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(7) Convertible Debentures
12 Months Ended
Dec. 31, 2012
Notes  
(7) Convertible Debentures

(7)       Convertible Debentures

 

During the period from August 24, 2011 to December 31, 2011, the Company issued various Convertible Debentures in the total amount of $141,000. During the year ended December 31, 2012, the Company issued various Convertible Debentures in the total amount of $268,500. All debentures bear simple interest of 14% per annum with a one year maturity.  The outstanding principal and interest of the debenture is convertible into shares of common stock at a conversion price of $0.04 per share.  The conversion rate was based upon the market price of the Company's common stock as determined by reference to recent cash sales.  [MK4] The Directors of the Company have approved the registration of 120% of the shares of common stock issuable upon conversion of the principal amount of the debentures to allow for conversion of principal and interest on such debentures into shares of common stock.

Following is an analysis of the convertible debentures outstanding as of December 31, 2012 and 2011:

 

Description

Date of Agreement

Cost basis at Conversion

Original Amount

Unpaid principal balance

Term

Interest Rate

 

 

 

 

 

 

 

Debenture 1

8/24/2011

$0.04

$100,000

$100,000

12 Months

14%

Debenture 2

9/27/2011

0.04

10,000

9,219

12 Months

14%

Debenture 3

10/10/2011

0.04

25,000

25,000

12 Months

14%

Debenture 4

12/20/2011

0.04

6,000

6,000

12 Months

14%

 

 

 

 

 

At December 31, 2011

$141,000

$140,219

 

 

 

 

Description

Date of Agreement

Cost basis at Conversion

Original Amount

Unpaid principal balance

Term

Interest Rate

 

 

 

 

 

 

 

Debenture 5

2/17/2012

0.04

10,000

10,000

12 Months

14%

Debenture 6

3/9/2012

0.04

5,000

5,000

12 Months

14%

Debenture 7

3/19/2012

0.04

5,000

5,000

12 Months

14%

Debenture 8

4/29/2012

0.04

5,000

5,000

12 Months

14%

Debenture 9

4/25/2012

0.04

10,000

10,000

12 Months

14%

Debenture 10

7/1/2012

0.04

25,000

25,000

12 Months

14%

Debenture 11

7/1/2012

0.04

25,000

25,000

12 Months

14%

Debenture 12

7/21/2012

0.04

25,000

25,000

12 Months

14%

Debenture 13

7/20/2012

0.04

62,000

62,000

12 Months

14%

Debenture 14

7/29/2012

0.04

10,000

10,000

12 Months

14%

Debenture 15

9/28/2012

0.04

25,000

25,000

12 Months

14%

Debenture 16

9/01/2012

0.04

10,000

10,000

12 Months

14%

Debenture 17

8/09/2012

0.04

15,000

15,000

12 Months

14%

Debenture 18

10/9/2012

0.04

5,000

5,000

12 Months

14%

Debenture 19

10/31/2012

0.04

12,500

12,500

12 Months

14%

Debenture 20

11/20/2012

0.04

5,000

5,000

12 Months

14%

Debenture 21

11/20/2012

0.04

2,000

2,000

12 Months

14%

Debenture 22

11/20/2012

0.04

2,000

2,000

12 Months

14%

Debenture 23

11/20/2012

0.04

5,000

5,000

12 Months

14%

Debenture 24

12/11/12

0.04

2,500

2,500

12 Months

14%

Debenture 25

12/29/12

0.04

2,500

2,500

12 Months

14%

 

 

 

 

 

 

 

At December 31, 2012

$409,500

$408,719

 

 

 

            Under the terms of the Convertible Debentures, the interest rate is increased to 16% if the Company fails to make payments when due. As of December 31, 2012, the Company had failed to make required payments on Convertible Debentures totaling $141,000.