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Item 1.01.
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Entry
into a Material Definitive Agreement.
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LG Capital Funding, LLC.
On December 13, 2016, the Company completed
the closing of a private placement financing transaction (the “Transaction”) with LG Capital Funding, LLC (“LG”),
pursuant to a Securities Purchase Agreement (the “LG Purchase Agreement”). Pursuant to the LG Purchase Agreement,
LG purchased two 8% Convertible Redeemable Notes (the “LG Notes”) in the aggregate principal amount of $65,525.00,
comprised of two notes in the amount of $32,812.50 each. The first note was paid for by LG on December 14, 2016, whereby the Company
received proceeds of $30,812.50 which excluded transaction costs, fees, and expenses and the second note was paid for by
the issuance of an offsetting $32,812.50 Collateralized Secured Promissory Note (the “CSPN”) issued by LG to the Company.
Principal and interest is due and payable
December 13, 2017, and the LG Notes are convertible into shares of the Company’s common stock at any time at the discretion
of LG at the lowest closing bid price during the eighteen (18) prior trading days including the day upon which a notice of conversion
is received by the Company multiplied by fifty eight percent (58%), representing a forty two percent (42%) discount.
Also on December 13, 2016, the Company
and LG terminated the January 19, 2016, Securities Purchase Agreement (the Jan SPA”). The parties agreed to terminate the
Jan SPA, whereby the unfunded balance of $32,812.50 is also terminated.
St. George Investments LLC
On December 14, 2016, the Company
received $50,000, for payment of principal and on December 15, 2016, received $616 of interest due from Investor Note #1
(“Note #1”) from St. George Investments LLC (“Investor”). Note #1 was issued by Investor pursuant to
the Securities Purchase Agreement dated October 31, 2016, by and between the Company and the Investor, pursuant to which the
Company issued to Investor a Convertible Promissory Note (the “CPN”) in the principal amount of $555,000. The CPN
matures on August 31, 2017 (the “Maturity Date”) and carries a ten percent (10%) per annum interest rate. The
Investor can convert any outstanding amount at anytime after funding at a conversion price of $0.05 per share. Beginning April
30, 2017, and on the same day of each month thereafter until the Maturity Date the Company shall make installment payments of
$111,000 plus any accrued and unpaid interest. If the Company elects to pay the installment payment in shares of common
stock, the conversion price shall be the lesser of $0.05 or 60% of the lowest intra-day price during the twenty (20) trading
days immediately preceding the conversion. To date the Company has received $150,000 and recorded $170,000 of principal
of convertible note payable to Investor, including $15,000 of original issue discount and $5,000 transaction costs.
In conjunction with
the issuance of Note #1 on October 31, 2016, the Company issued Warrant #2 to Purchase Shares of Common Stock (Warrant #2”)
of the Company. Warrant #2 is exercisable only when the full outstanding balance of Note #1 has been paid to the Company. Since
Note #1 was paid on December 14, 2016, Warrant #2 is now exercisable and expires October 31, 2021. The number of shares of common
stock to be purchased (the “Warrant Shares”) is equal to $27,500.00 divided by the Market Price (65% of the average
of the three lowest closing bid prices in the twenty (20) trading days immediately preceding the applicable date of exercise),
with an exercise price of $0.05. Both the Warrant Shares and exercise price are subject to adjustments pursuant to terms and conditions
of Warrant #2.
The foregoing description of the LG
Purchase Agreement, the LG Notes, the CSPN, the Jan SPA, Note #1 and Warrant #2 does not purport to be complete and is qualified
in its entirety by reference to the full text of each document, which are filed as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, 10.6
and 10.7, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.