Note 8 - Debt | Note 8 –Debt During the six month period ending June 30, 2015, the Company has entered into five new loan agreements in the total amount of $215,962. A summary of the new note payable as of June 30, 2015 and December 31, 2014 is as follows: Interest Maturity June 30, December 31, Creditor Rate Date 2015 2014 American Express Bank, FSB (1) 11.13% 2/3/2017 $ 67,337 $ - Total 67,337 - Less: Current portion (40,223) - Long-term portion $ 27,113 $ - A summary of the new convertible notes payable as of June 30, 2015 and December 31, 2014 is as follows: Interest Maturity June 30, December 31, Creditor Rate Date 2015 2014 KBM Worldwide, Inc. (2) 8.00% 10/28/2015 $ 64,000 $ - LG Capital Funding, LLC (3) 8.00% 3/25/2016 34,000 - Debt discount - convertible notes, net (51,192) - Total, net 46,808 - Less: Current portion (46,808) - Long-term portion $ - $ - A summary of the new related party note payable as of June 30, 2015 and December 31, 2014 is as follows: Interest Maturity June 30, December 31, Creditor Rate Date 2015 2014 Richard D. Surber (related party) (4) 18.00% 3/12/2018 $ 23,629 $ - Diversified Holdings X, Inc. (5) 18.00% 5/06/2016 9,309 - Total 32,938 - Less: Current portion (15,189) - Long-term portion $ 17,749 $ - (1) On February 3, 2015, the Landis Salons II, Inc. entered into a loan agreement with American Express Bank, FSB in the amount of $74,000. The note is a merchant account financing arrangement wherein Landis repays the loan at the rate of 30% of the American Express credit card sales receipts that are collected each month. The loan requires a prepaid interest charge that is 12% ($8,880) of the $74,000 loan amount. These financing costs are being amortized monthly to interest expense during the two year term of the loan. The total amount due at the inception date is $82,880. As of June 30, 2015, the loan balance was $67,337. Payments made during the six months ended June 30, 2015, amounted to $15,544. (2) On January 26, 2015, pursuant to a Securities Purchase Agreement, Green issued a $64,000 Convertible Promissory Note (the "Note") to KBM Worldwide, Inc. (“KBM”) that matures October 28, 2015. The Note bears interest at a rate of 8% per annum and can be convertible into Green’s common shares, at the holder’s option, at the conversion rate of 58%of the market price (a 42% discount) of the average of the three lowest trading price of Green’s common shares during the ten-day period ending one trading day prior to the date of the conversion, subject to a limitation that KBM and its affiliates cannot at any time hold, as a result of conversion, more than 9.99% of the outstanding common stock of Green. Green analyzed the conversion feature of the agreement for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the embedded conversion features should be classified as a derivative because 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. 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. The embedded derivative for the KBM Note is carried on Green’s balance sheet at fair value. The derivative liability is marked-to-market each measurement period and any unrealized change in fair value is recorded as a component of the income statement and the associated fair value carrying amount on the balance sheet is adjusted by the change. Green fair values the embedded derivative using the Black-Scholes option pricing model. The fair value of the derivative at the inception date of the KBM note was $60,048, which was recorded on the balance sheet. $60,048 was recorded as a debt discount on the balance sheet and $0 was recorded as a credit to non-cash interest expense. As of June 30, 2015, the balance of the note was $64,000 and the balance of the debt discount was $26,203. No payments were made on the note during the six months ended June 30, 2015. (3) On March 25, 2015, pursuant to a Securities Purchase Agreement, Green issued a $34,000 Convertible Promissory Note (the "Note") to LG Capital Funding, LLC (“LGCF") that matures March 25, 2016. The Note bears interest at a rate of 8% per annum and can be convertible into Green’s common shares, at the holder’s option, at the conversion rate of 58% of the market price (a 42% discount) of an average of the three lowest trading price of Green’s common shares during the eighteen-day period ending on the date of the conversion, subject to a limitation that LGCF and its affiliates cannot at any time hold, as a result of conversion, more than 9.99% of the outstanding common stock of Green. Green analyzed the conversion feature of the agreement for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the embedded conversion features should be classified as a derivative because 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. 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. The embedded derivative for the LGCF Note is carried on Green’s balance sheet at fair value. The derivative liability is marked-to-market each measurement period and any unrealized change in fair value is recorded as a component of the income statement and the associated fair value carrying amount on the balance sheet is adjusted by the change. Green fair values the embedded derivative using the Black-Scholes option pricing model. The fair value of the derivative at the inception date of the LGCF note was $40,018, which was recorded on the balance sheet. $34,000 was recorded as a debt discount on the balance sheet and $6,018 was recorded as non-cash interest expense. As of June 30, 2015, none of the note had been converted into shares of common stock. As of June 30, 2015, the balance of the note was $34,000 and the balance of the debt discount was $24,989. No payments have been made on the note as of June 30, 2015. 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 6 - Derivative Liability). (4) On March 24, 2015, Green Endeavors, Inc. and Landis Salons, Inc. (the "Company") issued a promissory note to Richard Surber, President, CEO and Director of Green, in the principal amount of $25,082 for funds loaned. The note bears interest at the rate of 18% per annum, has a maturity date of March 12, 2018, and requires monthly payments of $806. The Company shall be credited for satisfaction of the note for any payment that it makes of a loan that Mr. Surber is obligated to pay to Upstart Network, Inc., the reported source of the funds loan to the Company by Mr. Surber. As of June 30, 2015, the balance of the note was $23,629. Payments made during the six months ended June 30, 2015, amounted to $1,453. (5) On May 6, 2015, Landis Salons, Inc. (the "Company") issued a promissory note to Diversified Holdings X, Inc. a corporation solely owned by Richard Surber, President, CEO and Director of Green, in the principal amount of $10,000 for funds loaned. The note bears interest at the rate of 18%per annum, has a maturity date of May 6, 2016, and requires a single payment of $10,000 plus accrued interest. As of June 30, 2015, the balance of the note was $9,309. Payments made during the six months ended June 30, 2015, amounted to $691. 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. As of June 30, 2015, Mr. Surber is a personal guarantor to various notes payable by the Company with remaining principal balances of $108,603. Subsequent to June 30, 2015, 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. |