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Thursday, 09/29/2016 6:59:26 PM

Thursday, September 29, 2016 6:59:26 PM

Post# of 119915
SEANIEMAC INTERNATIONAL, LTD. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30, 2016
(Unaudited)

So long as the Company shall have any obligation under the Note, the Company shall not, without Apollo Capital’s written consent, lend money, give credit or make advances to any person, firm, joint venture or corporation, including, without limitation, officers, directors, employees, subsidiaries, and affiliates of the Company, except loans, credits or advances (a) in existence or committed on the date hereof and which the Company has informed Apollo Capital in writing prior to the date hereof, (b) made in the ordinary course of business, or (c) not in excess of $100,000.

The Company granted Apollo Capital a five (5) business day right of first refusal to provide the Company with any and all of the Company’s future capital needs until Apollo Capital has converted this Note in full or until the Company’s obligations to Apollo hereunder are otherwise satisfied in full. The Company will give Apollo Capital ten (10) business days’ prior written notice by email, receipt requested, of all capital needs during the period of such right of first refusal.

At the inception of the Apollo Capital note, the Company determined the aggregate fair value of $126,760 of embedded derivatives. The fair value of the embedded derivatives was determined using the Binomial Option Pricing Model based on the following assumptions: (1) dividend yield of 0%; (2) expected volatility of 177.05%, (3) weighted average risk-free interest rate of 0.11%, (4) expected life of 1.00 year, and (5) estimated fair value of the Company’s common stock of $0.00032 per share. The determined fair value of the debt derivatives of $30,000 was charged as a debt discount up to the net proceeds of the note with the remainder of $96,791 charged to current period operations as non-cash interest expense.

The charge of the amortization of debt discounts and costs for the three months ended June 30, 2016 and 2015 was $3,044 and $0, accounted for as interest expense. The charge of the amortization of debt discounts and costs for the six months ended June 30, 2016 and 2015 was $6,650 and $0, accounted for as interest expense. The remaining balance for the six months ended June 30, 2016 is $35,500.

On March 17 2016, the Company issued to Apollo Capital Group, LLC (“Apollo Capital”) a Convertible Promissory Note (the “Note”) in the original principal amount of $50,000 (the “Purchase Price”) which Note bears interest at 12% per annum and is compounded. As of June 30, 2016 the Company received $50,000 of the convertible note. The Company sold the Note to Apollo Capital for $50,000 with $5,000 retained by Apollo Capital as an original issuance discount for due diligence and legal expenses related to the transaction. The principal amount and accrued interest under the Note is convertible into the Company’s common stock, $0.001 par value (the “Common Stock”), at Apollo Capital’s option, at any time beginning 180 days after the date of issuance at a 60% discount of by the lowest trading price for the Company’s common stock during the 30 trading day period prior to conversion (the “Conversion Price”). All outstanding principal and accrued interest on the Note is due and payable on the maturity date, which date is September 17, 2016 (the “Maturity Date”). The conversion price is subject to adjustment in the event the Company sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant or any option to purchase or other disposition), any common stock or common stock equivalents entitling any person to acquire shares of Common Stock at an effective price per share that is lower than the conversion price in effect on the date of such issuance. In addition, the Conversion Price is subject to proportional adjustment in the event of stock splits, stock dividends and similar corporate events.

At the inception of the Apollo Capital note, the Company determined the aggregate fair value of $187,519 of embedded derivatives. The fair value of the embedded derivatives was determined using the Binomial Option Pricing Model based on the following assumptions: (1) dividend yield of 0%; (2) expected volatility of 176.67%, (3) weighted average risk-free interest rate of 0.11%, (4) expected life of 1.00 year, and (5) estimated fair value of the Company’s common stock of $0.00032 per share. The determined fair value of the debt derivatives of $55,000 was charged as a debt discount up to the net proceeds of the note with the remainder of $132,519 charged to current period operations as non-cash interest expense. The charge of the amortization of debt discounts and costs for the for the three months ended June 30, 2016 and 2015 was $28,762 and $0 and for the six months ended June 30, 2016 and 2015 was $29,630 and $0, accounted for as interest expense. The remaining balance for the six months ended June 30, 2016 is $55,000.

On March 29, 2016 the Company entered into a Leak-Out agreement with Apollo Capital Corp. The agreement will remain in effect until July 1, 2016. According to the agreement Apollo Capital Corp can trade no more than 18.5% of the daily number of cash volume of the common stock traded either of (i) the prior calendar week (Sunday – Saturday) or (ii) the prior seven calendar days, in each case as reported by OTC Markets Group, Inc. In addition, the daily limit is cumulative and applied in aggregate and not for each of the security and derivate security of the Company owned of record or beneficially by each Holder.

On December 18, 2015, the remaining balance of $302,185 of principal and $17,872 in accrued interest was assigned to Apollo Capital Corp from Iliad Research and Trading, L.P. A loss of $576,431 resulted from the debt modification. The remaining balance as of December 31, 2015 is $320,057. On December 18, 2015, the Company issued to Apollo Capital Group, LLC (“Apollo Capital”) a Convertible Promissory Note (the “Note”) in the original principal amount of $320,057 (the “Purchase Price”) which Note bears interest at 12% per annum and is compounded daily. The principal amount and accrued interest under the Note is convertible into the Company’s common stock, $0.001 par value (the “Common Stock”), at Apollo Capital’s option, at any time beginning 180 days after the date of issuance at a 65% discount of by the lowest trading price for the Company’s common stock during the 30 trading day period prior to conversion (the “Conversion Price”). All outstanding principal and accrued interest on the Note is due and payable on the maturity date, which date is June 18, 2016 (the “Maturity Date”). The conversion price is subject to adjustment in the event the Company sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant or any option to purchase or other disposition), any common stock or common stock equivalents entitling any person to acquire shares of Common Stock at an effective price per share that is lower than the conversion price in effect on the date of such issuance. In addition, the Conversion Price is subject to proportional adjustment in the event of stock splits, stock dividends and similar corporate events.

F- 33


SEANIEMAC INTERNATIONAL, LTD. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30, 2016
(Unaudited)

On May 12, 2016, the Company converted $2,000 of principal into 8,163,265 shares of common stock. The determined fair value of the debt derivatives of $6,163 was reclassified into equity during the period ended June 30, 2016. As of June 30, 2016, the outstanding loan balance on this including forbearance liability was $318,057.

The charge of the amortization of debt discounts and costs for the three months ended June 30, 2016 and 2015 was $0 and $27,362, respectively, and was accounted for as interest expense.
The charge of the amortization of debt discounts and costs for the six months ended June 30, 2016 and 2015 was $0 and $82,269, respectively, and was accounted for as interest expense. The remaining balance for the six months ended June 30, 2016 is $318,057.

Apollo Capital Corp- Convertible loan summary:

For the six months ended June 30, 2016, the Company converted $202,515 of principal into 551,892,855 shares of common stock, the related derivative liability of notes.

As of June 30, 2016 and December 31, 2015 the remaining balance due to Apollo Capital Corp is $383,330 and $0, respectively.

7. GE Park, LLC

On January 10, 2016, the terms a GE Park demand note totaling $50,000 and $4,000 of accrued interest was modified into convertible note (See Note 10). This note became convertible at 70% of the lowest traded price utilizing a 10-day look-back period. The determined fair value of the debt derivatives of $53,398 was charged as a loss on debt modification for the six months ended June 30, 2016. The note was fully converted into 77,142,856 shares valued at $54,000 during the six months ended June 30, 2016. The remaining balance for the six months ended June 30, 2016 is $0.

8. Apollo Management Group, LLC

On April 18, 2016, the Company issued to Apollo Capital Group, LLC (“Apollo Capital”) a Convertible Promissory Note (the “Note”) in the original principal amount of $220,000 (the “Purchase Price”) which Note bears interest at 12% per annum and is compounded daily. The Company sold the Note to Apollo Capital for $200,000 with $20,000 retained by Apollo Capital as an original issuance discount for due diligence and legal expenses related to the transaction. The principal amount and accrued interest under the Note is convertible into the Company’s common stock, $0.001 par value (the “Common Stock”), at Apollo Capital’s option, at any time beginning 180 days after the date of issuance at a 50% discount of by the lowest trading price for the Company’s common stock during the 20 trading day period prior to conversion (the “Conversion Price”). All outstanding principal and accrued interest on the Note is due and payable on the maturity date, which date is October 17, 2016 (the “Maturity Date”). The conversion price is subject to adjustment in the event the Company sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant or any option to purchase or other disposition), any common stock or common stock equivalents entitling any person to acquire shares of Common Stock at an effective price per share that is lower than the conversion price in effect on the date of such issuance. In addition, the Conversion Price is subject to proportional adjustment in the event of stock splits, stock dividends and similar corporate events.

The principal balance of the Note may be prepaid at any time after 10 days’ prior written notice by the Company to Apollo Capital by paying Apollo Capital an amount equal to the Prepayment Percentage (as hereinafter defined) multiplied by the sum of the principal amount due, accrued interest and any other amounts due under the Note. The Prepayment Percentage is (i) 150% during the period beginning on the date the Note is issued and ending 90 days thereafter or (ii) 200% during the period beginning 91 days after the Note is issued and ending 180 days thereafter. After the expiration of the 180 days after the date the Note issued, the Company has no right of prepayment.

F- 34


SEANIEMAC INTERNATIONAL, LTD. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30, 2016
(Unaudited)

At the inception of the Apollo Capital note, the Company determined the aggregate fair value of $400,567 of embedded derivatives. The fair value of the embedded derivatives was determined using the Binomial Option Pricing Model based on the following assumptions: (1) dividend yield of 0%; (2) expected volatility of 197.02%, (3) weighted average risk-free interest rate of 0.11%, (4) expected life of 1.00 year, and (5) estimated fair value of the Company’s common stock of $0.00035 per share. The determined fair value of the debt derivatives of $220,000 was charged as a debt discount up to the net proceeds of the note with the remainder of $180,567 charged to current period operations as non-cash interest expense. The charge of the amortization of debt discounts and costs for the for the three months ended June 30, 2016 and 2015 was $69,047 and $0 and for the six months ended June 30, 2016 and 2015 was $69,047 and $0, accounted for as interest expense. The remaining balance for the six months ended June 30, 2016 is $220,000.

On June 17, 2016, the Company issued to Apollo Management Group, LLC (“Apollo Capital”) a Convertible Promissory Note (the “Note”) in the original principal amount of $100,000 (the “Purchase Price”) which Note bears interest at 12% per annum and is compounded daily. During the six months ended June 30, 2016m, the Company received $60,500. The Company sold the Note to Apollo Capital for $100,000 with $10,000 retained by Apollo Management Group as an original issuance discount for due diligence and legal expenses related to the transaction. The principal amount and accrued interest under the Note is convertible into the Company’s common stock, $0.001 par value (the “Common Stock”), at Apollo Capital’s option, at any time beginning 180 days after the date of issuance at a 50% discount of by the lowest trading price for the Company’s common stock during the 20 trading day period prior to conversion (the “Conversion Price”). All outstanding principal and accrued interest on the Note is due and payable on the maturity date, which date is December 17, 2016 (the “Maturity Date”). The conversion price is subject to adjustment in the event the Company sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant or any option to purchase or other disposition), any common stock or common stock equivalents entitling any person to acquire shares of Common Stock at an effective price per share that is lower than the conversion price in effect on the date of such issuance. In addition, the Conversion Price is subject to proportional adjustment in the event of stock splits, stock dividends and similar corporate events.

The principal balance of the Note may be prepaid at any time after 10 days’ prior written notice by the Company to Apollo Capital by paying Apollo Capital an amount equal to the Prepayment Percentage (as hereinafter defined) multiplied by the sum of the principal amount due, accrued interest and any other amounts due under the Note. The Prepayment Percentage is (i) 150% during the period beginning on the date the Note is issued and ending 90 days thereafter or (ii) 200% during the period beginning 91 days after the Note is issued and ending 180 days thereafter. After the expiration of the 180 days after the date the Note issued, the Company has no right of prepayment.

At the inception of the Apollo Capital note, the Company determined the aggregate fair value of $93,206 of embedded derivatives. The fair value of the embedded derivatives was determined using the Binomial Option Pricing Model based on the following assumptions: (1) dividend yield of 0%; (2) expected volatility of 197.02%, (3) weighted average risk-free interest rate of 0.11%, (4) expected life of 1.00 year, and (5) estimated fair value of the Company’s common stock of $0.00035 per share. The determined fair value of the debt derivatives of $60,500 was charged as a debt discount up to the net proceeds of the note with the remainder of $32,706 charged to current period operations as non-cash interest expense. The charge of the amortization of debt discounts and costs for the for the three months ended June 30, 2016 and 2015 was $4,017 and $0 and for the six months ended June 30, 2016 and 2015 was $4,017 and $0, accounted for as interest expense. The remaining balance for the six months ended June 30, 2016 is $60,500.

13. Derivative Liabilities

As described in Note 12, as of June 30, 2016 and December 31, 2015, the Company issued convertible notes which are convertible into common stock, at holders’ option, at a discount to the market price of the Company’s common stock. The Company has identified the embedded derivatives related to these notes relating to certain anti-dilutive (reset) provisions. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date of debenture and to fair value as of each subsequent reporting date.

The following table represents the Company’s debt derivative liability activity for the six months ended June 30, 2016:

Balance December 31, 2015 $ 2,310,067
Initial measurement at issuance date of the notes 766,421
Loss on debt modification 134,614
Reclassification of derivative liability associated with convertible debt (483,333 )
Change in derivative liability during the six months ended June 30, 2016 (834,188 )
Balance June 30, 2016 $ 1,893,581

F- 35

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