NSAV Holding Inc (NSAV)

[DREAM BIG]

Convertible Promissory Notes Payable


During the period ended August 31, 2011, the Company issued four Unsecured Convertible Promissory Notes (the “Convertible Promissory Notes”) to the same entity in increments of $100,000, $499,952, $249,980 and $100,000, or a total of $949,932. The Convertible Promissory Notes were unsecured, due two years from the date of issuance, accrued interest at 10% per annum and were convertible into shares of the Company’s common stock at any time at the option of the holder at fifty percent (50%) of the fair market value of one share of the Company’s common stock based on the lowest bid during the ten days prior to the conversion date.


Due to their being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options embedded in the Convertible Promissory Notes, the conversion options are deemed and classified as derivative liabilities and recorded at fair value.


A summary of changes in Convertible Promissory Notes payable for the period ended August 31, 2011 is as follows:

Beginning balance $ -
Gross proceeds from the notes payable 949,932
Less: debt discount from conversion options (949,932)
Add: amortization of discount 949,932
Less: conversions to common stock (949,932)

Total notes payable $ -


During the nine month ended August 31, 2011, the holders of the Notes elected to convert all of the outstanding principal of $949,932 and interest of $31,032 on the Notes into 13,079,513 shares of common stock, or $0.075 per share.

As the conversion price was greater than the contractually obligated conversion price of $0.0255 per share, the Company recorded a gain on extinguishment of debt and an offsetting reduction in paid-in capital. Under the original terms, the note was convertible into 38,469,166 shares. As part of the settlement, the note was converted into only 13,079,513 shares. The gain on the settlement resulted from the fair value of the 25,389,643 shares not issued under the original loan terms calculated at the conversion date fair market value of $0.12 per share, or $3,072,147.


Read more: http://www.faqs.org/sec-filings/111020/Calibert-Explorations-Inc_10-Q/R9.htm#ixzz1dGZqwda8