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EXCEL - IDEA: XBRL DOCUMENT - Source Gold Corp.Financial_Report.xls
10-K - ANNUAL REPORT - Source Gold Corp.srgl_10k.htm
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EX-32.1 - CERTIFICATION - Source Gold Corp.srgl_ex321.htm
EX-10.5 - PROMISSORY NOTE - Source Gold Corp.srgl_ex105.htm
EX-10.6 - STOCK PURCHASE AGREEMENT - Source Gold Corp.srgl_ex106.htm
EX-31.1 - CERTIFICATION - Source Gold Corp.srgl_ex311.htm
EX-31.2 - CERTIFICATION - Source Gold Corp.srgl_ex312.htm
v2.4.0.6
Convertible Notes Payable
12 Months Ended
Jul. 31, 2012
Notes  
Convertible Notes Payable

Note 6 Convertible Notes Payable

 

 

July 31,

 

July 31

 

2012

 

2011

 

 

 

 

Promissory Note #1

$

32,500

 

$

-

Promissory Note #2

 

30,000

 

 

-

Promissory Note #3

 

52,500

 

 

-

 

 

 

 

 

 

 

 

115,000

 

 

-

Interest

 

2,165

 

 

-

Accretion expense

 

38,425

 

 

-

 

 

 

 

 

 

 

$

155,590

 

$

-

 

Promissory Note #1

 

On February 1, 2012, the Company received funding pursuant to a convertible promissory note in the amount of $32,500 dated January 23, 2012.  The promissory note is unsecured, bears interest at 8% per annum, and matures on October 25, 2012During the year ended July 31, 2012 the Company accrued $1,268 (2011 - $nil) in interest expense.

 

The note may be converted at the option of the holder into Common stock of the Company.  The conversion price is 51% of the market price, where market price defined as “the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date”.

 

As at July 31, 2012 and July 31, 2011, the convertible note payable was recorded net of unamortized debt and accrued interest discount of $11,029 and $nil, respectively.

 

Promissory Note #2

 

On March 19, 2012, the Company received $30,000 cash and the Company issued a convertible promissory note in the amount of $30,000.  The promissory note is unsecured, interest free and repayable upon demand.

 

The note may be converted at the option of the holder into Common stock of the Company.  The fixed conversion price is $0.01 per share.  Accordingly the note may be converted into 3,000,000 common shares of the Company.

 

The Company determined that this Promissory note should be accounted for in accordance with FASB ASC 470-20 which addresses “Accounting for Convertible Securities with Beneficial Conversion Features".  The beneficial conversion feature is calculated at its intrinsic value (that is, the difference between the conversion price $0.01 and the fair value of the common stock into which the debt is convertible at the commitment date (being $0.08), multiplied by the number of shares into which the debt is convertible. The valuation of the beneficial conversion feature recorded cannot be greater than the face value of the note issued.

 

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital.  Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance

 

During the year ended July 31, 2012 interest expense relating to the beneficial conversion feature of this convertible note of $30,000 (2011 - $nil) was recorded in the financial statements, with a corresponding increase to additional paid in capital.

 

Promissory Note #3

 

On May 14, 2012, the Company received funding pursuant to a convertible promissory note in the amount of $52,500 dated May 14, 2012.  The promissory note is unsecured, bears interest at 8% per annum, and matures on February 18, 2013During the year ended July 31, 2012 the Company accrued $897 (2011 - $nil) in interest expense.

 

The note may be converted at the option of the holder into Common stock of the Company.  The conversion price is 51% of the market price, where market price defined as “the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date”.

 

As at July 31, 2012 and July 31, 2011, the convertible note payable was recorded net of unamortized debt and accrued interest discount of $34,316 and $nil, respectively.