XcelMobility Inc. (OTCPK:XCLL) announced that it has entered into a securities purchase agreement for a private placement of a senior convertible note and warrants for gross proceeds of $250,000 on May 30, 2014. The company will issue the securities to new accredited investor, Hanover Holdings I, LLC. The principal amount of the note is $350,000 and is being issued at a original issue discount of approximately 28.57%. As part of the transaction, $40,000 of the outstanding principal amount of the note shall be automatically extinguished if the company has properly filed the registration statement with the Securities and Exchange Commission covering the resale by the investor of the shares of common Stock issued or issuable upon conversion of the note and no event of default or an event that with the passage of time or giving of notice would constitute an event of default has occurred on or prior to such date. Also, as part of the transaction $60,000 of the outstanding principal amount of the note shall be automatically extinguished without any cash payment by the company if the registration statement has been declared effective by the SEC on or prior to the effectiveness deadline and no event of default or an event that with the passage of time or giving of notice would constitute an event of default has occurred on or prior to such date. The company will issue the securities pursuant to exemption provided under Regulation D. The company has the right at any time to redeem all, but not less than all, of the total outstanding amount then remaining under the Convertible Note in cash at a price equal to 135% of the total amount of such note then outstanding. If at any time after the closing date, the closing bid price of the shares is equal to or greater than 140% of the exercise price for a period of 30 consecutive trading days, no equity conditions failure shall have occurred, and the aggregate dollar trading volume for each trading day during the measuring period exceeds $3,000 per day, then the company shall have the right to require the investor to exercise all, or any part, of the warrant at the then applicable exercise price. The company will not be permitted to effect a forced exercise if, after giving effect to such forced exercise, the company shall have received more than $150,000 in cash, in the aggregate, from one or more exercises of the warrant.

The note will carry an interest of 8% per annum and will mature on May 30, 2016. The convertible note is convertible at any time, in whole or in part, at the investor's option into shares at a conversion price equal to the lesser of the product of the arithmetic average of the lowest three trade prices during the 10 consecutive trading days ending and including the trading day immediately preceding the applicable conversion date and 65%, and $0.12. The warrants entitle the holder to acquire 3,716,091 common shares at an exercise price of $0.040365 per share. The warrants can only be exercised for cash for a period of one year from the closing of the transaction. As part of the transaction, the company will pay $40,000 of reasonable attorneys' fees and expenses incurred by the investor in connection with the transaction of which $25,000 paid shall be withheld by the investor from the purchase price at the closing as a non-accountable and non-refundable document preparation fee. The principal amount and interest which is not paid when due will result in a late charge being incurred and the company will be payable an amount on which interest will charged at 18% per annum from the date such amount was due until the same is paid in full. The company did not ebgage any finder, broker or any other intermediary as part of the transaction. Anthony J. Marsico, Esq. of Greenberg Traurig, LLP will serve as legal counsel to the investor.

On May 30, 2014, XcelMobility Inc. closed the transaction.