Page 7 of 12 – SEC Filing
The Reporting Persons were issued the following additional shares of Series A Preferred Stock as in kind payment
of dividends:
| (i) | 50,214 as the dividend for the period ended December 31, 2014; |
| (ii) | 67,500 as the dividend for the period ended June 30, 2015; |
| (iii) | 71,034 as the dividend for the period ended December 31, 2015; |
| (iv) | 24,388 as the dividend for the period ended June 30, 2016; and |
| (v) | 25,120 as the dividend for the period ended December 31, 2016. |
As of January 1, 2016, the Reporting
Persons no longer had the beneficial ownership of: (i) 1,500,000 shares of Series A Preferred Stock acquired in 2014, (ii) 125,832 shares of Series A Preferred Stock received as in kind dividends, and (iii) 2014 Warrants to purchase 1,875,000 shares
of Common Stock due to HCM no longer retaining investment discretion over these securities.
Pursuant to the Securities Purchase Agreement with the Issuer
dated as of December 28, 2015 (the December 2015 SPA), HCPF was issued (i) a Secured Convertible Promissory Note (the Note) in the principal amount of $150,000 which was initially convertible into 535,714 shares of
Common Stock at an initial conversion price of $0.28 per share; and (ii) a warrant to purchase 267,857 shares of Common Stock with an initial exercise price of $0.28 per share (2015 Warrant and together with shares of Series A
Preferred Stock, 2014 Warrants, the Note and shares of Common Stock, Issuer Securities). In a subsequent transaction on December 20, 2016, Slipstream Communications, LLC purchased the Secured Convertible Promissory Note and repaid
the outstanding amount on the Note.
In addition, during the period from September 24, 2014 until April 28, 2017, HCPF purchased 2,950,827
shares of Common Stock in open market transactions.
Issuer Securities were acquired with the working capital of the Reporting Persons in negotiated
transactions with the Issuer or in the open market, as described above.
| Item 4. | Purpose of Transaction. |
The Issuer Securities were acquired based on the Reporting Persons belief
that the Issuer Securities, when acquired, were undervalued and represented an attractive investment opportunity. Depending upon overall market conditions, other investment opportunities available to the Reporting Persons, and the availability of
Issuer Securities at prices that would make the purchase or sale of Issuer Securities desirable, the Reporting Persons may endeavor to increase or decrease their position in the Issuer through, among other things, the purchase or sale of shares of
Common Stock on the open market or in private transactions or otherwise, on such terms and at such times as the Reporting Persons may deem advisable.
No
Reporting Person has any present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a) – (j) of Item 4 of Schedule 13D except as set forth herein or such as would occur upon or in connection with
completion of, or following, any of the actions discussed herein. The Reporting Persons intend to review their investment in the Issuer Securities on a continuing basis. Depending on various factors including, without limitation, the Issuers
financial position and investment strategy, the price levels of the shares of Common Stock, conditions in the securities markets and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to
their investment in the Issuer as they deem appropriate including, without limitation, engaging in additional communications with management and the Board of the Issuer, engaging in discussions with stockholders of the Issuer and others about the
Issuer and the Reporting Persons investment, making proposals to the Issuer concerning changes to the capitalization, ownership structure, board structure (including board composition)
