Note 11 - Subsequent Events
|6 Months Ended|
Jun. 30, 2017
|Note 11 - Subsequent Events||
NOTE 11 - SUBSEQUENT EVENTS
11% Convertible Debt - HEP Investments, LLC
On July 14, 2017 the HEP Investments, LLC (Lender) funded an additional $158,040. Due to this additional funding and the reaching of a $250,000 tranche (see Note 5 - Loans Payable, Related Party), the Company issued to the Lender a $250,000, 11% convertible note (at a conversion price of $.10) and warrants to purchase 250,000 shares of common stock, at an exercise price of $.10 for a term of five years. The terms of the debt are in described in Note 6 - Convertible Debt.
On July 19, 2017, the Board of Directors approved the issuance Lender of a warrant to purchase 50 million shares of common stock at a exercise price of $.10 for a term of two years on the basis of $2.5 million funding through the 11% convertible note (at a conversion price of $.10). This warrant is in addition to 10% warrant coverage (five-year term) provided to Lender in connection with investments in convertible debt pursuant to existing agreements (see Note 6 - Convertible Debt). The warrant will not be issued until the related funding is complete.
In an agreement dated July 21, 2017 between Lender and Strome Mezzanine Fund LP (Participant) (Agreement), the Participant agreed to fund a total of $1.5 million through the Lenders 11% convertible note (at a conversion price of $.10). The Company also agreed to a "Right of First Refusal" (ROFR) with the Participant. The Company would give the Participant the ROFR to invest funds into the Company on the same terms and conditions ("Right of Participation") as negotiated by the Company with a third party, provided that the Right of Participation must be exercised within 10 days. Certain exclusions apply relating to the committed funding of $1.5 million from parties unrelated to the Participant. This ROFR terminates on the third (3) anniversary of the Agreement or if the participant fails to fund the full $1.5 million by November 20, 2017. The Participant has an agreement with the Lender that upon the funding of the Participant's $1.5 million by November 20, 2017, the Lender would allocate a portion (50%) of the warrant to purchase 50 million shares of common stock at an exercise price of $.10 issued to the Lender on the $2.5 million funding through the 11% convertible note as discussed above. On July 24, 2017 the Lender funded $1,000,000 of the $2.5 million (of which $500,000 is from the Lender and $500,000 is from the Participant). Due to this additional funding, the Company issued to the Lender a $1,000,000, 11% convertible note (at a conversion price of $.10) and warrants to purchase 1,000,000 shares of common stock, at an exercise price of $.10 for a term of five years. The terms of the debt are in described in Note 6 - Convertible Debt.
On August 1, 2017, the Lender funded an additional $50,000. This amount was recorded as Loan Payable, Related Party (see Note 5 - Loan Payable, Related Party).
In July 2017, the Lender converted $30,000 of the debt (at $.10 per share).
Stock Based Compensation
On August 3, 2017, the Company issued warrants to purchase 16,000,000 shares of common stock at an exercise price of $.06 with a term of 5 years pursuant to an agreement with a financial consulting firm. The warrants were valued at approximately $917,000 using the Black Scholes pricing model relying on the following assumptions: volatility 177.58%; annual rate of dividends 0%; discount rate 1.79%.
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
Reference 1: http://www.xbrl.org/2003/role/presentationRef