Pacific Gold Corp fka PCFG

[foxwoodsfan]

2009 10K:

So this is the convert debt currently being claimed by BME:

http://www.sec.gov/Archives/edgar/data/1137855/000115895711000195/f10k123109.htm

Series D Note

On February 26, 2007, Pacific Gold issued debentures with a face value of $2,440,000 and warrants to purchase up to 6,000,000 shares of common stock for net proceeds of $2,141,000 after fees and commissions of $299,000. The Company received $1,035,000 of the gross proceeds on February 26, 2007, $805,000 on April 11, 2007 and it received the final advance of proceeds of $600,000 on June 25, 2007. A description of the notes is as follows:

Maturity: The notes matured on April 20, 2009. The note-holder may elect at any time to convert its notes into shares of common stock at the conversion price (as described below). The lender is limited to total ownership of 4.99% of the outstanding shares of Pacific Gold at any time, so the ability to convert is limited.
Prepayment Obligations: The Company is required to make payments of $222,000, subject to certain adjustments, in cash or shares of common stock at the conversion rate of the lower of (i) $0.18 per share or (ii) 80% of the average of the two lowest volume weighted average prices of the common stock during the ten consecutive trading days immediately preceding the installment due dates as defined in the Convertible Debenture starting on July 1, 2007. The note holder has the option to defer payments until the maturity of the note.

Interest: Interest accrues at 10% on the outstanding face value of the debenture.

Conversion and conversion price: The number of shares of common stock shall be determined by dividing the amount owed by $0.18. The conversion price may be adjusted from time to time upon the occurrence of certain specified events considered to be dilutive to the debenture holder.

Warrant: In connection with the financing, a warrant to purchase up to 6,000,000 shares of common stock, with an exercise price of $0.216 per share and expiring February 26, 2012. In October 2007 the exercise price of these warrants was reduced to $0.18.
Pursuant to EITF 00-19 “Accounting for Derivative Financial Instruments Indexed to and potentially settled in, a Company’s Own Stock”, the Company recorded a derivative liability for the fair value of the Conversion feature and Warrants issued. The initial combined fair value was $3,684,906. The Company re-measured the fair value at each conversion date and again at September 30, 2009, with a resulting total change in the fair value of $3,684,906 recorded as a change in fair value of derivative liability due to maturity of the notes.


Face value at issuance – Series D $ 2,440,000
Cash payment to December 31, 2008 (298,607)
Convert to shares to December 31, 2008 (1,874,412)
Face value at December 31, 2008 266,981
Less: Fair value1 of discount amortized to December 31, 2008 (20,812)

Carrying value of Series D note at December 31, 2008 $ 246,169

Conversion to shares thru December 31, 2009 (266,982)
Less: Fair Value1 of discount amortized thru December 31, 2009 20,813

Carrying value of Series D note at December 31, 2009 $ -

Derivative Liability at December 31, 2009 $ -
_____________________
1 Fair value was calculated using the Black-Scholes model with the following assumptions: Expected life in years: 2-5; Estimated volatility: 90.6%; Risk-free interest rate: 2%; Dividend yield of 0%.

We have a registration payment arrangement with regard to the common stock issued in the private offering. We were required to file a registration statement within 45 days of closing and cause the registration statement to become effective on or prior to the 120 days after the closing date. Our registration statement was filed within the 45 day limit and became effective prior to the 120 days. In addition, we are required to use reasonable commercial efforts to maintain the registration statement's effectiveness and file additional registration statements in the future, to continue to provide to the sellers the opportunity to sell the shares of restricted stock that they may hold under the notes and warrants.

In the event we do not satisfy the registration obligations of the registration rights agreement, (a "Registration Default"), we shall pay the investors an amount in cash equal to 1% of the aggregate investment amount for each 30-day period of a Registration Default.

The maximum penalty that we may incur under this registration payment arrangement is 18% of the aggregate investment amount, or $439,200. Any payments made are to be prorated for any portion of a 30-day period of a Registration Default. We do not believe that payment under the registration payment arrangement is probable, and therefore no related liability has been recorded in the accompanying financial statements. As of September 30, 2009 no payments have been made.