8. Convertible Notes Payable

The activity from the date of the merger, October 17, 2012, to December 31, 2013 for convertible notes payable related to YouChange is summarized in the following paragraphs. During the year ended December 31, 2012, $142,218 of principal and $7,747 of interest were converted into 118,038 shares of our common stock. During the year ended December 31, 2013, $107,500 of principal and $6,493 of interest were converted into 89,942 shares of our common stock. As of December 31, 2012, the outstanding convertible notes payable and associated accrued interest described below were converted into a total of approximately 108,680 shares of our common stock. As of December 31, 2013, the outstanding convertible notes payable and associated accrued interest described below were convertible into a total of approximately 22,841 shares of our common stock.

The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separately from the convertible note payable and may not be settled in cash upon conversion, is treated as a discount to the convertible note payable. This discount is amortized over the period from the date of issuance to the date the note is due using the effective interest method. If the note payable is retired prior to the end of its contractual term, the unamortized discount is expensed in the period of retirement to interest expense. In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the common shares at the commitment date to be received upon conversion.

The following convertible notes payable were outstanding as of December 31, 2013 and 2012:


	As of December 31,
	2013		2012
Convertible note payable to unrelated parties, issuance date of October 2011	$	—	$	10,000
Convertible note payable to unrelated parties, issuance date of April 2012		—		5,000
Convertible note payable to unrelated parties, issuance date of August 2012		—		10,000
Convertible note payable to unrelated parties, issuance date of September 2012		—		10,000
Convertible note payable to unrelated parties, issuance date of September 2012		—		12,500
Convertible note payable to unrelated parties, issuance date of September 2012		25,000		25,000
Convertible note payable to unrelated parties, issuance date of October 2012		—		25,000
Convertible note payable to unrelated parties, issuance date of October 2012		—		10,000
Convertible note payable to unrelated parties, issuance date of October 2012		—		25,000

Total convertible notes payable—short term		25,000		132,500
Less: unamortized discounts due to beneficial conversions features		—		(33,394	)

Total convertible notes payable—short term, net of discounts	$	25,000	$	99,106

Further details for the outstanding notes payable are as follows:

•

During October 2011, we issued for cash a $10,000 convertible note to an unrelated, accredited third party. The note matured three months from the date of issuance and was extended for an additional 30 days. The note bore interest at a rate of 10.0% per annum and was convertible at any time, with accrued interest, at the discretion of the investor into shares of our common stock at a rate of $1.25 per share. Based on our share price at the time the note agreement was entered into, we recognized a beneficial conversion feature of $5,200 for this convertible note. The holder converted the note and its accrued interest during the year ended December 31, 2013 into 9,278 shares of common stock.

•

During April 2012, we issued for cash a $5,000 convertible note to an unrelated, accredited third party. The note matured six months from the date of issuance and was extended for an additional 30 days. The note bore interest at a rate of 10.0% per annum and was convertible at any time, with accrued interest, at the discretion of the investor into shares of our common stock at a rate of $1.75 per share. Based on our share price at the time the note agreement was entered into, we recognized a beneficial conversion feature of $2,712 for this convertible note. The holder converted the note and its accrued interest during the year ended December 31, 2013 into 3,130 shares of common stock.

•

During August 2012, we issued for cash a $10,000 convertible note to an unrelated, accredited third party. The note matured six months from the date of issuance but could be extended for an additional 30 days at our discretion. The note bore interest at a rate of 10.0% per annum and was convertible at any time, with accrued interest, at the discretion of the investor into shares of our common stock at a rate of $1.25 per share. Based on our share price at the time the note agreement was entered into, we recognized a beneficial conversion feature of $6,400 for this convertible note. The holder converted the note and its accrued interest during the year ended December 31, 2013 into 8,460 shares of common stock.

•

During September 2012, we issued for cash a $10,000 convertible note to an unrelated, accredited third party. The note matured six months from the date of issuance but could be extended for an additional 30 days at our discretion. The note bore interest at a rate of 10.0% per annum and was convertible at any time, with accrued interest, at the discretion of the investor into shares of our common stock at a rate of $1.25 per share. Based on our share price at the time the note agreement was entered into, we recognized a beneficial conversion feature of $8,600 for this convertible note. The holder converted the note and its accrued interest during the year ended December 31, 2013 into 8,339 shares of common stock.

•

During September 2012, we issued for cash a $12,500 convertible note to an unrelated, accredited third party. The note matured six months from the date of issuance but could be extended for an additional 30 days at our discretion. The note bore interest at a rate of 10.0% per annum and was convertible at any time, with accrued interest, at the discretion of the investor into shares of our common stock at a rate of $1.25 per share. Based on our share price at the time the note agreement was entered into, we recognized a beneficial conversion feature of $10,750 for this convertible note. The holder converted the note and its accrued interest during the year ended December 31, 2013 into 10,418 shares of common stock.

•

During September 2012, we issued for cash a $25,000 convertible note to an unrelated, accredited third party. The note matured six months from the date of issuance but could be extended for an additional 30 days at our discretion. The note bore interest at a rate of 10.0% per annum and was convertible at any time, with accrued interest, at the discretion of the investor into shares of our common stock at a rate of $1.25 per share. Based on our share price at the time the note agreement was entered into, we recognized a beneficial conversion feature of $17,500 for this convertible note. Although this note was past its maturity at December 31, 2013 and 2012, the holder converted the note and its accrued interest subsequent to December 31, 2013 into 23,201 shares of common stock.

•

During October 2012, we issued for cash a $25,000 convertible note to an unrelated, accredited third party. The note matured six months from the date of issuance but could be extended for an additional 30 days at our discretion. The note bore interest at a rate of 10.0% per annum and was convertible at any time, with accrued interest, at the discretion of the investor into shares of our common stock at a rate of $1.25 per share. Based on our share price at the time the note agreement was entered into, we recognized a beneficial conversion feature of $11,000 for this convertible note. During the period ended September 30, 2013, the holder converted the note and its accrued interest into 21,031 shares of common stock.

•

During October 2012, we issued for cash a $10,000 convertible note to an unrelated, accredited third party. The note matured six months from the date of issuance but could be extended for an additional 30 days at our discretion. The note bore interest at a rate of 10.0% per annum and was convertible at any time, with accrued interest, at the discretion of the investor into shares of our common stock at a rate of $1.25 per share. Based on our share price at the time the note agreement was entered into, we recognized a beneficial conversion feature of $2,400 for this convertible note. During the year ended December 31, 2013, the holder converted the note and its accrued interest into 8,292 shares of common stock.

•

During October 2012, we issued for cash a $25,000 convertible note to an unrelated, accredited third party. The note matured six months from the date of issuance but could be extended for an additional 30 days at our discretion. The note bore interest at a rate of 10.0% per annum and was convertible at any time, with accrued interest, at the discretion of the investor into shares of our common stock at a rate of $1.25 per share. Based on our share price at the time the note agreement was entered into, we recognized a beneficial conversion feature of $13,000 for this convertible note. During the period ended September 30, 2013, the holder converted the note and its accrued interest into 20,994 shares of common stock.