Kartoon Studios, Inc. Annual report pursuant to section 13 and 15(d)

Annual report pursuant to section 13 and 15(d)

8. Notes Payable (Tables)

8. Notes Payable (Tables)

12 Months Ended

Dec. 31, 2013

Black-Scholes valuation for the warrants

As of June 27, 2012, the warrants were valued in the amount of $379,688, based on the Black-Scholes valuation using the following assumptions:

Risk-free interest rate	0.73%
Expected life in years	5
Dividend yield	0
Expected volatility	63.65%

As of June 27, 2012, the debt discount for the convertible feature of the debenture was valued in the amount of $269,284 using the Black-Scholes calculation with the following assumptions:

Risk-free interest rate	0.31%
Expected life in years	2
Dividend yield	0
Expected volatility	60.01%

On August 29, 2013, the date of assignment of the Debentures, a debt discount was recorded in the aggregate amount of $1,163,333 for the derivative value of the convertible feature of the Reissued Debenture upon the exchange date using the Black-Scholes calculation with the following assumptions:

Risk-free interest rate	0.14%
Expected life in years	.83
Dividend yield	0
Expected volatility	63.22%

Notes payable and accrued interest

	12/31/2013		12/31/2012
Notes Payable
Debenture - $1,000,000 16% senior secured convertible (a)	$	–	$	1,000,000
Debt Discount - $1,000,000 16% senior secured convertible (a)		–		(485,147	)
Reissued Debenture - $1,163,333 16% senior secured convertible (a)		–		–
Debt Discount - $1,163,333 16% senior secured convertible (a)		–		–
Bridge Notes - 12% convertible (b)		–		–
Total Notes Payable		–		514,853
Less: Current Portion		–		–
Long Term Portion	$	–	$	514,853

Accrued Interest
Debenture - $1,000,000 16% senior secured convertible issued June 27,2012 (a)	$	–	$	26,667
2006 Debenture - $2,500,000 Terminated July 2009 (c)		–		19,049
Bridge Notes - $530,000 12% convertible issued August 30, 2013 (b)		–		–
Accrued Interest	$	–	$	45,716