Debenture convertible into common stock at 40% discount
By Angela McDaniels
Tacoma, Wash., Aug. 19 - Red Giant Entertainment, Inc. issued a $166,000 12% one-year secured convertible debenture to WHC Capital, LLC on Aug. 1.
Interest is payable in cash at maturity, according to an 8-K filing with the Securities and Exchange Commission.
If the company fails to repay the debenture with interest at maturity, the interest rate will increase to 22%.
The debenture is convertible into common stock at a conversion price equal to 60% of the lowest intra-day trading price of Red Giant's common stock for the 10 trading days immediately preceding the conversion date.
The company must register 300% of the principal amount of the shares into which the debenture is convertible, so it is preparing to register 48,823,528 shares. The registration will also include any shares that may be converted that comprise interest on the principal.
If the registration is not declared effective by the SEC by Dec. 9, the principal amount of the debenture will be increased to $232,400.
Benny Powell, the company's chief executive officer, president, chief financial officer, secretary and director, pledged 35 million shares of his common stock to secure the debenture.
Clermont, Fla.-based Red Giant is an intellectual property development company that intends to develop content for itself and for use on the internet and on various multiple media platforms.
| Issuer: | Red Giant Entertainment, Inc.
|
| Issue: | Secured convertible debenture
|
| Amount: | $166,000
|
| Maturity: | Aug. 1, 2014
|
| Coupon: | 12%, payable in cash at maturity
|
| Conversion price: | 60% of lowest intra-day trading price of stock for 10 trading days immediately preceding conversion date
|
| Warrants: | No
|
| Investor: | WHC Capital, LLC
|
| Pricing date: | Aug. 1
|
| Stock symbol: | OTCBB: REDG
|
| Stock price: | $0.013 at close Aug. 16
|
| Market capitalization: | $4.78 million
|
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