Nice, but why so much debt?
6. Convertible Note Payable
On November 1, 2012, the Company entered into a Securities Purchase Agreement and Convertible Promissory Note between the Company and Asher Enterprises for $19,250. The convertible note carries an 8% rate of interest and is convertible into common stock at a variable conversion price of 45% of the market price which shall be calculated as the average of the lowest three trading prices during 20 day period prior to the conversion date. The Promissory Note is due on August 5, 2013. The balance of this note was $19,250 as of January 31, 2013.
On December 11, 2012, the Company entered into a Securities Purchase Agreement and Convertible Promissory Note between the Company and Asher Enterprises for $20,000. The convertible note carries an 8% rate of interest and is convertible into common stock at a variable conversion price of 45% of the market price which shall be calculated as the average of the lowest three trading prices during 20 day period prior to the conversion date. The Promissory Note is due on September 15, 2013. The balance of this note was $20,000 as of January 31, 2013.
7. Derivative Liabilities
On June 6, 2011, the Company entered into a Securities Purchase Agreement and Convertible Promissory Note between the Company and SE Media Partners, Inc. for $36,000. The convertible note carries an 5% rate of interest and is convertible into common stock at a variable conversion price of 50% of the market price which shall be calculated as the average of the lowest day during the preceding 5 days before conversion. The Promissory Note was due on December 6, 2011. The balance of this note was $14,905 as of January 31, 2013.
On June 22, 2011, the Company entered into a Securities Purchase Agreement and Convertible Promissory Note between the Company and Asher Enterprises for $32,500. The convertible note carries an 8% rate of interest and is convertible into common stock at a variable conversion price of 35% of the market price which shall be calculated as the lowest trading days during the preceding 120 days before conversion. The Promissory Note was due on March 26, 2012. The balance of this note was $0 as of January 31, 2013 as the remaining conversions occurred during the six months ended January 31, 2013.
On August 6, 2011, the Company entered into a Securities Purchase Agreement and Convertible Promissory Note between the Company and SE Media Partners, Inc. for $18,000. The convertible note carries an 5% rate of interest and is convertible into common stock at a variable conversion price of 50% of the market price which shall be calculated as the average of the lowest day during the preceding 5 days before conversion. The Promissory Note was due on December 6, 2011. The balance of this note was $18,000 as of January 31, 2013.
As of January 31, 2013, the Company was indebted to an unrelated third party for $107,400, for monies loaned to the Company. On October 12, 2010, the Company granted a promissory note to this party in the amount of $200,000 in consideration for monies loaned to the Company. The promissory note is non-interest bearing and due on demand. On September 1, 2011, the Company entered into two agreements, each of which provide for the exchange of the two promissory notes dated October 12, 2010 in the principal amount of $100,000 for convertible promissory notes (the “Convertible Notes”) in the aggregate principal amount of $100,000. Each Convertible Note plus accrued interest of 0% may be converted into shares of common stock of the Company at any time before the maturity date by the Convertible Note holder at a conversion price of $0.0004 per share at the time of conversion. In the event of a default by the Company, each Convertible Note plus accrued interest may be converted into shares of common stock of the Company at any time after the default date by the Convertible Note holder at a conversion price of the lower of (i) par value or (ii) half of the average bid price over the five trading days prior to the conversion date, but in no case for an amount less than a 51% interest in the Company.
The Company is obligated to register the shares underlying the Convertible Notes under the Securities Act of 1933 until shares become available for resale under Rule 144(k). On September 1, 2011, a note holder converted $52,800 of principal into 880,000 shares of the Company. On August 14, 2012, a note holder converted $1,800 of principal into 4,500,000 shares of the Company. On August 27, 2012, a note holder converted $1,800 of principal into 4,500,000 shares of the Company. On September 27 and 28, 2012, two note holders converted $5,400 of principal into 13,500,000 shares of the Company. On December 6 2012, two note holders converted $8,000 of principal into 20,000,000 shares of the Company. On December 27, 2012, one note holder converted $6,000 of principal into 15,000,000 shares of the Company. On January 3, 2013, one note holder converted $4,800 of principal into 12,000,000 shares of the Company. On January 3, 2013, two note holders converted $12,000 of principal into 30,000,000 shares of the Company.
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Minerco Resources, Inc.
(A Development Stage Company)
Consolidated Notes to the Financial Statements
(unaudited)
7. Derivative Liabilities (continued)
On August 9, 2011, the Company entered into a Securities Purchase Agreement and Convertible Promissory Note between the Company and Asher Enterprises for $27,500. The convertible note carries an 8% rate of interest and is convertible into common stock at a variable conversion price of 35% of the market price which shall be calculated as the lowest trading days during the preceding 120 days before conversion. The Promissory Note was due on May 11, 2012. The balance of this note was $22,700 as of January 31, 2013.
On September 27, 2011, the Company entered into a Securities Purchase Agreement and Convertible Promissory Note between the Company and Asher Enterprises for $35,000. The convertible note carries an 8% rate of interest and is convertible into common stock at a variable conversion price of 35% of the market price which shall be calculated as the lowest trading days during the preceding 120 days before conversion. The Promissory Note was due on June 29, 2012. The balance of this note was $35,000 as of January 31, 2013.
On November 6, 2011, the Company entered into a Securities Purchase Agreement and Convertible Promissory Note between the Company and SE Media Partners, Inc. for $27,000. The convertible note carries an 5% rate of interest and is convertible into common stock at a variable conversion price of 50% of the market price which shall be calculated as the average of the lowest day during the preceding 5 days before conversion. The Promissory Note was due on May 6, 2012. The balance of this note was $27,000 as of January 31, 2013.
On June 18, 2012, the Company entered into a Securities Purchase Agreement and Convertible Promissory Note between the Company and Asher Enterprises for $11,500. The convertible note carries an 8% rate of interest and is convertible into common stock at a variable conversion price of 35% of the market price which shall be calculated as the lowest trading days during the preceding 120 days before conversion. The Promissory Note is due on March 20, 2013. The balance of this note was $11,500 as of January 31, 2013.
On July 23, 2012, the Company entered into a Securities Purchase Agreement and Convertible Promissory Note between the Company and its former Chief Financial Officer for $267,998. The convertible note carries an 5% rate of interest and is convertible into common stock at a variable conversion price of 50% of the market price which shall be calculated as the average of the lowest day during the preceding 5 days before conversion. The Promissory Note is due on January 23, 2013.
On July 23, 2012, the Company entered into a Securities Purchase Agreement and Convertible Promissory Note between the Company and its former Chief Executive Officer for $320,301. The convertible note carries an 5% rate of interest and is convertible into common stock at a variable conversion price of 50% of the market price which shall be calculated as the average of the lowest day during the preceding 5 days before conversion. The Promissory Note is due on January 23, 2013.
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