Deal with Southridge, look for more retiring of convertible debt soon. From 8K:
NOTE 5 – PREPAID EXPENSES
Prepaid expenses represent fees and costs totaling $ 135,000 incurred with Southridge Partners II, LLC “Southridge”) in connection with the Equity Purchase Agreement entered into by the Company on September 30, 2013 whereby Southridge has undertaken to purchase up to $ 10 million of the Company’s issued common stock periodically over a 24 month period at a rate equal to 90% of the Company’s trading price during the applicable period prior to drawdown. The Company’s obligation to Southridge for their fee and legal costs is evidenced partly through a promissory note for $ 100,000 due June, 2014 and partly through a convertible note for $ 35,000 maturing August 20, 2014. Under the terms of this Agreement, the Company is required to register an S-1 for the authority to issue registered common shares, which it plans to do so by the end of second quarter 2014..
Management plans to use the net proceeds from this facility to make early retirement of convertible debt as well as to finance ongoing operations and new investments. Because the transaction is not triggered until the successful registration of the S-1, the total cost of $ 135,000 has been treated as a prepaid expense and will be expensed concurrent with the S-1 filing.
