Item 3.02 Unregistered Sales of Equity Securities.
On February 1, 2017, the Company issued
617,971 common shares of the Company to Lind Asset Management IV, LLC upon conversion of US$275,000 in principal amount of the
Company’s outstanding convertible note issued in December of 2015 at a conversion price of C$0.76641 per share. The common
shares were issued pursuant to Section 3(a)(9) of the Securities Act, in connection with the voluntary conversion of convertible
note and based upon representations and warranties of Lind Asset Management IV, LLC in connection therewith.
On February 6, 2017, the Company issued
1,698,072 common shares of the Company to Lind Asset Management IV, LLC upon conversion of US$750,000 in principal amount of the
Company’s outstanding convertible note issued in December of 2015 at a conversion price of C$0.76426 per share. The common
shares were issued pursuant to Section 3(a)(9) of the Securities Act, in connection with the voluntary conversion of convertible
note and based upon representations and warranties of Lind Asset Management IV, LLC in connection therewith.
On February 14, 2017, the Company issued
a notice to Lind Asset Management IV, LLC regarding the first tranche increase. The additional $1.2 million in face amount of the
Initial Convertible Security is convertible into common shares of the Company pursuant to its terms. The disclosure regarding the
Lind Agreement and the First Tranche Increase contained in Item 1.01 of this Current Report on Form 8-K is hereby incorporated
by reference into this Item 3.02.
On February 14, 2017, the Company closed
the first tranche of its non-brokered private placement announced January 27, 2017. In connection therewith, the Company issued
3,860,800 units of the Company (each a “Unit”) at a price of C$0.70 per Unit, for aggregate gross proceeds of C$2,702,560.
Each Unit consists of one common share of the Company and one transferable common share purchase warrant (a "Warrant"),
with each Warrant entitling the holder thereof to acquire one additional common share at a price of C$0.85 until February 14, 2020.
The Units were issued on a private offering basis to investors with whom the Company had a pre-existing relationship pursuant to
(i) in the case of investors outside of the United States that were not, and were not acting for the account or benefit of, a U.S.
person (as defined in Regulation S under the Securities Act), in accordance with the exclusion from the registration requirements
of the Securities Act provided by Rule 903 of Regulation S thereunder, and (ii) in the case of investors inside the United States
or that were, or were acting for the account or benefit of, a U.S. person, pursuant to the exemption from the registration requirements
of the Securities Act provided by Rule 506(b) of Regulation D thereunder and Section 4(a)(2) thereof, in each case, pursuant to
the representations and covenants of the investors made to the Company in connection with their purchase of the Units.
As of February 14, 2017, there were 191,924,972
common shares of the Company outstanding.
Item 3.03 Material Modification to Rights
of Security Holders.
The disclosure contained in Item 1.01 of
this Current Report on Form 8-K is hereby incorporated by reference into this Item 2.03.
On February 14, 2017, in connection with
the closing of the Company’s offering of Units, the Company granted registration rights to the investors in the Unit offering.
Under the registration rights, the Company has agreed to use its commercially reasonable efforts to file a registration statement
with the United States Securities and Exchange Commission under the Securities Act registering the resale by the investors in the
Unit offering of the common shares underlying the Units and the common shares issuable upon exercise of the Warrants and to bring
such registration statement effective as soon as possible thereafter. The Company further agreed to use its commercially reasonable
efforts to maintain the registration statement or post-effective amendment thereto effective until the earlier of the date (i)
all of the registrable securities have been sold pursuant to such registration statement or Rule 144, if available, or (ii) three
years from the effective date. The Company’s agreement does not provide for any penalties or other payments or the issuance
of additional securities should the Company not file or bring a registration statement effective or fail to maintain the effectiveness
of the registration statement.
The above summary of the material terms
of the registration rights is qualified in its entirety by the actual terms and conditions of the registration rights contained
in the form of Subscription Agreement which is filed as Exhibit 4.2 to this Current Report on Form 8-K and is hereby incorporated
by reference into this Item 3.03.