Item 1.01 Entry into a Material Definitive Agreement
Auctus Fund, LLC
On February 26, 2018, we entered into a Securities Purchase Agreement
(the “Auctus SPA”), under which we agreed to sell a 12% convertible promissory note in an aggregate principal amount
of $167,750.00 (the “Auctus Note”) to Auctus Fund, LLC (“Auctus”). The Auctus Note will bear interest at
a rate of 12% per annum and will mature on November 26, 2018. The net proceeds of the sale of the Auctus Note, after deducting
the expenses payable by us, are expected to be $150,000.
At any time after the 180th calendar day after the issue date of
the Auctus Note, Auctus has the option to convert all or any part of the outstanding and unpaid principal amount and accrued and
unpaid interest of the Auctus Note into shares of our common stock at the Conversion Price. The “Conversion Price”
will be the lesser of (i) the lowest trading price of our common stock during the twenty-five-day trading period prior to the issue
date of the Auctus Note and (ii) 50% of the lowest trading price of our common stock during the twenty-five-day trading period
prior to the conversion. The Conversion Price is subject to further reduction upon certain events specified in the Auctus Note.
We have the right to prepay the Auctus Note at any time until the
180th calendar day after the issue date of the Auctus Note, in an amount equal to 150% (or 135% if we prepay the Auctus Note on
or before the date that is 90 days after the issue date of the Auctus Note) of the outstanding balance of the Auctus Note (including
principal and accrued and unpaid interest). We may not prepay the Auctus Note after the 180th calendar day after the issue date
of the Auctus Note. We will be subject to a liquidated damages charge of 25% of the outstanding principal amount of the Auctus
Note if we effect certain exchange transactions in accordance with, based upon or related or pursuant to Section 3(a)(10) of the
Securities Act. In addition, the Auctus Note grants Auctus the right to update the terms of the Auctus SPA and the Auctus Note
to incorporate the terms of any future transaction document related to a security issuance by us to a third party that are more
favorable to the third party than the terms of the Auctus SPA and the Auctus Note.
Any amounts due and payable to Auctus under the terms of the Auctus
Note, including any payment on an event of default, default interest, or agreed upon liquidated damages may, at the Auctus's option,
be converted into shares of our common stock at the Conversion Price.
Pursuant to a Registration Rights Agreement, we are required to
register 30,000,000 shares into which the Auctus Note is converted.
The foregoing description of the Auctus SPA, the Auctus Note, the
Registration Rights Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the full text of the SPA, the Note, and the Registration Rights Agreement which are
included in this Current Report as Exhibits 10.1, 4.1 and 10.2, respectively, and are incorporated herein by reference.
EMA Financial, LLC
On February 23, 2018 we entered into a Securities Purchase Agreement
(“EMA SPA”) with EMA Financial, LLC, a Delaware limited liability company (“EMA”), pursuant to which we
issued and sold to EMA a convertible promissory note, dated February 23, 2018 in the principal amount of $125,000 (the “EMA
Note”). In connection with the foregoing, we also entered into a Registration Rights Agreement with the Purchaser dated February
23, 2018 (the “Registration Rights Agreement”).
The EMA Note, which is due February 23, 2019, bears interest at
the rate of 10% per annum. All principal and accrued interest on the EMA Note is convertible into shares of our common stock at
the election of EMA at any time at a conversion price equal to the lesser of (i) the trading price for our common stock on the
trading day prior to the closing date of the EMA Note, or (ii) a 50% discount to the lowest trading or lowest closing bid price
for our common stock during the 25 trading day period immediately prior to conversion.
We have the right to prepay the EMA Note within 90 days of the closing
date at a premium of 135% of all amounts owed to EMA and at a premium of 150% if prepaid more than 90 but less than 180 days following
the closing date. We have no right to prepay the EMA Note more than 180 days after the closing date.
The EMA Note contains customary default events which, if triggered
and not timely cured, will result in default interest and penalties. Pursuant to the Registration Rights Agreement, we are required
to register the shares into which the EMA Note is converted. We must file the registration statement within 10 days of the closing
date.
The foregoing description of the EMA SPA, the EMA Note, the Registration
Rights Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the full text of the SPA, the Note, and the Registration Rights Agreement which are included in this
Current Report as Exhibits 10.3, 4.2 and 10.4, respectively, and are incorporated herein by reference.
If the above notes are converted prior to us paying off such notes
under the prepayment provisions, it would lead to substantial dilution to our shareholders as a result of the conversion discounted
for the notes. There can be no assurance that there will be any funds available to pay of the notes, or if available, on terms
that will be acceptable to us or our shareholders. If we fail to obtain such additional financing on a timely basis, the lenders
may convert the notes and sell the underlying shares, which may result in significant dilution to shareholders due to the conversion
discount, as well as a significant decrease in our stock price.