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Notes Payable - Related Parties
 12 Months Ended
Dec. 31, 2012
Related Party Transactions [Abstract]  
Related Party Transactions Disclosure [Text Block]

8. Notes Payable - Related Parties

 

On March 29, 2012, the Company issued an unsecured note payable to Ramon Shealy ("Mr. Shealy"), a then director (who subsequently resigned) of the Company, in the amount of $238,000, bearing interest at a rate of 10% for the term of the note (the “$238,000 Shealy Note”). All principal and interest was due and payable on June 27, 2012. On June 27, 2012, the maturity was extended to August 27, 2012. On August 27, 2012 the maturity was extended to October 25, 2012. On October 24, 2012 the maturity was extended to November 24, 2012 (see below for further extension of the $238,000 Shealy Note). On April 16, 2012, the Company issued a note payable to Mr. Shealy, in the amount of $12,000, bearing interest at a rate of 10% per quarter (the “$12,000 Shealy Note”). All principal and interest was due on July 15, 2012. On July 12, 2012 the maturity was extended to September 13, 2012. On August 27, 2012 the maturity was extended to November 12, 2012. On November 11, 2012 the maturity was extended to November 24, 2012. On November 24, 2012 the $238,000 Shealy Note and the $12,000 Shealy Note were combined into a $250,000 promissory note, under the same terms, with a maturity date of January 1, 2014 (the $250,000 Shealy Note”).

 

On June 20, 2012, the Company issued an unsecured promissory note payable to a relative of the Company’s Founders, in the amount of $14,000, due July 1, 2014 and bearing interest at 5% per annum, with the principal and interest to be paid on maturity (the “$14,000 Jackie Chretien Note”). See Note 17, Subsequent Events, for pay-off of the $14,000 Jackie Chretien Note subsequent to December 31, 2012.

 

On July 16, 2012, the Company issued an unsecured note payable to a shareholder, Mr. Haddix (who on December 13, 2012 became a member of the Board of Directors of the Company), in the amount of $95,000, due 45 days from the date of issuance and bearing interest at a rate of 10% per annum, with the principal and interest to be paid on maturity (the “$95,000 Haddix Note”). On August 29, 2012 the maturity was extended to November 16, 2012. On November 16, 2012, the maturity was extended to December 16, 2012. On December 14, 2012 the maturity was extended to January 15, 2013.All other provisions of the promissory note were unchanged. See Note 17, Subsequent Events, for conversion of the $95,000 Haddix Note to restricted common shares of the Company subsequent to December 31, 2012.

  

On July 20, 2012, the Company issued an unsecured note payable to the Mr. Haddix in the amount of $25,000, due 45 days from the date of the issuance and bearing interest at a rate of 10% per annum, with the principal and interest to be paid on maturity (the $25,000 Haddix Note”). On August 29, 2012 the maturity was extended to November 16, 2012. On November 16, 2012 the maturity for the note was extended to December 14, 2012. On December 14, 2012 the maturity for the note was extended to January 15, 2013.-. See Note 17, Subsequent Events, for conversion of the $25,000 Haddix Note to restricted common shares of the Company subsequent to December 31, 2012

 

On February 22, 2001, the Company, Intellinetics, issued an unsecured promissory note to a relative, Dr. Love, of the Company’s Founders, in the amount of $199,537, bearing interest at a rate of 8.65% per annum (the $199,537 Dr. Love Note”). From time to time, the Company has paid $42,245 on the principal amount of the $199,537 Dr. Love Note. The Company owed the relative $157,292 of the principal amount in addition to $130,279 of accrued interest, for an aggregate total of $287,571 (principal and interest). On December 31, 2012, Intellinetics assigned the aggregate amount of $287,571 (principal and accrued interest) of the $199,537 Dr. Love Note between Intellinetics and Dr. Love to Globalwise and Globalwise assumed such assignment. On December 31, 2012, Globalwise entered into a satisfaction of note agreement with Dr. Love whereby Dr. Love surrendered a note with an outstanding amount of $157,292 and accrued interest in the amount of $130,279 (for an aggregate total of $287,571) to Globalwise and discharged the principal and accrued interest in the amount of $287,571 in consideration for Globalwise issuing to Dr. Love a convertible promissory note in the amount of $287,571 due January 1, 2014 at an interest rate of 8.65%. On December 31, 2012, Dr. Love exercised his conversion rights under the convertible promissory note and surrendered the convertible promissory note to Globalwise and Globalwise issued to Dr. Love 958,570 restricted common shares, $0.001 par value, at $0.30 per share (based on the closing price on the immediately preceding business day) (subject to the applicable holding period restrictions under Rule 144) in reliance upon exemptions from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D, as promulgated by the SEC.

  

Notes payable due to related parties consist of the following:

 

    December 31, 2012     December 31, 2011  
The $199,537 Dr. Love Note   $ -     $ $157,292
The $95,000 Haddix Note     95,000       -  
Notes payable, bearing interest at 5.00% per annum.  Principal and unpaid interest are due on January 1, 2014     105,415       105,415  
The $14,000 Jackie Chretien Note     14,000       -  
The $250,000 Shealy Note     250,000       -  
Total notes payable - related party   $ 464,415     $ 262,707  
Less current portion     (95,000 )     -  
Long-term portion of notes payable-related party   $ 369,415     $ 262,707  

 

See Note 17, Subsequent Events, for conversion of the $95,000 Haddix Note to restricted common stock, and the $14,000 Jackie Chretien Note, subsequent to December 31, 2012.

 

Future minimum principal payments of these notes payable as described in this Note 8 - Related Parties are as follows:

 

For the Twelve Months Ended   December 31,  
2013   $ 95,000  
2014     369,415  
Total   $ 464,415  

 

As of December 31, 2012 and December 31, 2011, accrued interest for these notes payable-related parties amounted to $72,033 and $157,859, respectively. Of these amounts, $4,373 and $0, respectively, is reflected within accrued expenses, related parties, and $72,033 and $157,859, respectively, is reflected within other long-term liabilities-related parties on the consolidated balance sheets.

 

For the twelve months ended December 31, 2012 and 2011, interest expense in connection with notes payable – related parties was $43,755 and $20,460, respectively.