Quarterly report pursuant to Section 13 or 15(d)

SUBSEQUENT EVENTS

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SUBSEQUENT EVENTS
6 Months Ended
May. 31, 2015
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

In accordance with FASB ASC 855-10, the Company has analyzed its operations subsequent to May 31, 2015 through July 14, 2015 and has determined that it does not have any material subsequent events to disclose in these consolidated financial statements except for the following.

 

On May 29, 2015, the Company executed a secured Convertible Promissory Note for $252,500 with Typenex Co-Investment, LLC. The Note includes an OID of $22,500 and is to be received in multiple tranches as determined by the lender. The note bears interest at 10% per annum and individual loans mature thirteen months from the effective date of each payment. The first tranche for $87,500 (includes an OID of $7,500) was funded on June 2, 2015. The Note is convertible at a $1.30 per share.

 

On June 2, 2015, the Company executed a Convertible Promissory Note for $8,000 with Lord Abstract, LLC. The terms if this note are still being finalized.

 

On June 4, 2015, the Company executed a Convertible Promissory Note for $55,000 (includes an OID of $5,000) with Black Mountain Equities, Inc. The note has a one-time 10% interest charge and is due on or before June 4, 2016. The Note is convertible at a 30% discount of the average of the three lowest closing prices prior to the twenty trading days preceding conversion. The Company issued 5,000 shares of common stock as a loan fee in connection with the execution of this convertible promissory note. The stock was issued at the closing price on the date of grant of $1.15 for total non-cash expense of $5,750.

 

On June 12, 2015, the Company entered into a binding Letter of Intent (the “LOI”) for the purchase of all of the issued and outstanding capital stock of J.S. Technologies, Inc., a California corporation (“JS”).  JS is the manufacturer of Suhr brand guitars and related electronics and accessories.  Under the LOI, the Company has agreed to purchase all of the issued and outstanding capital stock in JS for a total purchase price of $11,000,000.  The purchase price will be paid, at the option of the individual JS stockholders, in either cash, new convertible preferred stock, or a combination of both.  The new convertible preferred stock to be issued as payment toward the purchase price will have a stated value of $4.00 per share, will accrue dividends at a rate of six percent per year, and will be convertible to common stock at a price of $1.00 per share of common stock.  All shares of the new preferred stock issued and outstanding at thirty-six months after closing will be automatically converted to common stock.  For additional details refer to the Company’s Form 8-K filed on June 16, 2015.

 

On June 15, 2015, the Company issued 100,000 shares of common stock to Hallmark Investments, Inc. for consulting services. The stock was issued at the closing price on the date of grant of $1.20 for total non-cash expense of $120,000.

 

On June 30, 2015, we entered into a $250,000 Convertible Promissory Note (the “Note”) with GCEF Opportunity Fund, LLC (“GCEF”). The face amount of the Note includes an original issue discount of $25,000. The initial advance to be made under the Note by GCEF is $25,000. GCEF may, after making this initial advance, lend us additional sums under the terms of the Note in such amounts and at such dates as it chooses. Individual loans mature one year from the effective date of each payment. Interest will be 10% compounded monthly. GCEF may convert all or part of the Note, at its discretion, into shares of our common stock. The conversion price is the lesser of $1.00 or sixty percent (60%) of the lowest closing price for our common stock in the twenty trading days immediately preceding the conversion date.