Quarterly report pursuant to Section 13 or 15(d)

NOTE 7 - CONVERTIBLE DEBENTURES

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NOTE 7 - CONVERTIBLE DEBENTURES
6 Months Ended
Jun. 30, 2012
Debt Disclosure [Abstract]  
NOTE 7 - CONVERTIBLE DEBENTURES

 

NOTE 7 - CONVERTIBLE DEBENTURES


On July 31, and September 2, 1998, the Company sold its 8% convertible debenture in the aggregate principal amount of $1,500,000 to an accredited investor pursuant to an exemption from registration under Section 4(2) and/or Regulation D.


The material terms of the Company' convertible debentures provide for the payment of interest at 8% per annum payable quarterly, mandatory redemption after 3 years from the date of issuance at 130% of the principal amount.  Subject to adjustment, the debentures are convertible into Common Stock at the lower of a fixed conversion price ($1.82 per share for $900,000 principal amount of debentures; $1.61 per share for $600,000 principal amount of debentures) or 75% of the average closing bid price for the Company's Common Stock for the 5 trading days preceding the date of the conversion notice.  Repayment of the indebtedness is secured by a general lien on the assets of the Company and guarantee by 5 of the Company's subsidiaries.   


Total issue costs were $156,551.20 which were amortized over the initial terms of the debt with a maturity date of July 31 and September 2, 2001.