Item
1.01. Entry into a Material Definitive Agreement.
Convertible
Note issued to Tangiers Global, LLC
The
Company has closed on May 7, 2018, a financing pursuant to a 12% Fixed Convertible Promissory Note dated April 27, 2018 (the “Note”)
in the principal amount of $236,085 due November 27, 2018 with Tangiers Global, LLC (sometimes referred to as “Tangiers”
or the “Holder”). The amount of $13,363.40 was retained by the Holder through an original issue discount for due diligence
and legal bills related to this transaction, and the Company received net proceeds of $222,721.60. The Company has agreed to pay
$122,721.60 to Tangiers to make the required payment of $122,721.60 to Tangiers under the Forbearance Agreement described below.
In the Event of Default under this Note, the outstanding principal amount of the Note shall become, at the Holder’s election,
immediately due and payable. The principal will increase by 35% of the outstanding principal amount of the Note. Additional interest
will accrue from the date of the Event of Default at the rate equal to the lower of 22% per annum or the highest rate permitted
by law.
The
Note is convertible at any time at a conversion price equal to 55% of the lowest trading price of the Company’s common stock
during the 15 consecutive Trading Days prior to the date on which Holder elects to convert all or part of the Note.
This Note may be prepaid by the Company, in
whole or in part, at 135% of the Principal Amount. After 180 days from the date of funding of the Note, the Note may not
be prepaid without written consent from Holder, which consent may be withheld, delayed or denied in Holder’s sole and absolute
discretion. If the Note is in default, the Company may not prepay the Note without written consent of the Holder.
The Company has agreed to provisions of the
Note that at all times hereafter while the Note is outstanding, in the event that the Company receives any written or oral proposal
containing one or more offers to provide additional capital or equity (with the exception of the private common stock offering
currently in progress with Company stockholders) or debt financing, the Company will provide the Holder a copy of all documents
received relating to the proposal no later than 3 business days from the receipt of the proposal documents. Following receipt of
the proposal documents from the Company, the Holder has for a period of 5 business days thereafter the right to invest, at similar
or on better terms to the Company, an amount equal to or greater than the financing amount specified in the proposal, upon written
notice to the Company that the Holder is exercising the right of first refusal. The Company also granted the Holder specified “piggyback”
registration rights, as well as a “most favored nation” type of provision with regard to future convertible debt financings
by the Company.
Tangiers Forbearance Agreement
In connection with the Tangiers Convertible
Note dated October 17, 2017, in the principal amount of $306,804 (“the Outstanding Note”), the Company entered
into a Forbearance Agreement, dated as of April 27, 2018 (the “Forbearance Agreement”), pursuant to which Tangiers
agreed to refrain and forbear from exercising and enforcing its remedies under the Outstanding Note, or any of the other
agreements entered into in connection with the transactions contemplated thereby, until July 16, 2018, and to extend the Maturity
Date of the Outstanding Note to July 16, 2018. Tangiers agreed to extend the prepayment schedule as to provide for the Company’s
prepayment right in under 90 days at 115% of Principal Amount of the Outstanding Note. After 90 days from the Execution Date of
the Forbearance Agreement, the Outstanding Note may not be prepaid without written consent from Tangiers, which consent may be
withheld, delayed, denied at the Holder’s sole option and absolute discretion. Tangiers further agreed to refrain from exercising
its conversion rights under the Outstanding Note until July 16, 2018. Contemporaneously with the execution of the Forbearance
Agreement, the Company agreed to make a $122,721.60 cash payment to Tangiers as a Forbearance Payment. In connection with
the Forbearance Agreement, on April 27, 2018 the Company issued Tangiers a five-year common stock purchase warrant to purchase
1,000,000 shares of the Company’s Common Stock, exercisable at a price of $0.05 per share.
Convertible Promissory Note Issued April
6, 2018
Effective on April 6, 2018, the Company issued
a convertible note in the principal amount of $113,000, bearing interest at the rate of 12% per annum (the “Convertible Note”)
to JSJ Investments Inc. (the “Holder”). The Convertible Note provides the Holder the right, at any time after 180 days
from the Issue Date of the Convertible Note, to convert the outstanding balance (including accrued and unpaid interest) of such
Convertible Note into shares of the Company’s common stock at a price (“Conversion Price”) for each share of
common stock equal to a 45% discount to the two lowest trading prices during the previous twenty (20) trading days to the date
of a Conversion Notice. The Maturity Date of the Convertible Note is April 6, 2019.
The Company may pay the Convertible Note in
full, together with any and all accrued and unpaid interest, plus any applicable pre-payment premium at any time on or prior to
the date which occurs 180 days after the issuance date thereof (the “Prepayment Date”). Until
the 90th day after the Issuance Date the Company may pay the principal at a cash redemption premium of 120%, in addition to outstanding
interest, without the Holder’s consent; and from the 91st day to the Prepayment Date, the Company may pay the principal
at a cash redemption premium of 125%, in addition to outstanding interest, without the Holder’s consent. After the Prepayment
Date up to the Maturity Date the Convertible Note shall have a cash redemption premium of 135% of the then outstanding principal
amount of the Note, plus accrued interest and Default Interest, if any, which may only be paid by the Company upon Holder’s
prior written consent.
The Convertible Note provides for customary
events of default such as failing to timely make payments under the Convertible Note when due, bankruptcy, failure to issue conversion
shares in a timely manner and failure of the Company to file annual and quarterly reports with the Securities and Exchange Commission.
If an Event of Default occurs, the Holder may in its sole discretion determine to request immediate repayment of all or any portion
of the Convertible Note that remains outstanding; at such time the Company will be required to pay the Holder the Default Amount,
defined as: the product of (A) the then outstanding principal amount of the Convertible Note, plus accrued Interest and Default
Interest, divided by (B) the Conversion Price as determined on the Issuance Date, multiplied by (C) the highest price at which
the Common Stock traded at any time between the Issuance Date and the date of the Event of Default. If the Company fails to pay
the Default Amount within five (5) Business Days of written notice that such amount is due and payable, then the Holder
shall have the right at any time, so long as the Company remains in default (and so long and to the extent there are a sufficient
number of authorized but unissued shares), to require the Company, upon written notice, to immediately issue, in lieu of the Default
Amount, the number of shares of Common Stock of the Company equal to the Default Amount divided by the Conversion Price then in
effect.
Promissory
Note issued to AMREFA
On
December 31, 2017, the Company issued to American Residential Fastigheter AB, a Swedish corporation (“AMREFA”), its
7% Promissory Note in the principal amount of $1,427,262.10 (the “Note”), due in installments as set forth in the
table below, in redemption of all outstanding shares of the Company’s Series A Convertible Preferred Stock held by AMREFA.
Installments
of principal and accrued interest under the Note are to be paid as follows:
Date of Payment
|
|
Amount of Principal Payment
|
|
|
Accrued Interest
|
|
|
Total Payment
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
$
|
475,754.03
|
|
|
$
|
49,954.17
|
|
|
$
|
525,708.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
$
|
475,754.03
|
|
|
$
|
33,302.78
|
|
|
$
|
509,056.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2019
|
|
$
|
475,754.03
|
|
|
$
|
16,651.39
|
|
|
$
|
492,405.42
|
|
Upon
the occurrence of an Event of Default under the Note, at the option of AMREFA and at any time and from time to time following
the occurrence of an Event of Default, the Default Amount of this Note shall be convertible into such number of fully paid and
tradable shares of Common Stock, as is determined by dividing: (x) the Default Amount (the amount of the Installment in default)
by (y) the market price of the Common Stock on the date of notice of conversion.
The
foregoing descriptions of the Convertible AND PROMISSORY NoteS, FORBEARANCE AGREEMENT AND COMMON STOCK PURCHASE WARRANT do not
purport to be complete and are qualified in their entirety by reference to the FORMS OF SUCH NOTES AND AGREEMENTS
THAT are filed as Exhibits to this Current Report on Form 8-K and are incorporated herein by reference. DEFINED TERMS USED IN
THE DESCRIPTIONS of the Notes and other financing documents IN THIS CURRENT REPORT SHALL HAVE THE MEANINGS PROVIDED IN THE RESPECTIVE
AGREEMENT, NOTES AND WARRANT, UNLESS SPECIFICALLY DEFINED ABOVE IN THIS REPORT.