On February 3
rd
, 2017, the Registrant
entered into a non-binding letter of intent (the “
Letter of Intent
”) with Waywire Networks, Inc. (“
Waywire
”).
Under the terms of the Letter of Intent,
the Registrant will acquire all of the assets of Waywire, including its intellectual property and portfolio of patents (the “Acquisition”),
and assume certain designated liabilities of Waywire, in exchange for 1,000,000 shares of common stock of the Registrant and three-year
warrants to acquire an aggregate of 3,000,000 shares of common stock of the Registrant (the “
Purchase Price
”).
In addition, Waywire shall be entitled to 50% of the proceeds of any sales of the patents.
The Registrant is required to file a registration
statement under the Securities Act of 1933 with respect to the resale of the aforementioned shares following the filing of its
Annual Report on Form 10-K for the year ended December 31, 2016.
The Acquisition is subject to a number of
conditions, including, without limitation, satisfactory completion of due diligence, execution of definitive documentation, and
the consummation by the Registrant of a $250,000 financing.
Pending the closing, the Registrant has
agreed to loan to Waywire $12,500 per week for at least three weeks to cover certain operating expenses, which loans shall accrue
interest at the rate of 12% per annum. The loans are subject to the following conditions:
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(a)
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The Registrant shall approve of the use of proceeds of such funds;
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(b)
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The Registrant shall not have determined that there shall have occurred a material adverse change in the business, prospects,
financial condition, or results of operations of Waywire; and
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(c)
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Waywire shall not have entered into any agreement to consummate any transaction with any third party with respect to the business,
operation, or assets of the Company (a “
Termination Event
”).
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In the event of a Termination Event (other than a Termination
Event resulting from failure of the Registrant to move forward in accordance with the terms of the Letter of Intent), the entire
principal amount of, and accrued and unpaid interest on, the Credit shall be immediately due and payable, together with a 20% premium
thereon. In the event of Termination Event resulting from failure of the Registrant to move forward in accordance with the terms
of the Letter of Intent, Waywire shall have 90 days to repay the loans and accrued interest thereon.
Pursuant to the Letter of Intent, following the closing, the
board of directors of the Registrant shall be comprised of six members, five of whom shall be designated by the Registrant and
one of which shall be designated by Waywire.
The description of the Letter of Intent contained herein does
not purport to be complete and is qualified in its entirety by reference to the Form of Letter of Intent, a copy of which is filed
herewith as Exhibit 10.1.