Forgiveness of debt occurs when a company issues shares to a creditor and then the creditor decides to forego the Debt intrument in exhange for the shares. But the income related to the forgiveness of debt would be the difference between the value of the stock and the debt. The increases number of shares has been due to financing, and because the creditor believes that the shares they recieved would be worth more in the market than the money they lend the company, then, they would rather take the shares and forgive the loan even though the loan is more than the value of shares now. A creditor will only do this if he/she expects the PPS to increase over time beyond the value of the loan. The $992,000 is actual net income from operations (the actual net income if financing never occured). But the other amount came about as I just described above. However, you have to consider the substance and form of the entire profit. If the company decided not to finance its activities, then the O/S could easily be at 99mil. and the revenues would not have bee the same because it would have been impossible to make the acquisitions that took place. I would not sell my shares for less than what the creditors got them for. 80mil shares were issues to some creditor at 0.025, and these shares could be tied with the forgiveness of debt income, meaning that they will only sell them when the PPS is above 0.025. Most of this debt is from assuming the debt of the purchased companys .....Pursuant to the Agreement, the Company is assuming 50% of the debt owed to the Allstate Shareholder which shall be no greater than $1.25 million dollars
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