PPJ Healthcare Enterprises Inc (PPJE)

[cash4]

Note F: Convertible Notes

https://www.otcmarkets.com/otcapi/company/financial-report/315971/content

https://www.otcmarkets.com/stock/PPJE/disclosure

To finance its operations the Company has entered a series of one-year convertible notes.
In general, these notes are convertible into common stock at a discount of from 40% to
60% of the market price at the time of conversion. From December 24, 2013, and
continued to 12/31/2015, several convertible notes have not been converted yet and are
due and unpaid. During 2013, and 2014 the Company issued 22 notes with a face amount
of $516,480. Some of these notes were converted during 2015, 2016 and 2019. The
balance of these convertible notes is approximately $329,062 without interest and late
fees on December 31, 2019.

In addition, Ms. Basu carrying multiple notes which she lent
to the Company since 2002, a total of more than $3,000,000.
The Company is in default on third party notes and has entered negotiations with some of
the lenders.

F-13
2006 Notes
On June 27, 2006, the Company entered a Securities Purchase Agreement (the “Securities
Purchase Agreement”) with New Millennium Capital Partners II, LLC, AJW
Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC (collectively, the
“Investors”). Under the terms of the Securities Purchase Agreement, the Investors
purchased an aggregate of (i) $2,000,000 in callable convertible secured notes (the
“Notes”) and (ii) warrants to purchase 50,000,000 shares of our common stock (the
“Warrants”).
Pursuant to the Securities Purchase Agreement, the Investors will purchase the Notes and
Warrants in three tranches as set forth below:

1. At closing on June 29, 2006 (“Closing”), the Investors purchased Notes aggregating
$700,000 and warrants to purchase 50,000,000 shares of our common stock;

2. Upon the filing of a registration statement registering the shares of common stock
underlying the Notes (“Registration Statement”), the Investors will purchase Notes
aggregating $600,000; and,

3. Upon effectiveness of the Registration Statement, the Investors will purchase Notes
aggregating $700,000.
The Notes carry an interest rate of 6% and a maturity date of June 27, 2009. The notes
are convertible into our common shares at the Applicable Percentage of the average of
the lowest three (3) trading prices for our shares of common stock during the twenty
(20) Trading day period prior to conversion. The “Applicable Percentage” means 50%;
provided, however, that the Applicable Percentage shall be increased to (i) 55% if a
Registration Statement is filed within thirty days of the closing and (ii) 60% if the
Registration Statement becomes effective within one hundred and twenty days from the
Closing.
At the Company's option, the Company may prepay the Notes if no event of default exists,
there are enough shares available for conversion of the Notes and the market price is at or
below $.05 per share. In addition, if the average daily price of the common stock, as
reported by the reporting service, for each day of the month ending on any determination
date is below $.05, the Company may prepay a portion of the outstanding principal amount
of the Notes equal to 101% of the principal amount hereof divided by thirty-six (36) plus
one month’s interest. Exercise of this option will stay all conversions for the following
month.

The full principal amount of the Notes is due upon default under the terms of
Notes. In addition, the Company has granted the investors a security interest in
substantially all its assets and intellectual property as well as registration rights.
The Company simultaneously issued to the Investors seven-year warrants to purchase
50,000,000 shares of our common stock at an exercise price of $.07. Which has now
expired.
The Investors have contractually agreed to restrict their ability to convert the Notes and
exercise the Warrants and receive shares of the Company’s common stock such that the
number of shares of the Company’s common stock held by them and their affiliates after
such conversion or exercise does not exceed 4.99% of the then issued and outstanding
shares of the the Company is committed to filing an SB-2 Registration Statement with the
SEC within 30 days from the Closing Date the Company will receive the second tranche
of the funding when the SB-2 is filed with the SEC and the third and final tranche of the
funding when the SB-2 is declared effective by the SEC. There are penalty provisions for
us should the filing not become effective within 120 days of the Closing Date. The notes
are secured by all our assets to the extent of the outstanding note.
About the 2006 convertible notes, the lender is in bankruptcy and the Company may be
able to issue Class B Preferred B Stock for these notes. At present, there are $1,118,557
of such notes outstanding.