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NOTE 5: SHORT-TERM DEBT
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12 Months Ended |
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Dec. 31, 2012
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| Short-term Debt [Text Block] |
NOTE
5: SHORT-TERM DEBT
On
June 28, 2011, an aggregate of $30,916 of convertible debt
and accrued interest of $614 was converted into 448,822
common shares.
On
August 25, 2011, Clean Coal borrowed $25,000. The note is
unsecured, bears interest at 10% per annum and matures August
25, 2012.
The note becomes convertible into shares of Clean Coal common
stock at $0.013 per share on August 25, 2012. Clean Coal
evaluated the conversion option under FASB ASC 470-20 and
determined it does not contain a beneficial conversion
feature.
On
August 29, 2011, Clean Coal borrowed $25,000. The note is
unsecured, bears interest at 10% per annum and matures August
29, 2012.
The note becomes convertible into shares of Clean Coal common
stock at $0.014 per share on August 29, 2012. Clean Coal
evaluated the conversion option under FASB ASC 470-20 and
determined it does not contain a beneficial conversion
feature.
On
September 13, 2011, Clean Coal borrowed $50,000 under a note
which is unsecured, bears interest at 15% per annum
beginning October
13, 2011 and matures October 13, 2011. If the note is repaid
prior to maturity, Clean Coal is required to issue the lender
500,000 common shares. If the note is not repaid by maturity,
Clean Coal is required to issue the lender 1,000,000 common
shares. The
note was not repaid as of October 13, 2011 and Clean Coal
issued the lender 1,000,000 common shares on that date. The
shares were valued at $22,000 and recorded as interest
expense.
On
September 15, 2011, Clean Coal borrowed $50,000 under a note
which is unsecured, bears interest at 15% per annum
beginning November
1, 2011 and matures November 1, 2011. If the note is repaid
prior to maturity, Clean Coal is required to issue the lender
500,000 common shares. If the note is not repaid by maturity,
Clean Coal is required to issue the lender 1,000,000 common
shares. The
note was not repaid as of November 1, 2011 and Clean Coal
issued the lender 1,000,000 common shares on that date. The
shares were valued at $17,000 and recorded as interest
expense.
On
November 10, 2011, Clean Coal borrowed $100,000 under a note
that is unsecured, bears interest at 5% per annum and
matures March
9, 2012. If the note is not repaid by maturity, Clean Coal is
required to issue the lender 600,000 common shares. This note
was not repaid prior to the maturity date and these shares
were issued on March 10, 2012, valued at $43,200, included in
the derivative liability and expensed (see Note 6).
During
December 2011, Clean Coal borrowed an aggregate of $197,000
under four notes. The notes are unsecured, bear interest at
10% per annum, beginning March 1, 2012, and mature March 31,
2012. In connection with the notes, Clean Coal issued the
lenders an aggregate of 3,940,000 common shares. The relative
fair value of the shares was determined to be $68,231 was
recorded as loan discounts. The discounts are being amortized
over the life of the loans using the effective interest rate
method. During 2011, amortization expense of $13,312 was
recorded.
During
2011, Clean Coal borrowed an additional $2,300 under a
previously issued note payable and repaid an aggregate of
$50,000 of previously issued notes payable.
$50,000
of the outstanding notes at December 31, 2011 became
convertible into common stock in August 2012 at $0.013 and
$0.014 per share. These notes and their accrued interest of
$5,027 were converted into an aggregate of 3,717,835 common
shares during September 2012.
During
2012, Clean Coal borrowed an aggregate of $458,000 under
multiple notes. The notes are unsecured, bear interest at
10%, beginning between March 1, 2012 and April 1, 2012, and
matured March 31, 2012. In connection with the notes, Clean
Coal agreed to issue the lenders an aggregate of 7,160,000
common shares. 3,160,000 shares were issued. The other
4,040,000 common shares were in excess of Clean Coal’s
authorized stock and were accounted for as a derivative
liability (see Note 6). The relative fair value of the
3,160,000 shares was determined to be $81,921 and was
recorded as loan discounts. The fair value of the 4,000,000
common shares was determined to be $205,160 of which $187,880
was recorded as loan discounts and $17,280 was expensed as a
loss on derivative liabilities. The discounts are being
amortized over the life of the loans using the effective
interest rate method and were fully amortized during the year
ended December 31, 2012. During June 2012, $200,000 of
these notes and accrued interest of $10,027 was extinguished
through the issuance of 4,000,000 common shares. The
fair value of the shares was determined to be $227,600
resulting in a loss on extinguishment of $17,573.
On
March 20, 2012, the Company borrowed $2,000,000 under a
promissory note. The note is unsecured, bears no interest and
matures July 17, 2012. The note becomes convertible into 6.7%
of the fully diluted outstanding common stock of the Company
upon shareholder approval of an increase to the authorized
stock of the Company. Clean Coal incurred financing costs of
$120,000 associated with this note which is being amortized
over the life of the note. During year ended December 31,
2012, amortization expense of $120,000 was recorded on these
deferred financing costs. During June 2012, the Company
increased the authorized stock of the company whereby the
note became convertible. The 6.7% of the fully diluted
outstanding common stock on the date of the increase was
determined to be 48,528,082 shares. Clean Coal evaluated
the note for a beneficial conversion feature under ASC 470-20
as of the date of the note and determined that a beneficial
conversion feature existed. The intrinsic value of the
beneficial conversion feature was determined to be
$2,000,000, and was recognized as a discount to the debt that
is being amortized using the effective interest method over
the life of the note. During the year ended December 31,
2012, amortization of $2,000,000 was recorded against this
discount. In August 2012, the note was converted into
48,528,082 common shares.
On
March 30, 2012, the Company borrowed $347,399 under a
promissory note. $94,758 of the borrowing consisted of
accrued interest that was converted to loan principal. The
note is unsecured, bears interest at 10% per annum beginning
June 30, 2012 and matures December 31, 2012. The note becomes
convertible into common stock on September 30, 2012 at $0.08
per share if the note is not repaid prior to maturity. Clean
Coal evaluated the note for a beneficial conversion feature
under ASC 470-20 on the date of the note and determined that
a beneficial conversion feature exists. The intrinsic value
of the beneficial conversion feature was determined to be
$21,712 and it will be recognized upon the note becoming
convertible. During June 2012, this note was
extinguished through the issuance of 4,342,485 shares of
common stock. The fair value of the stock on
extinguishment date was determined to be $247,087 resulting
in a gain on extinguishment of $100,312.
During
April 2012, Clean Coal borrowed an aggregate of $250,000
under two promissory notes. The notes are unsecured,
originally matured in May 2012 and bear interest at 10%.
During July 2012, these notes were modified whereby the
maturity date was extended to December 31, 2012 and $10,000
of accrued interest was converted to principal.
On
July 1, 2012, the Company borrowed $100,000 under a
promissory note. The note is unsecured, bears interest at 20%
per annum and matures November 26, 2012.
On
September 14, 2012, the Company issued a note to convert
accounts payable of $90,000 to debt. The note is unsecured,
bears interest at 10% per annum and matures December 10,
2012. This is the only note outstanding as of December 31,
2012 and it is past due and due on demand.
During
the year ended December 31, 2012, the Company made cash
payments totaling $1,040,303 on their outstanding notes
payable.
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