Annual report pursuant to section 13 and 15(d)

NOTE 7 - CONVERTIBLE DEBENTURES PAYABLE

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NOTE 7 - CONVERTIBLE DEBENTURES PAYABLE
12 Months Ended
Dec. 31, 2011
Debt Disclosure [Text Block]
NOTE 7 - CONVERTIBLE DEBENTURES PAYABLE

7.5% $2,359,000 Convertible Debentures

On December 30, 2005, the Company entered into a Securities Purchase Agreement with YA Global Investments, L.P (YA Global). Pursuant to such purchase agreement, YA Global purchased $2,359,047 of secured convertible debentures, which were convertible into shares of the Company’s Class A Common Stock. Two such debentures were issued on December 30, 2005 for an aggregate of $1,759,047, interest payable at the rate of 7.5% per annum, and included a debenture that was issued on May 6, 2006 equal to $600,000 with interest payable at the rate of 7.5% per annum (the December 30, 2005 and May 6, 2006 convertible debenture together the “YA Convertible Debentures”).  As of December 31, 2010, the YA Convertible Debentures were $1,319,000.

During 2011, the Company made payments in the amount of $735,000 to satisfy any and all obligations owed to YA Global, including outstanding principal, accrued interest and accrued liquidated damages.  As a result of the restructuring of the debt, the Company recorded a gain on the extinguishment of $1,461,660, which is presented as other income in the accompanying statement of operations.

Additionally, the Company recorded a gain on the extinguishment of the derivative liability associated with this convertible debenture of approximately $767,000.

During the year ended December 31, 2010, the Company had issued 325,079 shares of Class A common stock for repayment of $60,900 of principal on the convertible debenture held by YA Global Investments.