Note 11 – Subsequent Events

On March 9, 2018, the Company entered into a Securities Purchase Agreement with the Lender.  The Company issued a 3.5% original issue discount (“OID”) senior secured convertible promissory note having an aggregate face amount of $777,202 (the “March 2018 Convertible Note”).  The March 2018 Convertible Note bears interest at a rate of 10% per annum and matures in nine months.  The Company received cash proceeds of $750,000 net of the 3.5% original issue discount of $27,202.  At the Lender’s  option, the principal and accrued interest under the March 2018 Convertible Note are convertible into common stock at a rate of $0.50 per share and have a full reset feature.  The note is secured by all assets of the Company.  The Company at any time may prepay in whole or in part the outstanding principal and accrued interest at 120% during the first 90 days and 130% for the period from the 91st day through maturity.

On March 14, 2018, Yield Endurance, Inc., a New Jersey corporation (“Yield”) and wholly-owned subsidiary of the Company entered into a series of agreements providing Yield with bitcoin (“BTC”) and the ability to enter into transactions with Madison Partners LLC as described below.

Under the terms of the agreements, Yield entered into a Note Purchase Agreement (the “NPA”) with Prism Funding Co. LP (“Prism”)and borrowed $5,000,000 of bitcoin, which loan has been guaranteed by the Company.   Yield issued a 10% original issue discount Senior Secured Convertible Note (the “Senior Note”) in the principal amount of $5,500,000 and received $5,000,000 of bitcoin. The Senior Note is payable 30 days following written demand from Prism and bears interest at a rate of 10% per annum. On the Maturity Date, the Company must repay the Senior Note, as follows: an amount equal to: (a) in the event that the value of bitcoin on the Maturity Date is less than the value of bitcoin on the Closing Date, the principal amount of this Senior Note, plus interest; (b) in the event that the value of bitcoin on the Maturity Date is greater than or equal to the value of bitcoin on the Closing Date, the principal amount of this Senior Note, plus interest, by return of the number of bitcoin delivered to Yield on the Closing Date, provided the total value shall equal or exceed all amounts due and owing under the Note.

As additional consideration, the Company issued to Prism 25,000,000 five-year warrants to purchase the Company’s common stock, exercisable at $0.01 per share.

Yield also entered into a Confidential bitcoin Lending Program Participation Agreement (the “Bitcoin Agreement”) with Madison Partners LLC (“Madison”) under which Madison will lend Yield’s bitcoin to third parties. Under the Bitcoin Agreement, Madison will pay Yield an amount equal to the following: (a) 10% of the income from bitcoin lending plus (b) 50% of the income in excess of 10% on all bitcoin loans made by Madison using Yield’s bitcoin. In the event that the Senior Note becomes due and payable, Madison agrees to take steps to re-deliver the bitcoin to Yield prior to the Maturity Date, or alternatively, deliver cash equal to the value of the bitcoin on the date of notice of termination of the Bitcoin Agreement. In connection with the NPA, Yield also entered into an Account Control Agreement (the “Control Agreement”).

 The Company repaid its President and Chief Executive Officer $169,715 of principal and interest due under related party notes.

The Company and the Lender had orally agreed to waive the anti-dilution provisions of the February and March Convertible Notes in connection with the issuance of 25,000,000 warrants to Prism.  They entered into a written waiver agreement on March 26, 2018.  Accordingly, the conversion price of these Notes remains at $0.50 per share. The exercise price of the warrants issued to the Lender in connection with the February and March Convertible Notes is at $0.01 per share.

We evaluated subsequent events after the balance sheet date through the date the financial statements were issued. We did not identify any additional material events or transactions occurring during this subsequent event reporting period that required further recognition or disclosure in these financial statements.