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Re: SOUTHGAS post# 3233

Saturday, 04/11/2015 2:46:51 PM

Saturday, April 11, 2015 2:46:51 PM

Post# of 17086
This section of the latest 10Q says it won't( A MUST READ):

Note 6 - Convertible Notes

CRDF Global

On October 24, 2013, the Company obtained financing for further research on the first patent that it filed on October 28, 2013, for pure hydrogen production. At the same time, two hundred and twenty two thousand dollars ($222,000) was paid to CRDF Global (U.S. Civilian Research & Development Foundation) to manage and facilitate the research.


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The sum of $200,000 of the $220,000 paid to CRDF Global has been recorded on the balance sheet as a “prepaid expense”. This is advance payment for further research on the Company’s first patent on pure hydrogen production.

This financing is in the form of an “Unsecured Convertible Promissory Note” (the Note). The principle sum is three hundred thousand dollars ($300,000) and carries a simple interest rate of ten per cent (10%) per annum payable quarterly in arrears. The principle loan can be repaid in whole but not in part with accrued interest, at any time without penalty on the production of a written notice ten days in advance.

The note holder has the option to convert the principle sum plus any accrued interest into non-assessable common shares of stock at a conversion price of seventy-five per cent (75%) of the fair market value of the shares, five days prior to the conversion date. Once the conversion has taken place, it is irrevocable.

The Company has recorded a beneficial conversion feature of $100,000 which will amortize over the life of the loan.

As of January 31, 2015, the balance of the unamortized debt discount was $9,095 (April 30, 2014 $72,212) and the accrued interest on the “Note” was $72,592 (April 30, 2014-$27,976). During the nine month period to January 31, 2015, the Company charged interest expense of $107,733, comprising of accrued interest of $44,616 and amortization of debt discount of $63,117.

During the nine month period to January 31, 2014, the Company charged interest expense of $28,184 comprising of $14,500 and amortization of debt discount of $13,684

Anton Group Hill Ltd. #1

On December 20, 2013, the Company issued an Unsecured Convertible Promissory Note (The “Note”) to Anton Group Hill Ltd., or it’s permitted assigns in the principle sum of Twenty Five Thousand Dollars ($25,000). This is a working capital loan which carries a simple interest rate of 10% per annum payable quarterly in arrears and matures in two (2) years from the date of issue.

The principle can be repaid in whole but not in part with accrued interest, at any time without penalty on the production of a written notice ten days in advance.

The “Note” holder has the option to convert the principle sum plus any accrued interest into no-assessable common shares of stock at a conversion price of seventy-five per cent (75%) of the fair market value of the shares, five days prior to the conversion date. Once the conversion has taken place, it is irrevocable.

The Company has recorded a beneficial conversion feature of $8,333 which will amortize over the life of note.

At January 31, 2015, the balance of unamortized debt discount was $2,135 (April 30, 2014-$6,776) and the accrued interest on the “Note” was $5,255 (April 30, 2014-$1,612). During the nine month period to January 31, 2015, the Company charged interest expense of $8,282 comprising accrued interest of $3,643 and amortization of debt discount of $4,639.

Anton Group Hill Ltd. #2

On February 26, 2014, the Company issued an Unsecured Convertible Promissory Note (The “Note”) to Anton Group Hill Ltd. Or its permitted assigns (“Holder”) in the principle sum of twenty thousand ($20,000), plus simple interest thereon from the date of this note until fully paid at the rate of ten percent (10%) per annum payable in arrears and matures in two (2) years from the date of issue. Interest on this “Note” shall be computed on the basis of a 360 day year and a 30 day month.

This is a working capital loan.

The principle can be repaid in whole but not in part with accrued interest, at any time without penalty on production of a written notice ten days in advance.


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The “Note” holder has the option to convert the principle sum plus any accrued interest into no-assessable common shares of stock at a conversion price of seventy-five per cent (75%) of the fair market value of the shares, five days prior to the conversion date. Once the conversion has taken place, it is irrevocable.

The Company has recorded a beneficial conversion feature of $6,667 which will amortize over the life of the note.

At January 31, 2015, the balance of unamortized debt discount was $2,835 (April 30, 2014-$6,091) and the accrued interest on the “Note” was $3,458 (April 30, 2014-$614). During the nine month period to January 31, 2015 the Company charged interest expense of $6,100, comprising accrued interest of $2,844 and amortization of debt discount of $3,256.

Anton Group Hill Ltd. #3

On March 18, 2014, the Company issued an Unsecured Convertible Promissory Note (The “Note”) to Anton Group Hill Ltd. Or its permitted assigns (“Holder”) in the principle sum of fifteen thousand ($15,000), plus simple interest thereon from the date of this note until fully paid at the rate of ten percent (10%) per annum payable in arrears and matures in two (2) years from the date of issue. Interest on this note shall be computed on the basis of a 360 day year and a 30 day month. This is a working capital loan.

The principle can be repaid in whole but not in part with accrued interest, at any time without penalty on production of a written notice ten days in advance.

The “Note” holder has the option to convert the principle sum plus any accrued interest into no-assessable common shares of stock at a conversion price of seventy-five per cent (75%) of the fair market value of the shares, five days prior to the conversion date. Once the conversion has taken place, it is irrevocable.

The Company has recorded a beneficial conversion feature of $5,000 which will amortize over the life of the loan.

At January 31, 2015, the balance of unamortized debt discount was $2,353 (April 30, 2014-$4,705) and the accrued interest on the “Note” was $2,432 (April 30, 2014-$314). During the nine month period to January 31, 2015, the Company charged interest expense of $4,471, comprising accrued interest of $2,118 and amortization of debt discount of $2,353.

Anton Group Hill Ltd. #4

On April 15, 2014, the Company issued an Unsecured Convertible Promissory Note (The “Note”) to Anton Group Hill Ltd. or its permitted assigns (“Holder”) in the principle sum of fifteen thousand ($15,000), plus simple interest thereon from the date of this note until fully paid at the rate of ten percent (10%) per annum payable in arrears and matures in two (2) years from the date of issue. Interest on this note shall be computed on the basis of a 360 day year and a 30 day month. This is a working capital loan.

The principle can be repaid in whole but not in part with accrued interest, at any time without penalty on production of a written notice ten days in advance.

The “Note” holder has the option to convert the principle sum plus any accrued interest into non-assessable common shares of stock at a conversion price of seventy-five per cent (75%) of the fair market value of the shares, five days prior to the conversion date. Once the conversion has taken place, it is irrevocable.

The Company has recorded a beneficial conversion feature of $5,000 which will amortize over the life of the note.

At January 31, 2015, the balance of unamortized debt discount was $2,653 (April 30, 2014- $4,897) and the accrued interest on the “Note” was $2,206 (April 30, 2014-$110). During the nine month period to January 31, 2015, the Company charged interest expense of $4,341, comprising accrued interest of $2,096 and amortization of debt discount of $2,244.


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LG Capital Funding LLC

On June 20, 2014, the Company issued a Convertible Redeemable Note (“The Note”) to LG Capital Funding, LLC., or its permitted assigns (“Holder”) in the principle sum of fifty thousand dollars ($50,000), plus simple interest thereon from the date of this “Note” until fully paid at the rate of eight percent (8%) per annum payable in arrears and matures in one (1) year from the date of issue. This is a working capital loan.

During the first 180 days that this “Note” is in effect, it may be prepaid at 150% of the face amount plus any accrued interest. This “Note” may not be prepaid after the 180 th day.

The “Note” holder has the option to convert the principle sum plus any accrued interest into non-assessable common shares of stock at a conversion price of fifty-five per cent (55%) of the lowest daily closing bid , fifteen days prior to the conversion date. Once the conversion has taken place, it is irrevocable. In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to 45% instead of 55% while that “Chill” is in effect.

The Company has recorded a beneficial conversion feature of $40,909 which will amortize over the life of the “Note”.

At January 31, 2015, the balance of unamortized debt discount was $8,475 (April 30, 2014-$0) and the accrued interest on the “Note” was $8,384 (April 30, 2014-$0). During the nine month period to January 31, 2015, the Company charged interest expense of $40,818, comprising accrued interest of $8,384 and amortization of debt discount of $32,434.

Auctus Private Equity Fund LLC

On July 29, 2014, the Company issued a Convertible Promissory Note (The “Note”) to Auctus Private Equity Fund, LLC, or its permitted assigns (“Holder”) in the principle sum of fifty six thousand, two hundred and fifty dollars ($56,250) , plus simple interest thereon from the date of this “Note” until fully paid at the rate of eight percent (8%) per annum payable in arrears and matures in nine (9) months from the date of issue, namely April 29, 2015. This is a working capital loan.

This “Note” may not be prepaid in whole or part without permission of the “Holder” which may be withheld for any or no reason.

The “Note” holder has the option to convert the principle sum and any accrued interest into non-assessable common shares of stock at a conversion price of fifty five percent (55%) of the lowest daily closing bid, twenty five days prior to the conversion date. One the conversion has taken place it is irrevocable. In the event that the Company experiences a DTC “Chill” on its shares, the conversion price shall be subject to a further fifteen percent (15%) discount while the “Chill” is in effect.

The Company has recorded a beneficial conversion feature of $46,023 which will amortize over the life of the “Note”.

At January 31, 2015, the balance of unamortized debt discount was $6,598 (April 30, 2014-$0) and the accrued interest on the “Note” was $7,724 (April 30, 2014-$0). During the nine month period to January 31, 2015, the Company charged interest expense of $47,149, comprising accrued interest of $7,724 and amortization of debt discount of $39,425.

Typenex-Co-Investment LLC

On August 7, 2014, the Company issued a Secured Convertible Promissory Note (the “Note”) to Typenex Co-Investment, LLC or its permitted assigns (“Holder”) in the principle sum of two hundred and eighty thousand dollars ($280,000). The funds will be disbursed to the Company in five tranches. They all carry an interest rate on the principle amount of ten percent (10%) which will accrue from the date of issue of each tranche. The “Note” matures on September 7, 2015. The “Note” carries an Ordinary Issuer Discount of $25,000, a loan arrangement fee of $5,000 and the Company granted Typenex a share purchase warrant to purchase up to $140,000 of common stock.

An initial tranche of seventy five thousand dollars ($75,000) was received by the Company on August 7, 2014.


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The “Note” is secured by all of the intellectual property held by the company.

The “Note” holder has the option to convert the principle and any accrued interest into no-assessable common shares of stock at a conversion price of sixty five percent (65%) of the lowest closing bid twenty (20) trading days before the conversion date. Once the conversion has taken place it is irrevocable. In the event the Company experiences a DTC “Chill” on its shares, the conversion price will be subject to a further five percent (5%) discount for all future conversions. If any major default occurs after the effective date of the “Note” then the conversion factor for all future conversions shall automatically be reduced by an additional 5% for each of the first three (3) major defaults.

Commencing on February 7, 2015, and on the same day of each month thereafter, the Company shall pay the lender an instalment amount equal to $35,000 plus accrued interest. The instalment may be settled either by cash or the conversion of the “Note” into common stock as noted above.

The loan arrangement fee has been expensed as incurred and the Original Issuer Discount of $25,000 will amortize over the life of the “Note”. The Company also recorded a beneficial conversion feature of $70,000 which will amortize over the life of the “Note”.

At January 31, 2015, the balance of the unamortized debt discount was $34,267 (April 30, 2014-$0), the accrued interest on the “Note” was $14,429 (April 30, 2014-$0) and the balance of unamortized Ordinary Issuer Discount was $5,302. During the nine month period to January 31, 2015, the Company charged interest expense of $50,162, comprising accrued interest of $14,429, amortization of debt discount of $35,733 and amortization of Ordinary Issuer Discount of $19,698. The Company also recorded $275,300 of loan fees comprising the cash paid of $5,000 and the fair value of the share purchase warrant granted of $270,300.

Typenex Share Purchase Warrant disclosure

On August 7, 2014, in connection with the issuance of the Typenex Co-Investment, LLC note payable the Company issued a share purchase warrant whereby the holder could acquire up to $140,000 of Common stock until August 7, 2019. The exercise price is defined as the lower of $0.008 and Market Price. Market Price is comprises sixty five percent (65%) of the lowest 3 closing bid prices during the twenty (20) trading days before August 7, 2014. Should the average price of the three lowest bid prices be less than $0.005 then the conversion factor shall be reduced to 60% of market price. The Company has determined the exercise price is $0.00198 and accordingly a maximum of 70,707,071 common shares could be issued pursuant exercise of the share purchase warrant. The fair value of the warrants issuable pursuant was determined as $270,300, which has been expensed a loan arrangement fee.

A summary of changes in share purchase warrants for the nine months ended January 31, 2015 and the year ended April 30, 2014 is presented below:

NINE MONTHS ENDED YEAR ENDED
JANUARY 31, 2015 APRIL 30, 2014
NUMBER WEIGHTED AVERAGE EXERCISE PRICE NUMBER WEIGHTED AVERAGE EXERCISE PRICE

Balance, beginning of period

-

$
-

-

$
-

Issued

70,707,071

0.00198

-

$
-


Balance, end of period

70,707,071

$
0.00198

-

$
-



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As at January 31, 2015, share purchase warrants were outstanding for the purchase of common shares as follows:

NUMBER
EXERCISABLE
AT
NUMBER OF WARRANTS PRICE PER WARRANT JANUARY 31, 2015
EXPIRY
DATE

70,707,071

$
0.00198

70,707,071

August 7, 2019

The fair value of each finder’s warrant issued is estimated on the date of issuance using the Black-Scholes option pricing model with the following weighted average assumptions:

JANUARY 31, APRIL 30,
2015 2014

Risk free interest rate

1.6
%

-

Expected life

5 years

-

Expected volatility

195
%

-

Expected forfeiture

-

-

Expected dividend yield

-

-

Fair value of warrants issued

$
0.0038

-


JMJ Financial

On August 9, 2014, the Company issued a “Convertible Promissory Note” (the “Note”) to JMJ Financial or its permitted assigns (“Holder”) in the principle sum of five hundred thousand dollars (500,000). The funds will be disbursed to the Company as required. Each disbursement will carry an interest rate on the principle amount of twelve percent (12%) per annum with the first three months interest free. The maturity date of each disbursement is two (2) years. The “Note” carries an Ordinary Issuer Discount of $50,000, being 10% of the “Note”. The initial payment of forty four thousand dollars ($44,000) was received by the Company on August 13, 2014.

The “Note” holder has the option to convert the principle and any accrued interest into non-assessable common shares of stock, at a conversion price of the lower of $0.0035 or sixty percent (60%) of the lowest closing bid twenty five (25) trading days before the conversion date. In the event the conversion shares are not deliverable by Depository Trust Company (DTC), an additional 10% discount shall apply and if the Company experiences a DTC “Chill” on its shares, the conversion price will be subject to a further five percent (5%) discount while the “Chill” is in place.

The Original Issuer Discount on the first tranche of $4,000 will amortize over the life of the “Note”. The Company recorded a beneficial conversion feature of $29,333 which will amortize over the life of the “Note”.

At January 31, 2015, the balance of unamortized debt discount was $21,838 (April 30, 2014-$0), the accrued interest on the “Note” was $8,800 (April 30, 2014-$0) and the balance of unamortized Ordinary Issuer Discount was $1,731. During the nine month period to January 31, 2015, the Company charged interest expense of $16,295, comprising accrued interest of $8,800, amortization of debt discount of $7,495 and amortization of Ordinary Issuer Discount of $2,287.


http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=10582283

OD


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