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18. Subsequent Events | 9 Months Ended
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Jun. 30, 2017
Notes |
18. Subsequent Events | 18. Subsequent Events Subsequent to June 30, 2017, the Company entered into the following agreements and transactions: (1) On August 2, 2017, the Company received a cash advance from a third party in the amount of $100,000, which incurs fees of $1,500 per day until repaid. During November 2017, the Company amended the advance to be callable at any time, due May 30, 2018, and to become convertible into shares of the Company’s common stock at the most favorable rate available as of the date of the agreement. The conversion rate may adjusted for any more favorable conversion terms provided to any other note holder at a future date. (2) On August 7, 2017, the Company received a cash advance from a third party in the amount of $50,000, which incurs fees of $750 per day until repaid. During November 2017, the Company amended the advance to be callable at any time, due May 30, 2018, and to become convertible into shares of the Company’s common stock at the most favorable rate available as of the date of the agreement. The conversion rate may adjusted for any more favorable conversion terms provided to any other note holder at a future date. (3) During August 2017, the Company received letters related to unsecured notes payable with third parties with principal balances totaling $5,900,000 as of June 30, 2017 where the lenders waived any historical and future events of default through August 24, 2017 and extended the maturity date through August 24, 2017. (4) During August 2017, the Company received a letter related to an unsecured note payable with a third party with a principal balance of $334,464 as of June 30, 2017 wherein the lender waived any historical and future events of default through August 24, 2017 and extended the maturity date through August 24, 2017. On December 18, 2017, another letter was received wherein the lender waived any historical and future events of default through February 28, 2018 and extended the maturity date through February 28, 2018. (5) During August 2017, the Company received a letter related to secured and unsecured notes payable with entities controlled by the Company’s former chief executive officer and Executive Chairman of the Board of Directors, who was in office at the time, with principal balances of $1,721,100, $1,303,135, $250,000 and $25,463 as of June 30, 2017, wherein the lenders waived any historical and future events of default through August 24, 2017 and extended the maturity date through August 24, 2017. On December 18, 2017, another letter was received wherein the lender waived any historical and future events of default through January 12, 2018 and extended maturity date was extended through January 12, 2018. (6) During August 2017, the Company received a letter related to an unsecured note payable with a former Executive Chairman of the Board of Directors with a principal balance of $542,004 as of June 30, 2017 wherein the lender waived any historical and future events of default through August 24, 2017 and extended the maturity date through August 24, 2017. On December 18, 2017, another letter was received wherein the lender waived any historical and future events of default through January 12, 2018 and extended maturity date was extended through January 12, 2018. (7) During July 2017, the Company granted 1,562 shares of common stock, with a value of $12,496 on the date of grant, to the former Executive Chairman and Chief Executive Officer of the Company, who was in office at the time, as a bonus for services performed during the three months ended June 30, 2017. The value of the shares has been included in accrued expenses as of June 30, 2017. (8) On August 16, 2017, the Company sold $248,500 of future customer receipts to a third party for $175,000 in cash. The $73,500 difference between the future customer receipts and cash received by the Company is being amortized to interest expense over the term of the note. The note is subordinated to another note and is guaranteed by the Company’s former Executive Chairman and Chief Executive Officer, who was in office at the time. (9) During July 2017, the Company granted 50,000 shares of common stock, with a value of $400,000 on the date of grant, to a third party as part of a one-year consulting agreement. The value of the shares will be amortized to selling, general and administrative expenses evenly over the service period. On September 5, 2017, the Board of Directors granted the issuance of 500 shares of Series H Preferred stock in lieu of the 50,000 shares of common stock, to which the third party has verbally agreed. The Series H Preferred shares have not yet been issued. (10) During July 2017, the Company granted 3,937 shares of common stock to employees for bonuses. The $31,500 fair value of the shares has been included in accrued expenses as of June 30, 2017. (11) On August 28, 2017, the Company sold $224,850 of future customer receipts to a third party for $150,000 in cash. The $74,850 difference between the future customer receipts and cash received by the Company is being amortized to interest expense over the term of the note. The note is subordinated to another note and is guaranteed by the Company’s former Executive Chairman and Chief Executive Officer, who was in office at the time. (12) On August 31, 2017, the Company sold $119,920 of future customer receipts to a third party for $80,000 in cash. The $39,920 difference between the future customer receipts and cash received by the Company is being amortized to interest expense over the term of the note. The note is subordinated to another note and is guaranteed by the Company’s former Executive Chairman and Chief Executive Officer, who was in office at the time. (13) On September 5, 2017, the Board of Directors of the Company modified the terms of the Series G Convertible Preferred stock to remove the 18-month lock-up period. The amendment has not been filed with the State of Delaware as of the date of this filing. (14) On September 5, 2017, the Board of Directors of the Company ratified a change to the Series H Preferred stock, previously contemplated and approved by the Board of Directors, to where each share of the Series H Preferred stock is convertible into 100 shares of the Company’s common stock, is limited to a total ownership of 4.99% of the outstanding common stock at the time of conversion, is to be non-voting stock, does not bear interest or dividends, and is transferable with the same terms. The Certificate of Designation for the Series H Preferred stock has not been filed with the State of Delaware as of the time of this filing and no shares had been issued prior to September 5, 2017. (15) On September 5, 2017, the Company entered into a consulting agreement with a former Executive Chairman and Chief Executive Officer of the Company, which replaced and existing consulting agreement, for certain consulting services to the Company including, but not limited to (i) developing business plans, (ii) making introductions to potential customers and/or suppliers, (iii) identifying qualified employees and other service providers, (iv) sales, marketing, manufacturing and other operating activities, and (v) meeting with the Company's and its affiliates' respective managers, officers, employees, agents, and other service providers regarding the business, prospects and affairs of the Company and its affiliates. The former officer may not engage in and shall not be entitled to any fees or consideration for (i) negotiating the purchase and/or sale of Company securities, (ii) making recommendations regarding transactions involving Company securities, (iii) or any other matters involving transactions of Company securities. The agreement is for one year and includes compensation of $250.00 per hour, but such compensation may not exceed $20,000 during any calendar month, plus 1,500 shares of the Company’s Series H Preferred stock. The shares of Series H Preferred stock have not been issued at the time of this filing. (16) On September 5, 2017, the Company renewed an existing license and royalty agreement with an entity controlled by a former Executive Chairman and Chief Executive Officer of the Company (the “licensee”). Under the agreement, the licensee receives the right to make, sell and use products related to the Company’s intellectual property regarding diabetics, cellular, GPS and CareCenter arena and generally characterized as the CareCenter Technology in a certain region. The Company shall receive a royalty of 15% of the licensee’s gross sales price for the product. The initial term is for three years whereby the licensee must achieve a minimum royalty of $10,000 per month to maintain the agreement, whereby the agreement will be extended for one addition year unless terminated. If the minimum monthly royalty is not maintained, the licensee may pay a sum to bring the total payment up to $360,000 within 60 days of the end of the three-year term to extend the agreement for one additional year. The Company may terminate the agreement if the licensee does not commence to manufacture, distribute and sell product within a 6-month period after the execution of the agreement. (17) On September 5, 2017, the Company granted 1,500 shares of the Company’s Series H Preferred stock to an entity controlled by a former Executive Chairman of the Board of Directors for past services rendered in addition to amounts earned under an existing consulting agreement. The shares of Series H Preferred stock have not been issued at the time of this filing. (18) On September 5, 2017, the Company entered into an employment agreement with the former Executive Chairman and Chief Executive Officer of the Company, who was in office at the time, for a period of two years for services as the Executive Chairman and Chief Executive Officer of the Company. The initial term of the agreement is for two years and shall automatically renew on a year to year basis, unless terminated sooner. The base compensation is $360,000 per year plus 1,500 shares of the Company’s Series H Preferred stock. The shares of Series H Preferred stock have not yet been issued. The terms of the Series H Preferred stock have been approved by the Board of Directors of the Company, but no Certificate of Designation has been filed with the appropriate authoritative body. An additional cash or stock bonus may be awarded, subject to the attainment of such individual and ActiveCare objectives as the Board of Directors of the Company shall establish from time to time as determined by the Board of Directors of the Company. Upon certain termination conditions upon termination of the agreement, the Company may be required to pay severance of twice the base compensation of the former Executive Chairman and Chief Executive Officer at its highest point during the five-year period prior to termination. In addition, the Board of Directors approved compensation at a level of $360,000 per year retroactive from July 2017, when the former Executive Chairman and Chief Executive Officer was appointed, until the employment agreement was signed. Effective October 12, 2017, the agreement was amended to waive any constructive termination in relation to changes in title, working conditions or duties such that his powers are diminished, reduced or otherwise changed to include powers, duties, or working conditions which are note materially consistent with title, continuing after written notice and 10 days to cure. (19) On September 5, 2017, the Board of Directors granted 963 shares of Series H Preferred stock to the former Executive Chairman and Chief Executive Officer of the Company, who was in office at the time, in lieu of 96,275 shares of previously granted common stock as a bonus for services performed. The Series H Preferred shares have not yet been issued. (20) On September 5, 2017, the Board of Directors granted 200 shares of Series H Preferred stock to the holder of an unsecured note payable with a balance of $300,000 as of June 30, 2017 for the extension of the note payable. The Series H Preferred shares have not yet been issued. (21) From September 21, 2017 through December 1, 2017, the Company received cash advances totaling $230,000 from an entity controlled by the Company’s former Executive Chairman and Chief Executive Officer, who was in office at the time, and repaid $10,000 plus the reimbursement of bank fees of $200. (22) On September 25, 2017, the Company entered into agreements with its primary product vendor that supersedes all prior agreements with the vendor. Under the agreements, the vendor will provide all products and services to the Company’s service members as they are assigned to the vendor. In return, the vendor will pay the Company a fee for services rendered to the vendor and to the members for monitoring and reporting. The Company also earns commissions on all members assigned under the agreement to be paid upon completion of certain milestones met with each individual member. The agreements also modify the terms of an existing note payable to the vendor. The note accrues interest at 0.65% per annum, is reduced by the amount of commissions earned by the Company under the agreements and matures on September 25, 2019. The agreements also add interest fees on existing accounts payable at 0.65% per annum and the accounts payable are reduced by the amount of commissions earned by the Company under the agreements for a minimum of 24 months. (23) On September 27, 2017, the Company received a cash advance from a third party in the amount of $40,000, which incurs fees of $600 per day until repaid. (24) In October 2017, the Company entered into a settlement agreement related to an unsecured note payable with a principal balance of $300,000 as of June 30, 2017. As part of the agreement, the lender lent the Company an additional $200,000 which has been added to the principal balance of the note payable. The agreement modified the terms of the note payable to become secured by inventory owned by the Company, requires issuance of 3,000 shares of Series H Preferred Stock, which were granted by the Board of Directors on September 5, 2017 and are required to be able to convert the lender’s shares into 300,000 shares of the Company’s common stock, and requires payments of $8,600 for 72 consecutive weeks. If any payment is late, the Company is required to issue the lender an additional 86 shares of Series H Preferred Stock per late payment and an additional 172 shares of Series H Preferred stock if late payments are not cured within 30 days and for each subsequent 30-day period the note is in default. The amended note also requires payment of a key man life insurance policy on a former Executive Chairman of the Board of Directors naming the lender as the benefactor. The fair value of the shares will be amortized over the life of the amended note. The note terms are adjustable for any terms subsequently provided to other investors. (25) On November 7, 2017, the Company entered into individual agreements related to secured borrowings from four different parties that each previously purchased customer receivables that require daily payments. The agreements modified each agreement to reduce the amount of the respective daily payment to approximately half of the amount previously drawn through January 7, 2018, whereafter the amount of the payment returns to the payment required under the respective agreement plus an additional amount equal to the amount shorted during the period of lower payments divided by the number of remaining payments remaining on the original term of the respective note payable. Three of the four agreements are verbal. On January 5, 2018, the Company further modified each agreement to keep the amount of the daily payments at approximately the same level as the agreement on November 7, 2017 through mid-March 2018, except one where the lower payments are only through February 5, 2018. Three of the four agreements are verbal. (26) On November 13, 2017, an entity controlled by a former Executive Chairman of the Board of Directors, with whom we contracted for consulting, terminated the existing consulting arrangement. (27) On November 13, 2017, the Company entered into a sales broker agreement with an entity controlled by a former Executive Chairman of the Board (the “Sales Broker”). Under the Sales Broker agreement, the Company will provide services to certain customers referred to the Company and the Sales Broker will receive administration fees in the amount of 15% of gross revenues, as defined by the Sales Broker agreement, as long as the Company services the respective customer even in the event the Sales Broker agreement is terminated. The Sales Broker will promote the Company, its services and products, and introduce potential customers to the Company as a sales representative. The initial term of the Sales Broker agreement is one year, which automatically renews for additional one-year periods until cancelled by either party. (28) On November 30, 2017, the Company signed a letter of understanding with a former consultant where the Company agreed to convert $100,000 of past consulting fees owed into an equivalent value of equity in the Company upon a qualifying capital raise. (29) On November 10, 2017, the Company signed a formal agreement replacing a former verbal agreement with an unsecured note holder, with principal due of $350,000 as of June 30, 2017. The new agreement memorialized previously agreed upon terms whereby the lender converted a $350,000 advance into an unsecured note payable, with interest at 2.8% of revenues, for $143,987 in fees and a future payoff fee of 20% of the principal, or $70,000, which are included in accrued liabilities and interest expense as of June 30, 2017. The written agreement adjusted the verbal agreement to where the Company is required to pay any outstanding interest at the end of the first month following a quarter end. The lender may call all amounts due under the note payable as due and payable after February 28, 2018, given 15 calendar days notice, and the written agreement includes a most favored nations clause in relation to conversion features. (30) On November 27, 2017, the Company signed a formal agreement memorializing previous agreements with the holder of an unsecured note and cash advance, with aggregate principal due of $1,200,000 as of June 30, 2017, as well as additional advances with aggregate principal of $190,000 that were received subsequent to June 30, 2017. The new agreement memorialized the terms of the note payable whereby the lender converted $617,500 in advances into a $1,100,000 unsecured note payable, with interest at 18% per annum for $95,226 in fees, which have been included in accrued liabilities and interest expense as of June 30, 2017. In addition, the new agreement allows for advances to incur fees at 1.5% of the advance principal per calendar day until paid in full. The written agreement adjusted the verbal agreements to where the note payable and advance balances and fees may be called by the lender at any time and are due by May 30, 2018, and the new agreement includes a most favored nations clause in relation to conversion features on the note payable and advances. The new agreement also assigned $2,000,000 of note payable principal held by an entity controlled by an officer of the Company to the lender. All interest accrued on the assigned balance is payable to the officer. (31) On December 6, 2017 the Company entered into those certain forbearance and lock up letter agreements with three (3) debtors which held convertible debentures in the aggregate principal amount of $1,109,345 at the time of the agreements, whereby the debtors agreed that, without prior written consent of the Company, the debtors will not, directly or indirectly, (i) offer for sale, sell, pledge, or otherwise transfer or dispose of (or enter into any transaction that is designed to, or could be expected to, result in the transfer or disposition by any person at any time in the future of) any shares of common stock (including, without limitation, shares of common stock that may be deemed to be beneficially owned by the undersigned in accordance with the rules and regulations of the Securities and Exchange Commission and shares of common stock that may be issued upon exercise of any options or warrants) or securities convertible into or exercisable or exchangeable for common stock, (ii) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of shares of common stock, whether any such transaction is to be settled by delivery of common stock or other securities, in cash or otherwise, (iii) except as provided for, make any demand for or exercise any right or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of any shares of common stock or securities convertible into or exercisable or exchangeable for common stock or any other securities of the Company, or (iv) publicly disclose the intention to do any of the foregoing for a period of the earlier of (a) June 5, 2018 or (2) the consummation of a qualified offering, herein deemed as an offering by the Company of $3,000,000 or more. Additionally, the Debt Holders agreed that they will forbear from enforcing their rights and remedies against any defaults which may exist historically, currently or in the future through June 5, 2018 under the existing loan documents. The agreements automatically terminate upon the earlier of (i) inability to raise a minimum of $550,000 in capital on or before December 31, 2017; (ii) June 5, 2018; or (iii) the consummation of a qualified offering of at least $3,000,000 by the Company. In addition, two (2) of the debtor agreements waive their rights to default litigation only through December 31, 2017 and any new financing must receive their prior consent unless it is common equity. (32) Effective December 11, 2017, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with four accredited investors, including the Company’s new Chief Executive Officer in connection with the closing of a bridge financing (the “Bridge Financing”) in the gross amount of $600,000. The three remaining accredited investors hold notes payable with an aggregate principal balance of $3,865,865 as of June 30, 2017. Pursuant to the Purchase Agreements, the Investors purchased from the Company (i) Promissory Notes in the aggregate principal amount of $631,578.06 (the “Notes”) due and payable six months from the Effective Date and (ii) Common Stock Purchase Warrants (the “Warrant”), exercisable for five years from the date of issuance, to purchase up that certain amount of shares with an aggregate exercise amount equal to $600,000 at an exercise price per share equal to the lesser of (i) 80% of the per share price of common stock in the companies contemplated private placement of securities of up to $5,000,000, contemplated to take place within six months of the effective date (the “Private Placement”) (ii) $3.00 per share, (iii) 80% of the offering price in the Private Placement (if applicable), or (iv) 80% of the exercise price of any warrants issued in the Private Placement, in each case subject to adjustment hereunder (the “Exercise Price”). The Notes were issued in favor of the Investors with an original issue discount equal to five percent (5%). Additionally, pursuant to the Purchase Agreement, the Company will issue the investors common stock (the “Origination Shares”) worth 30% of the purchase price paid by each investor (the “Origination Dollar Amount”) on the 5th trading day after the pricing of the Private Placement, but in no event later than six months from the Effective Date. The Origination Dollar amount will divided by the lowest of (i) $3.00 (subject to adjustment for stock splits), (ii) 80% of the common stock offering price in the Private Placement, (iii) 80% of the offering price of the Private Placement (if applicable), or (iv) 80% of the exercise price of any warrants issued in the Private Placement. At the closing of the Private Placement the Note shall automatically convert into a subscription into the Private Placement in an amount equal to 125% of the Note balance, subject to certain conditions as outlined therein. If the Company fails to repay the balance due under the Note on its Maturity the Investors have the right, at any time, at their election, to convert all or part of the outstanding and unpaid principal sum and accrued interest (and any other fees) into shares of fully paid and non-assessable shares of common stock of the Company pursuant to the following conversion formula: number of shares receivable upon conversion equals the dollar amount being converted divided by the Conversion Price. The Conversion Price is the lesser of $3.00 (subject to adjustment for stock splits) or 60% of the lowest trade price in the 25 trading days. Further, in the event of any default, the outstanding principal amount of the Notes, plus accrued but unpaid interest, liquidated damages, fees and other amounts owing in respect thereof through the date of acceleration (the “Note Balance”), shall become, at the Investor’s election, immediately due and payable in cash at the Mandatory Default Amount. The Mandatory Default Amount means the investor’s choice of (this choice may be made at any time without presentment, demand, or notice of any kind): (i) the Note Balance divided by the Conversion Price on the date of the default multiplied by the closing price on the date of the default; or (ii) the Note Balance divided by the Conversion Price on the date the Mandatory Default Amount is either (a) demanded or (b) paid in full, whichever has a lower Conversion Price, multiplied by the closing price on the date the Mandatory Default Amount is either (a) demanded or (b) paid in full, whichever has a higher closing price; or (iii) 150% of the Note Balance. If, at any time the Note is outstanding, the Company issues a Variable Security (as defined therein), then in such event the Investors shall have the right to convert all or any portion of the outstanding balance of the Notes into shares of Common Stock on the same terms as granted in any applicable Variable Security issued by the Company. (33) On November 17, 2017, the Company received cash advances from third parties totaling $60,000. On January 5, 2018, the advances converted into agreements with the same terms as the Bridge Financing entered into on December 11, 2017. (34) On December 11, 2017, Eric Robinson voluntarily resigned as Chief Financial Officer, Secretary and In-House Counsel, and all other positions with the Company to which he has been assigned regardless of whether he served in such capacity, effective immediately. On the same date, Jeffrey S. Peterson voluntarily resigned as Chairman of the Board of Directors, while acknowledging that he will continue to serve the Company as a Director and Executive Vice President. On the same date, Robert J. Welgos and Bradley Robinson voluntarily resigned as members of the Board of Directors and all other positions with the Company to which they may have been assigned, regardless of whether they served in such capacity, effective immediately. These resignations were not as a result of any disagreements with the Company. (35) On December 11, 2017, Isaac Onn was appointed as a member of the Company’s board of Directors and Mark J. Rosenblum was appointed as the Company’s Chairman of the Board of Directors and Chief Executive Officer in connection with the Bridge Financing. In connection with Mr. Rosenblum’s appointment as the Company’s Chief Executive Officer, on December 11, 2017, the Company and Mr. Rosenblum finalized the terms of his employment and entered into an employment agreement (the “Rosenblum Employment Agreement”). Mr. Rosenblum shall have such duties, responsibilities and authority which shall include, but not be limited to the responsibility for the overall management, direction and strategy of the Company. The Company shall pay Mr. Rosenblum a salary at a rate of Three Hundred Thousand and 00/100 Dollars ($300,000) per year (the “Initial Base Salary”). The Initial Base Salary shall increase to an annual rate of Three Hundred and Sixty Thousand Dollars ($360,000) (the “Base Salary”) upon the Company closing a financing of at least Five Million Dollars ($5,000,000). Mr. Rosenblum shall be eligible for an annual performance-based cash bonus of up to 100% of the Base Salary (as further defined in the Rosenblum Employment Agreement”). The Rosenblum Employment Agreement is for a term of three (3) years and will be automatically renewed for one year periods, unless otherwise terminated by the Company or Mr. Rosenblum. Upon execution of the Rosenblum Employment Agreement the Company agreed to issue restricted shares equal to $300,000 valued at the offering price of the next equity offering of the Company (“RSU”) and an option to purchase an aggregate $600,000 valued at the offering price of the next equity offering of the Company at an exercise price equal to the market price for the next equity offering of the Company (the “Options”). One-third of these Options shall vest immediately, another third on the first anniversary of the Rosenblum Employment Agreement, and the final third on the second anniversary of the Rosenblum Employment Agreement. The RSUs shall vest 50% immediately upon issuance and 25% on each of the first and second anniversaries of the Rosenblum Employment Agreement. If the Company terminates Mr. Rosenblum’s employment without just cause or if Mr. Rosenblum’s employment is terminated due to Disability (as defined therein), Mr. Rosenblum shall be entitled to receive, in addition to any accrued and unpaid Base Salary, plus any accrued but unused vacation time and unpaid expenses that have been earned as of the date of such termination, the following severance payments (the “Severance Payments”): (i) equal monthly installments at the applicable Base Salary rate then in effect, as determined on the first day of the calendar month immediately preceding the day of termination, to be paid beginning on the first day of the month following such termination and continuing until the later of (A) the expiration of the Term or (B) the expiration of (i) six (6) months following the effective termination date; provided, however, that if the Company terminates the Agreement without Just Cause (as defined in the Rosenblum Employment Agreement) within six (6) months of the effective date, then Mr. Rosenblum will only be entitled to three (3) months of severance instead of six (6) months; and (ii) during the Severance Period (as defined in the Rosenblum Employment Agreement), health and life insurance benefits substantially similar to those which Mr. Rosenblum was receiving or entitled to receive immediately prior to termination; provided, however, such insurance benefits shall be reduced to the extent comparable benefits during such period following Mr. Rosenblum’s termination, and any benefits actually received shall be reported by Mr. Rosenblum to the Company. The Company will reimburse Mr. Rosenblum for any reasonably travel and relocation expenses. (36) During December 2017, the Company entered into those certain forbearance and lock up letter agreements with a debtor which holds convertible debentures in the principal amount of $25,312 as of December 5, 2017, whereby the debtor agreed that, without prior written consent of the Company, the debtor will not, directly or indirectly, (i) offer for sale, sell, pledge, or otherwise transfer or dispose of (or enter into any transaction that is designed to, or could be expected to, result in the transfer or disposition by any person at any time in the future of) any shares of common stock (including, without limitation, shares of common stock that may be deemed to be beneficially owned by the undersigned in accordance with the rules and regulations of the Securities and Exchange Commission and shares of common stock that may be issued upon exercise of any options or warrants) or securities convertible into or exercisable or exchangeable for common stock, (ii) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of shares of common stock, whether any such transaction is to be settled by delivery of common stock or other securities, in cash or otherwise, (iii) except as provided for, make any demand for or exercise any right or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of any shares of common stock or securities convertible into or exercisable or exchangeable for common stock or any other securities of the Company, or (iv) publicly disclose the intention to do any of the foregoing for a period of the earlier of (a) June 5, 2018 or (2) the consummation of a qualified offering, herein deemed as an offering by the Company of $3,000,000 or more. Additionally, the debtor agreed that they will forbear from enforcing their rights and remedies against any defaults which may exist historically, currently or in the future through June 5, 2018 under the convertible debentures. The forbearance and lock up letter agreements automatically terminate upon the earlier of (i) inability to raise a minimum of $550,000 in capital on or before December 31, 2017; (ii) June 5, 2018; or (iii) the consummation of a qualified offering of at least $3,000,000 by the Company. (37) On January 12, 2018, the Company received letters from four (4) debtors which hold convertible debentures with principal balances totaling $3,162,955 as of June 30, 2017 where the debtors forbear against any historical and future events of default and remedies through February 15, 2018. Further, the maturity date was extended through February 15, 2018. As part of the letters, the Company agreed not to initiate any new financing arrangements without the consent of the debtors. (38) On January 12, 2018, the Company received a letter from a lender who holds two unsecured notes payable with principal balances totaling $550,000 as of June 30, 2017 where the lender forbears against any historical and future events of default through February 28, 2018 and extended the maturity date through February 28, 2018 in exchange for 12,000 shares of common stock. (39) On December 22, 2017, the Company entered into a Services Agreement (the “Cleveland Clinic Agreement”) with the Cleveland Clinic Foundation d.b.a. Cleveland Clinic, an Ohio nonprofit corporation (“Cleveland Clinic”). Pursuant to the Cleveland Clinic Agreement, the Company will be providing services to Cleveland Clinic as agreed to by the parties in any mutually agreed form pursuant to a “Statement of Work”. Pursuant to the Statement of Work included in the Cleveland Clinic Agreement, the Company will provide monitoring services to Cleveland Clinic’s expected beneficiary diabetic population within the Cleveland Clinic Medicare ACO. The initial term of the Cleveland Clinic Agreement is for three years and shall automatically renew after the term for a successive twelve (12) month period from year to year unless sooner terminated by either party in accordance with the terms of the Cleveland Clinic Agreement. As consideration for the Company’s Services, the Company is to receive a fixed monthly fee per Covered Diabetic Patient (as defined in the Cleveland Clinic Agreement). In addition, at such time the Cleveland Clinic Accountable Care Organization (“CCACO”) shall receive a shared savings payment from the Centers for Medicare and Medicaid Services, CCACO shall share such savings with the Company based on a formula defined in the Cleveland Clinic Agreement. Cleveland Clinic may, by written notice to the Company, terminate the Agreement, any purchase order or any portion of a purchase order if the Company (i) is in material breach of any of the terms and conditions of the Cleveland Clinic Agreement or any Purchase Order, which breach in not cured within thirty (30) days after notification of such breach, (ii) terminates or suspends its business, becomes insolvent, or becomes subject to any bankruptcy or insolvency proceeding under Federal or State law. Cleveland Clinic further may terminate the Cleveland Clinic Agreement, any Purchase Order or any portion of any Purchase Order for convenience upon ninety (90) days’ prior written notice to Company (“Termination for Convenience”). In connection with any Termination for Convenience, Cleveland Clinic will reimburse Company for the actual cost reasonably incurred for work in process up to the time of cancellation, as well as any non-cancellable contract of Company, or non-cancellable purchase order to a third party, entered into for the benefit of Cleveland Clinic. The Cleveland Clinic Agreement is nonexclusive, and Cleveland Clinic may contract with others to perform similar services. Accordingly, the Company may also perform similar services for others.

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- Definition The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 855 -URI http://asc.fasb.org/topic&trid=2122774 + Details
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