Message: Entry into a Material Definitive Agreement, Creation of a Direct Financial Oblig
In April 2008 the Company issued 40,000 shares of common stock as payment of a $4,800 finance fee on the $40,000 12% promissory note.
On October 8, 2008 Eric M. Polis was appointed as a director of the Company. Mr. Polis is Secretary, Treasurer and a director of ASI Technology Corporation the holder of the 18% Secured Promissory Note. In June 2008 the Company made a $50,000 principal reduction and incurred a $4,000 finance fee upon a six month renewal and in December 2008 made a $100,000 principal reduction and incurred a $3,000 finance fee for a six-month renewal of the note. The $4,000 finance fee was paid by issuing 40,404 shares of common stock and the Company issued 28,517 shares in payment of the $3,000 fee in February 2009. Note financing fees paid to creditors are recorded as a debt discount and amortized over the term of each note using the interest method. Interest expense incurred during the nine months ended December 31, 2008 on this note was $30,750.
The Company has the option, subject to certain limitations, to elect to make installment payments on the 7.5% Convertible Term Note either in cash or in shares of common stock (“Monthly Installment Shares”). Monthly Installment Shares are valued at the arithmetic average of the closing prices for the last five trading days of the applicable month without discount. Payments must be paid in cash if the computed average price is less than $0.10 per share. During the nine months ended December 31, 2008 the Company made seven monthly installment payments aggregating $230,000 through the issuance of 1,941,884 shares of common stock and made two installment payments in cash of $60,000.
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