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Item 3.02.
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Unregistered Sales of Equity Securities.
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The information contained above in Item
1.01 is hereby incorporated by reference into this Item 3.02.
Regulation D Offering and Additional Sales of Series B Preferred
Stock
Subsequent to the completion of Company’s
Regulation D offering of Series B Preferred Stock and Class D-2 Warrants in December 2017, as reported in the Company’s Form
8-K filed on January 4, 2018, the Company has made additional sales of Series B Preferred Stock and Class D-2 Warrants to investors
from March 15, 2018 through March 19, 2018. During such period, the Company has issued an aggregate of 73,500 shares of Series
B Preferred Stock, convertible into 735,000 shares of common stock, and Class D-2 Warrants to acquire an aggregate of up to 735,000
additional shares of common stock for a subscription price of approximately $170,000, on the same terms as in December 2017.
The Series B Preferred Stock is subject
to restrictions, under which it is not currently convertible and will not become convertible into common stock until common stock
is available therefor or after 6 months following issuance. When sufficient shares of common stock are available for issuance upon
conversion, each share of Series B Preferred Stock will be convertible at the option of the holder, at any time, into 10 shares
of common stock, par value $0.001 per share, for a total of 735,000 shares of common stock (the equivalent of a conversion price
of $0.23 per share of common stock). Shares of the Series B Preferred Stock will only receive dividends if the common stock receives
dividends, and such dividends would be in the same amount, on an as-converted basis. In case of a liquidation event, if the Series
B Preferred Stock is still outstanding at that time, each holder will, with respect to each Series B Preferred share owned by such
holder, be entitled to a liquidation preference of either the amount paid for the Series B Preferred share or the amount that the
holder of such Series B Preferred share would have received if it had converted such share to common stock immediately prior to
the liquidation event.
The Class D-2 Warrants are not currently
exercisable and will become exercisable only when shares of common stock are available for issuance upon exercise.
In connection with these issuances of Series
B Preferred Stock and Class D-2 Warrants, the Company entered into voting agreements with certain investors.
The Series B Preferred Stock and Class D-2
Warrants described in this Item 3.02 were offered and sold in reliance upon exemptions from registration pursuant to Rule 506(c)
of Regulation D promulgated under Section 4(a)(2) under the Securities Act. Each of the offerings was made to an “accredited
investor” (as defined by Rule 501 under the Securities Act).
Other Events
As of March 20, 2018, approximately 6,927,817
previously issued and outstanding shares of Series A Preferred Stock and 432,326 shares of Series B Preferred Stock have been
converted by investors into an aggregate of 73,601,430 shares of common stock. As of the date of this filing, the Company has
issued and outstanding, 414,665,188 shares of common stock, 3,486,302 shares of Series A Preferred Stock and 6,355,696 shares
of Series B Preferred Stock. To the extent applicable, the common stock issued upon conversion was issued pursuant to the exemption
from the registration requirements afforded by Section 3(a)(9) of the Securities Act.