CSMG Technologies, Inc (fka CTGI)

[Jagman]

You are kidding, right??? As a business manager, filing info should be your cup of tea, IMO....

"Cash is needed Don and Frank will give something to get it! What do you think and please tell me how they are funding things now!"


The Company from July 27, 2006 through June 30, 2008 raised $7,319,000 (of which $325,000 was repaid during 2007 and 2008) through Empire Financial Group in the form of unsecured convertible notes. The notes commenced interest accrual on January 1, 2007, at 15% per annum, and are convertible into Live Tissue Connect, Inc. shares at 50% of the IPO of the LTC’s common stock price. The Company has accrued $1,284,562 in interest through June 30, 2008. The total due the investors as of June 30, 2008 is $8,278,562. The entire balance is reflected as a current liability on the Company’s condensed consolidated balance sheets.

These notes matured on July 15, 2008 and the Company is currently working with their investment banker to extend these notes until completion of the LTC IPO. In addition, the Company is in the process of retaining an independent valuation specialist to conduct a valuation of Live Tissue Connect, Inc. and determine whether an adjustment may be necessary for the beneficial conversion feature as it relates to the convertible notes. The Company is working with the investment bankers currently to structure the extension and modifications to the existing convertible note agreements. These modifications may require the Company to extinguish the debt in accordance with EITF 06-6, ‘Debtor’s Accounting for a Modification (or Exchange) of Convertible Debt Instruments” and EITF 96-19, “Debtor’s Accounting for a Modification or Exchange of Debt Instruments”.

The Company has had one investor request a repayment of his $100,000 convertible note coming due July 15, 2008. Additionally we offered through a private placement up to 5 million shares of preferred stock at $1 per share in our majority owned subsidiary Live Tissue Connect, Inc. through Empire-Jesup Lamont of which $530,000 was raised during the Company’s second fiscal quarter. These preferred shares have not been issued as of June 30, 2008. The preferred stock carries a cumulative dividend of 8%. Each holder of Series A Preferred will have the right, at the earlier of the IPO and the end of 18 months, to convert the total amount of money due to the owners of the Series A Preferred into shares of Common Stock at a conversion ratio of 50% of the Initial Public Offering (IPO) price. If no IPO has been completed at the 18 th month, the holder of the Series A Preferred may convert total amount of money due into shares of Common Stock at a price equal to 50% of the closing price of CSMG Technologies, Inc. stock on the first business day following the anniversary of the eighteenth (18th) month of the Closing. The Company is in the process of retaining an independent valuation specialist to conduct a valuation of Live Tissue Connect, Inc. and determine whether an adjustment may be necessary for the beneficial conversion feature as it relates to the preferred stock.

Through July 31, 2008 Empire Jesup-Lamont has raised a total of $680,000 in the preferred stock offering.

Empire received 290,941 warrants on May 18, 2007 as part of their commission for the raising of the money. The Company recorded these warrants in accordance with EITF 96-18 and recognized an expense in the amount of $186,092.

The Company from time to time entered into various note agreements with shareholders of the Company. The 10 notes that remain as of June 30, 2008 commenced from 2000 through 2005, and accrue interest at rates ranging from 8% to 12%.

The remaining principal of these 10 notes as of June 30, 2008 is $1,437,604. Accrued interest through June 30, 2008 on these notes is $1,005,300, for a total amount due as of June 30, 2008 of $2,442,904.

Four of these unsecured notes are convertible to the Company’s Rule 144 common stock at $.625 per share at any time until the note is repaid. One note for $464,572 is owed to the Company’s president and accrues at 10% interest per annum and has an open maturity date, two notes to a board member for $114,000 and accrues at 11% due in June 2010 with the interest rate increasing to 15% per annum if unpaid on the maturity date, and one note for $8,000 is accruing at 15% to an investor we have been unable to locate. The remaining 6 notes are described below in notes payable but in litigation.

The Company’s management has been very successful over the past few years in converting these notes into shares of common stock. For the six months ended June 30, 2008, the Company has converted $331,680 in accrued interest ($49,014), notes payable ($179,067, and a discount on conversion of the notes payable of ($103,060) to additional paid in capital based on the beneficial conversion price into 530,688 shares of common stock. For the year ended December 31, 2007, the Company has converted $1,748,423 in notes plus accrued interest into 2,733,248 shares of stock. In addition, the Company recorded a discount in the amount of $922,001 to additional paid in capital based on the beneficial conversion price. All these notes were unsecured.

(There is more, READ THE 10Q!!)
http://www.pinksheets.com/edgar/GetFilingHtml?FilingID=6111970