Item
8.01 Other Events.
As
reported on Forms 8-K filed on December 8, 2017 and January 15, 2018, respectively, we entered into securities purchase agreements
pursuant to which we issued unsecured convertible notes payable to EMA Financial, LLC, (“EMA”) in amounts totaling
$260,000 (the “EMA Notes”); to Auctus Fund, LLC (“Auctus”) in amounts totaling 260,000 (the “Auctus
Notes”); and to Power Up Lending Group, Ltd., (“PUP”) in an amount totaling $105,000 (the “PUP Note”),
referred to collectively as the “Notes”.
On
March 8, 2018, we paid the Notes in full, prior to maturity, including all accrued interest, effectively terminating all conversion
rights associated with the Notes.
As
reported on Form 8-K filed on October 2, 2017, and on Form 8-K/A, filed on October 26, 2017 (referred to collectively as the “October
Form 8-K”), we entered into an Equity Purchase Agreement (“Purchase Agreement”), dated September 15, 2017 and
effective September 26, 2017, with Kodiak Capital Group, LLC (hereinafter referred to as “Kodiak” or the “Purchaser”).
Under the Purchase Agreement, we have the right, but not the obligation, to sell shares of our common stock to Purchaser from
time to time, in our sole discretion, for aggregate gross proceeds of up to $2,000,000.
For
each share of our common stock sold to Purchaser under the Purchase Agreement, the Purchaser will pay a purchase price equal to
80% of the Market Price. The Market Price is defined as the VWAP on the principal trading platform for the Common Stock, as reported
by OTC Markets Group Inc., during the five consecutive Trading Days immediately preceding the date (the “Closing Request
Date”) that Kodiak receives a Put Notice from us (the “Valuation Period”).
As
also reported on the October Form 8-K, pursuant to the terms of the Purchase Agreement, we paid Kodiak certain commitment fees,
as more fully set forth therein, which included an unsecured Promissory Note (the “Commitment Note”), dated September
15, 2017, for the principal amount of $100,000 with interest at the rate of 5% per annum, payable nine months from the issue date,
and a Common Stock Purchase Warrant (the “Third Warrant”) to be issued upon the closing of the first Put, entitling
Purchaser to purchase up to 4,000,000 shares of our common stock at exercise price of $0.25 per share.
As
also reported on the October Form 8-K, pursuant to the terms of the Purchase Agreement, we entered into a Registration Rights
Agreement with Purchaser requiring us to prepare and file a Registration Statement registering the resale by Purchaser of shares
to be issued under the Purchase Agreement and the Warrants, and we agreed to certain exclusivity provisions concerning financings
with third-parties, among other terms and conditions as set forth therein.
The
foregoing description of the terms of the Purchase Agreement and any documents referenced therein, does not purport to be complete
and is subject to and qualified in its entirety by reference to the agreement itself, a copy of which is filed with this report,
and the terms of which are incorporated herein by reference. The benefits and representations and warranties set forth in such
documents (if any) are not intended to and do not constitute continuing representations and warranties of the Company or any other
party to persons not a party thereto.
On
March 5, 2018, we effected an agreement with Kodiak, pursuant to which we put 2,308,460 shares to Kodiak for net proceeds of $925,000,
or approximately $0.40 per share, and we put 739,645 shares to Kodiak for net proceeds of $75,000, or approximately $0.10 per
share (referred to collectively as the “March Put”). In consideration of, and as a condition to the March Put, Kodiak
agreed: (i) to a “leak-out” provision, limiting the amount of shares Kodiak could sell in any given week to not more
than the greater of (a) 500,000 shares per week and (b) six percent of the prior week’s reported trading volume, proportionately
adjusted for weeks with fewer than five trading days; (ii) that the number of shares Kodiak would be entitled to purchase under
the terms of the Third Warrant are deemed reduced from 4,000,000 at $0.25 per share, to 2,100,000 at $0.25 per share; (iii) that
the Commitment Note in the principal amount of $100,000 is deemed null and void and our payment obligations thereunder are effectively
terminated; (iv) that our obligations under the terms of the Purchase Agreement and the Registration Rights Agreement are deemed
satisfied; and (v) that the restrictions concerning third-party financings are terminated. In addition, we confirmed that we will
not effectuate any further puts to Kodiak under the Purchase Agreement.