As of September 4, 2015, the issuer had 17,254,533 shares of common stock outstanding.
Between July 6, 2015 and August 12, 2015, holders of convertible promissory notes converted an aggregate principal and interest amount of $204,515 into an aggregate of 5,148,641 shares of our common stock.
Potentially dilutive common shares consist of employee stock options, warrants, and other convertible securities in the amount of 42,205,251, and are excluded from the diluted earnings per share computation in periods where the Company has incurred net loss. During the six months ended June 30, 2015, the Company recorded a net loss, resulting in no dilutive common shares.
On August 4, 2015, the Company issued a convertible promissory note in the principal sum of up to $250,000 The note contains a 10% original issue discount, and is to be funded in the aggregate amount of $225,000 in tranches at the sole discretion of the holder. The first tranche funded was $50,000. The note has a maturity date of two years from the funding of each tranche and is convertible at the lesser of $0.10 or at a 40% discount to the lowest trade price of the Company’s common stock in the 25 trading days prior to conversion, subject to up to an additional 15% discount in the case conversion shares are not deliverable by Deposit/Withdrawal at Custodian (“DWAC”) and/or we are not DTC eligible. Each tranche is subject to a one-time interest charge of 12% 90 days after its funding. The note can be prepaid by the Company only during the first 90 days following the issuance of each funding tranche. As long as the note is outstanding, if the Company issues any security with terms more favorable than the terms of the note or a term was not similarly provided to the holder of the note, then such more favorable or additional term shall, at the holder’s option, become part of the note. In addition, the holder of the note shall be entitled to piggyback registration rights with respect to the conversion shares. The note includes customary default provisions related to payment of principal and interest and bankruptcy or creditor assignment. In addition, it shall constitute an event of default under the note if the Company loses its status as DTC eligible, the Company is delinquent in its filings with the SEC or fails to meet the requirements to satisfy the availability of Rule 144 to the holder. In an event of default, the note may become immediately due and payable at premiums to the outstanding principal. The note also provides that if shares issuable upon conversion of the note are not timely delivered in accordance with the terms of the note then the Company shall be subject to certain cash penalties that increase proportionally to the duration of the delinquency.
