Grant of Stock Options

The Company granted members of the Board of Directors stock options to purchase a total of 1,944,446 shares of common stock. The stock options vest over one year, exercisable at $0.18 per share and will expire in 10 years. Total fair value of the stock options amounted to $292,000 which will be expensed over its vesting period.

Issuance of Convertible Notes

From February 26, 2018, through March 31, 2018, the Company issued and sold to accredited US investors and non-U.S. investors an aggregate of $314,000 Convertible Promissory Notes (the “Notes”) and warrants to purchase an aggregate of 1,959,375 shares of common stock (the “Warrants”). The Company received proceeds from the closing of the private placement of $285,000, which funds were used, and are being used, for general corporate purposes and working capital. Of the Notes issued, one Note was issued to a current member of the Company’s Board of Directors on in the amount of $44,000 convertible to 550,000 shares of common stock and Warrants to purchase 275,000.

The Notes are due twelve (12) months from their respective issuance dates (the “Maturity Date”). The Notes do not bear interest and were issued in the face amount equal to 110% of the purchasers’ commitments. The Notes are convertible into shares of the Company’s common stock at a rate of $0.08 per share. If the Notes are not paid in full by the Maturity Date, the balance remaining on the Maturity Date shall be increased by 10% and the Company shall be required to pay interest at a rate of 10% per annum thereon until all sums thereunder are paid in full.

The Warrants are exercisable into shares of the Company’s common stock for a term of one (1) year at an exercise price of $0.08 per share. The Warrants also contain provisions that protect the holders against dilution by adjustment of the conversion price in certain events involving a reduction or increase in the Company’s shares.

The offering was made to non-U.S investors and to U.S. “accredited investors,” as the term is defined in Regulation D under the Securities Act of 1933, as amended (the “Securities Act”), and were made without general advertising or solicitation. The securities sold in the offering were not registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on exemptions from registration including the exemption from registration afforded by Section 4(a)(2) of the Securities Act and Regulation S promulgated under the Securities Act, and corresponding provisions of state securities law, which, respectively, exempt transactions by an issuer not involving any public offering or transactions with non-U.S. Investors.

Conversion of Convertible Notes

In February and March 2018, the Company issued 935,000 shares of common stock upon conversion of previously issued convertible notes in aggregate value of $72,000.

Exercise of Warrants

In February and March 2018, the Company issued 935,000 shares of common stock upon the exercise of previously issued warrants for aggregate cash proceeds of $46,750. On March 30, 2018, a member of the Company’s Board of Directors exercised a warrant to purchase 275,000 shares of common stock which are scheduled to be issued on April 2, 2018 on proceeds of $22,000.

Exercise of Options

In February 2018, the Company issued 179,710 shares of common stock to a Director of the Company upon the exercise of previously issued options for aggregate cash proceeds of $12,580.

Common stock issued in exchange for services

In March 2018, the Company issued 50,000 shares of common stock in exchange for services in aggregate value of $12,000.