American Green Inc (ERBB)

[iSmellCrickets]

Understanding that ALL companies need financing is key to understanding how commerce is done.

If you are a small company with great idea's , say you seek out , or are found to have a viable business model with a marketable product, investors that have assets that you need to move forward, will take a note , or a share count in lie of cash, a loan more or less. And almost all loans of any sort are accompanied by interest on that amount.

This is where debentures come in to play. These could be what is called angel investors, or simply as stated above. The loan must be paid somehow. And they do not have to be disclosed.

In corporate finance, a debenture is a medium- to long-term debt instrument used by large companies to borrow money, at a fixed rate of interest. The legal term "debenture" originally referred to a document that either creates a debt or acknowledges it, but in some countries the term is now used interchangeably with bond, loan stock or note. A debenture is thus like a certificate of loan or a loan bond evidencing the fact that the company is liable to pay a specified amount with interest and although the money raised by the debentures becomes a part of the company's capital structure, it does not become share capital.[1] Senior debentures get paid before subordinate debentures, and there are varying rates of risk and payoff for these categories.

Debentures are generally freely transferable by the debenture holder. Debenture holders have no rights to vote in the company's general meetings of shareholders, but they may have separate meetings or votes e.g. on changes to the rights attached to the debentures. The interest paid to them is a charge against profit in the company's financial statements.