From today's 8-K:
Quote:
Extract of item 2.03:
The variable conversion price is the lesser of $0.01 per share, or 70% of the average of the three lowest daily volume weighted average prices (“VWAP”) over the 15 trading day period prior to the date of conversion
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
On June 7, 2017, the Registrant entered into a 9.75% convertible note facility agreement (the “Agreement”) with an investor. The Agreement provides that the investor will fund up to $369,000, including an initial tranche of $55,000, which was funded at the closing of the Agreement and twelve additional tranches of $26,250 each. All tranches mature 17 months after the date of the Agreement. The Agreement provides that the entire outstanding balance under the Agreement, along with a required 25% prepayment penalty, may be paid to the investor at the option of the Registrant, in whole, at any time. The investor may convert the remaining outstanding balance of convertible notes in whole, or in part, at any time beginning six months after funding, into shares of the Registrant’s common stock. The Registrant may, at its option, pay all or any portion of a note conversion in cash, or a combination of cash and conversion shares, without penalty, provided it makes a timely election to do so. The number of shares of common stock to be initially delivered upon conversion shall be equal to the dollar amount being converted divided by the variable conversion price. The variable conversion price is the lesser of $0.01 per share, or 70% of the average of the three lowest daily volume weighted average prices (“VWAP”) over the 15 trading day period prior to the date of conversion. The number of shares of the Registrant’s common stock required to be issued to the investor upon any conversion may be subsequently adjusted upward in the event that the recalculated variable conversion price on the 23rd trading day following the date of conversion is lower than the calculated variable conversion price on the date of conversion. In such case, the Registrant would be required to deliver the incremental number of shares to the investor, determined based on the recalculated variable conversion price. The Registrant has reserved 50 million shares of its unissued common stock for potential conversion of the convertible notes under this convertible note facility.
The investor anticipates that upon any conversion, the shares of stock it receives from the Registrant will be freely tradable in compliance with Rule 144 of the U.S. Securities and Exchange Commission.
The convertible promissory note was privately offered and sold to the Holder in reliance on specific exemptions from the registration requirements of the United States federal and state securities laws which the Registrant believes are available to cover this transaction based on representations, warranties, agreements, acknowledgements and understandings provided to the Registrant by the investor.
