SoOum Corp. (fka SOUM)

[21ZNA9]

$800,000 OUTSTANDING TOXIC NOTES.



As of June 30, 2014, the Company has outstanding eleven (11) security purchase agreements with accredited investors for the sale of convertible promissory notes bearing interest at 8.0% per annum. Pursuant to the convertible promissory notes the investor may convert the amount paid towards the Securities Purchase Agreements into common stock of the company at a conversion price equal to 50% of the average of the 3 lowest volume weighted average trading prices during the 10 day period ending on the latest complete trading day prior to the conversion date. Trading price means the closing bid price on the OTC Market Over-the-Counter Bulletin Board Pink Sheets.

The conversion rights embedded in the 8% Notes are accounted for as a derivative financial instruments because of the down round feature of the conversion price. The beneficial conversion feature was valued at the date of issuance using the Black-Scholes-Merton options pricing model with the following assumptions: risk free interest rates ranging from .11%, contractual expected life of nine (9) months, expected volatility of 236%, calculated using the historical closing price of the company’s common stock, and dividend yield of zero, resulting in fair market value.



The Company is in default on all of the following unsecured term notes payable.

http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=10171173