You must remember that convertible note holders are getting their shares at about .025 to sell into the market (49% of the lowest daily VWAP in the proceeding 30 days before conversion , which was around .05) . And there are several of these types of agreements from different hedge funds.
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On August 14, 2015, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with accredited investors (the “Investors”) pursuant to which the Company agreed to sell, and the Investors agreed to purchase, convertible debentures (the “Debentures”) in the aggregate principal amount of up to $ 3,979,877, in up to 11 tranches.
The initial closing in the aggregate principal amount of $650,000 occurred on August 15, 2015. The second closing in the amount of $185,000 will occur on August 28, 2015, the third closing in the amount of $125,000 will occur on September 4, 2015, the fourth through seventh closings are in the amount of $60,000 each and will occur on September 11, 2015 with the remaining 3 closings occurring every 2 weeks thereafter, the eighth closing in the amount of $250,000 will occur 3 days after the filing of a registration statement on Form S-1 registering the shares of stock underlying the Debentures and any accrued interest thereunder (the “Registration Statement”), the ninth closing in the amount of $250,000 will occur 8 days after the filing of the Registration Statement, the tenth closing in the amount of $1,278,877 will occur within 3 business days of the effective date of the Registration Statement, and the eleventh closing, at the sole option of the purchaser, in the amount of up to $1,000,000 will occur by October 15, 2015 if the Investor’s option is exercised. The Debentures bear interest at the rate of 10% per year and mature 12 months after issuance.
Each of the Debentures are convertible at any time, in whole or in part, at the option of the holders into shares of the Company’s common stock at a conversion price that is the lower of (a) $0.75, or (b) a 49% discount to the lowest daily volume weighted average price of the Company’s common stock during the 30 trading days prior to the conversion date.
