Investor Help (NO Ihub questions)

[Eli's Gone]

Here is a typical OTC convertible note:

Lender and company agree to $105K loan @12% with maturity date 1 year out from agreement....

Lender pays company $100K on loan date ($105K-$5K Original Issue Discount)...

Company may pay back loan at 110% of face value plus interest during the 1st 90 days...

Company may pay back loan at 130% face value plus interest during 90-180 days..

After 180 days, company cannot pay back loan without lender approval...

After 180 days, loan becomes convertible into common shares at some agreed upon toxic rate i.e. 50-70% of the 5 day VWAP prior to conversion...

at the conversion date (180 days out), loan is convertible and any/all shares converted are free trading...

***there is usually a limit built into the conversion on holdings such as 4.99% so the lender doesn't become a 5% holder---the lender usually converts in small amounts as the PPS usually drops and he gets more and more shares---PPS doesn't matter to him as he has a built in % discount to price on his newly converted free trading shares...

GL...