(10) Subsequent Events

On March 21, 2017, we received an eight-month, non-convertible loan of $170,000 from an accredited investor. The loan earns an annual interest rate of 10% and includes a 10% original issue discount.  We also agreed to issue the investor 170,000 shares of restricted common stock.

On March 16, 2017, we awarded 660,000 incentive stock options to certain employees and 1,855,000 non-qualified stock options to officers, consultants and directors of the Company. Terms of the stock options include the following significant items: (i) $0.28 exercise price, (ii) 10-year life, (iii) 36 month vesting equally per month for employees and 12 month vesting equally per month for directors, (iv) options vest immediately upon change in-control.

On March 14, 2017, we received an eight-month, non-convertible loan of $250,000 from a privately-held investment firm. The loan earns an annual interest rate of 10% and includes a 10% original issue discount.  We also agreed to issue the investor 250,000 shares of restricted common stock.

On March 2, 2017, we signed a Merchant Agreement with a lender. Under the agreement we received a loan of $75,000. The Company paid no fees in connection with this loan.

On February 15, 2017, we received a six-month, non-convertible loan of $110,000 from each of two accredited investors. We agreed to issue the investors 170,000 shares of restricted common stock. The loans earn no interest but carry a 10% original issue fee.

On February 6, 2017, we signed a Merchant Agreement with a lender. Under the agreement we received a loan of $125,000. The Company paid $1,250 in fees in connection with this loan. Under the agreement, $16,180 was used to pay off the prior loan.

We received $250,000 in January 2017 and $500,000 in February 2017 pursuant to the October Revolving Note and we issued to the Investor additional warrants to purchase 1,875,000 shares of our common stock. The terms of the Warrants are identical except for the exercise date, issue date, and termination date. Interest on the principal balance of the Revolving Note shall be paid in full on the Maturity Date, unless otherwise paid prior to the Maturity Date. 

On January 17, 2017, we signed a one-year agreement with an investor relations firm. We have the right to terminate the agreement within 10 days of the end of each three-month period. We are committed to pay the IR firm $25,000 for each three-month term, in three equal monthly allotments, should we choose to keep them under contract. We also have awarded the IR firm warrants to purchase the Company’s restricted common stock at an exercise price of $0.40/share. The number of warrants and exercise price that we are committed to pay the IR firm for each three-month period, should we choose to keep them under contract, is as follows: Months 1-3: 100,000 warrants at $0.40. Months 4-6: 125,000 warrants at $0.60. Months 7-9: 125,000 warrants at $0.80. Months 10-12: 150,000 warrants at $1.00.

In January 2017, we executed an amendment to the July 1, 2016 convertible note that was due on January 6, 2017. We received an extension of up to three months on the note’s due date. In exchange for the extension, we agreed to issue 50,000 shares of restricted common stock and pay the investor $10,000 for each 30-day extension. We made a payment of $34,000 in January 2017 for the first one-month extension and interest on the note from the initial close date through February 6, 2017. On February 28, 2017, the note was paid in full.