On March 6, 2017, the Company closed on a private placement offering with institutional investors and one director (the "Investors") pursuant to which the Company issued and sold the Investors Senior Convertible Notes (the “Notes”) in the aggregate principal amount of $750,000, with an original issue discount of 5%, for gross proceeds to the Company of $712,500 prior to payment of $20,000 in reimbursement of legal fees of the lead Investor. The Notes matured on September 3, 2017 (the “Maturity Date”) and bear interest at 8% per annum, with a default interest rate of 18% from the default date. On the Maturity Date, the Company was obligated to repay an amount equal to 120% of outstanding principal and accrued interest. This additional 20% amounted to $171,000 as of September 30, 2017, and it is included in accrued interest on the balance sheet. On the Maturity Date (and subsequently, if the Holders elect to extend the Maturity Date), the Investors may elect to convert the Notes into the common stock of the Company at $0.30 per share, subject to adjustment (the “Conversion Price”). As additional consideration, the Company issued the Investors a total of 2,500,000 five-year warrants to purchase the Company’s common stock, which are exercisable on or after the Maturity Date at $0.35 per share. The Company failed to pay the Notes on the Maturity Date, which date the investors did not elect to extend.

On August 18, 2017, the Company closed on an offering of convertible notes and warrants on terms substantially identical to the March 6, 2017 financing. The purchasers are the same investors as in the March financing except for one person who is a former director that did not participate in this financing. The Company received $60,000 in net proceeds from the issuance of $63,158 of convertible notes. Additionally, the Company issued the investors a total of 210,526 five-year warrants at $.35 per share. The Company failed to pay these convertible notes when due on September 3, 2017.

The original issue discount interest expense of $40,658 was amortized over the life of the Notes, and was fully amortized as of September 30, 2017.

The Company was unable to pay approximately $1,012,000 to retire its convertible notes due September 3, 2017. The Company has no finite plans concerning future financing, although it has had preliminary discussions with investors about a restructuring which would provide some working capital. No specific terms have been discussed and any financing will be very dilutive to existing shareholders.