(11) Subsequent Events

During the three months ended March 31, 2018, we issued to Debenture holders 12,494 shares of common stock for quarterly interest of $52,371 issued in stock in lieu of cash. Of the 12,494 shares issued, 1,092 shares were issued to members of the Company’s Board of Directors, who are also Debenture holders.

On various dates in March 2018, we received six-month, convertible loans of $150,000 from three accredited investors. The loans include a 10% original issue discount and are convertible into a qualified offering at the deal price.

On March 14, 2018, we received a three month, non-convertible loan of $50,000 from a related party who was a member of the Company’s Board of Directors.

On March 12, 2018, we received a six-month, convertible loan of $253,000 from an accredited investor. The loan has an original issue discount of $53,000. The loan can be converted at any time into common stock at a conversion price of $7.50. We agreed to issue the investor 6,750 shares of restricted common stock.

On March 12, 2018, we received a six-month convertible loan of $85,000 from a privately-held investment firm. The Company paid total fees of $5,400 related to this loan.

The Revolving Note was further amended on January 30, 2018 to increase the aggregate principal amount to $4,000,000 with all other terms unchanged. We received the additional $500,000 advances in January and March 2018.

On February 22, 2018 we signed a Merchant Agreement with a lender. Under the agreement we received $110,000 in exchange for rights to all customer receipts until the lender is paid $147,400, which is collected at the rate of $921.25 per business day. The payments were secured by second position rights to all customer receipts until the loan has been paid in full.

On February 12, 2018, we received a six-month, convertible loan of $100,000 from an accredited investor. The loan earns a one-time interest of 10%. $50,000 of the proceeds were used to pay off the outstanding balance of a previous loan from this lender. The loan can be converted at any time into common stock at a conversion price of $7.50. We issued the investor 5,000 shares of restricted common stock.

On February 12, 2018, we issued 3,500 shares of restricted common stock to an accredited investor to extend the maturity date of our eight-month, non-convertible loan of $170,000 originated on March 21, 2017 to February 15, 2018. The accredited investor agreed to a further extension to March 31, 2018 in exchange for 3,500 shares of restricted common stock yet to be issued.

On January 19, 2018, we received a six-month, convertible loan of $150,000 from an accredited investor. The loan earns a one-time interest of 10% and includes a 10% original issue discount. We also issued the investor 4,000 shares of restricted common stock. The loan can be converted at any time into common stock at a conversion price of $7.50.

On January 16, 2018, we received a one year, convertible loan of $131,250 from an accredited investor. The loan earns interest of 4% per year. The loan can be converted into common stock after 180 calendar days at a discount of 40% to market price as defined in the loan.

On January 3, 2018, we received a one year, convertible loan of $95,000 from an accredited investor. The loan includes a 5% original issue discount. The loan can be converted into common stock after 180 calendar days at a discount of 40% to market price as defined in the loan.