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Notes Payable
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6 Months Ended |
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Jun. 30, 2012
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| Notes to Financial Statements | |
| Notes Payable |
Note C – Notes Payable
On May 1, 2012 we were notified by Gulf Coast Capital, LLC that they had purchased and caused to be assigned a $50,000 convertible debenture from The John Saunders Trust that originally purchased the same from us on July 7, 2008, plus $15,572 in interest. Additionally, we were notified that Gulf Coast had purchased and caused to be assigned a note payable to John Saunders in the amount $15,000 plus accrued interest in the amount of $3,265. On May 21, 2012 we received a demand letter requiring full payment by May 31, 2012 of the $50,000 debenture and the $15,000 note, plus accrued interest, now owned by Gulf Coast.
By means of a subscription agreement between Gulf Coast and us dated May 31, 2012, we have agreed to retire the last remaining debt of the company by exchanging this debt for 4,657,626 shares of our restricted common stock at a negotiated a price of $.018 per share, or 50% of the average closing price for the last 10-day period. Following the conversion of this debt into our restricted common stock we have no other debt outstanding with the exception of $5,063 in accrued interest.
Since we converted the note at an approximate 50% discount to the market price on the date of conversion, we recognized a loss on debt extinguishment totaling $65,207 which represents the difference between the reacquisition price as determined by the estimated fair value of the common stock and the net carrying amount of the notes and accrued interest.
During the three and six months ended June 30, 2012 we recognized $869 and $2,165 respectively of interest expense. |