More toxic debt
On March 9, 2016 the Company signed a term sheet with LG Capital Funding, LLC wherein the Company will receive $500,000 of funding over a one-year period. The Company received the first funding of $50,000 upon the signing of the agreement on March 9, 2016.
On March 9, 2016 the Company signed a term sheet with Quarum Holdings, LLC wherein the Company will receive $500,000 of funding over a one-year period. The Company received the first funding of $50,000 upon the signing of the agreement on March 9, 2016.
On March 9, 2016 the Company signed a term sheet with Cerberus Financial Group, Ltd wherein the Company will receive $500,000 of funding over a one-year period. The Company received the first funding of $50,000 upon the signing of the agreement on March 9, 2016.
This type of debt is more toxic than the standard convertible debenture. The lender needs to receive enough free trading shares to complete the $500,000 funding. The company is issuing shares to the lender, who uses the proceeds from the sale of said shares to capitalize the loan. In essence, the company is issuing shares, using the lender as a conduit, to fund itself. It's a clever work-around from having to file a registration statement.
It is also highly dilutive of existing shareholders.
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