During the period the Company issued 200,000 shares of Series A
Preferred Stock at $10.00 per share together with warrants to purchase
200,000 shares of Series B Preferred stock and, at the option of the Company,
up to an additional 600,000 shares of Series B Preferred Stock at $10.00 per
share. Net proceeds from issuance of the Series A Preferred Stock was
$1,800,000. The Series A Preferred Stock pays a dividend of 9% per year and
is convertible over 18 months into common stock at the lesser of the average
closing bid price of the common stock for the five trading days preceding the
sale of the preferred shares, or at 82.5% of the average closing bid for the
five trading days preceding the conversion of the Series A Preferred Stock
into common stock. During the period the Company recorded a deemed dividend
of $581,098 with respect to the discount and recorded accrued dividends of
$72,074 with respect to the 9% dividend on the Series A Preferred Shares.
During June 1998, 30,000 shares of Series A preferred stock including accrued
dividends were converted into 309,789 shares of common stock.
The warrants provide for the purchasers, during the 18 months after
purchase of the Series A Preferred Stock, |
