Annual report pursuant to Section 13 and 15(d)

7. CONVERTIBLE DEBENTURES

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7. CONVERTIBLE DEBENTURES
12 Months Ended
Jun. 30, 2012
Debt Disclosure [Abstract]  
7. CONVERTIBLE DEBENTURES

In August and December 2011, the Company issued two convertible debentures in exchange for $42,000 and $30,000 of cash, respectively and a further convertible debenture in March 2012 in exchange for $75,000 of cash. The notes are convertible at $1.50 per share, due six months from the issuance date and carry an interest rate of 5% per annum. The Company evaluated ASC 815 "Derivatives and Hedging" and determined that the conversion features do not cause bifurcation and treatment of the embedded conversion option as a derivative liability.  Furthermore, there was no beneficial conversion feature values associated with the notes at the note dates as the conversion price was greater than or equal to the fair market value of the stock as evidenced by cash sales of common stock.

 

The above mentioned August 2011 convertible debenture for $42,000 was converted to shares of common stock in February 2012.  $43,068 of principal and interest was converted at $1.50 into 28,712 shares. See Note 9.

 

The above mentioned December 2011 convertible debenture for $30,000 was converted to shares of common stock in June 2012.  $30,758 of principal and interest was converted at $1.50 into 20,506 shares. See Note 9.

 

The remaining note balance, which pertains to the above mentioned March 2012 debenture, as of June 30, 2012 is $75,000. (see conversion of this note in footnote 13).