Private Placement Offerings

6 Months Ended

Jun. 29, 2014

Private Placement Offerings

Private Placement Offerings

NOTE 11 – PRIVATE PLACEMENT OFFERINGS

On May 22, 2013, the Company entered into a Private Placement Engagement Agreement with WestPark Capital, Inc. (“WestPark”), which later been amended on April 30, 2014. Under the amendment to the Private Placement Engagement Agreement (the “Agreement”), WestPark will be compensated 10% of transaction value for all equity related transactions, 5% of debt placement for subordinated debt, 2.5% of debt on senior debt placement, 0.5% on credit enhancement, 5% of transaction value for all transactions that are placed through general solicitation of the Company’s customer database, and 7 years warrants for the purchase of an equity interest of the Company equal to 3% of the outstanding shares after the final closing of funding pursuant to the terms of this Agreement. If funds raised are less than $2,000,000, such 3% will be prorated accordingly. The warrants will have a nominal exercise price of $0.1 per share and a cashless exercise provision.

As of June 29, 2014, the Company had the below three offerings with WestPark.

On September 9, 2013, the Company entered into a private placement (the “2013 Offering”) to raise capital by issuing Debentures attached with sixty percent (60%) warrants maturing four years from the date of issuances.

The Debentures accrue interest at a rate of 7% per annum and mature four years from the date of issuance. The Debentures have a conversion price of $0.37 per unit and the attached warrants exercise price is 30% discount of market price, subject to a $0.25 per share floor, or $0.37 per warrant share on date of maturity.

The Company may require conversion of the Debentures if the Company’s Common Stock is trading at a volume of 50,000 shares per day for thirty consecutive trading days, provided the average trading price of such stock is $0.75 or greater during such time. The Debentures shall automatically convert at maturity. See Note 10 for more information on the offering.

On April 22, 2014, the Company entered into an amendment to the initial private placement (the “Amended 2013 Offering”) to amend the terms from issuing Debenture to issuing common stock of the Company with $0.20 per share. As of June 29, 2014, the Company has raised $255,000 with the issuance of 1,275,000 shares of the Company’s common stock under this offering.

On May 13, 2014, the Company commenced a “best efforts” offering (the “2014 Offering”) of up to $2,600,000 representing 6,700,000 shares of the Company’s common stock, at a price per tier as set forth below. The 2014 Offering is being made pursuant to Rule 506(c) of Regulation D under the Securities Act of 1933, as amended, and the Jumpstart Our Business Startups Act. As of June 29 2014, the Company has raised $140,000 at $0.25 per share with stock payable of 560,000 shares of the Company’s common stock under this offering.

First $300,000 invested	$	0.25
Next $300,000 invested	$	0.30
Next $1,000,000 invested	$	0.40
Final $1,000,000 invested	$	0.50

As of June 29, 2014, the Company granted approximately 294,675 warrants to WestPark based on the aforementioned terms, and WestPark exercised 238,986 warrants that related to the 2013 Offering and Amended 2013 Offering.