Annual report pursuant to Section 13 and 15(d)

Subsequent Events

v2.4.1.9
Subsequent Events
12 Months Ended
Dec. 31, 2014
Subsequent Events [Abstract]  
Subsequent Events

NOTE 21 – SUBSEQUENT EVENTS

 

Employment Contracts

 

On January 1, 2015, the Company entered into an employment contract with a key executive with an initial term of three years and automatic renewals for successive one year terms. The contract covers such items as compensation, salary deferrals, termination for cause and change in control features. In addition, this contract included the granting of 250,000 in options for the individuals to acquire the Company’s common stock, which vested immediately upon the signing of the employment contracts.

 

Income Taxes

 

On February 27, 2015, the Company received a notice from the Internal Revenue Service (“IRS”) that the IRS intended to audit the Company’s federal income tax returns for tax years 2011, 2012 and 2013. The Company believes that the tax returns for the periods under examination were prepared appropriately and were filed correctly with the IRS. Any adjustments resulting from these audits will not result in additional cash payments by the Company but merely decreases in the Company’s net operating loss carry forwards as described in Note 19.

 

Convertible Debt

 

In March of 2015, the Company entered into agreements with six accredited investors for the issuance of convertible promissory notes in the aggregate principal amount of $530,000 which are convertible into shares of the Company’s stock at prices at a discount of 35-45% of the Company’s share price at the date of conversion or at an average price based on the price during 15-25 days closing prices prior to the date of conversion. The notes bear interest at rates of 8-12% per annum. Several of the notes have Original Issue Discount interest at 10% of the principal advanced to the Company by the investor. The notes may be prepaid within periods ranging from four months to the maturity date, with prepayment penalties of zero interest if repaid within ninety days up to maturity date and amounts due expressed as percentages of the principal and interest outstanding ranging from 115% to 150%. In addition, the Company instructed its transfer agent to reserve approximately 75.7 million shares for the potential conversion of these notes. The Company incurred investment banking and legal fees of approximately $58,000 in connection with these notes.

 

On April 7, 2015, the Company received notice from its largest convertible debt holder of their intent to convert a portion of their outstanding convertible debt, approximately $163,000, to shares of the Company’s common stock. Using the formula provided for in the related convertible debt agreement, this lender will receive approximately 4,656,000 shares of the Company’s common stock.

 

On April 10, 2015, the Company received notice from another convertible debt holder of their intent to convert a portion of their outstanding convertible debt, approximately $117,000, to shares of the Company’s common stock. Using the formula provided for in the related convertible debt agreement, this lender will receive approximately 4,656,000 shares of the Company’s common stock.