Note 5. Note Receivable – ARG
In connection with the April 2012 sale of properties discussed in Note 4, the $240,000 balance due under the sale was evidenced by 48 ARG corporate bonds (as so termed under ARG’s corporate documents) with a nominal value of $5,000 per bond (totaling $240,000). Of the 48 ARG bonds, 24 were ARG debt obligations (“ARG debt obligation bonds”) in the principal amount of $5,000 each, totaling $120,000, due in five years and bearing interest at the rate of 6% per annum, receivable quarterly commencing December 31, 2012. The remaining 24 ARG bonds were convertible into shares of ARG common stock, each bond being convertible into 5,000 shares of ARG common stock with a market value of $1.00 each (“ARG convertible share bonds”), totaling $120,000. As of April 30, 2012 the Company transferred six ARG debt obligation bonds in the amount of $30,000 and the rights to conversion shares for six ARG convertible share bonds in the amount of $30,000 in satisfaction of $60,000 of an April 30, 2012 interest payment due Rupes Futura AB on the Company’s outstanding $500,000 convertible debenture (see Note 9), resulting in a Note Receivable - ARG balance $180,000 at April 30, 2012.
In June 2012 the Company sold three ARG debt obligation bonds in the amount of $15,000 and three ARG convertible share bonds (which were converted to converted to shares of ARG common stock at ARG’s annual general meeting held on June 29, 2012) in the amount of $15,000 to an independent investor totaling $30,000.
At October 31, 2012, the Company continues to hold 15 of the ARG debt obligation bonds recorded as Note Receivable – ARG in the amount of $75,000 and 75,000 shares of ARG common stock recorded as Investment –non-marketable securities in the amount of $75,000 (see Note 6).