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Subsequent Events
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12 Months Ended |
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Dec. 31, 2011
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| Notes to Financial Statements | |
| Subsequent Events |
NOTE 10 – SUBSEQUENT EVENTS
On
February 7, 2012, the note holders of the Company’s 6% convertible debentures converted a total principal amount of
$55,000 of the convertible debentures into common stock. The Company issued 2,200,000 shares in connection with the
conversion of these convertible debentures. The conversion price of such shares issued amounted to $0.025 per
share.
On February 21, 2012, the Company entered into a stock option cancellation agreement (the “Cancellation Agreement”) with Daniel Bleak, pursuant to which the stock option (the “Option”) to purchase 30,000,000 shares of common stock granted on May 2, 2011 to Mr. Bleak in connection with his appointment as the Chairman and Chief Executive Officer of the Company was cancelled. As of the date of the Cancellation Agreement, the entire Option remained unexercised.
On
February 21, 2012 the Company granted Mr. Bleak 25,000,000 restricted shares of common stock as compensation for his
continued services. The Company valued these common shares at the fair market value on the date of grant at $0.14 per
share or $3,500,000.
On February 29, 2012, the Company entered into note purchase agreements with certain investors whereby it sold an aggregate of $105,882.35 of convertible promissory notes (the “Notes”) at an aggregate purchase price of $90,000. These investors include Daniel Bleak and several of the Company’s existing shareholders. Unless earlier converted or immediately due and payable upon an event of default, the Notes shall mature on February 28, 2013.
The face value of each Note may be converted at the holder’s option, in whole or in part, at any time at least three months following the date of issuance into shares of the Company’s common stock at a conversion price of $0.05 per share, subject to adjustment in the case of stock splits, reclassifications, reorganizations, certain issuances at less than the conversion price and the like. Further, at any time prior to the maturity date or conversion as set forth in the prior sentence, the face value of each Note shall be exchanged into the applicable dollar amount of equity securities issued by the Company in a subsequent financing of at least $1,000,000 at a conversion price of $0.05 per share of the Company’s common stock. Until such time that the Notes are no longer outstanding, without the consent of the holders, the Company is prohibited from incurring certain debt, selling any accounts receivable or declaring any dividend.
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