Convertible Notes Payable

6 Months Ended

Jun. 30, 2017

Convertible Notes Payable [Abstract]

NOTE 5 – CONVERTIBLE NOTES PAYABLE

The Company regularly issues notes payable which are convertible at a discount of the trading price of the Company's common stock. Due to these provisions, the embedded conversion option qualified for derivative accounting under ASC 815-15, Derivatives and Hedging.

Convertible notes payable dated December 11, 2014, with Redwood Management, LLC and Dominion Capital, LLC (the "Holder") in the aggregate principal amount of $608,696 for a purchase price of $500,000 (8% original issue discount). The Holder is guaranteed interest at the rate of 12% and the notes have a maturity date of December 11, 2015. The Company began making amortization payments on May 11, 2015 and continuing monthly thereafter. The Debentures are convertible into shares of common stock of the Company at any time at the discretion of the Investors at a conversion price equal to the lesser of (i) $0.10 or (ii) 70% of the lowest traded price per share of the common stock during the twenty-five (25) trading days prior to the date of conversion.

Convertible note with the Vires Group dated July 10, 2015 for an aggregate principal amount of $69,000 with $4,000 in deferred financing costs for broker fees. The note earns an interest rate equal to 8% per annum and is due on April 30, 2016. The note is convertible any time after 180 days from issuance at 62% of the average of the lowest 3 trading prices of the Company's common stock during the 30 trading days prior to the conversion date.

Convertible note with LG Capital dated July 27, 2015 for an aggregate principal amount of $45,000 with $2,250 in deferred financing costs for broker fees. The note earns an interest rate equal to 8% per annum and matures on July 27, 2016. The note is convertible at 62% of the lowest trading price of the Company's common stock during the 15 trading days prior to the conversion date.

Convertible note with JMJ dated August 31, 2015 for an aggregate principal amount of $44,000 with a $4,000 original issue discount. The note earns an interest rate equal to 12% per annum and matures on August 31, 2017. The note is convertible at 60% of the lowest trading price of the Company's common stock during the 20 trading days prior to the conversion date.

Convertible notes payable with Union Capital with an aggregate principal amount of $342,996. The Company recorded debt discounts totaling $255,961, resulting from the bifurcation of the derivative liability and determined that the fair value of the conversion feature was $264,562 at the issuance date. The notes are convertible at 60% of the lowest trading price of the Company's common stock during the 20 trading days prior to the date of conversion.

Convertible notes payable with GW Holding Group with an aggregate principal amount of $135,827. The notes bear interest at 10% per annum and mature at various dates from March through September of 2017. The notes are convertible at 52% of the lowest trading price of the Company's common stock during the 20 trading days prior to the conversion date. Pursuant to these notes, the Company recorded a debt discount of $169,086, resulting from the bifurcation of the derivative liability. The Company determined that the fair value of the conversion feature was 151,392 at the issuance date.

Convertible notes payable as of June 30, 2017 and December 31, 2015, consisted of the following:

Lender	Interest Rate			Issue Year		Maturity Year		Principal June 30, 2017			Principal December 31, 2016
Redwood/Dominion Capital		12	%		2014		2015	$	148,164		$	148,164
JMJ		12	%		2015		2017		33,000			33,000
Union Capital		8	%		2015		2016		316,447			316,447
GW Holdings		10	%		2015		2016		35,000			35,000
Union Capital		8	%		2016		2017		388,544			343,863
GW Holdings		8	%		2016		2017		142,693			129,851
Total principal									1,063,848			1,006,325
Less debt discount									(169,705	)		(400,579	)
Deferred financing costs									(5,890	)		(15,504	)
Net convertible debt									888,253			590,242
Current maturities									580,001			535,231
Long term, net								$	308,282		$	55,011

As summary of value changes to the notes for the six months ended June 30, 2017 is as follows:

Carrying value of Convertible Notes at December 31, 2016	$	590,242
Additional principal		49,472
Total principal		639,714
Less: conversion of principal		-
Less: discount related to fair value of the embedded conversion feature		(47,991	)
Less: deferred financing cost related to debt issuances		(1,500	)
Less: discount related to original issue discount		(3,786	)
Add: amortization of deferred financing cost		9,929
Add: amortization of discount		291,887
Carrying value of Convertible Notes at June 30, 2017	$	888,253

World Moto, Inc. 10-Q