Effective February 14, 2017, the Company entered into a Securities Purchase Agreement, (the “Purchase Agreement”), by and between an otherwise unaffiliated, accredited investor (the “Purchaser”) and the Company in connection with our issuance and sale to the Purchaser of shares of Series A Preferred Stock under the terms and conditions as set forth in the Purchase Agreement (the “Sale”).

In connection with the Sale, our Board of Directors (our “Board”) authorized and approved a series of preferred stock to be known as “Series A Convertible Preferred Stock”, for which 1,050,000 shares, $0.0001 par value per share, were authorized and a Certificate of Designations, Preferences and Rights of the Series A Convertible Preferred Stock, (the “Certificate”), was filed with the Office of the Secretary of State of the State of Nevada (the “State”) to effectuate the authorization. Pursuant to the Purchase Agreement, the purchase of shares of our Series A Preferred Stock may occur in several tranches (each, a “Tranche”; and, collectively, the “Tranches”). The first Tranche of $300,000 ($315,000 in stated value, represented by 315,000 shares of our Series A Preferred Stock) closed simultaneously with the execution of the Purchase Agreement on February 14, 2017 (the “First Closing”), and each additional Tranche shall close at such times and on such financial terms as may be agreed to by the Purchaser and us.

The Series A PS has the following rights and privileges:

Pursuant to the terms of the Purchase Agreement, the shares of our Series A Preferred Stock issued in the First Closing are to be redeemed by us in five (5) equal weekly payments (each, a “Redemption Payment”), commencing in approximately 180 days from the First Closing. All but one of the Redemption Payments may be made by us in cash or in shares of our common stock, at our option. The Holder shall have the option to demand payment of one Installment Redemption Payment in shares of Common Stock Redemption Payments made using shares of our common stock will be valued based upon a VWAP formula, tied to the then-current quoted price of shares of our common stock, described with greater particularity in the Purchase Agreement.

The Company considered the guidance of ASC 480-10, Distinguishing Liabilities From Equity to determine the appropriate treatment of the Series A shares. Pursuant to ASC 480-10, the Company determined that the Series A shares is an obligation to be settled, at the option of the Company, in cash or in variable number of shares with a fixed monetary value that should be recorded as a liability under ASC 480-10.

On July 28, 2017, the Company amended the Certificate of Designations to include the mandatory redemption dates. On January 8^th the Company will redeem the $52,500 of Preferred Shares and any accrued but unpaid dividends. Beginning the earlier of the effectiveness of a Registration Statement or January 28, 2018, the Company will begin redeeming the 131,250 preferred shares issued on July 28, 2017. The Company shall redeem $26,250 of Preferred Shares an any accrued but unpaid dividends thereon on the first business day of each week for five consecutive weeks.

On September 1, 2017, the Company amended the Certificate of Designations. Solely in respect to the 189,000 Preferred Shares that were issued on February 13, 2017 and outstanding as of August 28, 2017, the Company shall redeem $31,500 of the outstanding amount of such Preferred Shares an any accrued but unpaid dividends thereon on the first business day of each week for six consecutive weeks. Solely in respect to the 52,500 Preferred Shares that were issued on July 7, 2007 and outstanding as of the date of the second amendment, beginning the earlier of the effectiveness of a Registration Statement and January 8, 2018, the Company shall redeem $26,500 of the outstanding amount of such Preferred Shares an any accrued but unpaid dividends thereon on the first business day of each week for two consecutive weeks.

Beginning the earlier of the effectiveness of a Registration Statement and February 28, 2018, the Company will begin redeeming the 131,250 preferred shares issued on September 1, 2017. The Company shall redeem $26,250 of Preferred Shares an any accrued but unpaid dividends thereon on the first business day of each week for five consecutive weeks.

During the period ended September 30, 2017, the Company issued 630,000 shares of Series A Preferred Stock in exchange for cash of $555,000, net of original issue discount and legal fees totaling $75,000. As a result, the Company recorded a liability of $630,000 and a debt discount of $75,000. The debt discount is being amortized to interest expense over the redemption period of the Series A Preferred Stock. During the period ended September 30, 2017, the Company also redeemed 283,500 shares of Series A Preferred stock with a value of $283,500 in exchange for 2,368,824 shares of common stock with a fair value of $263,876 and cash payment of $138,322. As a result of these redemptions, the Company recognize interest expense of $118,698 to account the difference between the fair value of common shares issued and cash payment totaling $402,198 and recorded value of the Series A Preferred stock of $283,500.

As of September 30, 2017, the Company has 346,500 Preferred Series A Shares outstanding amounting to $346,500 and unamortized discount of $10,670 or a net balance of $335,830.