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SUBSEQUENT EVENTS
6 Months Ended
Jun. 30, 2017
Notes to Financial Statements  
NOTE 11 - SUBSEQUENT EVENTS

Additional Borrowings

 

On July 10, 2017, the Company received additional proceeds of $55,000 from the February 8, 2017 Convertible Promissory Note to an Accredited Investor. The note bears interest at 10% per annum and matures 12 months from its effective date.

 

On August 11, 2017, the Company received additional proceeds of $60,000 from the February 8, 2017 Convertible Promissory Note to an Accredited Investor. The note bears interest at 10% per annum and matures 12 months from its effective date.

 

Merger Agreement

 

On July 26, 2017, the Company entered into an Agreement and Merger Agreement (the “Merger Agreement”) with Munzee, Inc., a Delaware corporation (“Munzee”). The Merger Agreement provides for the merger of Munzee with and into the Company, with the Company being the surviving corporation. The Merger is currently scheduled to close on October 1, 2017. When the Merger closes the Company will issue the current owners of all of Munzee’s outstanding common stock 4,355,000 shares of the Company’s Series B Convertible Preferred Stock, a yet-to-be-created series of preferred stock. Once created, each share of the Series B Preferred Stock will be convertible into fifty (50) shares of the Company’s common stock, on a post-reverse basis (based on a prospective 1-for-100 reverse stock split planned for on or about September 1, 2017).

 

Securities Exchange Agreements

 

On July 25, 2017, the Company entered into a Securities Exchange and Common Stock Purchase Agreement with Craig Holland, Chief Executive Officer (the “Holland Securities Exchange Agreement”). Under the Holland Securities Exchange Agreement, Mr. Holland agreed to exchange promissory notes issued by the Company dated December 31, 2013 and September 30, 2014 (the “Holland Notes”), and the $756,984 in principal owing under the Holland Notes, into 37,849,200 shares of the Company’s common stock (the “Holland Common Stock”), on a post-reverse basis (based on a prospective 1-for-100 reverse stock split planned for on or about September 1, 2017). The closing under the Holland Securities Exchange Agreement for the exchange of the Holland Notes for the Holland Common Stock will occur automatically upon the effectiveness of the referenced reverse stock split. At the closing, the $285,764 in interest currently due under the Holland Notes will be waived.

  

On July 25, 2017, the Company entered into a Securities Exchange and Common Stock Purchase Agreement with Mick Donahoo, Chief Financial Officer (the “Donahoo Securities Exchange Agreement”). Under the Donahoo Securities Exchange Agreement, Mr. Donahoo agreed to exchange a promissory note issued by the Company dated December 31, 2013 (“Donahoo Note”), and the $31,042 in principal owing under the Donahoo Notes, into 1,552,100 shares of the Company’s common stock (the “Donahoo Common Stock”), on a post-reverse basis (based on a prospective 1-for-100 reverse stock split planned for on or about September 1, 2017). The closing under the Donahoo Securities Exchange Agreement for the exchange of the Donahoo Notes for the Donahoo Common Stock will occur automatically upon the effectiveness of the referenced reverse stock split. At the closing, the $9,841 in interest due under the Donahoo Note will be waived.

 

On July 25, 2017, the Company entered into a Securities Exchange and Common Stock Purchase Agreement with Robert Cowdell (the “Cowdell Securities Exchange Agreement”). Under the Cowdell Securities Exchange Agreement, Mr. Cowdell agreed to exchange a promissory note issued by the Company dated December 31, 2013 (“Cowdell Note”), and the $61,443 in principal owing under the Cowdell Notes, into 3,072,100 shares of the Company’s common stock (the “Cowdell Common Stock”), on a post-reverse basis (based on a prospective 1-for-100 reverse stock split planned for on or about September 1, 2017). The closing under the Cowdell Securities Exchange Agreement for the exchange of the Cowdell Notes for the Cowdell Common Stock will occur automatically upon the effectiveness of the referenced reverse stock split. At the closing, the $21,900 in interest due under the Cowdell Note will be waived.

 

On July 25, 2017, the Company entered into a Securities Exchange and Common Stock Purchase Agreement with the Holland Family Trust, a trust controlled by Craig Holland, Chief Executive Officer (the “Holland Trust Securities Exchange Agreement”). Under the Holland Trust Securities Exchange Agreement, the Holland Trust agreed to exchange promissory notes issued by the Company dated December 31, 2013 and September 30, 2014 (the “Holland Trust Notes”), and the $207,083 in principal owing under the Holland Trust Notes, into 10,354,150 shares of the Company’s common stock (the “Holland Trust Common Stock”), on a post-reverse basis (based on a prospective 1-for-100 reverse stock split planned for on or about September 1, 2017). The closing under the Holland Trust Securities Exchange Agreement for the exchange of the Holland Trust Notes for the Holland Trust Common Stock will occur automatically upon the effectiveness of the referenced reverse stock split. At the closing, the $78,175 in interest due under the Holland Trust Notes will be waived.

 

On July 25, 2017, the Company entered into a Securities Exchange and Common Stock Purchase Agreement with an Accredited Investor (the “Accredited Investor #1 Securities Exchange Agreement”). Under the Accredited Investor #1 Securities Exchange Agreement, the Accredited Investor #1 agreed to exchange a promissory note issued by the Company dated December 20, 2013 (the “Accredited Investor #1 Note”), and the $214,966 in principal owing under the Accredited Investor #1 Note, into 214,966 shares of the Company’s Series A Convertible Preferred Stock, a yet-to-be-created series of preferred stock. Once created, each share of the Series A Preferred Stock will be convertible into fifty (50) shares of the Company’s common stock, on a post-reverse basis (based on a prospective 1-for-100 reverse stock split planned for on or about September 1, 2017) (the “Accredited Investor #1 Series A Stock”), but the holder cannot convert if it would cause the holder to own more than 4.99% of the Company’s outstanding common stock. The closing under the Accredited Investor #1 Securities Exchange Agreement for the exchange of the Accredited Investor #1 Note for the Accredited Investor #1 Series A Stock will occur automatically upon the effectiveness of the referenced reverse stock split. At the closing, the $70,815 in interest due under the Accredited Investor #1 Notes will be waived.

 

On July 25, 2017, the Company entered into a Securities Exchange and Common Stock Purchase Agreement with an Accredited Investor (the “Accredited Investor #2 Securities Exchange Agreement”). Under the Accredited Investor #2 Securities Exchange Agreement, the Accredited Investor #2 agreed to exchange promissory notes issued by the Company dated June 25, 2014 and February 11, 2015 and July 28, 2015 and April 7, 2016 (the “Accredited Investor #2 Notes”), and the $1,942,322 in principal owing under the Accredited Investor #2 Notes, into 1,942,322 shares of the Company’s Series A Convertible Preferred Stock, a yet-to-be-created series of preferred stock. Once created, each share of the Series A Preferred Stock will be convertible into fifty (50) shares of the Company’s common stock, on a post-reverse basis (based on a prospective 1-for-100 reverse stock split planned for on or about September 1, 2017) (the “Accredited Investor #2 Series A Stock”), but the holder cannot convert if it would cause the holder to own more than 4.99% of the Company’s outstanding common stock. The closing under the Accredited Investor #2 Securities Exchange Agreement for the exchange of the Accredited Investor #2 Notes for the Accredited Investor #2 Series A Stock will occur automatically upon the effectiveness of the referenced reverse stock split. At the closing, the $363,706 in interest due under the Accredited Investor #2 Notes will be waived.

  

On July 25, 2017, the Company entered into a second Securities Exchange and Common Stock Purchase Agreement with Accredited Investor #2 (the “Second Accredited Investor #2 Securities Exchange Agreement”). Under the Second Accredited Investor #2 Securities Exchange Agreement, the Accredited Investor #2 agreed to exchange a promissory note issued by the Company dated February 8, 2017 (the “Accredited Investor #2 Note”), and the principal owing under the Second Accredited Investor #2 Note on September 30, 2017, into shares of the Company’s Series A Convertible Preferred Stock, a yet-to-be-created series of preferred stock, with the number of shares to be determined by the principal amount due under the note on September 30, 2017 at price of $1 per share. At the closing, the interest due under the Second Accredited Investor #2 Note will be waived.

 

On July 25, 2017, the Company entered into a Securities Exchange and Common Stock Purchase Agreement with an Accredited Investor (the “Accredited Investor #3 Securities Exchange Agreement”). Under the Accredited Investor #3 Securities Exchange Agreement, the Accredited Investor #3 agreed to accept 51,094 shares of the Company’s Series A Convertible Preferred Stock, a yet-to-be-created series of preferred stock (the “Accredited Investor #3 Series A Stock”), for all amounts due to Accredited Investor #3 under that certain Game Marketing Investment Agreement between the Company and Accredited Investor #3 dated February 1, 2016, as orally modified by the parties on June 9, 2016 (the “Game Marketing Agreement”). Once created, each share of the Series A Preferred Stock will be convertible into fifty (50) shares of the Company’s common stock, on a post-reverse basis (based on a prospective 1-for-100 reverse stock split planned for on or about September 1, 2017) (the “Accredited Investor #3 Series A Stock”), but the holder cannot convert if it would cause the holder to own more than 4.99% of the Company’s outstanding common stock. The closing under the Accredited Investor #3 Securities Exchange Agreement for the exchange of the amounts due under the Game Marketing Agreement for the Accredited Investor #3 Series A Stock will occur automatically upon the effectiveness of the referenced reverse stock split. At the closing, any interest due under the Game Marketing Agreement, as amended, will be waived.

 

Note Amendments

 

On July 25, 2017, the Company entered into an Amendment No. 1 to a Promissory Note with Craig Holland, Chief Executive Officer, under which the Company agreed to amend the terms of that certain Convertible Promissory Note dated December 31, 2013, as extended by agreement dated December 31, 2016, and entered into by and between the parties (the “Holland Salary Note”) in order to (i) make the Holland Salary Note non-interest bearing, (ii) change the conversion price from a variable price to $0.0002 per share, and (iii) waive all interest due and owing under the Holland Salary Note.

 

On July 25, 2017, the Company entered into an Amendment No. 1 to a Promissory Note with Mick Donahoo, Chief Financial Officer, under which the Company agreed to amend the terms of that certain Convertible Promissory Note dated December 31, 2013, as extended by agreement dated December 31, 2016, and entered into by and between the parties (the “Donahoo Salary Note”) in order to (i) make the Donahoo Salary Note non-interest bearing, (ii) change the conversion price from a variable price to $0.0002 per share, and (iii) waive all interest due and owing under the Donahoo Salary Note.

 

On July 25, 2017, the Company entered into an Amendment No. 1 to a Promissory Note with Craig Holland, Chief Executive Officer, under which the Company agreed to amend the terms of that certain Convertible Promissory Note dated December 31, 2013, as extended by agreement dated December 31, 2016, and entered into by and between the parties (the “Holland Note”) in order to make the Holland Note non-interest bearing, (ii) make the Holland Note non-convertible, and (iii) waive all interest due and owing under the Holland Note.