Metrospaces Inc (MSPC)

[Helter Skelter]

Related to the derivative...non-cash loss expensed...

Note 9 – Acquisition Note Payable

In connection with the acquisition referred to in Note 4, the Company issued a convertible promissory note in the principal amount of $4,500,000. The note was convertible at, at any time at the option of the holder, into shares of Common Stock, as provided therein. The Company has determined that the conversion feature embedded in the note constituted a derivative and it has been bifurcated from the note and recorded as a derivative liability, with a corresponding discount recorded to the associated debt or a charge to interest expense where the derivative exceeds the carrying value of the note, on the accompany balance sheet, and revalued to fair market value at each reporting period. During the year ended December 31, 2015, the Company made principal payments aggregating $56,100. On June 13, 2015, the Company exchanged the unpaid $4,443,900 of the note and accrued interest thereon for 45,354 shares of our Series C PIK Convertible Preferred Stock.