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Loans Payable - Related Parties

6 Months Ended

Jun. 30, 2015

12. Loans Payable – Related Parties

Loans payable to related parties consist of the following:

	June 30, 2015		December 31, 2014
	(Unaudited)

Loan payable - GE Park, LLC (A)	$	114,374	$	166,200
Loans payable – Other related parties		4,046		-
Loans payable - Brookstein (B)		15,702		15,702
Loans payable - RDRD II Holding, LLC (C)		903,292		880,478
Total	$	1,037,414	$	1,062,380

Convertible loans payable to related parties consist of the following:

	June 30, 2015		December 31, 2014
	(Unaudited)

Convertible loan payable - GE Park, LLC (A)	$	-	$	95,000
Convertible loan payable - GE Park, LLC (A)		79,750		79,750
Unamortized debt discount		-		(63,888	)
Total	$	79,750	$	110,862

The Company has specified the following person and entities as related parties with ending balances as of June 30, 2015 and December 31, 2014:

RDRD, a shareholder of the Company, Barry Brookstein, our Chief Executive Officer and Chief Financial Officer and GE Park, LLC an affiliate of the non-controlling interest holder in Seaniemac minority shareholder.

A. Loan Payable – GE Park, LLC

During the year ended December 31, 2014, GE Park, LLC loaned the Company $166,200 to be used for working capital purposes. These notes bear interest at 4% per annum and are due on demand.

On February 12, 2015, the terms a GE Park demand note totaling $47,600 was modified. This note became convertible at 50% of the lowest traded price utilizing a 10 day look-back period (see Note-13). The determined fair value of the debt derivatives of $94,917 was charged as a loss on debt modification for the six months ended June 30, 2015. The note was fully converted into 79,193,262 shares during the six months ended June 30, 2015 (See Note 13).

On February 20, 2015, the terms of two GE Park demand notes totaling $33,600 were modified. These notes became convertible at 50% of the lowest traded price utilizing a 10 day look-back period (see Note-13). The determined fair value of the debt derivatives of $75,378 was charged as a loss on debt modification for the six months ended June 30, 2015. The note amounted to $21,600 was converted into 33,895,385 shares during the six months ended June 30, 2015 (See Note 13).

During the six months ended June 30, 2015, the GE Park accounts payable balance amounted to $17,374 was re classed into as “loan payable”.

On October 22, 2013, GE Park, LLC loaned the Company $95,000 to be used for working capital purposes. These notes bear interest at 4% per annum and are due on demand. On November 22, 2014, this promissory loan was modified into convertible note and subsequently transferred to Apollo Capital Corp (See Note 13).

The Note bears interest at the rate of 4% per annum. All interest and principal must be repaid on within five days after demand. The note is convertible into common stock, at a 50% discount to the average lowest trading prices of the common stock during the 10 trading day period prior to conversion.

The Company has identified the embedded derivatives related to the above described note. These embedded derivatives included certain conversion features and reset provisions. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date of the Notes and to fair value as of each subsequent reporting date.

On October 22, 2013, the Company determined the aggregate fair value of $187,188 of embedded derivatives. The fair value of the embedded derivatives was determined using the Binomial Option Pricing Model based on the following assumptions: (1) dividend yield of 0%; (2) expected volatility of 278.85%, (3) weighted average risk-free interest rate of 0.02, (4) expected life of 0.25 year, and (5) estimated fair value of the Company’s common stock of $0.00719 per share.

During the six months ended June 30, 2015, the Company converted $95,000 of principal into 136,053,867 shares of common stock (See Note 13). The determined fair value of the debt derivatives of $139,813 was reclassified into equity during the period ended June 30, 2015.

In addition, the Company issued GE Park a convertible note in the amount of $79,750 on November 25, 2014. The cash purchase price of $72,500 (which amount is net of the pro-rata portion of original issue discount of $7,250) was received by the Company on the issuance date.

The Note bears interest at the rate of 4% per annum. All interest and principal must be repaid on May 25, 2015. The note is convertible into common stock, at a 50% discount to the lowest trading prices of the common stock during the 20 trading day period prior to conversion. On March 3, 2015, the GE Park conversion terms of the GE Park convertible note dated November 25, 2014 for $79,750 were modified to 50% of the lowest traded price utilizing a 10 day look-back. A loss a $38,052 resulted from this modification.

On October 25, 2014, the Company determined the aggregate fair value of $139,421 of embedded derivatives. The fair value of the embedded derivatives was determined using the Binomial Option Pricing Model based on the following assumptions: (1) dividend yield of 0%; (2) expected volatility of 280.29%, (3) weighted average risk-free interest rate of 0.07%, (4) expected life of 0.50 year, and (5) estimated fair value of the Company’s common stock of $0.00719 per share. The determined fair value of the debt derivatives of $72,500 as charged as a debt discount up to the net proceeds of the note with the remainder of $66,921 charged to current period operations as non-cash interest expense.

The charge of the amortization of debt discounts and costs for the three and six months ended June 30, 2015 was $1,410 and $63,888, respectively, and was accounted for as interest expense.

Interest expense for the three and six months ended June 30, 2015 and 2014 totaled $1,670 and $3,323, respectively. Interest expense for the three and six months ended June 30, 2014 totaled $1,734 and $2,683, respectively. Accrued interest at June 30, 2015 and December 31, 2014 totaled $10,162 and $8,799, respectively.

B. Loans Payable – Brookstein

At various times, Brookstein loaned the Company monies for working capital purposes. The loans do not bear interest and are due on demand. At June 30, 2015 and 2014, loans payable to Brookstein totaled $15,702 for both.

C. Loans Payable – RDRD II Holding, LLC

RDRD II Holding, LLC, a Delaware limited liability company and substantial shareholder of the Company (“RDRD”) loaned monies to the Company and its subsidiary, Seaniemac, for working capital purposes. The loans to the Company aggregating $370,067 do not bear interest and are due on demand. The loans to Seaniemac aggregating $516,498 bear interest at 4% per annum. At June 30, 2015 and December 31, 2014, loans payable were $903,292 and $880,748, respectively, and accrued interest totaled $42,571 and $34,831, respectively.

The Company imputed interest of $7,561 and $5,610 amount loaned to the Company by RDRD during the three months ended June 30, 2015 and 2014, respectively, at an assumed rate of 8% per annum.

The Company imputed interest of $14,776 and $10,874 amount loaned to the Company by RDRD during the six months ended June 30, 2015 and 2014, respectively, at an assumed rate of 8% per annum.

Interest expense to related parties totaled $14,616 and $13,078 for the three month ended June 30, 2015 and 2014 respectively.

Interest expense to related parties totaled $26,960 and $25,167 for the six month ended June 30, 2015 and 2014 respectively.