -45,488 | -3,534 | | | | | | | | | | |
Long-term portion | | | $6,762 | $21,466 | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
-1 | On May 12, 2006, Green borrowed $171,000 from Xing Investment Corp with a convertible promissory note. The note is interest bearing at 10% per annum with no interest due until the note maturity date of May 12, 2008. Both principal and accrued interest, at the option of the note holder, may be converted into Common stock of Green at $0.01 per share. The note was not liquidated at the maturity date and is currently in default. No payments have been made on the obligation because Green is unable to locate Xing Investment Corp. or its representatives. As of December 31, 2013 and 2012, accrued interest reported in accounts payable and accrued expenses was $34,200. | | | | | | | |
| | | | | | | | | | | | | | |
-2 | During the period from April 5, 2011 through February 2, 2012, Green has issued a series of convertible promissory notes with an aggregate face amount of $197,500 to Asher Enterprises, Inc. that mature from January 9, 2012 to November 6, 2012. The transactions have been handled as a private sale exempt from registration under Rule 506 of the Securities Act of 1933. The notes mature in approximately 270 days from issuance and bear interest at a rate of 8% per annum. At the holder’s option, the notes can be converted into Green’s common shares at the conversion rates of 56% to 61% discount to the market price of the lowest three trading prices of Green’s common shares during the ten-day period ending one trading day prior to the date of the conversion. | | | | | | | |
|
| On October 11, 2013, the Company agreed with Asher Enterprises, Inc. to satisfy all remaining unsatisfied convertible notes held by Asher as of that date. The settlement between the parties provided for the complete release and satisfaction of the three remaining notes with outstanding balances, the notes are dated July 19, 2011, December 7, 2011, and February 2, 2012, including the mutual release by the Company and Asher of any and all claims, liabilities, damages, causes of action or otherwise that may exist arising from the said notes. As a result of the agreement all principal and interest due under the terms of the three notes, including any penalties or default fees, are released. The Company made a cash payment to Asher in the sum of $50,000 and has received each of the three above described original notes marked as “PAID” in exchange for the cash payment. This satisfaction of the notes will result in the removal from the Company’s balance sheet of the derivative and underlying liabilities created by the notes as of October 11, 2013. The payoff of the Asher Notes resulted in the elimination of $37,500 in loss contingency, $86,334 in derivative liability, $13,100 of accrued interest, $65,000 in principal debt, and a $65,600 gain from forgiveness of debt. | | | | | | | |
| | | | | | | | | | | | | | |
-3 | On February 25, 2013, Landis Salons, Inc. entered into a capital lease financing agreement in the principal amount of $5,911 with Imaging Concepts. The lease agreement requires 60 monthly payments of principal and interest in the amount of $128.22. Interest is at the rate of 10.9% per year and the maturity date is February 25, 2018. Landis has the option to purchase the leased salon equipment at maturity for a $1 bargain purchase amount. The Company applied the guidance of ASC 840 in its determination of the lease being a capital lease. In addition to the Company’s guarantee for the debt, Richard Surber is personal guarantor to the lease. As of December 31, 2013, the note balance is $5,139. Principal payments made on the note during the year ended December 31, 2013 amounted to $772. | | | | | | | |
| | | | | | | | | | | | | | |
-4 | On June 18, 2010, Landis Salons, Inc. received a loan in the amount of $100,000 from the Division of Economic Development of Salt Lake City Corporation. The loan includes a 1% origination fee and bears interest at the rate of 3.25% per annum. Principal and interest payments are made monthly over a five year term commencing June 2010. The loan is secured by a $25,000 certificate deposit held in the name of Landis Salons, Inc. and is personally guaranteed by Richard Surber, CEO of Green. The certificate of deposit is considered long-term, restricted cash because it is collateral for the loan. As of December 31, 2013, the note balance is $33,439. Principal payments made on the note during the year ended December 31, 2013 amounted to $20,251. | | | | | | | |
| | | | | | | | | | | | | | |
-5 | On February 27, 2012, Green and Landis Experience Center, LLC issued an 11% note payable in the principal face amount of $50,000 to William and Nina Wolfson in exchange for a cash payment of the same amount. The note has a due date of February 27, 2016. The note provides for monthly payments in the amount of $1,292.28 of principal and interest. In addition to the Company’s guarantee to the note, Richard Surber has personally guaranteed the note. As of December 31, 2013, the note balance is $30,858. Principal payments made on the note during the year ended December 31, 2013 amounted to $11,421. | | | | | | | |
| | | | | | | | | | | | | | |
-6 | On April 15, 2013, Green entered into a promissory note with its parent company, Nexia Holdings, Inc., in the amount of $37,400 for cash advanced to Green. Interest on the note is 10% per annum, monthly payments are $1,726 and the note is due 24 months from signing. As of December 31, 2013, the principal balance on the note was $27,250 and principal payments on the note amounted to $10,150. | | | | | | | |
| | | | | | | | | | | | | | |
-7 | On April 23, 2012, Landis Salons, Inc. entered into a capital lease financing agreement in the principal amount of $53,230 with Castleton Capital Corporation. The lease agreement requires 48 monthly payments of principal and interest in the amount of $1,535. Interest is at the rate of 16.96% per year and the maturity date is April 23, 2016. Landis has the option to purchase the leased salon equipment at maturity for a $1 bargain purchase amount. The Company applied the guidance of ASC 840 in its determination of the lease being a capital lease. In addition to the Company’s guarantee for the debt, Richard Surber is personal guarantor to the lease. As of December 31, 2013, the note balance is $35,289. Principal payments made on the note during the year ended December 31, 2013 amounted to $11,362. | | | | | | | |
| | | | | | | | | | | | | | |
-8 | On July 26, 2012, Landis Salons, Inc. entered into a capital lease financing agreement in the principal amount of $16,826 with Time Payment Corporation. The lease agreement requires 48 monthly payments of principal and interest in the amount of $485. Interest is at the rate of 17.75% per year and the maturity date is September 5, 2016. Landis has the option to purchase the leased salon equipment at maturity for $2,178 or less. The Company applied the guidance of ASC 840 in its determination of the lease being a capital lease. In addition to the Company’s guarantee for the debt, Richard Surber is personal guarantor to the lease. As of December 31, 2013, the note balance is $12,589. Principal payments made on the note during the year ended December 31, 2013 amounted to $3,262. | | | | | | | |
| | | | | | | | | | | | | | |
-9 | On September 5, 2012, Landis Salons, Inc. received a loan in the amount of $22,959 from Cyprus Credit Union for the refinancing of a Company truck. The loan replaced the loan for the truck to Chase bank (see loan #3 above). The loan has a maturity date of December 5, 2014 and bears interest at the rate of 2.69% per annum. Principal and interest payments of $899 are made monthly over 27 months commencing October 5, 2012. The loan is secured by a lien on the vehicle in addition to the corporate guarantee for the loan. Richard Surber, CEO of the Company has personally guaranteed the loan. As of December 31, 2013, the note balance is $10,920. Principal payments made on the note during the year ended December 31, 2013 amounted to $9,491. | | | | | | | |
| | | | | | | | | | | | | | |
-10 | On August 20, 2012, the Board of Directors of LEC approved that LEC enter into a loan agreement with Salt Lake City Corporation in the amount of $50,000. Pursuant to the board approval, a note in the amount of $50,000 was issued on August 21, 2012. The note bears interest at 5% per annum and requires 60 monthly installments of $943.56 commencing October 1, 2012. In addition to corporate guarantees and the personal guarantee by Richard Surber, President, CEO, and Director of LEC, a certificate of deposit is being held as collateral for the loan. As of December 31, 2013, the note balance is $38,644. Principal payments made on the note during the year ended December 31, 2013 amounted to $9,141. | | | | | | | |
| | | | | | | | | | | | | | |
-11 | On August 15, 2012, Green issued a $75,000 promissory convertible promissory note to Southridge Partners II, LP as a condition of Southridge entering into an Equity Purchase Agreement with the Company (see Note 11). The transaction has been handled as a private sale exempt from registration under Rule 506 of the Securities Act of 1933. The note bears no interest and matures on February 28, 2013 at which time a balloon payment of the entire principal amount is due. The holder of the note is entitled any time after the maturity date to convert the note into common stock of the Company at 70% of the average of the two lowest closing bid prices for the five day prior to the date of the conversion. The Company determined the note contained a beneficial conversion feature and therefore recorded a $32,143 debt discount. As of December 31, 2013, the balance of the note was $75,000 and the balance of the debt discount was $0. No payments were made on the note during the year ended December 31, 2013. | | | | | | | |
|
-12 | On August 17, 2012, Green issued a $35,000 convertible promissory note to Eastshore Enterprises, Inc. Green converted $15,000 of accounts payable to Eastshore to the note and also received $20,000 in cash for the loan. The transaction has been handled as a private sale exempt from registration under Rule 506 of the Securities Act of 1933. The note matures on August 17, 2014 and bear interest at a rate of 8% per annum. After one year from issuance, the holder can be convertible into Green’s common shares at the conversion rate of 54% of the market price of the lowest price of Green’s common shares during the ten-day period ending one trading day prior to the date of the conversion. As of December 31, 2013, none of the note had been converted into shares of common stock. As of December 31, 2013, the balance of the note was $35,000 and the balance of the debt discount was $10,979. No payments were made on the note during the year ended December 31, 2013. | | | | | | | |
| | | | | | | | | | | | | | |
| The exercise price of these convertible notes are subject to “reset” provisions in the event the Company subsequently issues common stock, stock warrants, stock options or convertible debt with a stock price, exercise price or conversion price lower than conversion price of these notes. If these provisions are triggered, the conversion price of the note will be reduced. As a result, the Company has determined that the conversion feature is not considered to be solely indexed to the Company’s own stock and is therefore not afforded equity treatment. In accordance with AC 815, the Company has bifurcated the conversion feature of the note and recorded a derivative liability (see Note 7 - Derivative Liability). | | | | | | | |
| | | | | | | | | | | | | | |
-13 | On November 5, 2012, Landis Salons II, Inc. entered into a promissory note with Richard Surber, President, CEO and Director of Green, for the sum of $25,000 for funds loaned. The note bears interest at the rate of 20% per annum, with a term of five years and monthly payments of $662.35 and a demand feature by which the note can be called upon the demand of Mr. Surber. Landis Salons II as security for the note pledged all of its assets, stock in trade, inventory, furniture, fixtures, supplies, any intangible property and all tangible personal property of Landis Salons II and all and any other assets to which Landis Salons II holds title or claims ownership or that is hereafter acquired by Landis Salons II, subject only to purchase money liens held by sellers or grantors. As of December 31, 2013, the balance of the note was $25,000. No payments were made on the note during the year ended December 31, 2013. Mr. Surber is also providing his personal guaranty for several lines of credit and credit cards that are being utilized by the company and its operating subsidiaries. In addition to the above, Mr. Surber is a personal guarantor to notes payable by the Company with remaining principal balances of $138,861. Subsequent to December 31, 2013, Mr. Surber continues to provide his personal guaranty for several lines of credit, credit cards, and loans that are being utilized by the Company and its subsidiaries. The total amount of these credit obligations could exceed the amount of $300,000 from time to time. | | | | | | | |