CONVERTIBLE PROMISSORY NOTES

6 Months Ended

Jun. 30, 2012

CONVERTIBLE PROMISSORY NOTES [Text Block]

9. CONVERTIBLE PROMISSORY NOTES

On October 3, 2010, the Group issued a convertible promissory note in the principal amount of up to $400,000, with interest on the unpaid principal at a rate of 5.0% simple interest per annum. The Note matures on October 3, 2015. The outstanding principal and accrued but unpaid interest thereon may be converted (1) upon a qualified debt or equity financing, in which case the holder of the Note would receive for the same promissory note or class and series of stock, respectively, issued in such qualified financing; (2) upon mutual agreement by the holder and the Company, in which case the holder would receive a number of shares of common stock based on a conversion price equal to the trailing volume weighted average price; or (3) upon a reorganization, consolidation or merger of the Group, in which case the holder would receive a number of shares of common stock based on a conversion price equal to the trailing volume weighted average price. On October 4, 2010, the note was assigned to another party (“Note I”), and on January 21, 2011, the note holder agreed to extend the total funds available to the Group to $500,000. As of June 30, 2012, the Group has drawn $495,000 under Note I and no share conversion occurred.

On December 22, 2010, the Group issued a convertible promissory note (“Note II”) in the principal amount of $500,000, with interest on the unpaid principal at a rate of 5.0% simple interest per annum. The Note matures on December 22, 2015. The outstanding principal and accrued but unpaid interest thereon may be converted (1) upon a qualified debt or equity financing, in which case the holder of the Note would receive for the same promissory note or class and series of stock, respectively, issued in such qualified financing; (2) upon mutual agreement by the holder and the Group, in which case the holder would receive a number of shares of common stock based on a conversion price equal to the trailing volume weighted average price; or (3) upon a reorganization, consolidation or merger of the Group, in which case the holder would receive a number of shares of common stock based on a conversion price equal to the trailing volume weighted average price. As of June 30, 2012, the Group has drawn $500,000 under the Note and no share conversion occurred.

The details of convertible promissory notes as of June 30, 2012 are as follows:

		As of June 30, 2012
		Note I		Note II		Total
Convertible notes payable:
-Par value	$	495,000	$	500,000	$	995,000
-Accrued interest		37,668		38,043		75,711
	$	532,668	$	538,043	$	1,070,711

The details of convertible promissory notes as of December 31, 2011 are as follows:

		As of December 31, 2011
		Note I		Note II		Total
Convertible notes payable:
-Par value	$	495,000	$	500,000	$	995,000
-Accrued interest		25,326		25,581		50,907
	$	520,326	$	525,581	$	1,045,907

FIRST CHINA PHARMACEUTICAL GROUP, INC. 10-Q/A