UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] |
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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For the quarterly period ended September 30, 2014 |
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[ ] |
Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934 |
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For the transition period from __________ to__________ |
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Commission File Number: 333-165692 |
Cross Click Media, Inc.
(Exact name of registrant as specified in its
charter)
Nevada |
47-1771976 |
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
8275 S. Eastern Avenue, Suite 200-661 , Las Vegas, NV 89123 |
(Address of principal executive offices) |
(855) 873-7992 |
(Registrant’s telephone number) |
___________________________ |
(Former name, former address and former fiscal year, if changed since last report) |
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days [X] Yes [ ] No
Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files).
[X] Yes [ ] No
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
[ ] Large accelerated filer Accelerated filer |
[ ] Non-accelerated filer |
[X] Smaller reporting company |
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Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act).
[ ] Yes [X] No
State the number of shares outstanding of each
of the issuer’s classes of common stock, as of the latest practicable date: 433,778,454 as of November 20, 2014.
CROSSCLICK MEDIA, INC.
(Formerly Co-Signer, Inc.)
TABLE OF CONTENTS
CROSSCLICK MEDIA, INC.
(Formerly Co-Signer, Inc.)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
September 30, 2014 | |
December 31, 2013 |
ASSETS |
| |
|
Current Assets: |
| | | |
| | |
Cash |
$ | — | | |
$ | 1,792 | |
Accounts receivable |
| 129,571 | | |
| 483 | |
Other receivable |
| 93,618 | | |
| 322 | |
Prepaid expenses |
| 13,338 | | |
| 23,647 | |
Total Current Assets |
| 236,527 | | |
| 26,244 | |
|
| | | |
| | |
Deposits |
| 2,150 | | |
| 2,150 | |
Property and equipment, net |
| 22,196 | | |
| 25,411 | |
Intangible assets, net |
| 9,192 | | |
| 17,746 | |
Total Assets |
$ | 270,065 | | |
$ | 71,551 | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
| | | |
| | |
|
| | | |
| | |
LIABILITIES |
| | | |
| | |
Current Liabilities: |
| | | |
| | |
Cash overdraft |
$ | 7,774 | | |
$ | — | |
Accounts payable |
| 525,809 | | |
| 279,040 | |
Deferred revenue |
| 11,888 | | |
| — | |
Accrued liabilities |
| 78,938 | | |
| 24,030 | |
Accrued compensation |
| 56,312 | | |
| — | |
Accrued interest |
| 123,931 | | |
| 24,954 | |
Derivative liability |
| 205,223 | | |
| 121,588 | |
Notes payable, related party |
| 96,516 | | |
| 16,360 | |
Notes payable |
| 7,121 | | |
| 44,300 | |
Convertible notes payable, net of discounts of $131,039 and $60,234, respectively |
| 1,127,274 | | |
| 941,515 | |
Total Current Liabilities |
| 2,240,786 | | |
| 1,451,787 | |
Long Term Liabilities: |
| | | |
| | |
Notes payable |
| 51,440 | | |
| 51,440 | |
Convertible notes payable, related party net of discounts of $0 and $37,682, respectively |
| — | | |
| 40,078 | |
Convertible notes payable, net of discounts of $0 and $16,856, respectively |
| 30,000 | | |
| 39,144 | |
Total Liabilities |
| 2,322,226 | | |
| 1,582,449 | |
|
| | | |
| | |
STOCKHOLDERS’ DEFICIT: |
| | | |
| | |
Preferred stock, $0.001 par value, 8,5000,000 authorized, no shares issued and outstanding |
| — | | |
| — | |
Series A preferred stock; $0.001 par value, 1,500,000 shares authorized, 1,173,041 shares issued and outstanding |
| 1,173 | | |
| 1,173 | |
Common stock; $0.001 par value, 440,000,000 shares authorized, 261,258,000 and 113,740,949 issued and outstanding, respectively |
| 261,259 | | |
| 113,741 | |
Additional paid in capital |
| 2,501,956 | | |
| 919,607 | |
Deferred stock compensation |
| (328,370 | ) | |
| (186,749 | ) |
Accumulated deficit |
| (4,488,179 | ) | |
| (2,358,670 | ) |
Total Stockholders’ Deficit |
| (2,052,161 | ) | |
| (1,510,898 | ) |
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |
$ | 270,065 | | |
$ | 71,551 | |
The accompanying
notes are an integral part of these consolidated financial statements
CROSSCLICK MEDIA, INC.
(Formerly Co-Signer, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
For the Nine Months Ended September 30, | |
For the Three Months Ended September 30, |
|
2014 | |
2013 | |
2014 | |
2013 |
|
| |
| |
| |
|
Revenue |
$ | 221,413 | | |
$ | 46,321 | | |
$ | 158,365 | | |
$ | 12,286 | |
Cost of revenue |
| (6,950 | ) | |
| — | | |
| (3,875 | ) | |
| — | |
Gross Margin |
| 214,463 | | |
| 46,321 | | |
| 154,490 | | |
| 12,286 | |
|
| | | |
| | | |
| | | |
| | |
Operating Expenses: |
| | | |
| | | |
| | | |
| | |
Professional fees |
| 87,381 | | |
| 60,670 | | |
| 8,340 | | |
| 44,155 | |
Salaries and wages |
| 247,995 | | |
| 74,029 | | |
| 126,831 | | |
| 29,010 | |
Advertising and promotion |
| 73,646 | | |
| 74,039 | | |
| 40,532 | | |
| 16,166 | |
Stock based compensation |
| 948,306 | | |
| 170,000 | | |
| 250,483 | | |
| 170,000 | |
General and administrative |
| 395,945 | | |
| 107,375 | | |
| 147,851 | | |
| 43,784 | |
Total Operating Expenses |
| 1,753,273 | | |
| 486,113 | | |
| 574,037 | | |
| 303,115 | |
Loss from Operations |
$ | (1,538,810 | ) | |
$ | (439,792 | ) | |
$ | (419,547 | ) | |
$ | (290,829 | ) |
|
| | | |
| | | |
| | | |
| | |
Other Income (Expense): |
| | | |
| | | |
| | | |
| | |
Interest income |
| 173 | | |
| — | | |
| 66 | | |
| — | |
Amortization of debt discount |
| (237,057 | ) | |
| (117,466 | ) | |
| (82,655 | ) | |
| (104,236 | ) |
Change in fair value of derivative liability |
| 348,303 | | |
| (34,773 | ) | |
| 379,219 | | |
| (34,773 | ) |
Derivative expense |
| (178,614 | ) | |
| — | | |
| — | | |
| — | |
Loss on conversion of debt |
| (102,282 | ) | |
| — | | |
| (102,282 | ) | |
| — | |
Loss on issuance of debt |
| (275,000 | ) | |
| — | | |
| (15,000 | ) | |
| — | |
Interest expense |
| (146,222 | ) | |
| (60,438 | ) | |
| (43,041 | ) | |
| (59,021 | ) |
Total Other Income (Expense) |
| (590,699 | ) | |
| (212,677 | ) | |
| 136,307 | | |
| (198,030 | ) |
|
| | | |
| | | |
| | | |
| | |
Loss before Provision for Income Taxes |
| (2,129,509 | ) | |
| (652,469 | ) | |
| (283,240 | ) | |
| (488,859 | ) |
|
| | | |
| | | |
| | | |
| | |
Provision for Income Taxes |
| — | | |
| — | | |
| — | | |
| — | |
|
| | | |
| | | |
| | | |
| | |
Net Loss |
$ | (2,129,509 | ) | |
$ | (652,469 | ) | |
$ | (283,240 | ) | |
$ | (488,859 | ) |
|
| | | |
| | | |
| | | |
| | |
Net Loss per share |
| | | |
| | | |
| | | |
| | |
Basic |
$ | (0.01 | ) | |
$ | (0.01 | ) | |
$ | (0.00 | ) | |
$ | (0.01 | ) |
|
| | | |
| | | |
| | | |
| | |
Weighted average shares outstanding –basic |
| 150,813,246 | | |
| 46,264,974 | | |
| 183,583,499 | | |
| 72,761,065 | |
The accompanying notes
are an integral part of these consolidated financial statements.
CROSSCLICK MEDIA, INC.
(Formerly Co-Signer, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
For the Nine Months Ended September 30, |
|
2014 | |
2013 |
Cash flows from operating activities: |
| | | |
| | |
Net loss for the period |
$ | (2,129,509 | ) | |
$ | (652,469 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
| | | |
| | |
Depreciation and amortization |
| 16,231 | | |
| 9,045 | |
Stock-based compensation |
| 948,306 | | |
| 170,000 | |
Derivative expense |
| 178,614 | | |
| — | |
Loss on conversion of debt |
| 102,282 | | |
| — | |
Loss on issuance of debt |
| 275,000 | | |
| — | |
Change in fair value of derivative liability |
| (348,303 | ) | |
| 34,773 | |
Amortization of debt discount |
| 237,057 | | |
| 117,466 | |
Change in assets and liabilities: |
| | | |
| | |
(Increase) in accounts receivables |
| (129,088 | ) | |
| 483 | |
(Increase) decrease in other receivables |
| (106,056 | ) | |
| (13,940 | ) |
(Increase) decrease in prepaid expenses and other assets |
| 29,069 | | |
| (23,647 | ) |
Increase in accounts payable and accruals |
| 477,617 | | |
| 332,349 | |
Net cash used in operating activities |
| (448,780 | ) | |
| (25,940 | ) |
|
| | | |
| | |
Cash flows from investing activities: |
| | | |
| | |
Purchase of property and equipment |
| (4,462 | ) | |
| — | |
Repayments of note receivable, related party |
| — | | |
| 6,060 | |
Net cash provided by (used) in investing activities |
| (4,462 | ) | |
| 6,060 | |
|
| | | |
| | |
Cash flows from financing activities: |
| | | |
| | |
Cash overdraft |
| 7,774 | | |
| — | |
Proceeds from notes payable |
| 417,000 | | |
| 11,700 | |
Payments on notes payable |
| (50,980 | ) | |
| — | |
Proceeds from notes payable, related party |
| 82,784 | | |
| — | |
Payments on notes payable, related party |
| (5,128 | ) | |
| (2,000 | ) |
Net cash provided by financing activities |
| 451,450 | | |
| 9,700 | |
Net increase in cash |
| (1,792 | ) | |
| (10,180 | ) |
Cash at beginning of period |
| 1,792 | | |
| 11,339 | |
Cash at end of period |
$ | — | | |
$ | 1,159 | |
|
| | | |
| | |
Supplemental Cash Flow Information: |
| | | |
| | |
Cash paid for interest |
$ | 918 | | |
$ | — | |
Cash paid for income taxes |
$ | — | | |
$ | — | |
Non-Cash Investing and Financing Information: |
| | | |
| | |
Net liabilities assumed in connection with merger activities |
$ | — | | |
$ | 452,367 | |
Common stock issued for conversion of debt |
$ | 269,136 | | |
$ | — | |
Common stock issued for conversion of accrued interest |
$ | 5,122 | | |
$ | — | |
The accompanying notes are an integral part
of these consolidated financial statements.
CROSSCLICK MEDIA, INC.
(Formerly Co-Signer, Inc.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2014
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Nature of Business
CrossClick Media, Inc. (“CrossClick”
or the “Company”) was incorporated in Nevada on February 23, 2010 as Southern Products, Inc. and was doing business
as SIGMAC USA. On August 12, 2013, the Company acquired all of the issued and outstanding common stock of Co-Signer.com, Inc.,
a private Nevada corporation (“Co-Signer.com”). As a result of the acquisition, we divested our former consumer electronics
business and began to focus on the business of Co-Signer.com, Inc. as our primary line of business.
On August 12, 2013, the Company completed its
merger with Co-Signer.com and its wholly-owned subsidiary, Co-Signer Acquisition Corp. Under the Merger Agreement the Company merged
with and into Co-Signer Acquisition Corp. In connection with the closing of this transaction, Co-Signer, Inc. acquired all of the
issued and outstanding shares of the Company, which resulted in the Company becoming a wholly-owned subsidiary of Co-Signer, Inc.
In exchange for all of the issued and outstanding shares of the Company’s stock, the shareholders received a total of 1,173,041
shares of the newly-designated Series A Convertible Preferred Stock, $51,440 in newly-issued 8% Secured Notes, warrants to purchase
a total of 51,440 shares of common stock an exercise price of $0.25 per share, and 23,000,000 newly-issued shares of common stock.
The closing of the transaction has been characterized
as a reverse capitalization; therefore, the historical financial statements are the financial statements of Co-Signer.com, Inc.
which have been presented to retroactively reflect the historic capitalization of the accounting acquiree.
On June 18, 2014, the Company changed its name
to CrossClick Media, Inc. from Co-Signer, Inc. with the full consent of the Board of Directors and filed such with the Nevada Secretary
of State’s office. Subsequently FINRA approved the name and stock symbol change with an effective date of July 14. The Company
transitioned from a real estate financial services holding company to a marketing and new media company featuring an affiliate
network, call center, and an enterprise solutions division that can provide design, web development, ecommerce, data management
and more through an integrated platform.
Basis of Presentation
The accompanying interim unaudited financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the
rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordingly, they
do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations,
stockholders’ deficit or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal
recurring adjustments) have been made which are necessary for a fair financial statement presentation. The interim results for
the three and nine months ended September 30, 2014 are not necessarily indicative of the results for the full fiscal year.
Reclassification
Certain reclassifications have been made to
conform the prior year information to the 2014 classifications for comparative purposes.
Principles of consolidation
The consolidated financial statements include
the accounts of Cross Click Media, Inc. and Co-Signer.com, Inc. All significant intercompany balances and transactions
have been eliminated. Cross Click Media, Inc. and Co-Signer.com, Inc., will be collectively referred herein to as the “Company”.
Cash and Cash Equivalents
The Company considers all highly liquid investments
with maturities of three months or less to be cash equivalents. There were no cash equivalents as of September 30, 2014 and December
31, 2013.
Basic Loss per Share
Basic income (loss) per share is calculated
by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during
the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders
by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding
is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.
Concentrations of Credit Risk
The Company maintains its cash in bank deposit
accounts, the balances of which at times may exceed federally insured limits. The Company continually monitors its banking relationships
and consequently has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit
risk on cash and cash equivalents.
Property and Equipment
Property and equipment are stated at cost. Depreciation
and amortization are provided utilizing the straight-line method over the related asset’s estimated useful life of three
years.
Maintenance and repairs are charged to expense
as incurred; renewals and improvements that extend the useful life of the assets are capitalized. Upon retirement or
disposal, the asset cost and the related accumulated depreciation and amortization are eliminated from the respective accounts
and a resulting gain or loss, if any, is included in the results of operations.
Intangible Assets
The Company classifies intangible assets into
three categories: (1) intangible assets with definite lives subject to amortization, (2) intangible assets with indefinite lives
not subject to amortization and (3) goodwill. The Company determines the useful lives of identifiable intangible assets after considering
the specific facts and circumstances related to each intangible asset. Factors the Company considers when determining useful lives
include the contractual term of any agreement related to the asset, the historical performance of the asset, the Company’s
strategy for using the asset, any laws or other local regulations which could impact the useful life of the asset, and other economic
factors, including competition and specific market conditions. Intangible assets that are deemed to have definite lives are amortized,
on a straight-line basis, over their useful lives of three years.
Revenue Recognition
The Company recognizes revenue in accordance
with Staff Accounting Bulletin No. 104, “Revenue Recognition in Financial Statements,” which has four basic
criteria that must be met before revenue is recognized: 1) existence of persuasive evidence that an arrangement exists; 2) delivery
has occurred or services have been rendered; 3) the seller’s price to the buyer is fixed and determinable; and 4) collectability
is reasonably assured. Our revenue recognition policies are consistent with these criteria. For Tenant Application fees revenue
is recognized at the time each application is submitted. Upon the signing of a Co-Signer.com Tenant Agreement and the corresponding
Co-Signer.com, Inc. Landlord Agreement supplemented by the executed Tenant Client’s lease, the Company recognizes the revenue
for each Surety Fee as indicated in the Tenant Agreement, usually on a monthly basis.
For media and marketing fees, revenue is recognized
upon completion of the task or upon achievement of contracted progressive billing with designated milestones. Each client signs
a Statement of Work order which is signed off by the client upon completion or per the terms outlined in the Statement of Work
and invoiced accordingly.
Default Rent Reserve Policy
The Company reviews each calendar quarter whether
a default rent reserve should be established and funded. As of September 30, 2014 the Company has not considered it necessary to
fund such a reserve. The Company’s pricing model provides cash flows to offset default risk when losses are below 100% of
the lowest default rate per Experian Rent Bureau’s analysis of default rates of tenants that are “Unscoreable”.
That number for 2013 was 9.00%. If the Company is to experience losses above 9%, it will then fund a reserve account based upon
trend.
Fair Value of Financial Instruments
For certain of the Company’s non-derivative
financial instruments, including cash and cash equivalents, accounts receivables, prepaid expenses, accounts payable, accrued liabilities,
and notes payable, the carrying amount approximates fair value due to the short-term maturities of these instruments. The estimated
fair value of long-term debt is based primarily on borrowing rates currently available to the Company for similar debt issues.
The fair value approximates the carrying value of long-term debt.
ASC Topic 820, “Fair Value Measurements
and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial
Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement
that enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheets for receivables
and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the
short period of time between the origination of such instruments and their expected realization and their current market rate of
interest.
The three levels of valuation hierarchy are
defined as follows:
| · | Level 1. Observable inputs such as quoted prices in active markets; |
| · | Level 2. Inputs, other than the quoted prices in active markets, that are observable either
directly or indirectly; |
| · | Level 3. Unobservable inputs in which there is little or no market data, which require the
reporting entity to develop its own assumptions. |
The following
presents the gross value of assets and liabilities that were measured and recognized at fair value, as of September 30,
2014.
|
Level I | |
Level II | |
Level III | |
Total |
Derivative liability |
$ | — | | |
$ | 205,223 | | |
$ | — | | |
$ | 205,223 | |
Stock-Based Compensation
We account for equity instruments issued in
exchange for the receipt of goods or services from non-employees. Costs are measured at the fair market value of the consideration
received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments
issued for consideration other than employee services is determined on the earlier of the date on which there first exists
a firm commitment for performance by the provider of goods or services or on the date performance is complete. The Company
recognizes the fair value of the equity instruments issued that result in an asset or expense being recorded by the company, in
the same period(s) and in the same manner, as if the Company has paid cash for the goods or services.
The Company accounts for employee stock-based
compensation in accordance with the guidance of FASB ASC Topic 718, Compensation - Stock Compensation which requires all
share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based
on their fair values. The fair value of the equity instrument is charged directly to compensation expense and credited
to additional paid-in capital over the period during which services are rendered.
The Company follows ASC Topic 505-50, formerly
EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction
with Selling Goods and Services ,” for stock options and warrants issued to consultants and other non-employees. In
accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company
are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant,
whichever can be more clearly determined.
Advertising and Marketing costs
The Company expenses all costs of advertising
as incurred. For the nine months ended September 30, 2014 and 2013, there was $73,646 of and $74,039 in advertising and marketing
costs.
Income Taxes
Income taxes are computed using the asset and
liability method of accounting. Under the asset and liability method, a deferred tax asset or liability is recognized for estimated
future tax effects attributable to temporary differences and carry-forwards. The measurement of deferred income tax assets is adjusted
by a valuation allowance, if necessary, to recognize future tax benefits only to the extent, based on available evidence; it is
more likely than not such benefits will be realized. The Company’s deferred tax assets were fully reserved at September 30,
2014.
The Company accounts for its income taxes using
the Income Tax topic of the FASB ASC 740, which requires the recognition of deferred tax liabilities and assets for expected future
tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred
tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities
using enacted tax rates in effect for the year in which the differences are expected to reverse. It is the Company’s policy
to classify interest and penalties on income taxes as interest expense or penalties expense. For the nine months ended September
30, 2014 and 2013, there have been no interest or penalties incurred on income taxes.
Recent Accounting Pronouncements
The Company has implemented all new accounting
pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless
otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued,
that might have a material impact on its financial position or results of operations.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following
as of:
|
September 30, 2014 | |
December 31, 2013 |
Computer equipment |
$ | 8,408 | | |
$ | 6,446 | |
Property & equipment |
| 25,100 | | |
| 22,600 | |
Less: accumulated depreciation |
| (11,312 | ) | |
| (3,635 | ) |
Property and equipment, net |
$ | 22,196 | | |
$ | 25,411 | |
Depreciation expense for the nine months ended
September 30, 2014 and 2013 was $7,677 and $1,430, respectively.
NOTE 3 - INTANGIBLE ASSETS
Intangible assets consisted of the following
as of:
|
September 30, 2014 | |
December 31, 2013 |
Website design |
$ | 34,310 | | |
$ | 34,310 | |
Domain name |
| 1,500 | | |
| 1,500 | |
Less: accumulated amortization |
| (26,618 | ) | |
| (18,064 | ) |
Intangible assets, net |
$ | 9,192 | | |
$ | 17,746 | |
Amortization expense for the nine months ended
September 30, 2014 and 2013 was $8,554 and $7,614, respectively.
NOTE 4 - NOTES PAYABLE
On June 29, 2012, the Company issued a $488,489
Convertible Promissory Note and Security Interest in favor of a trade creditor representing the past due invoices of the creditor
for professional fees. During the year ended December 31, 2013, the creditor advanced a total of $8,006 for payment of the Company’s
operating expenses whereby increasing the principal balance of the note to $491,465. On November 5, 2013, the Company executed
the Second Amendment to the Convertible Promissory Note. In this amendment the creditor has agreed to waive the default in the
payment of monthly installments and to waive all accrued default interest. The Note is now due in full on or before May 31, 2014.
The conversion price of the Note has been amended to $0.075 per share. Additionally, certain accounts payable and accrued expenses
of $278,962 due to the creditor for services provided subsequent to the issuance of the original obligation were added to the Note,
making the current balance of the Note $812,249. As a result of retiring the old debt and including it in the new note the expensing
of the remaining debt discount of $270,502 was accelerated which resulted in a loss on extinguishment of debt of $183,877. Interest
relating to the amortization of the debt discount for the year ended December 31, 2013 amounted to $69,772 and $0 remained of the
debt discount at December 31, 2013. As of September 30, 2014 this note is past due and there is principal and interest due of $812,249
and $88,124 on the new note, respectively.
On June 12, 2013, the Company executed a promissory
note for $10,000. The loan has no stated interest rate and was due August 12, 2013. The note does not bear interest but did include
a loan fee of $5,000. During the nine months ended September 30, 2014, $3,000 was repaid on the loan and the loan was extended
with no specific terms of repayment.
On August 12, 2013, in connection with the
merger, the Company issued $51,440 of new notes. The notes are secured, bear interest at 8% and mature in five years. As of September
30, 2014 there is $4,667 of accrued interest on these notes.
On September 23, 2013, we entered into a $400,000
Promissory Note (the “Note”) with JMJ Financial (“JMJ”). The face amount of the Note includes an original
issue discount of $40,000. The initial advance to be made under the Note by JMJ is $50,000. JMJ 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. If repaid within ninety (90) days from the date of issue, the loan will
not bear interest. Upon ninety (90) days after the date of issue, a one-time interest charge of twelve percent (12%) of the principal
amount will be applied. JMJ may convert all or part of the Note, at its discretion, into shares of our common stock. The conversion
price is sixty percent (60%) of the lowest trading price for our common stock in the twenty-five trading days immediately preceding
the conversion date. For the initial advance the Company recorded a debt discount in the amount of $55,000 (payment plus 10% original
discount) in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the
effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $129,184
based on the Black Scholes Merton pricing model. As of September 30, 2014, this note was fully converted into common stock. As
a result of the conversion the remaining debt discount was expensed and the Company recognized a gain on derivative of $3,636.
On November 1, 2013, the Company executed a
convertible promissory note for $30,000. The note bears interest at 9% and matures in two years. The loan is convertible at any
time into shares of common stock at $0.075 per share beginning one year from the date of the note. In addition, the note required
the issuance of warrants to purchase 400,000 warrants. The aggregate fair value of these warrants totaled $14,034 based on the
Black Scholes Merton pricing model. As of September 30, 2014, there is $2,463 of accrued interest.
On November 1, 2013, the Company executed a
convertible promissory note for $16,000. The note is convertible at $0.075 after one year, bears interest at 9% and matures in
two years. During the nine months ended September 30, 2014, the Company repaid $3,000 before it borrowed another $5,000 on the
loan. As of September 30, 2014, there is $1,279 of accrued interest.
On November 4, 2013, we obtained short term
financing from a Lender under a 9% Convertible Note in the amount of $70,000 (the “Short-Term Note”). The Short-Term
Note features an original issue discount of $6,700. The $63,300 in funding received from the Lender was used to pay off and retire
the Convertible Promissory Note issued to Asher Enterprises, Inc., dated April 9, 2013. The Short-Term Note accrues interest at
a rate of nine percent (9%) per year, with all principal and interest due in full within thirty days from the date of issue. The
note was reviewed for a beneficial conversion feature and it was determined that none existed as the fair market price of the stock
was in excess of the conversion price on the date of the note. At any time, the Short-Term Note may be converted, in whole or in
part at the option of the holder, at a price of $0.075 per share. The Short-Term Note is currently in default. As of September
30, 2014 there is $5,696 of accrued interest.
On November 25, 2013, the Company issued a
Convertible Promissory Note to Asher Enterprises, Inc. in the amount of $42,500. The note bears interest at a rate of 8% per annum,
is unsecured and matures on August 27, 2014. The Note is convertible into common stock in whole or in part 180 days after funding
at a variable conversion price equal to a 42% discount to the average of the lowest three trading prices in the 10-day trading
price prior to the conversion date. During the nine months ended September 30, 2014, the note and $1,700 of accrued interest was
converted into shares of common stock. As a result of the conversion the Company recognized a loss on conversion of $25,321.
The Company received its second payment from
JMJ towards the loan, of $22,000 on December 9, 2013. The Company recorded a debt discount in the amount of $22,000 (payment plus
10% original discount) in connection with the initial valuation of the beneficial conversion feature of the note to be amortized
utilizing the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability
of $37,173 based on the Black Scholes Merton pricing model. As of September 30, 2014, principal of $3,525 and $2,889 of accrued
interest were converted to common stock and $16,164 of the debt discount has been amortized to interest expense. In addition, the
Company fair valued the derivative at $13,685 resulting in a gain on the change in fair value of the derivative. The note balance
of $18,475 is shown net of a debt discount of $3,836 at September 30, 2014 and has accrued interest of $0. Subsequent to September
30th the Company received a conversion notice that they were unable to fulfill due to not having enough available authorized
shares to cover the conversion. This resulted in default on the Note. The Company is in the process of increasing its authorized
common stock and will honor the conversion notices as soon as it is able.
As of December 31, 2013 the Company owed Chiles Valley, LLC, $20,000.
This loan was repaid in full during the quarter ended March 31, 2014.
On January 8, 2014, the Company issued a Convertible
Promissory Note to Asher Enterprises, Inc. in the amount of $32,500. The note bears interest at a rate of 8% per annum, is unsecured
and matures on October 10, 2014. The Note is convertible into common stock in whole or in part 180 days after funding at a variable
conversion price equal to a 42% discount to the average of the lowest three trading prices in the 10-day trading price prior to
the conversion date. During the nine months ended September 30, 2014, the note and $1,300 of accrued interest was converted into
shares of common stock. As a result of the conversion the Company recognized a loss on conversion of $42,514.
On February 13, 2014, we entered into a $250,000
Convertible Promissory Note (the “Note”) with Black Mountain Equities, Inc. (“BME”). The face amount of
the Note includes an original issue discount of $25,000. The initial advance to be made under the Note by BME is $25,000. BME 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. There is a one-time interest charge of ten percent (10%) and individual loans mature one year from the effective date
of each payment. BME may convert all or part of the Note, at its discretion, into shares of our common stock. The conversion is
equal to the lesser of a 40% discount to the lowest trading prices in the twenty-five (25) day trading price prior to the conversion
date or at a fixed price if $0.025. For the initial advance the Company recorded a debt discount in the amount of $30,000 (payment
plus 10% original discount and one time interest charge) in connection with the initial valuation of the beneficial conversion
feature of the note to be amortized utilizing the effective interest method of accretion over the term of the note. Further, the
Company recognized a derivative liability of $82,251 based on the Black Scholes Merton pricing model. As of September 30, 2014,
principal of $3,650 and $2,750 of accrued interest were converted to common stock $18,904 of the debt discount has been amortized
to interest expense. In addition, the Company fair valued the derivative at $21,111 resulting in a gain on the change in fair value
of the derivative. The note balance of $23,600 is shown net of a debt discount of $11,096 at September 30, 2014 and has accrued
interest of $0. Subsequent to September 30th the Company received a conversion notice that they were unable to fulfill
due to not having enough available authorized shares to cover the conversion. This resulted in default on the Note. The Company
is in the process of increasing its authorized common stock and will honor the conversion notices as soon as it is able.
On February 26, 2014, the Company issued a
Convertible Promissory Note to GCEF Opportunity Fund, LLC in the amount of $72,500, includes an original issue discount of $7,500.
The note bears a onetime 12% interest charge, is unsecured and matures in one year. The Note is convertible into common stock in
whole or in part at any time with a conversion price equal to a 50% discount to the average bid price in the ten day trading price
prior to the conversion date. The Company recorded a debt discount in the amount of $81,200 in connection with the initial valuation
of the beneficial conversion feature of the note to be amortized utilizing the effective interest method of accretion over the
term of the note. Further, the Company recognized a derivative liability of $179,454 based on the Black Scholes Merton pricing
model. As of September 30, 2014; $48,275 of the debt discount has been amortized to interest expense. In addition, the Company
fair valued the derivative at $49,626 resulting in a gain on the change in fair value of the derivative. As of September 30, 2014
the note balance is $81,200 with a remaining debt discount of $32,925. In addition to the terms outlined above the Company issued
to GCEF 5,000,000 shares of common stock. The stock was valued at $0.052, the closing price on the date of the note for non-cash
expense of $260,000 which was recorded as a loss on the issuance of debt. Subsequent to September 30th the Company received
a conversion notice that they were unable to fulfill due to not having enough available authorized shares to cover the conversion.
This resulted in default on the Note. The Company is in the process of increasing its authorized common stock and will honor the
conversion notices as soon as it is able.
On March 3, 2014, the Company issued a Convertible
Promissory Note to Asher Enterprises, Inc. in the amount of $37,500. The note bears interest at a rate of 8% per annum, is unsecured
and matures on December 5, 2014. The Note is convertible into common stock in whole or in part 180 days after funding at a variable
conversion price equal to a 42% discount to the average of the lowest three trading prices in the 10-day trading price prior to
the conversion date. During the nine months ended September 30, 2014, the note and $1,500 of accrued interest was converted into
shares of common stock. As a result of the conversion the Company recognized a loss on conversion of $34,447.
On March 14, 2014, the Company issued a Convertible
Promissory Note to Magna Equities II, LLC (formerly Hanover Holdings I, LLC) in the amount of $38,000. The note bears interest
at a rate of 12% per annum, is unsecured and matures in eight months. The Note is convertible into common stock in whole or in
part at any time with a conversion price equal to the lesser of a 45% discount to the lowest trading prices in the five day trading
price prior to the conversion date or at a fixed price if $0.04. The Company recorded a debt discount in the amount of $38,000
in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the effective
interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of $41,636 based
on the Black Scholes Merton pricing model. On September 16, 2014 $6,600 of principal was converted to common stock. As of September
30, 2014; $31,276 of the debt discount has been amortized to interest expense. In addition, the Company fair valued the derivative
at $18,181 resulting in a gain on the change in fair value of the derivative. The note balance is $31,400 with a remaining debt
discount of $6,724 at September 30, 2014 and has accrued interest of $2,468. Subsequent to September 30th the Company
received a conversion notice that they were unable to fulfill due to not having enough available authorized shares to cover the
conversion. This resulted in default on the Note. The Company is in the process of increasing its authorized common stock and will
honor the conversion notices as soon as it is able.
On March 20, 2014, the Company issued a Convertible
Promissory Note to KBM Worldwide, Inc. in the amount of $42,500. The funds were not received on the note until April. The note
bears interest at a rate of 8% per annum, is unsecured and matures on December 31, 2014. The Note is convertible into common stock
in whole or in part 180 days after funding at a variable conversion price equal to a 42% discount to the average of the lowest
three trading prices in the 10-day trading price prior to the conversion date. The Company recorded a debt discount in the amount
of $32,624 in connection with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing
the effective interest method of accretion over the term of the note. Further, the Company recognized a derivative liability of
$32,624 based on the Black Scholes Merton pricing model. The note is shown net of a debt discount of $32,624 at September 30, 2014
and has accrued interest of $1,565. Subsequent to September 30th the Company received a conversion notice that they
were unable to fulfill due to not having enough available authorized shares to cover the conversion. This resulted in default on
the Note. The Company is in the process of increasing its authorized common stock and will honor the conversion notices as soon
as it is able.
On April 17, 2014, the Company received another
payment on the original JMJ Financial convertible promissory note dated September 23, 2013 of $44,000 including a $4,000 original
issue discount. The Company recorded a debt discount in the amount of $44,000 (payment plus 10% original discount) in connection
with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the effective interest method
of accretion over the term of the note. Further, the Company recognized a derivative liability of $61,319 based on the Black Scholes
Merton pricing model. As of September 30, 2014; $20,131 of the debt discount has been amortized to interest expense. In addition,
the Company fair valued the derivative at $43,200 resulting in a gain on the change in fair value of the derivative. The note is
shown net of a debt discount of $23,869 at September 30, 2014 and has accrued interest and fees of $9,777.
On June 5, 2014, the Company issued a Convertible
Promissory Note to KBM Worldwide, Inc. in the amount of $32,500. The note bears interest at a rate of 8% per annum, is unsecured
and matures on December 31, 2014. The Note is convertible into common stock in whole or in part 180 days after funding at a variable
conversion price equal to a 42% discount to the average of the lowest three trading prices in the 10-day trading price prior to
the conversion date. As of September 30, 2014 there is $805 of accrued interest on this note.
On June 19, 2014, we borrowed the sum of $15,000
from Steven J. Smith under the terms of a Promissory Note. Pursuant to these terms the loan was non-interest bearing but did include
a fee of 1,000,000 shares of common stock. The note was due and payable within seven (7) days of funding with no stated interest.
The shares were valued at the closing price on the date of the loan of $0.0051 for a total non-cash expense of $5,100. The repayment
terms of this note are currently be renegotiated.
On June 23, 2014, the Company received another
payment on the original JMJ Financial convertible promissory note dated September 23, 2013 of $27,500 including a $2,500 original
issue discount. The Company recorded a debt discount in the amount of $27,500 (payment plus 10% original discount) in connection
with the initial valuation of the beneficial conversion feature of the note to be amortized utilizing the effective interest method
of accretion over the term of the note. Further, the Company recognized a derivative liability of $34,654 based on the Black Scholes
Merton pricing model. As of September 30, 2014; $7,535 of the debt discount has been amortized to interest expense. In addition,
the Company fair valued the derivative at $26,796 resulting in a gain on the change in fair value of the derivative. The note is
shown net of a debt discount of $19,965 at September 30, 2014 and has accrued interest of $3,611.
On June 25, 2014, the Company issued a Convertible
Promissory Note to KBM Worldwide, Inc. in the amount of $32,500. The note bears interest at a rate of 8% per annum, is unsecured
and matures on December 31, 2014. The Note is convertible into common stock in whole or in part 180 days after funding at a variable
conversion price equal to a 42% discount to the average of the lowest three trading prices in the 10-day trading price prior to
the conversion date. As of September 30, 2014 there is $698 of accrued interest on this note.
The maturities of these notes and the related party notes below,
net of discounts for the next five years are:
Twelve months ended September 30, | |
|
| 2015 | | |
$ | 1,230,911 | |
| 2016 | | |
| 30,000 | |
| 2017 | | |
| — | |
| 2018 | | |
| 51,440 | |
| 2019 | | |
| — | |
| Total Future Maturities | | |
$ | 1,312,351 | |
A summary of the status of the Company’s debt discounts including
original issue discounts, and derivative liabilities, and changes during the periods is presented below:
Debt Discount | |
December 31, 2013 | |
Additions | |
Amortization | |
September 30, 2014 |
Finiks Capital – February 1, 2013 | |
$ | 37,682 | | |
$ | — | | |
$ | (37,682 | ) | |
$ | — | |
Neal – June 3, 2013 | |
| 3,975 | | |
| — | | |
| (3,975 | ) | |
| — | |
JMJ – October 2, 2013 | |
| 41,439 | | |
| — | | |
| (41,439 | ) | |
| — | |
JMJ – December 9, 2013 | |
| 18,795 | | |
| — | | |
| (14,959 | ) | |
| 3,836 | |
Black Mountain Equities, Inc. – February 13, 2014 | |
| — | | |
| 30,000 | | |
| (18,904 | ) | |
| 11,096 | |
GCEF Opportunity Fund, LLC – February 26, 2014 | |
| — | | |
| 81,200 | | |
| (48,275 | ) | |
| 32,925 | |
Hanover Holdings, LLC – March 14, 2014 | |
| — | | |
| 38,000 | | |
| (31,276 | ) | |
| 6,724 | |
KBM – March 20, 2014 | |
| — | | |
| 32,624 | | |
| — | | |
| 32,624 | |
JMJ – April 17, 2014 | |
| — | | |
| 44,000 | | |
| (20,131 | ) | |
| 23,869 | |
JMJ – June 23, 2014 | |
| — | | |
| 27,500 | | |
| (7,535 | ) | |
| 19,965 | |
| |
$ | 101,891 | | |
$ | 253,324 | | |
$ | (224,176 | ) | |
$ | 131,039 | |
Derivative Liabilities | |
December 31, 2013 | |
Initial valuation | |
Revaluation on 9/30/14 | |
(Gain) loss of fair value of derivative |
JMJ – October 2, 2013 | |
$ | 88,314 | | |
$ | — | | |
$ | — | | |
$ | (88,314 | ) |
JMJ – December 9, 2013 | |
| 33,274 | | |
| — | | |
| 13,685 | | |
| (19,589 | ) |
Black Mountain Equities, Inc. – February 13, 2014 | |
| — | | |
| 82,251 | | |
| 21,111 | | |
| (61,140 | ) |
GCEF Opportunity Fund, LLC – February 26, 2014 | |
| — | | |
| 179,454 | | |
| 49,626 | | |
| (129,828 | ) |
Hanover Holdings, LLC – March 14, 2014 | |
| — | | |
| 41,636 | | |
| 18,181 | | |
| (23,455 | ) |
KBM – March 20, 2014 | |
| — | | |
| 32,624 | | |
| 32,624 | | |
| — | |
JMJ – April 17, 2014 | |
| — | | |
| 61,319 | | |
| 43,200 | | |
| (18,119 | ) |
JMJ – June 23, 2014 | |
| — | | |
| 34,654 | | |
| 26,796 | | |
| (7,858 | ) |
| |
$ | 121,588 | | |
$ | 431,938 | | |
$ | 205,223 | | |
$ | (348,303 | ) |
Original Issue Discount | |
December 31, 2013 | |
Additions | |
Amortization | |
September 30, 2014 |
JMJ – October 2, 2013 | |
$ | 3,767 | | |
$ | — | | |
$ | (3,767 | ) | |
$ | — | |
JMJ – December 9, 2013 | |
| 1,879 | | |
| — | | |
| (1,496 | ) | |
| 383 | |
Black Mountain Equities, Inc. – February 13, 2014 | |
| — | | |
| 5,000 | | |
| (2,644 | ) | |
| 2,356 | |
GCEF Opportunity Fund, LLC – February 26, 2014 | |
| — | | |
| 16,200 | | |
| (9,586 | ) | |
| 6,614 | |
Darren Magot – January 27, 2014 | |
| — | | |
| 2,500 | | |
| (2,500 | ) | |
| — | |
JMJ – April 17, 2014 | |
| — | | |
| 4,000 | | |
| (1,830 | ) | |
| 2,170 | |
JMJ – June 23, 2014 | |
| — | | |
| 2,500 | | |
| (685 | ) | |
| 1,815 | |
| |
$ | 5,646 | | |
$ | 30,200 | | |
$ | (22,508 | ) | |
$ | 13,338 | |
NOTE 6 - RELATED PARTY TRANSACTIONS
Notes Payable
On February 1, 2013, the Company executed a
convertible promissory note for $65,000 with Finiks Capital, a related party. The note bears interest at a rate of 5% per annum,
is unsecured and matures in two years. The loan is convertible at any time into shares of common stock at $0.0065 per share. The
Company recorded a discount in the amount of $65,000 in connection with the initial valuation of the beneficial conversion feature
of the note to be amortized utilizing the interest method of accretion over the term of the note. As a result of the conversion
feature the Company has recorded a debt discount of $65,000, $27,318 of which has been amortized to interest expense. On January
19, 2014, Finiks Capital transferred its rights to the $65,000 promissory note and $3,879 of accrued interest to Strategic IR,
Inc. During the period ended September 30, 2014, Strategic IR, Inc. converted the $65,000 note payable it had assumed from Finiks
Capital into 10,000,000 shares of common stock at $0.0065 per share per the terms of the original Note.
On May 23, 2013, the Company executed a promissory
note for $10,000 with a related party. The note bears interest at 12% and was due August 21, 2013. Since the original note was
issued an additional $15,000 was loaned to the Company and $2,200 of forbearance fees were added to the loan. As of September 30,
2014 the loan and all accrued interest was repaid in full.
On January 27, 2014, the Company executed a
convertible promissory note for $40,000 with Darren Magot, a member of the Board of Directors. The note includes a $2,500 loan
origination fee, accrues interest at 8% and matures in 180 days. As of September 30, 2014 $3,000 has been repaid on the note and
there is $1,989 of accrued interest. The note was reviewed for a beneficial conversion feature and it was determined that none
existed as the fair market price of the stock was in excess of the conversion price on the date of the note.
As of September 30, 2014, the Company owed
a related party $59,516 for cash advances to assist in covering operating expenses. The loan is unsecured, due on demand, and has
no stated interest rate.
Stock Issuances
On January 10, 2014, the Company issued 5,350,000
shares of common stock to various employees and consultants. The shares were issued at $0.0383 based on the market value of the
common stock on the date of authorization for total non-cash expense of $204,905.
On February 12, 2014, the Company issued 250,000
shares of common stock to a member of the Board of Directors and 1,000,000 shares of common stock to its CEO for services rendered.
The shares were issued at $0.04 based on the market value of the common stock on the date of authorization for total non-cash expense
of $50,000.
Revenue
During the nine months ended September 30,
2014, the Company recognized $61,808 from related parties.
NOTE 7 - STOCKHOLDERS’
DEFICIT
The Company is authorized to issue up
to 10,000,000 shares of $0.001 par value preferred stock, of which 1,500,000 shares have been designated as Series “A”
convertible preferred. In addition the Company is authorized to issue up to 440,000,000 shares of $0.001 par value common stock.
On May 15, 2013, the Company issued 446,500
shares of common stock for services. The shares were issued at $0.07 based on the market value of the common stock on the date
of authorization for total non-cash expense of $31,256.
On August 12, 2013, the Company issued 23,000,000
shares of common stock and 1,173,041 shares of preferred stock pursuant to its merger agreement with Co-Signer.com, Inc. Pursuant
to the merger agreement, upon closing, 30,555,560 shares of common stock held by a former officer and director, were canceled.
On September 16, 2013, the Company issued 2,000,000
shares of common stock for services. The shares were issued at $0.085 based on the market value of the common stock on the date
of authorization for total non-cash expense of $170,000.
On November 1, 2013, the Company issued 2,222,222
shares of common stock for services. The shares were issued at $0.08 based on the market value of the common stock on the date
of authorization for total non-cash stock compensation expense of $177,778.
On November 7, 2013, the Company issued 3,000,000
shares of common stock for services. The shares were issued at $0.075 based on the market value of the common stock on the date
of authorization for total non-cash expense of $225,000.
On December 1, 2013, the Company issued 500,000
shares of common stock for services. The shares were issued at $0.03 based on the market value of the common stock on the date
of authorization for total non-cash expense of $15,050.
On December 9, 2013, the Company issued 1,000,000
shares of common stock to a Director for services. The shares were issued at $0.0398 based on the market value of the common stock
on the date of authorization for total non-cash expense of $39,800, $16,124 of which has been booked to stock compensation expense.
On December 10, 2013, a note for $5,000 dated
June 10, 2013, plus $190 of accrued interest was converted into 750,000 shares of common stock. The shares were converted at the
market price on the date of conversion of $0.0398, which resulted in a loss on conversion of $24,660.
During the year ended December 31, 2013, the
Company issued 3,266,667 shares of common stock for total cash proceeds of $62,000.
On January 2, 2014, the Company issued 3,500,000
shares of common stock for consulting services. The shares were issued at $0.028 based on the market value of the common stock
on the date of authorization for total non-cash expense of $98,000, $73,500 of which has been booked to stock compensation expense.
On January 10, 2014, the Company issued 5,350,000
shares of common stock to various employees and consultants. The shares were issued at $0.0383 based on the market value of the
common stock on the date of authorization for total non-cash expense of $204,905.
On February 12, 2014, the Company issued 250,000
shares of common stock to a member of the Board of Directors and 1,000,000 shares of common stock to its CEO for services rendered.
The shares were issued at $0.04 based on the market value of the common stock on the date of authorization for total non-cash expense
of $50,000.
On February 26, 2014, the Company issued 7,000,000
shares of common stock for services. The shares were issued at $0.052 based on the market value of the common stock on the date
of authorization for total non-cash expense of $364,000, $244,791 of which has been booked to stock compensation expense.
On February 26, 2014, the Company issued 5,000,000
shares of common stock to GCEF Opportunity Fund, LLC. The shares were issued in conjunction with a convertible promissory note.
The stock was valued at $0.052, the closing price on the date of the note for non-cash expense of $260,000 which was recorded as
a loss on the issuance of debt.
On March 1, 2014, the Company issued 750,000
shares of common stock for services. The shares were issued at $0.058 based on the market value of the common stock on the date
of authorization for total non-cash expense of $43,500, $31,417 of which has been booked to stock compensation expense.
On March 27, 2014, the Company issued 1,593,240
shares of common stock in conversion of $10,622 of principal and accrued interest. The loan was converted at $0.0067 per the terms
of the agreement.
During the period ended September 30, 2014,
Strategic IR, Inc. converted the $65,000 note payable it had assumed from Finiks Capital into 10,000,000 shares of common stock
at $0.0065 per share per the terms of the original Note.
On September 16, 2014, Magna Equities II, LLC
(formerly Hanover Holdings) converted $6,600 of principal into 8,000,000 shares of common stock pursuant to the terms of their
note.
On September 17, 2014, Black Mountain Equities
converted $6,400 of principal into 8,000,000 shares of common stock pursuant to the terms of their note.
During the nine months ended September 30,
2014, JMJ Financial converted $61,160 of the principal and interest from the convertible promissory note dated September 23, 2013,
into 16,400,000 shares of common stock pursuant to the terms of the note.
On September 22, 2014, JMJ Financial converted
$1,062 of interest from the convertible promissory note dated September 23, 2013, satisfying that note in full, and $6,414 of principal
and interest from the convertible promissory note dated December 9, 2013 into 8,900,000 shares of common stock pursuant to the
terms of the note.
During the nine months ended September 30,
2014, Asher Enterprises, Inc. converted $42,500 and $1,700 of the principal and interest, respectively, from the convertible promissory
note dated November 25, 2013, into 9,442,857 shares of common stock pursuant to the terms of the note. The company recorded a loss
on conversion related to this note of $25,321.
During the nine months ended September 30,
2014, Asher Enterprises, Inc. converted $32,500 and $1,300 of the principal and interest, respectively, from the convertible promissory
note dated January 8, 2014, into 17,705,747 shares of common stock pursuant to the terms of the note. The company recorded a loss
on conversion related to this note of $42,514.
During the nine months ended September 30,
2014, Asher Enterprises, Inc. converted $37,500 and $1,500 of the principal and interest, respectively, from the convertible promissory
note dated March 3, 2013, into 43,625,207 shares of common stock pursuant to the terms of the note. The company recorded a loss
on conversion related to this note of $34,447.
NOTE 8 - WARRANTS
Pursuant
to the terms and conditions of the merger agreement dated August 12, 2013, the Company issued 51,440 warrants. The aggregate fair
value of the warrants totaled $3,975 based on the Black Scholes Merton pricing model using the following estimates: exercise price
of $0.25, 1.39% risk free rate, 207% volatility and expected life of the warrants of 5 years.
Pursuant
to the terms and conditions of the convertible note dated November 2, 2013, the Company issued 400,000 warrants. The aggregate
fair value of the warrants totaled $14,034 based on the Black Scholes Merton pricing model using the following estimates exercise
price of $0.13, .61% risk free rate, 169% volatility and expected life of the warrants of 3 years.
Pursuant
to the terms and conditions of the common stock purchase agreement dated November 2, 2013, the Company issued 266,667 warrants.
The aggregate fair value of the warrants totaled $17,580 based on the Black Scholes Merton pricing model using the following estimates:
exercise price of $0.13 .61% risk free rate, 169% volatility and expected life of the warrants of 3 years.
Pursuant
to the terms and conditions of the consulting agreement dated January 2, 2014, the Company issued 1,000,000 warrants. The aggregate
fair value of the warrants totaled $24,544 based on the Black Scholes Merton pricing model using the following estimates: exercise
price of $0.075 .13% risk free rate, 158% volatility and expected life of the warrants of 5 years. As of September 30, 2014, $18,408
has been expensed to stock based compensation.
Pursuant
to the terms and conditions of the consulting agreement dated January 2, 2014, the Company issued 1,000,000 warrants. The aggregate
fair value of the warrants totaled $26,123 based on the Black Scholes Merton pricing model using the following estimates: exercise
price of $0.10, .13% risk free rate, 158% volatility and expected life of the warrants of 7 years. As of September 30, 2014, $19,592
has been expensed to stock based compensation.
Pursuant
to the terms and conditions of the consulting agreement dated February 12, 2014, the Company issued 2,000,000 warrants. The aggregate
fair value of the warrants totaled $56,586 based on the Black Scholes Merton pricing model using the following estimates: exercise
price of $0.05 .12% risk free rate, 178% volatility and expected life of the warrants of 5 years. As of September 30, 2014, $35,930
has been expensed to stock based compensation.
On February
17, 2014, the Company issued 500,000 warrants. The aggregate fair value of the warrants totaled $15,561 based on the Black Scholes
Merton pricing model using the following estimates exercise price of $0.05 .12% risk free rate, 182% volatility and expected life
of the warrants of 3 years.
A summary of the status of the Company’s
outstanding stock warrants as of September 30, 2014 and changes during the periods is presented below:
Warrants | |
Weighted Average Price | |
|
| Outstanding, December 31, 2013 | | |
| 718,107 | | |
$ | 0.21 | |
| Issued | | |
| 4,500,000 | | |
| 0.07 | |
| Exercised | | |
| — | | |
| — | |
| Forfeited | | |
| — | | |
| — | |
| Expired | | |
| — | | |
| — | |
| Outstanding, September 30, 2014 | | |
| 5,218,107 | | |
$ | 0.09 | |
| Exercisable, September 30, 2014 | | |
| 4,905,607 | | |
$ | 0.08 | |
| |
Outstanding | |
Exercisable |
Range of Exercise Prices | |
Number
Outstanding
at 9/30/2014 | |
Weighted
Average
Remaining
Contractual Life | |
Weighted Average
Exercise Price | |
Number
Exercisable
at 9/30/2014 | |
Weighted
Average
Exercise Price |
| $ | | |
| 0.05-0.25 | | |
| 5,218,107 | | |
| 4.2 Years | | |
$ | 0.09 | | |
4, 905,607 | |
$ | 0.08 | |
NOTE 9 – STOCK OPTIONS
On February 13, 2014, the Company granted Kurt
Kramarenko, CEO 4,000,000 stock options as additional compensation. The options allow for cashless exercise and will vest at a
rate of 500,000 options per each fiscal quarter, beginning with the conclusion of the first fiscal quarter during the term of the
agreement. The aggregate fair value of the options totaled $133,984 based on the Black Scholes Merton pricing model using the following
estimates: exercise price of $0.05 .12% risk free rate, 206% volatility and expected life of the options of 2 years. As of September
30, 2014, $45,676 has been expensed to stock based compensation.
On January 1, 2014, the Company granted Darren
Magot, a Director, 1,000,000 stock options as additional compensation. The options allow for cashless exercise and will vest at
a rate of 250,000 options per each fiscal quarter, beginning with the conclusion of the first fiscal quarter during the term of
the agreement. The aggregate fair value of the options totaled $72,725 based on the Black Scholes Merton pricing model using the
following estimates: exercise price of $0.05 .12% risk free rate, 180% volatility and expected life of the options of 5 years.
As of September 30, 2014, $45,453 has been expensed to stock based compensation.
A summary of the status of the Company’s
outstanding stock options as of September 30, 2014 and changes during the periods is presented below:
| |
Option | |
Weighted Average Price |
| Outstanding, December 31, 2013 | | |
| — | | |
$ | — | |
| | | |
| | | |
| | |
| Issued | | |
| 5,000,000 | | |
| 0.06 | |
| Exercised | | |
| — | | |
| — | |
| Forfeited | | |
| — | | |
| — | |
| Expired | | |
| — | | |
| — | |
| Outstanding, September 30, 2014 | | |
| 5,000,000 | | |
$ | 0.06 | |
| Exercisable, September 30, 2014 | | |
| 2,250,000 | | |
$ | 0.06 | |
| |
Outstanding | |
Exercisable |
Range of Exercise Prices | |
Number Outstanding at 9/30/2014 | |
Weighted Average Remaining Contractual Life | |
Weighted Average Exercise Price | |
Number Exercisable at 9/30/2014 | |
Weighted Average Exercise Price |
| $ | | |
| 0.05-0.08 | | |
| 5,000,000 | | |
| 1.9 Years | | |
$ | 0.06 | | |
| 2,250,000 | | |
$ | 0.06 | |
NOTE 10 – COMMITMENTS
We rent approximately 4,100 square feet of
office space in Las Vegas, Nevada on a month-to-month basis. We currently pay rent that escalates quarterly and culminates in a
monthly rate of $2,500. Rent expense for the nine months ended September 30, 2014 was $26,467.
NOTE 11 - GOING CONCERN
As of September 30, 2014, the Company has a
working capital deficit of $2,004,259, limited revenue and an accumulated deficit of $4,488,179. The financial statements are prepared
using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets
and liquidation of liabilities in the normal course of business. Without realization of additional capital, it would be unlikely
for the Company to continue as a going concern. The Company’s management plans on raising cash from public or private debt
or equity financing, on an as needed basis and in the longer term, upon achieving profitable operations through its business activities.
NOTE 12 - SUBSEQUENT EVENTS
Subsequent to September 30, 2014 KBM Worldwide, Inc. converted a
total of $19,200 into 74,815,454 shares of common stock pursuant to the terms of their convertible promissory notes.
Subsequent to September 30, 2014 JMJ Financial converted a total
of $17,514 into 58,500,000 shares of common stock pursuant to the terms of their convertible promissory notes.
Subsequent to September 30, 2014 Black Mountain Equities, Inc. converted
a total of $10,380 into 24,500,000 shares of common stock pursuant to the terms of their convertible promissory note.
Subsequent to September 30, 2014 GCEF Opportunity Fund, LLC converted
a total of $1,471 into 14,705,000 shares of common stock pursuant to the terms of their convertible promissory notes.
On September 24, 2014, the Company executed
a convertible promissory note with KBM Worldwide, Inc. for $32,500. The note carries all of the same terms as the previous notes
between the lender and the Company. The funds were not received until October.
October 7, 2014, the board of directors approved
a Certificate of Designation for Class B Convertible Preferred Stock. This newly designated class of preferred stock consists of
one million (1,000,000) shares.
On October 7, 2014, the Company entered into
a Debt Conversion Agreement (the “Agreement”) with MCKEA Holdings, LLC (“MCKEA”). Under the Agreement,
MCKEA agreed to extinguish and release various debts owed by the Company totaling $198,654. The debt includes various sums owing
to MCKEA as well as certain third party debts acquired by MCKEA under assignment. In exchange for the release of these debts, the
Company agreed to issue MCKEA 1,000,000 shares of the newly-designated Class B Convertible Preferred Stock.
On October 8, 2014, the Company’s Board
of Directors approved a resolution to amend its Articles of Incorporation to increase the aggregate number of shares that it may
issue to three billion (3,000,000,000) shares, consisting of 2,990,000,000 shares of common stock and 10,000,000, shares of preferred
stock.
On October 9, 2014, a portion of the GCEF Opportunity
Fund note in the amount $20,000 was assigned to WHC Capital, LLC. Concurrent with this assignment, we entered into a replacement
Convertible Promissory Note with WHC Capital. The replacement note bears interest at 12% per annum, is due on or before October
9, 2015, and is convertible to shares of our common stock at price equal to a fifty percent (50%) discount to our lowest closing
bid price during the ten (10) trading days preceding the conversion.
On November 6, 2014, an additional portion
of the GCEF Opportunity Fund Note in the amount of $20,000 was assigned to Beaufort Capital Partners, LLC. On November 13, 2014,
we entered into a Securities Exchange and Settlement Agreement with Beaufort. Under this agreement, the $20,000 in debt may be
exchanged for shares of our common stock at either: (A) the lesser of (i) $0.0001, or (ii) 50% of our common stock price, if our
common stock price falls below $0.00049 per share, or (B) 50% of our common stock price if our common stock price remains above
$0.0005 during the applicable pricing period.
In accordance with ASC 855-10, the Company
has analyzed its operations subsequent to September 30, 2014 through the date these financial statements were issued and has determined
that it does not have any material subsequent events to disclose in these financial statements other than the event described above.
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
Forward-Looking Statements
Certain statements, other than purely historical
information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results,
and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking
statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,”
“estimates,” “intends,” “strategy,” “plan,” “may,” “will,”
“would,” “will be,” “will continue,” “will likely result,” and similar expressions.
Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which
may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual
effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations
and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory
changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties
should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
Company Overview
On August 12, 2013, we acquired all of the
issued and outstanding common stock of Co-Signer.com, Inc., a private Nevada corporation (“Co-Signer.com”). As a result
of the acquisition, we divested our former consumer electronics business and began to focus on the business of Co-Signer.com, Inc.
as our primary line of business. The Company reserves the right to explore and pursue other opportunities that may be presented
to its management and provide additional revenues, market share or value for the Company and its shareholders. Co-Signer.com was
incorporated on December 16, 2011 as a closely held Nevada corporation for the purpose of providing real estate financial services
to tenants that were required to have a cosigner for their residential lease due to either no, poor or bad credit. The service
is marketed as an added-value proposition for tenant screening services, property management associations or as a direct service
to property management companies and landlords willing to accept commercialized cosigning services for “good people with
less than perfect” credit.”
On June 18, 2014 we changed our name to CrossClick
Media, Inc. from Co-Signer, Inc. pursuant to the full consent of our Board of Directors. Subsequently, FINRA approved the name
and stock symbol change with an effective date of July 14, 2014. We transitioned our business focus from a real estate financial
services holding company to a marketing and new media company featuring an affiliate network, call center, and an enterprise solutions
division that can provide design, web development, ecommerce, data management and more through an integrated platform. With this
new change in business model we have started reporting new revenues our first month of the new operations.
We are based in the Greater Las Vegas area
in Nevada.
Services
CrossClick Media, Inc. provides multiple marketing
techniques for small business branding which can impact our clients’ corporate image, grow your their service or product
brands and engage their customers by driving purchases, establishing trust and building brand loyalty. We feature a nationwide
affiliate network, along with a call center component for all inbound and outbound traffic supported by a robust IT and design
team that can deliver innovative integrated solutions including web development, data management and harvesting, ecommerce and
CRM/ERP solutions and design and editorial that will dynamically tell a company’s story.
Our client base will be focused on political
organizations and small cap corporations seeking better public awareness, fundraising and campaign support, online and in-store
marketing, IR and PR services, and innovative marketing to help brand their corporate identity, products and services. Within the
first month of operations since the transition in business model we has generated revenue from our new line of business and have
a few clients already receiving services on a daily or weekly basis.
Our wholly-owned subsidiary, Co-Signer.com,
provides credit-challenged tenants with a cosigner while providing residential landlords a contracted rent payment guarantee for
a specified number of months within the 12 month lease period for their specified properties, one lease at a time. This lease payment
assurance program remains flexible with defaulted rent paid for either a 3-month or 6-month period of time within the 12-month
contract period, depending upon the requirement or election of the landlord.
Co-Signer.com was established as a result of
the 2008 financial and housing crises. Since the summer of 2007 to today, a large number of Americans have lost their jobs, their
homes and/or their businesses resulting in having their personal wealth and credit scores severely reduced and damaging their credit
history. Over this same time period, circumstances and events have occurred leaving more and more people unable to qualify for
a residential lease. A survey by the Associated Press (July 2013) states that 80% of all adult Americans will experience near poverty
or unemployment in their lifetime while a recent report by Experian stated that America is becoming more of a renter nation out
of choice, and as such, the need for residential cosigning of leases will only grow. As a result of these circumstances, the need
to have someone cosign for a residential lease has increased. In the case of many tenants, the family and friends who would have
cosigned for them a few years ago are now unable to do so.
Co-Signer.com seeks to meet the increased need
for lease cosigners with the concept of commercializing residential rent guarantees (cosigning) as a professional financial service
on a tenant-fee paid basis. Our service replaces the traditional need to rely on family and friends to cosign on a lease with an
affordable and professional service that benefits both tenant and landlord; similar to the very same type of service that has been
a mainstay in Australia’s residential leasing industry for over the past twenty years. This surety service product directly
benefits the landlord and those responsible for the collection of residential rents while being paid for by an independent second
party, the tenant. Instead of looking for an individual to be their guarantor or co-signer, or having to pay a significantly larger
security deposit or prepaid rent, a renter may qualify to purchase a lease guarantee from Co-Signer.com to satisfy the landlord's
financial and credit requirements. Additional benefits are available to the paying tenant, including a credit reporting option
on the tenant’s rent payments during the contract period.
Over the past forty (40) months, Co-Signer.com
has continued to develop, refine and field-test its business model and rent guarantee programs in targeted markets across the United
States. Co-Signer.com’s management believes that the Company has a unique service ready to be distributed in the top twenty-five
U.S. rental markets. In June 2014 the Company launched its test of an infield sales force in the Southern Michigan area. The test
results did not meet management’s expectations and the Company is evaluating strategic opportunities for its future including
sale of the asset to qualified third-party investors.
Co-Signer.com utilizes special underwriting
parameters through its proprietary online application and processing service, and provides a friendly and easy online landlord
relations platform. Co-Signer.com seeks to be the premiere solution for residential cosigning services and provides this service
line under Co-Signer.com brand name.
Based upon the acceptance by the real estate
industry it has experienced to date, the management of Co-Signer.com believes its business model is sustainable whether the contracted
service is for a residential lease for a single family home or an apartment lease in a multiple unit complex. Co-Signer.com’s
growth strategy is based on the expansion of its residential lease payment program and on bundling this program with tenant screening
and residential placement services online. The Company’s goal is to make the use of commercial rent assurance the U.S. industry
standard and to focus its resources and market awareness efforts on landlords and property managers, educating them on the simplicity
and value of the Company’s service that facilitates housing for tenants and maximizes occupancy rates and cash flow for landlords.
With almost 39,000,000 rental units in the United States and 1 out of every 4 adults having poor, bad, or no credit, the demand
for commercialized cosigning services provides a real growth opportunity.
Suppliers and Service Providers
As of September 2014, CrossClick Media has
contracted business operational services with Hostgator for server hosting services, Time Warner Cable for commercial VOIP and
Internet services, VoxTeleSys for voice and call services and OPC Marketing for call center operations. After September 30, 2014
the Company entered a two-year services agreement with Five9, Inc., one of the nation’s leading “cloud based”
Call Center solutions that employs VOIP technology for ease of use and expansion and replaces VoxTeleSys as the source of telephony
connectivity.
In an exclusive website, database and IT services
contract, Co-Signer.com retained Imagine Media Group, LLC, a high-level security approved U.S. military and government IT services
provider, to develop and maintain its online presence, including database development, application processing and evaluation and
an integrated tenant screening, sales and marketing program with all proprietary rights retained by Co-Signer.com. Imagine Media
Group has been an experienced web site, database, and process developer for the banking, military and financial services industries
for over the past 15 years. The agreement with Imagine Media Group was executed by LetUsCosign.com, Inc., a company previously
acquired by Co-Signer.com. A renewed agreement was executed on July 1, 2013 for three years.
In an affiliate agreement dated February 14,
2012, Co-Signer.com contracted with National Tenant Network, Inc. (“NTN”) to provide tenant screening information and
services through NTN’s online portal, www.NTNOnline.com and to exclusively market each other’s services to their clients
and to the public. This annual agreement provides that Co-Signer.com will be the only rent guarantee service to be promoted by
NTN through all of its marketing channels, including all online affiliates nationwide, while providing daily online tenant screening
ratings to assist in the evaluation of tenants applying for Co-Signer.com’s services. This agreement is cancelable with a
30 day written notice. NTN is recognized as a leading tenant screening service for the single-family residential leasing business
throughout the United States, and it has been awarded for its marketing campaigns at industry events and for its presence online
within the property management industry. Co-Signer.com’s written agreement with NTN has formally expired. Co-Signer.com entered
an agreement on January 6, 2014 with Contemporary Information Corporation (CIC), the nation's highest rated credit information
service bureau, which provides comprehensive tenant screening services to over 10,000 property managers. On February 24, 2014 two
marketing agreements were entered by CIC and Co-Signer.com that had one exclusively market the other nationally on a revenue sharing
basis. In September 2014 marketing and underwriting services with CIC were discontinued, and as of September 30 the Company was
negotiating with comparable service providers.
In April of 2013, Co-Signer.com signed a consulting
agreement with a marketing architect to lead the final development and deployment of its sales and marketing strategy and expand
its brand recognition in the top twenty-five U.S. rental markets. The marketing consultant has over 15 years of experience helping
private investors and business owners audit, develop and manage their portfolio of business brands. This contract concluded at
the end of 2013.
Expansion and Development
Co-Signer.com currently has provided services
to over seventy five tenant clients and over three dozen landlords and property management companies in targeted U.S. metropolitan
markets. Co-Signer.com has developed a multi-level marketing plan to promote, sell and distribute its services to the following
marketplaces and audiences:
|
· |
Real estate brokers and realtors in the top 25 U.S. rental markets; |
|
|
· |
All realtors who service specialize in single-family and multi-residential short sales; |
|
· |
The top 500 property management companies in the U.S.; |
|
|
· |
The apartment association for each of the 50 U.S. states and the local chapters in the top 25 U.S. rental markets; and |
|
|
· |
The members of the National Association of Realtors, the National Apartment Association, and the National Association of Real Property Managers, an association specializing in the single-family home leasing industry. |
|
Results of Operations
The closing of our acquisition of Co-Signer.com,
Inc. has been characterized as a reverse capitalization; therefore, the results of operations presented are those of Co-Signer.com,
Inc. The historical financial statements are the financial statements of Co-Signer.com, Inc. which have been presented to retroactively
reflect the historic capitalization of the accounting acquiree.
Results of Operations for the Three Months
ended September 30, 2014 and 2013.
Revenue
For the three months ended September 30, 2014,
revenue was $158,365 compared to $12,286 for the three months ended September 30, 2013; an increase of $146,079. The current quarter
includes revenue from the new operations of CrossClick Media, Inc.
Operating Expenses
Professional fees for the three months ended
September 30, 2014 were $8,340, as compared to $44,155 for the three months ended September 30, 2013, a decrease of $35,815 or
81%. Professional fees mainly consist of legal, auditor and other fees associated with the Company’s quarterly filings
and year end audit.
Salaries and wage expense for the three months
ended September 30, 2014 was $126,831, as compared to $29,010 for the three months ended September 30, 2013, an increase of $97,821
or 337%. The increase in the current period is attributed to changes within management personnel and the additional
employees hired for CrossClick Media.
Advertising and promotion expense for the three
months ended September 30, 2014 was $40,532, as compared to $16,166 for the three months ended September 30, 2013, an increase
of $24,366 or 151%. The increase is directly attributable to the increased business activity from CrossClick Media.
Stock based compensation is a non-cash expense
incurred from the issuance of shares of the Company’s common stock, warrants and options which have been issued for services
to both employees and other service providers. During the three months ended September 30, 2014, we incurred $250,483 of expense
as a result of fair valuing common shares, options and warrants that were issued compared to $170,000 for the three months ended
September 30, 2013, an increase of $80,483 or 47%.
General and administrative expense for the
three months ended September 30, 2014 was $147,851, as compared to $43,784 for the three months ended September 30, 2013, an increase
of $104,067 or 238%. The increase can be attributed to an increase in the expense incurred for outside services, travel and increases
in other general business expenses in conjunction with increased operations.
Other income and expense
During the three months ended September 30,
2014 we incurred $82,655 of expense for amortization of debt discount, derivative expense of $0 and had a gain on the change in
fair market value of our derivative liability of $379,219, compared to $104,236 of amortization of debt discount and a loss on
the change in fair market value of our derivative liability of $34,773 in the prior year. In addition, interest expense decreased
$15,980, to $43,041 in the current period compared to $59,021 in the prior year. Overall the large gain in the change in the fair
market value of the derivative liability resulted in net other income.
Net Loss
Overall we recorded a net loss of $283,240
for the three months ended September 30, 2014, as compared to a net loss of $488,859 for the three months ended September 30, 2013,
a decrease of $205,619. As discussed above the decrease in net loss can in part be attributed to the large gain in the change
in the fair market value of the derivative liability and increased revenue.
Results of Operations for the Nine Months
ended September 30, 2014 and 2013.
Revenue
For the nine months ended September 30, 2014,
revenue was $221,413 compared to $46,321 for the nine months ended September 30, 2013; an increase of $175,092. The current quarter
includes revenue from the new operations of CrossClick Media, Inc.
Operating Expenses
Professional fees for the nine months ended
September 30, 2014 were $87,381, as compared to $60,670 for the nine months ended September 30, 2013, an increase of $26,711. Professional
fees mainly consist of legal, auditor and other fees associated with the Company’s quarterly filings and year end audit.
Salaries and wage expense for the nine months
ended September 30, 2014 was $247,995, as compared to $74,029 for the nine months ended September 30, 2013, an increase of $173,966
or 235%. The increase in the current period is attributed to changes within management personnel and the additional
employees hired for CrossClick Media.
Advertising and promotion expense for the nine
months ended September 30, 2014 was $73,646, as compared to $74,039 for the nine months ended September 30, 2013.
Stock based compensation is a non-cash expense
incurred from the issuance of shares of the Company’s common stock, warrants and options which have been issued for services
to both employees and other service providers. During the nine months ended September 30, 2014, we incurred $948,306 of expense
as a result of fair valuing common shares, options and warrants that were issued. We recorded $40,000 for the issuance of 1,000,000
shares of common stock to our CEO and $908,306 for issuance of shares to various service providers. During the nine months ended
September 30, 2013, stock-based compensation expense was $170,000.
General and administrative expense for the
nine months ended September 30, 2014 was $395,945, as compared to $107,375 for the nine months ended September 30, 2013, an increase
of $288,570. The increase can be attributed to an increase in the expense incurred for outside services, travel and increases in
other general business expenses in conjunction with increased operations.
Other income and expense
During the nine months ended September 30,
2014 we incurred $237,057 of expense for amortization of debt discount, derivative expense of $178,614 and had a gain on the change
in fair market value of our derivative liability of $348,303, compared to $117,466 of amortization of debt discount in the prior
year and a loss on the change in fair market value of our derivative liability of $34,773. There was also a loss on the issuance
of debt and the conversion of debt of $275,000 and $102,282, respectively, and an increase in interest expense of $85,784.
Net Loss
Overall we recorded a net loss of $2,129,509
for the nine months ended September 30, 2014, as compared to a net loss of $652,469 for the nine months ended September 30, 2013,
an increase of $1,477,040. As discussed above the increase in net loss can in part be attributed to stock issued for services,
an increase in the amortization of debt discount, derivative and interest expense and the loss on extinguishment of debt.
Liquidity and Capital Resources
As of September 30, 2014, we had an accumulated
deficit of $4,488,179 and a working capital deficit of $2,004,259. For the nine months ended September 30, 2014, net cash used
in operating activities was $448,780 and we netted $451,450 from financing activities.
During the nine months ended September 30,
2014, the Company purchased computers and other equipment for $4,462.
On June 29, 2012, we issued a $488,489 Convertible
Promissory Note and Security Interest in favor of a trade creditor representing the past due invoices of the creditor for professional
fees. During the year ended December 31, 2013, the creditor advanced a total of $8,006 for payment of our operating expenses whereby
increasing the principal balance of the note to $491,465. The note is collateralized through the granting of a Security Interest
in all the current and future assets of the Company until such time the note is fully satisfied. The Security Interest was subsequently
perfected by the holder through filing. As amended, the Convertible Promissory Note is now due in full on or before May 31, 2014.
The conversion price of the Note, amended, is $0.075 per share. Additionally, certain accounts payable and accrued expenses of
$278,962 due to the creditor for services provided subsequent to the issuance of the original obligation were added to the Note.
As of September 30, 2014 this note is past due and there is principal and interest due of $812,249 and $88,124 on the new note,
respectively.
In connection with our acquisition of Co-Signer.com.,
we also issued a total of $51,440 in 8% Secured Notes to a total of ten former shareholders of Co-Signer.com. The 8% Secured Notes
are due in five years and accrue interest at an annual rate of eight percent (8%). Interest accrued under the 8% Secured Notes
is due in semi-annual payments. All payments of interest due under the 8% Secured Notes may, at our option, be paid in shares of
our common stock valued at a price per share equal to the average of the closing market prices for our common stock during five
trading days immediately preceding the due date for such payment. Our obligations under the 8% Secured Notes are secured by a lien
on all of our assets granted under Article 9 of the Uniform Commercial Code. As of September 30, 2014 there is $4,667 of accrued
interest on these notes.
On June 12, 2013, the Company executed a promissory
note with Robert and Suzanne Roysden for $10,000. The loan has no stated interest rate and was due August 12, 2013. The note does
not bear interest but did include a loan fee of $5,000. During the period ended September 30, 2014, $3,000 was repaid on the loan
and the loan was extended with no specific terms of repayment.
On September 23, 2013, we entered into a $400,000
Promissory Note (the “Note”) with JMJ Financial (“JMJ”). The face amount of the Note includes an original
issue discount of $40,000. Funds are loaned to the Company under a series of advances made under the Note. Loans made under the
Note mature in one year from the date of the advance and, if repaid within ninety (90) days from the date of issue, the loans will
not bear interest. Upon ninety days after the date of issue, a onetime interest charge of twelve percent (12%) of the principal
amount will be applied. JMJ may convert all or part of the balance under the Note, at its discretion, into shares of our common
stock. The conversion price is sixty percent (60%) of the lowest trading price for our common stock in the twenty-five trading
days immediately preceding the conversion date.
Our outstanding loans with JMJ under the Note
are as follows:
Date |
Due Date |
Principal and Interest Amount |
December 9, 2013 |
December 9, 2014 |
$18,475 |
April 17 2014 |
April 17 2015 |
$49,777 |
June 23, 2014 |
June 23, 2015 |
$31,111 |
|
Total |
$99,363 |
On November 1, 2013, we entered into a $30,000,
9% Convertible Promissory Note with Charles J. Kalina III. The note bears interest at 9% and matures in two years. The loan is
convertible at any time into shares of common stock at $0.075 per share beginning one year from the date of the note. In addition,
the note requires the issuance of warrants to purchase 400,000 shares of common stock at a price of $.125, exercisable for three
years. As of September 30, 2014, there is $2,463 of accrued interest.
On November 1, 2013, the Company executed a
convertible promissory note for $16,000 with Steven J. Smith. The note is convertible at $0.075 after one year, bears interest
at 9% and matures in two years. During the nine months ended September 30, 2014, the Company repaid $3,000 before it borrowed another
$5,000 on the loan. As of September 30, 2014, there is $1,279 of accrued interest.
On November 4, 2013, we obtained short term
financing from a Lender under a 9% Convertible Note in the amount of $70,000 (the “Short-Term Note”). The Short-Term
Note features an original issue discount of $6,700. The $63,300 in funding received from the Lender was used to pay off and retire
a prior Convertible Promissory Note issued to Asher Enterprises, Inc., dated April 9, 2013. The Short-Term Note accrues interest
at a rate of nine percent (9%) per year, with all principal and interest due in full within thirty days from the date of issue.
The Short-Term Note is currently in default. At any time, the Short-Term Note may be converted, in whole or in part at the option
of the holder, at a price of $0.075 per share. As of September 30, 2014 there is $5,696 of accrued interest.
On January 27, 2014, the Company executed a
convertible promissory note for $40,000 with Darren Magot, a member of the Board of Directors. The note includes a $2,500 loan
origination fee, accrues interest at 8% and matures in 180 days. As of September 30, 2014 $3,000 has been repaid and there is $1,989
of accrued interest. The Note is convertible into common shares of our common stock at $.04 per share. In addition, we issued Mr.
Magot warrants to purchase 1,000,000 shares of our common stock at $.05 per share, exercisable for three years.
On February 13, 2014, we entered into a $250,000
Convertible Promissory Note (the “Note”) with Black Mountain Equities, Inc. (“BME”). The face amount of
the Note includes an original issue discount of $25,000. The initial advance to be made under the Note by BME is $25,000. BME 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. There is a one-time interest charge of ten percent (10%) and individual loans mature one year from the effective date
of each payment. BME may convert all or part of the Note, at its discretion, into shares of our common stock. The conversion is
equal to the lesser of a 40% discount to the lowest trading prices in the twenty-five (25) day trading price prior to the conversion
date or at a fixed price if $0.025. As of September 30, 2014, principal of $3,650 and $2,750 of accrued interest were converted
to common stock. As of September 30, 2014 the note balance including all interest and fees is $23,600.
On February 26, 2014, the Company issued a
Convertible Promissory Note to GCEF Opportunity Fund, LLC in the amount of $72,500, includes an original issue discount of $7,500.
The note bears a onetime 12% interest charge, is unsecured and matures in one year. The Note is convertible into common stock in
whole or in part at any time with a conversion price equal to a 50% discount to the average bid price in the ten day trading price
prior to the conversion date. In addition to the terms outlined above the Company issued to GCEF 5,000,000 shares of common stock.
The stock was valued at $0.052, the closing price on the date of the note for non-cash expense of $260,000 which was recorded as
a loss on the issuance of debt.
On October 9, 2014, a portion of the GCEF Opportunity
Fund note in the amount $20,000 was assigned to WHC Capital, LLC. Concurrent with this assignment, we entered into a replacement
Convertible Promissory Note with WHC Capital. The replacement note bears interest at 12% per annum, is due on or before October
9, 2015, and is convertible to shares of our common stock at price equal to a fifty percent (50%) discount to our lowest closing
bid price during the ten (10) trading days preceding the conversion.
On November 6, 2014, an additional portion
of the GCEF Opportunity Fund Note in the amount of $20,000 was assigned to Beaufort Capital Partners, LLC. On November 13, 2014,
we entered into a Securities Exchange and Settlement Agreement with Beaufort. Under this agreement, the $20,000 in debt may be
exchanged for shares of our common stock at either: (A) the lesser of (i) $0.0001, or (ii) 50% of our common stock price, if our
common stock price falls below $0.00049 per share, or (B) 50% of our common stock price if our common stock price remains above
$0.0005 during the applicable pricing period.
On March 14, 2014, the Company issued a Convertible
Promissory Note to Magna Equities II, LLC (formerly Hanover Holdings I, LLC) in the amount of $38,000. The note bears interest
at a rate of 12% per annum, is unsecured and matures in eight months. The Note is convertible into common stock in whole or in
part at any time with a conversion price equal to the lesser of a 45% discount to the lowest trading prices in the five day trading
price prior to the conversion date or at a fixed price if $0.04. On September 16, 2014, $6,600 of principal was converted to common
stock. As of September 30, 2014 the remaining principal and interest due on the note is $31,400 and $2,468, respectively.
On June 19, 2014, we borrowed the sum of $15,000
from Steven J. Smith under the terms of a Promissory Note. Pursuant to these terms the loan was non-interest bearing but did include
a fee of 1,000,000 shares of common stock. The note was due and payable within seven (7) days of funding with no stated interest.
The shares were valued at the closing price on the date of the loan of $0.0051 for a total non-cash expense of $5,100. The repayment
terms of this note are currently be renegotiated.
We have also received short term financing
from KBM Worldwide, Inc. (“KBM”) under a series of Securities Purchase Agreements (the “SPAs”) and a Convertible
Promissory Notes (the “Notes”). The Notes bear interest at an annual rate of 8%, with principal and interest coming
due approximately nine (9) months from issue. The Note may be converted in whole or in part, at the option of the holder, to shares
of our common stock, par value $0.001, at any time following 180 days after the issuance dates of the Notes. The conversion price
under the Notes is a 42% discount to the Market Price of our common stock on the conversion date.
Our outstanding loans with KBM are as follows:
Date |
Due Date |
Principal Amount |
March 20, 2014 |
December 31, 2014 |
$42,500 |
June 5, 2014 |
March 9, 2015 |
$32,500 |
June 25, 2014 |
March 27, 2015 |
$32,500 |
September 24, 2014 (funded in October 2014) |
July 6, 2015 |
$32,500 |
|
Total |
$140,000 |
Subsequent to September 30th the
Company received several conversion notices that they were unable to fulfill due to not having enough available authorized shares
to cover the conversion. This resulted in default on the applicable Notes (see Note 4). The Company is in the process of increasing
its authorized common stock and will honor the conversion notices as soon as it is able.
On October 7, 2014, we entered into a Debt
Conversion Agreement (the “Agreement”) with MCKEA Holdings, LLC (“MCKEA”). Under the Agreement, MCKEA agreed
to extinguish and release various debts owed by us and totaling $198,653.74. The debt includes various sums owing to MCKEA as well
as certain third party debts acquired by MCKEA under assignment. In exchange for the release of these debts, we agreed to issue
MCKEA 1,000,000 shares of our Class B Convertible Preferred Stock. Class B Convertible Preferred Stock votes together with our
common stock at a rate of three thousand (3,000) votes for each preferred share held. In addition, Class B Convertible Preferred
Stock is convertible to shares of our common stock, at the option of the holder, at a rate of 250 shares of common stock for each
preferred share held. The conversion right also contains and anti-dilution feature whereby, for each additional share of common
stock issued by us in the future, the holders of the Class B Convertible Preferred Stock shall, as a whole, received an equal number
of common shares on a pro-rata basis. Further, for so long as shares of our Class B Convertible Preferred Stock are issued and
outstanding, we may not designate any additional classes of preferred stock without the written consent of the holders of the majority
of the then-issued and outstanding Class B Convertible Preferred shares.
We currently have little operating capital
and will dependent on fundraising in order to expand our operations and market our services to a wider group of potential customers.
We can offer no assurance that we will obtain financing in the near future or on terms that are acceptable to us. Additional financing
through public or private equity financings or other financing sources may not be available on acceptable terms, or at all.
Off Balance Sheet Arrangements
As of September 30, 2014, there were no off
balance sheet arrangements.
Going Concern
We have negative working capital and have incurred
losses since inception. These factors create substantial doubt about our ability to continue as a going concern. The financial
statements do not include any adjustment that might be necessary if we are unable to continue as a going concern.
Our ability to continue as a going concern
is dependent on generating cash from the sale of our common stock and/or obtaining debt financing and attaining future profitable
operations. Management’s plans include selling our equity securities and obtaining debt financing to fund our capital requirement
and ongoing operations; however, there can be no assurance we will be successful in these efforts.
Item 3. Quantitative and Qualitative Disclosures
About Market Risk
A smaller reporting company is not required
to include this item.
Item 4. Controls and Procedures
We carried out an evaluation of the effectiveness
of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
as of September 30, 2014. This evaluation was carried out under the supervision and with the participation of our Chief Executive
Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that, as of September 30, 2014, our disclosure controls and procedures were not effective. There have been no changes in our internal
controls over financial reporting during the quarter ended September 30, 2014. Management determined that the material weaknesses
that resulted in controls being ineffective are primarily due to lack of resources and number of employees. Material weaknesses
exist in the segregation of duties required for effective controls and various reconciliation and control procedures not regularly
performed due to the lack of staff and resources.
Disclosure controls and procedures are controls
and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under
the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required
to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief
Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Limitations on the Effectiveness of Internal
Controls
Our management does not expect that our disclosure
controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Further,
the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These
inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because
of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of
two or more people, or by management override of the internal control. The design of any system of controls also is based in part
upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may deteriorate.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are not a party to any other pending legal
proceeding. We are not aware of any other pending legal proceeding to which any of our officers, directors, or any beneficial holders
of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.
Item 1A. Risk Factors
A smaller reporting company is not required
to include this item.
Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds
On January 2, 2014, the Company issued 3,500,000
shares of common stock for consulting services. The shares were issued at $0.028 based on the market value of the common stock
on the date of authorization for total non-cash expense of $98,000.
On January 10, 2014, the Company issued 5,350,000
shares of common stock to various employees and consultants. The shares were issued at $0.0383 based on the market value of the
common stock on the date of authorization for total non-cash expense of $204,905.
On February 12, 2014, the Company issued 250,000
shares of common stock to a member of the Board of Directors and 1,000,000 shares of common stock to its CEO for services rendered.
The shares were issued at $0.04 based on the market value of the common stock on the date of authorization for total non-cash expense
of $50,000.
On February 26, 2014, the Company issued 7,000,000
shares of common stock for services. The shares were issued at $0.052 based on the market value of the common stock on the date
of authorization for total non-cash expense of $364,000.
On February 26, 2014, the Company issued 5,000,000
shares of common stock to GCEF Opportunity Fund, LLC. The shares were issued in conjunction with a convertible promissory note.
The stock was valued at $0.052, the closing price on the date of the note for non-cash expense of $260,000 which was recorded as
a loss on the issuance of debt.
On March 1, 2014, the Company issued 750,000
shares of common stock for services. The shares were issued at $0.058 based on the market value of the common stock on the date
of authorization for total non-cash expense of $43,500.
On March 27, 2014, the Company issued 1,593,240
shares of common stock in conversion of $10,622 of principal and accrued interest. The loan was converted at $0.0067 per the terms
of the agreement.
During the nine months ended September 30,
2014, Strategic IR, Inc. converted the $65,000 note payable it had assumed from Finiks Capital into 10,000,000 shares of common
stock at $0.0065 per share per the terms of the original Note.
On April 2, 2014, JMJ Financial converted $10,000
of the amount due pursuant to the terms of it convertible promissory note into 800,000 shares of common stock.
On April 24, 2014, JMJ Financial converted
$15,750 of the amount due pursuant to the terms of it convertible promissory note into 1,500,000 shares of common stock.
On May 16, 2014, JMJ Financial converted $17,850
of the amount due pursuant to the terms of it convertible promissory note into 1,700,000 shares of common stock.
On May 30, 2014, Asher Enterprises, Inc. converted
$15,000 of the amount due pursuant to the terms of it convertible promissory note into 2,142,857 shares of common stock.
On June 10, 2014, Asher Enterprises, Inc. converted
$29,200 of the amount due pursuant to the terms of it convertible promissory note into 7,300,000 shares of common stock.
On June 16, 2014, JMJ Financial converted $10,000
of the amount due pursuant to the terms of it convertible promissory note into 4,000,000 shares of common stock.
On June 19, 2014, the Company issued 1,000,000
shares of common stock to Steven J. Smith for a loan fee. The shares were valued at the closing price on the date of the loan of
$0.0051 for a total non-cash expense of $5,100.
On July 22, 2014, Asher Enterprises, Inc. converted
$15,000 of the amount due pursuant to the terms of it convertible promissory note into 5,172,414 shares of common stock.
During September 2014, Asher Enterprises, Inc.
converted $57,800 of the amount due pursuant to the terms of it convertible promissory note into 56,158,540 shares of common stock.
On September 11, 2014, JMJ Financial converted
$7,560 of the amount due pursuant to the terms of it convertible promissory note into 8,400,000 shares of common stock.
On September 16, 2014, Magna Equities converted
$6,600 of the amount due pursuant to the terms of it convertible promissory note into 8,000,000 shares of common stock.
On September 17, 2014, Black Mountain Equities
converted $6,400 of the amount due pursuant to the terms of it convertible promissory note into 8,000,000 shares of common stock.
On September 22, 2014, JMJ Financial converted
$7,476 of the amount due pursuant to the terms of it convertible promissory note into 8,900,000 shares of common stock.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
Exhibit Number |
Description of Exhibit |
10.1 |
KBM Worldwide, Inc. Convertible Promissory Note dated September 24, 2014 |
10.2 |
KBM Worldwide, Inc. Securities Purchase Agreement dated September 24, 2014 |
10.3 |
Convertible Promissory Note issued to WHC Capital, LLC dated October 9, 2014 |
10.4 |
Securities Exchange and Settlement Agreement with Beaufort Capital Partners, LLC dated November 13, 2014 |
10.5 |
Service Agreement with Five9, Inc. |
31.1 |
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2 |
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 |
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
101 |
Materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 formatted in Extensible Business Reporting Language (XBRL). |
SIGNATURES
Pursuant to the requirements of
the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
|
Cross Click Media, Inc. |
|
|
Date: |
November 26, 2014
|
|
|
|
/s/ Kurtis A. Kramarenko |
By: |
Kurtis A. Kramarenko |
Title: |
President, Chief Executive Officer, and Chief Financial Officer |
CERTIFICATIONS
I, Kurtis A. Kramarenko, certify that;
1. |
|
I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2014 of Cross Click Media Inc. (the “registrant”); |
2. |
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. |
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. |
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. |
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. |
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. |
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. |
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 26, 2014
/s/ Kurtis A. Kramarenko
By: Kurtis A. Kramarenko
Title: Chief Financial Officer
CERTIFICATIONS
I, Kurtis A. Kramarenko, certify that;
1. |
|
I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2014 of Cross Click Media Inc. (the “registrant”); |
2. |
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. |
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. |
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. |
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. |
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. |
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. |
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. |
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 26, 2014
/s/ Kurtis A. Kramarenko
By: Kurtis A. Kramarenko
Title: Chief Executive Officer
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AND
CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002
In connection with the quarterly Report of
Cross Click Media Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2014 filed with the Securities
and Exchange Commission (the “Report”), I, Kurtis A. Kramarenko, Chief Executive Officer of the Company, certify, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of Section 13(a)
of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material
respects, the consolidated financial condition of the Company as of the dates presented and the consolidated result of operations
of the Company for the periods presented. |
By: |
/s/ Kurtis A. Kramarenko |
Name: |
Kurtis A. Kramarenko |
Title: |
Principal Executive Officer, Principal Financial Officer and Director |
Date: |
November 26, 2014 |
This certification has been furnished solely pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS NOTE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
Principal
Amount: $20,000
Date:
October 9, 2014 (Tacking Back to February 28, 2014, at the latest)
CONVERTIBLE
PROMISSORY NOTE
Cross
Click Media, Inc. F/K/A Co-Signer Inc., (hereinafter called the "Borrower" or "XCLK"), hereby promises
to pay to the order of WHC Capital, LLC, a Delaware Limited Liability Company, or its registered assigns (the "Holder")
the sum of $20,000 together with any interest as set forth herein, on October 9, 2015 (the "Maturity Date"), and to
pay interest on the unpaid principal balance hereof at the rate of Twelve percent (12%) (the "Interest Rate") per annum
from the date hereof (the "Issue Date") until the same becomes due and payable, whether at maturity or upon acceleration
or by prepayment or otherwise. This Note shall serve in lieu of (and tack back to) $20,000 of convertible debt owing to
GCEF Opportunity Fund, LLC, _pursuant to that certain $72,500 Convertible Promissory Note dated February 26, 2014, (attached hereto),
and incorporate all interests and charges contemplated therein.
This
Note may not be prepaid in whole or in part except as otherwise explicitly set forth herein. Any amount of principal or interest
on this Note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date
thereof until the same is paid ("Default Interest"). Interest shall commence accruing on the date that the Note is fully
paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed. All payments due hereunder (to
the extent not converted into common stock) shall be made in lawful money of the United States of America.
All
payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance
with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is
not a business day, the same shall instead be due on the next succeeding day which is a business day and, in the case of any interest
payment date which is not the date on which this Note is paid in full, the extension of the due date thereof shall not be taken
into account for purposes of determining the amount of interest due on such date. As used in this Note, the term "business
day" shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of New York, New York
are authorized or required by law or executive order to remain closed.
Each
capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in the supporting documents of
same date (attached hereto).
This
Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive
rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.
The
following terms shall apply to this Note:
ARTICLE
I. CONVERSION RIGHTS
1.1 Conversion
Right. The Holder shall have the right and at any time during the period beginning on the date of this Note to convert all
or any part of the outstanding and unpaid principal amount of this Note into fully paid and non- assessable shares of Common Stock,
as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower into which such
Common Stock shall hereafter be changed or reclassified at the conversion price (the "Conversion Price") determined
as provided herein (a "Conversion"); provided, however, that in no event shall the Holder be entitled
to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number
of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion
of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained
herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to
which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of
more than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence,
beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso, provided,
further, however, that the limitations on conversion may be waived by the Holder upon, at the election of the Holder,
not less than 61 days' prior notice to the Borrower, and the provisions of the conversion limitation shall continue to apply until
such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). The number of shares
of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined
below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion, (the "Notice
of Conversion"), delivered to the Borrower by the Holder in accordance with the Sections below; provided that the Notice
of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice)
to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the "Conversion Date").
The
term "Conversion Amount" means, with respect to any conversion of this Note, the sum of (1) the principal amount of
this Note to be converted in such conversion plus (2) at the Borrower's option, accrued and unpaid interest, if any, on
such principal amount at the interest rates provided in this Note to the Conversion Date, plus (3) at the Borrower's option,
Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4) at the
Holder's option, any amounts owed to the Holder.
1.2
Conversion Price.
(a)
Calculation of Conversion Price. Holder, at its discretion, shall have the right to convert this Note in its entirety or
in part(s) into common stock of the Company valued at a Fifty Percent (50%) discount off of the lowest closing bid price for the
Company's common stock during the Ten (10) trading days immediately preceding a conversion date, as reported by Quotestream.
If
on the Clearing Date (as defined herein), the Common Stock of the Company has depreciated by Seven and a half percent (7.5%) or
more from the date of conversion, a corresponding adjustment to the Conversion Amount stated in that specific Notice of Conversion
shall be made, so as to adjust for such dilution. The "Clearing Date" shall be defined as the date on which the Holder's
broker shall provide confirmation to the Holder that the shares of common stock issued pursuant to a Notice of Conversion are
eligible for trading.
(b)
Conversion Price During Major Announcements. Notwithstanding anything contained in the preceding section to the contrary,
in the event the Borrower (i) makes a public announcement that it intends to consolidate or merge with any other corporation (other
than a merger in which the Borrower is the surviving or continuing corporation and its capital stock is unchanged) or sell or
transfer all or substantially all of the assets of the Borrower or (ii) any person, group or entity (including the Borrower) publicly
announces a tender offer to purchase 50% or more of the Borrower's Common Stock (or any other takeover scheme) (the date of the
announcement referred to in clause (i) or (ii) is hereinafter referred to as the "Announcement Date"), then the Conversion
Price shall, effective upon the Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined
below), be equal to the lower of (x) the Conversion Price which would have been applicable for a Conversion occurring on the Announcement
Date and (y) the Conversion Price that would otherwise be in effect. From and after the Adjusted Conversion Price Termination
Date, the Conversion Price shall be determined as set forth in this Section. For purposes hereof, "Adjusted Conversion Price
Termination Date" shall mean, with respect to any proposed transaction or tender offer (or takeover scheme) for which a public
announcement as contemplated by this Section has been made, the date upon which the Borrower (in the case of clause (i) above)
or the person, group or entity (in the case of clause (ii) above) consummates or publicly announces the termination or abandonment
of the proposed transaction or tender offer (or takeover scheme) which caused this Section 1.2(b) to become operative.
1.3
Authorized Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve
from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance
of Common Stock upon the full conversion of this Note. The Borrower is required at all times to have authorized and reserved five
times the number of shares that is actually issuable upon full conversion of the Note (based on the Conversion Price of the Notes
in effect from time to time)(the "Reserved Amount"). The Reserved Amount shall be increased from time to time in accordance
with the Borrower's obligations.
The
Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. In addition,
if the Borrower shall issue any securities or make any change to its capital structure which would change the number of shares
of Common Stock into which the Notes shall be convertible at the then current Conversion Price, the Borrower shall at the same
time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved,
free from preemptive rights, for conversion of the outstanding Notes.
The
Borrower (i) acknowledges that it has irrevocably
instructed its transfer agent to issue certificates for the Common Stock issuable upon
conversion of this Note, and (ii) agrees that its issuance of this Note shall constitute full authority to its officers and agents
who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common
Stock in accordance with the terms and conditions of this Note.
If,
at any time the Borrower does not maintain the Reserved Amount it will be considered an Event of Default as defined in this Note.
1.4
Method of Conversion.
(a)
Mechanics of Conversion. This Note may be converted by the Holder in whole or in part at any time from time to time after
the Issue Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable means of communication
dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time).
(b)
Surrender of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note
in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless
the entire unpaid principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the
principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the
Holder and the Borrower, so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute
or discrepancy, such records of the Borrower shall, prima facie, be controlling and determinative in the absence of manifest
error. Notwithstanding the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer this
Note unless the Holder first physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and
deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable
transfer taxes) may request, representing in the aggregate the remaining unpaid principal amount of this Note. The Holder and
any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following
conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be
less than the amount stated on the face hereof.
(c)
Payment of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other
than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other
securities or property unless and until the person or persons (other than the Holder or the custodian in whose street name such
shares are to be held for the Holder's account) requesting the issuance thereof shall have paid to the Borrower the amount of
any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.
(d)
Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail
(or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in
this Section, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates
for the Common Stock issuable upon such conversion within three (3) business days after such receipt (the "Deadline")
(and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with
the terms hereof and the Purchase Agreement.
Within
Five (5) business days of having received certificate(s) for common stock pursuant to a Notice of Conversion, Holder may elect
to rescind the Notice of Conversion and return the shares, at Holder's expense, to the Company's Transfer Agent. In the event
of such rescission, the principal amount outstanding under this Note shall be adjusted to include the Conversion Amount which
was deducted from the Note as part of the rescinded Notice of Conversion.
(e)
Obligation of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall
be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the
amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults
on its obligations under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith
terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such
conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower's obligation to issue and deliver
the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder
to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person
or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder
of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of
any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the
Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall be
the Conversion Date so long as the Notice of Conversion is received by the Borrower before 6:00 p.m., New York, New York time,
on such date.
(f)
Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock
issuable upon conversion, provided the Borrower is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer ("FAST") program, upon request of the Holder and its compliance with the provisions contained in
Section 1.1 and in this Section 1.4, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit
the Common Stock issuable upon conversion to the Holder by crediting the account of Holder's Broker with DTC through its Deposit
Withdrawal Agent Commission ("DWAC") system.
(g)
Failure to Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder's right to pursue other remedies,
including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion
of this Note is not delivered by the Deadline (other than a failure due to the circumstances described in Section 1.3 above, which
failure shall be governed by such Section) the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the
Deadline that the Borrower fails to deliver such Common Stock. Such cash amount shall be paid to Holder by the fifth day of the
month following the month in which it has accrued or, at the option of the Holder (by written notice to the Borrower by the first
day of the month following the month in which it has accrued), shall be added to the principal amount of this Note, in which event
interest shall accrue thereon in accordance with the terms of this Note and such additional principal amount shall be convertible
into Common Stock in accordance with the terms of this Note. The Borrower agrees that the right to convert is a valuable right
to the Holder. The damages resulting from a failure, attempt to frustrate, interference with such conversion right are difficult
if not impossible to qualify. Accordingly the parties acknowledge that the liquidated damages provision contained in this Section
are justified.
1.5
Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred
unless (i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer
agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for
opinions of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act
(or a successor rule) ("Rule 144") or (iv) such shares are transferred to an "affiliate" (as defined in Rule
144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who is an
Accredited Investor. Except as otherwise provided herein (and subject to the removal provisions set forth below), until such time
as the shares of Common Stock issuable upon conversion of this Note have been registered under the Act or otherwise may be sold
pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately
sold, each certificate for shares of Common Stock issuable upon conversion of this Note that has not been so included in an effective
registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits
removal of the legend, shall bear a legend substantially in the following form, as appropriate:
"NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES."
The
legend set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer
legend if (i) the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made
without registration under the Act, which opinion shall be accepted by the Company so that the sale or transfer is effected or
(ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder
under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 144 without any restriction
as to the number of securities as of a particular date that can then be immediately sold. In the event that the Company does not
accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration,
such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to this note.
1.6
Effect of Certain Events.
(a)
Effect of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially
all of the assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which
more than 50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of
the Borrower with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i)
be deemed to be an Event of Default (as defined in Article III) pursuant to which the Borrower shall be required to pay to the
Holder upon the consummation of and as a condition to such transaction an amount equal to the Default Amount (as defined in Article
III) or (ii) be treated pursuant to Section 1.6(b) hereof. "Person" shall mean any individual, corporation, limited
liability company, partnership, association, trust or other entity or organization.
(b)
Adjustment Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion
of all of the Notes, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different number
of shares of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance
of all or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the
Borrower, then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis
and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable
upon conversion, such stock, securities or assets which the Holder would have been entitled to receive in such transaction had
this Note been converted in full immediately prior to such transaction (without regard to any limitations on conversion set forth
herein), and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder of this
Note to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and
of the number of shares issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable
in relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction
described in this Section 1.6(b) unless (a) it first gives, to the extent practicable, thirty (30) days prior written notice (but
in any event at least fifteen (15) days prior written notice) of the record date of the special meeting of shareholders to approve,
or if there is no such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization
or other similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting
successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Section 1.6(b). The
above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.
(c)
Adjustment Due to Distribution. If the Borrower shall declare or make any distribution of its assets (or rights to acquire
its assets) to holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any
dividend or distribution to the Borrower's shareholders in cash or shares (or rights to acquire shares) of capital stock of a
subsidiary (i.e., a spin-off)) (a "Distribution"), then the Holder of this Note shall be entitled, upon any conversion
of this Note after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such
assets which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had
such Holder been the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to
such Distribution.
(d)
Adjustment Due to Dilutive Issuance. If, at any time when any Notes are issued and outstanding, the Borrower issues
or sells, or in accordance with this Section hereof is deemed to have issued or sold, any shares of Common Stock for no consideration
or for a consideration per share (before deduction of reasonable expenses or commissions or underwriting discounts or allowances
in connection therewith) less than the Conversion Price in effect on the date of such issuance (or deemed issuance) of such shares
of Common Stock (a "Dilutive Issuance"), then immediately upon the Dilutive Issuance, the Conversion Price will be reduced
to the amount of the consideration per share received by the Borrower in such Dilutive Issuance.
The
Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or grants any warrants,
rights or options (not including employee stock option plans), whether or not immediately exercisable, to subscribe for or to
purchase Common Stock or other securities convertible into or exchangeable for Common Stock ("Convertible Securities")
(such warrants, rights and options to purchase Common Stock or Convertible Securities are hereinafter referred to as "Options")
and the price per share for which Common Stock is issuable upon the exercise of such Options is less than the Conversion Price
then in effect, then the Conversion Price shall be equal to such price per share. For purposes of the preceding sentence, the
"price per share for which Common Stock is issuable upon the exercise of such Options" is determined by dividing (i)
the total amount, if any, received or receivable by the Borrower as consideration for the issuance or granting of all such Options,
plus the minimum aggregate amount of additional consideration, if any, payable to the Borrower upon the exercise of all such Options,
plus, in the case of Convertible Securities issuable upon the exercise of such Options, the minimum aggregate amount of additional
consideration payable upon the conversion or exchange thereof at the time such Convertible Securities first become convertible
or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the exercise of all such Options (assuming
full conversion of Convertible Securities, if applicable). No further adjustment to the Conversion Price will be made upon the
actual issuance of such Common Stock upon the exercise of such Options or upon the conversion or exchange of Convertible Securities
issuable upon exercise of such Options.
Additionally,
the Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or sells any Convertible
Securities, whether or not immediately convertible (other than where the same are issuable upon the exercise of Options), and
the price per share for which Common Stock is issuable upon such conversion or exchange is less than the Conversion Price then
in effect, then the Conversion Price shall be equal to such price per share. For the purposes of the preceding sentence, the "price
per share for which Common Stock is issuable upon such conversion or exchange" is determined by dividing (i) the total amount,
if any, received or receivable by the Borrower as consideration for the issuance or sale of all such Convertible Securities, plus
the minimum aggregate amount of additional consideration, if any, payable to the Borrower upon the conversion or exchange thereof
at the time such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of
Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment to the Conversion
Price will be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities.
(e)
Purchase Rights. If, at any time when any Notes are issued and outstanding, the Borrower issues any convertible securities
or rights to purchase stock, warrants, securities or other property (the "Purchase Rights") pro rata to the record holders
of any class of Common Stock, then the Holder of this Note will be entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares of Common
Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion contained herein) immediately
before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
(f)
Notice of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the
events described in this Section 1.6, the Borrower, at its expense, shall promptly compute such adjustment or readjustment and
prepare and furnish to the Holder of a certificate setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Borrower shall, upon the written request at any time of the Holder, furnish
to such Holder a like certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time in
effect and (iii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time
would be received upon conversion of the Note.
1.7
Trading Market Limitations. Unless permitted by the applicable rules and regulations of the principal securities market
on which the Common Stock is then listed or traded, in no event shall the Borrower issue upon conversion of or otherwise pursuant
to this Note and the other Notes issued pursuant to the Purchase Agreement more than the maximum number of shares of Common Stock
that the Borrower can issue pursuant to any rule of the principal United States securities market on which the Common Stock is
then traded (the "Maximum Share Amount"), which shall be 4.99% of the total shares outstanding on the Closing Date (as
defined in the Purchase Agreement), subject to equitable adjustment from time to time for stock splits, stock dividends, combinations,
capital reorganizations and similar events relating to the Common Stock occurring after the date hereof. Once the Maximum Share
Amount has been issued, if the Borrower fails to eliminate any prohibitions under applicable law or the rules or regulations of
any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the Borrower or
any of its securities on the Borrower's ability to issue shares of Common Stock in excess of the Maximum Share Amount, in lieu
of any further right to convert this Note, this will be considered an Event of Default under Section 3.3 of the Note.
1.8
Status as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than
the shares, if any, which cannot be issued because their issuance would exceed such Holder's allocated portion of the Reserved
Amount or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder's rights as a Holder
of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such shares
of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure
by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received certificates
for all shares of Common Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect to a conversion
of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common
Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with respect to such unconverted
portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note
has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted. In all cases, the
Holder shall retain all of its rights and remedies (including, without limitation, (i) the right to receive Conversion Default
Payments pursuant to Section 1.3 to the extent required thereby for such Conversion Default and any subsequent Conversion Default
and (ii) the right to have the Conversion Price with respect to subsequent conversions determined in accordance with Section 1.3)
for the Borrower's failure to convert this Note.
1.9
Prepayment. Maker may prepay this Note, in whole or in part, at any time and from time to time, with premium, where
parties have approved said prepayment and premium in writing.
ARTICLE
II. CERTAIN COVENANTS
2.1
Distributions on Capital Stock. So long as the Borrower shall have any obligation under this Note, the Borrower shall not
without the Holder's written consent (a) pay, declare or set apart for such payment, any dividend or other distribution (whether
in cash, property or other securities) on shares of capital stock other than dividends on shares of Common Stock solely in the
form of additional shares of Common Stock or (b) directly or indirectly or through any subsidiary make any other payment or distribution
in respect of its capital stock except for distributions pursuant to any shareholders' rights plan which is approved by a majority
of the Borrower's disinterested directors.
2.2
Restriction on Stock Repurchases. So long as the Borrower shall have any obligation under this Note, the Borrower shall
not without the Holder's written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property
or other securities or otherwise) in any one transaction or series of related transactions any shares of capital stock of the
Borrower or any warrants, rights or options to purchase or acquire any such shares.
2.3
Borrowings. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder's
written consent, create, incur, assume guarantee, endorse, contingently agree to purchase or otherwise become liable upon the
obligation of any person, firm, partnership, joint venture or corporation, except by the endorsement of negotiable instruments
for deposit or collection, or suffer to exist any liability for borrowed money, except (a) borrowings in existence or committed
on the date hereof and of which the Borrower has informed Holder in writing prior to the date hereof, (b) indebtedness to trade
creditors or financial institutions incurred in the ordinary course of business or (c) borrowings, the proceeds of which shall
be used to repay this Note.
2.4
Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the
Holder's written consent, sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course
of business. Any consent to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition.
2.5
Advances and Loans. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without
the Holder' s written consent, lend money, give credit or make advances to any person, firm, joint venture or corporation, including,
without limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits or advances
(a) in existence or committed on the date hereof and which the Borrower has informed Holder in writing prior to the date hereof,
(b) made in the ordinary course of business or (c) not in excess of $100,000.
ARTICLE
III. EVENTS OF DEFAULT
If
any of the following events of default (each, an "Event of Default") shall occur:
3.1
Failure to Pay Principal or Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this
Note, whether at maturity, upon acceleration or otherwise.
3.2
Conversion and the Shares. The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens
in writing that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder
in accordance with the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue) (electronically or
in certificated form) any certificate for shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant
to this Note as and when required by this Note, the Borrower directs its transfer agent not to transfer or delays, impairs, and/or
hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for shares of
Common Stock to be issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note,
or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing)
any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any shares of
Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or
makes any written announcement, statement or threat that it does not intend to honor the obligations described in this paragraph)
and any such failure shall continue uncured (or any written announcement, statement or threat not to honor its obligations shall
not be rescinded in writing) for three (3) business days after the Holder shall have delivered a Notice of Conversion. It is an
obligation of the Borrower to remain current in its obligations to its transfer agent. It shall be an event of default of this
Note, if a conversion of this Note is delayed, hindered or frustrated due to a balance owed by the Borrower to its transfer agent.
If at the option of the Holder, the Holder advances any funds to the Borrower's transfer agent in order to process a conversion,
such advanced funds shall be paid by the Borrower to the Holder within forty eight (48) hours of a demand from the Holder.
3.3
Breach of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this
Note and any collateral documents including but not limited to the Purchase Agreement and such breach continues for a period of
ten (10) days after written notice thereof to the Borrower from the Holder.
3.4
Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement,
statement or certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase
Agreement), shall be false or misleading in any material respect when made and the breach of which has (or with the passage of
time will have) a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.
3.5
Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors,
or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business,
or such a receiver or trustee shall otherwise be appointed.
3.6
Judgments. Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary
of the Borrower or any of its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed
for a period of twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.
3.7
Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary,
for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any
subsidiary of the Borrower.
3.8
Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTCBB
or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or
the American Stock Exchange.
3.9
Failure to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange
Act; and/or the Borrower shall cease to be subject to the reporting requirements of the Exchange Act.
3.10
Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
3.11
Cessation of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to
pay its debts as such debts become due, provided, however, that any disclosure of the Borrower's ability to continue as a "going
concern" shall not be an admission that the Borrower cannot pay its debts as they become due.
3.12
Maintenance of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property
or other assets which are necessary to conduct its business (whether now or in the future).
3.13
Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC for any
date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result
of such restatement would, by comparison to the original financial statement, have constituted a material adverse effect on the
rights of the Holder with respect to this Note or supporting documents.
3.14
Reverse Splits. The Borrower effectuates a reverse split of its Common Stock without at least twenty (20) days prior written
notice to the Holder.
3.15
Replacement of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails
to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form
as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares
of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.
3.16
Cross-Default. Notwithstanding anything to the contrary contained in this Note or the other related or companion documents,
a breach or default by the Borrower of any covenant or other term or condition contained in any of the Other Agreements, after
the passage of all applicable notice and cure or grace periods, shall, at the option of the Borrower, be considered a default
under this Note and the Other Agreements, in which event the Holder shall be entitled (but in no event required) to apply all
rights and remedies of the Holder under the terms of this Note and the Other Agreements by reason of a default under said Other
Agreement or hereunder. "Other Agreements" means, collectively, all agreements and instruments between, among or by:
(1) the Borrower, and, or for the benefit of, (2) the Holder and any affiliate of the Holder, including, without limitation, promissory
notes; provided, however, the term "Other Agreements" shall not include the related or companion documents to this Note.
Each of the loan transactions will be cross-defaulted with each other loan transaction and with all other existing and future
debt of Borrower to the Holder.
Upon
the occurrence and during the continuation of any Event of Default specified in Section 3.1 (solely with respect to failure to
pay the principal hereof or interest thereon when due at the Maturity Date), the Note shall become immediately due and payable
and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Default Sum
(as defined herein). UPON THE OCCURRENCE AND DURING THE CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, THE NOTE
SHALL BECOME IMMEDIATELY DUE AND PAYABLE AND THE BORROWER SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER,
AN AMOUNT EQUAL TO: (Y) THE DEFAULT SUM (AS DEFINED HEREIN); MULTIPLIED BY (Z) TWO (2). Upon the occurrence and during the continuation
of any Event of Default specified in Sections 3.1 (solely with respect to failure to pay the principal hereof or interest thereon
when due on this Note upon a Trading Market Prepayment Event pursuant to Section 1.7 or upon acceleration), 3.3, 3.4, 3.6, 3.8,
3.9, 3.11, 3.12, 3.13, 3.14, and/or 3. 15 exercisable through the delivery of written notice to the Borrower by such Holders (the
"Default Notice"), and upon the occurrence of an Event of Default specified the remaining sections of Articles III (other
than failure to pay the principal hereof or interest thereon at the Maturity Date specified in Section 3,1 hereof), the Note shall
become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder,
an amount equal to the greater of (i) 150% times the sum of (w) the then outstanding principal amount of this Note
plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the date of payment (the "Mandatory
Prepayment Date") plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and/or (x) plus
(z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding principal amount of this
Note to the date of payment plus the amounts referred to in clauses (x), (y) and (z) shall collectively be known as the
"Default Sum") or (ii) the "parity value" of the Default Sum to be prepaid, where parity value means (a) the
highest number of shares of Common Stock issuable upon conversion of or otherwise pursuant to such Default Sum in accordance with
Article I, treating the Trading Day immediately preceding the Mandatory Prepayment Date as the "Conversion Date" for
purposes of determining the lowest applicable Conversion Price, unless the Default Event arises as a result of a breach in respect
of a specific Conversion Date in which case such Conversion Date shall be the Conversion Date), multiplied by (b) the highest
Closing Price for the Common Stock during the period beginning on the date of first occurrence of the Event of Default and ending
one day prior to the Mandatory Prepayment Date (the "Default Amount") and all other amounts payable hereunder shall
immediately become due and payable, all without demand, presentment or notice, all of which hereby are expressly waived, together
with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise
all other rights and remedies available at law or in equity.
If
the Borrower fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable,
then the Holder shall have the right at any time, so long as the Borrower remains in default (and so long and to the extent that
there are sufficient authorized shares), to require the Borrower, upon written notice, to immediately issue, in lieu of the Default
Amount, the number of shares of Common Stock of the Borrower equal to the Default Amount divided by the Conversion Price then
in effect.
ARTICLE
IV. MISCELLANEOUS
4.1
Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or
privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder
are cumulative to, and not exclusive of, any rights or remedies otherwise available.
4.2 Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or
certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address
as such party shall have specified most recently by written notice. Any notice or other communication required or permitted
to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation
generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day
during normal business hours where such notice is to be received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second
business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:
If
to the Borrower, to:
CrossClick
Media, Inc.
8275
S Eastern Ave
SUite 200-661
Las Vegas,
NV 89123
Attn:
Facsimile:
If
to the Holder:
WHC
Capital, LLC
200 Stonehinge
Lan
Suite
3
Carle
Place, NY. 1151
Fax: 212.574.3326
4.3
Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and
the Holder. The term "Note" and all reference thereto, as used throughout this instrument, shall mean this instrument
(and the other Notes issued pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented, then
as so amended or supplemented.
4.4
Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit
of the Holder and its successors and assigns. Each transferee of this Note must be an "accredited investor" (as defined
in Rule 501(a) of the 1933 Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral
in connection with a bona fide margin account or other lending arrangement.
4.5
Cost of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection,
including reasonable attorneys' fees.
4.6
Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated
by this Note shall be brought only in the state courts of New York or in the federal courts located in the state and county of
Nassau. The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder
and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Borrower
and Holder waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's
fees and costs. In the event that any provision of this Note or any other agreement delivered in connection herewith is invalid
or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may
prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.
Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding
in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other manner permitted by law.
4.7
Certain Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding
principal amount (or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest
on such interest, the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on
this Note may be difficult to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty
and is intended to compensate the Holder in part for loss of the opportunity to convert this Note and to earn a return from the
sale of shares of Common Stock acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant
to this Note. The Borrower and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate
to the possible loss to the Holder from the receipt of a cash payment without the opportunity to convert this Note into shares
of Common Stock.
4.8
Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase
Agreement.
4.9
Notice of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder
of Common Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder
with prior notification of any meeting of the Borrower's shareholders (and copies of proxy materials and other information sent
to shareholders). In the event of any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders
who are entitled to receive payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire
(including by way of merger, consolidation, reclassification or recapitalization) any share of any class or any other securities
or property, or to receive any other right, or for the purpose of determining shareholders who are entitled to vote in connection
with any proposed sale, lease or conveyance of all or substantially all of the assets of the Borrower or any proposed liquidation,
dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20) days prior to
the record date specified therein (or thirty (30) days prior to the consummation of the transaction or event, whichever is earlier),
of the date on which any such record is to be taken for the purpose of such dividend, distribution, right or other event, and
a brief statement regarding the amount and character of such dividend, distribution, right or other event to the extent known
at such time. The Borrower shall make a public announcement of any event requiring notification to the Holder hereunder substantially
simultaneously with the notification to the Holder in accordance with the terms of this Section 4.9.
4.10
Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm
to the Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges
that the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach
or threatened breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other
available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining,
preventing or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity
of showing economic loss and without any bond or other security being required.
IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer:
Cross
Click Media, Inc.
By:
/s/ Gary R. Gottlieb
Print:
Gary R. Gottlieb
Title/Date:
10/9/14
SECURITIES
EXCHANGE AND SETTLEMENT AGREEMENT
This
Securities Exchange and Settlement Agreement, dated as of November 13, 2014 (this "Agreement"), by and between
Cross Click Media, Inc., a Nevada corporation (inclusive of any Subsidiaries, "Issuer"), and Beaufort Capital Partners
LLC ("Investor") (Issuer and Investor may hereinafter be referred to individually as a "Party"
or jointly as the "Parties").
WHEREAS,
Issuer issued a promissory note to GCEF Opportunity Fund, L.L.C. ("Original Holder"), on February 26, 2014, with
an original principal amount of $72,500, which promissory note i s annexed hereto as Exhibit A and made a part hereof (the
"Debt Securities Instrument");
WHEREAS,
pursuant to a certain Debt Securities Assignment and Purchase Agreement and Securities Exchange and Settlement Agreement between
Original Holder and Investor, and confirmed by the Issuer, dated as of November 6, 2014, a copy of which is annexed hereto as
Exhibit B (the "Debt Assignment and Purchase Agreement"), Investor has heretofore acquired from Original
Holder all rights and interest in and to $20,000 of the debt securities reflected in the Debt Securities Instrument, in the principal
amount of twenty thousand dollars (USD$20,000) (the "Debt Securities") in consideration of a cash sum following
such securities having become eligible for resale based on certain conditions pursuant to exemption from registration under Rule
144 (such securities acquisition, the "144 Debt Conveyance"), and Investor is now the sole Beneficial Owner of
the Debt Securities;
WHEREAS,
notwithstanding that, in accordance with its stated terms, the Debt Securities Instrument has rights of convertibility into shares
of the common stock of Issuer, $0.001 par value per share (the "Issuer Common Stock"), and without regard to
such terms of "conversion" provision in the Debt Securities Instrument, Investor desires to exchange the Debt Securities
from time to time hereinafter for equity securities in the form of unrestricted shares of Issuer Common Stock, and Issuer desires
to facilitate such exchange, in each case pursuant to their respective economic interests and in each case as more specifically
and fully set forth herein; and
WHEREAS,
subject to certain conditions, and pursuant to Section 3(a)(9) of the Securities Act, one or more exchanges of the Debt Securities
for shares of Issuer Common Stock (each, a "3(a)(9) Exchange") while beneficially held by Investor is/are eligible
to be effected without registration as more specifically and fully provided herein;
NOW,
THEREFORE, the Parties hereby acknowledge, represent, warrant, covenant and agree, in each case as applicable, as follows for
the benefit of each other as well as the benefit of the securities legal counsel and securities transfer agent professionals involved
in the 144 Debt Conveyance and any one or more 3(a)(9) Exchanges hereunder (such transactions collectively, the "Transactions"):
1.
Recitals. The foregoing recitals are hereby incorporated by reference into this Agreement
and made a part hereof.
2.
Definitions. For purposes of this Agreement, the following
terms, when appearing in their capitalized forms as follows, shall have the corresponding assigned meanings:
"144
Debt Conveyance" - shall have the meaning specified in the second paragraph of the recitals to this Agreement.
"3(a)(9)
Exchange" - shall have the meaning specified in the fifth paragraph of the recitals to this Agreement.
"Affiliate"
- with respect to any specified Person, any other Person who, directly or indirectly, through one or more intermediaries, Controls,
is Controlled By, or is Under Common Control With, such specified Person.
"Agreement"
- shall have the meaning specified in the preamble above.
"Authorization"
- any authorization, approval, consent, certificate, license, permit or franchise of or from any Governmental Authority or pursuant
to any Law.
"Beneficial
Owner" - with respect to any shares means a Person who shall be deemed to be the beneficial owner of such shares (i)
which such Person or any of its Affiliates or associates (as such term is defined in Rule 12b-2 promulgated under the Exchange
Act) beneficially owns, directly or indirectly, (ii) which such Person or any of its Affiliates or associates has, directly or
indirectly, (A) the right to acquire (whether such right is exercisable immediately or subject only to the passage of time), pursuant
to any agreement, arrangement or understanding or upon the exercise of consideration rights, exchange rights, warrants or options,
or otherwise, or (B) the right to vote pursuant to any agreement, arrangement or understanding, (iii) which are beneficially owned,
directly or indirectly, by any other Persons with whom such Person or any of its Affiliates or associates or any Person with whom
such Person or any of its Affiliates or associates has any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any such shares, or (iv) pursuant to Section 13(d) of the Exchange Act and any rules or regulations
promulgated thereunder.
"Clearing
Date" - the first date upon which both (i) the Exchange Shares under any Exchange Notice have been deposited into the
Investor's designated brokerage account, and (ii) the Investor has thereafter received confirmation from its brokerage firm that
it may execute trades involving such Exchange Shares.
"Control"
(including "Controlled By" and "Under Common Control With") - the possession, directly or indirectly
or as trustee or executor, of the power to direct or cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, as trustee or executor, by contract or credit arrangement or otherwise.
"Current
Form 10 Information" - for a given registrant/company, such information as is or may be required by the SEC to satisfy
the financial and other disclosure requirements of SEC Form 10 within the meaning of Rule 144.
"Current
Public Information" - in an appropriate format the information concerning a given issuer specified in paragraphs (a)(5)(i)
to (xiv) inclusive, and paragraph (a)(5)(xvi), of Rule 15c2-11 of the Rules and Regulations promulgated under the Exchange Act.
"Debt
Securities" - shall have the meaning specified in the second paragraph of the recitals to this Agreement.
"Debt
Securities Instrument" - shall have the meaning specified in the first paragraph of the recitals to this Agreement.
"DTC"
- The Depository Trust Company, a subsidiary of DTCC.
"DTCC"
- The Depository Trust & Clearing Corporation.
"DTC
Eligibility" / "DTC Eligible" - in respect of a given security, its eligibility to be traded electronically
in book-entry form through DTC.
"DWAC"
- DTC's Deposit Withdrawal Agent Commission system.
"Exchange
Act" - the Securities and Exchange Act of 1934, as amended.
"Exchange
Amount" - shall have the meaning specified in Section 2.1 of this Agreement.
"Exchange
Cap" - the maximum number of shares of Issuer Common Stock that Issuer may issue pursuant to this Agreement and the transactions
contemplated hereby without (i) breaching Issuer's obligations under the applicable rules of The Nasdaq Stock Market or any other
Principal Market on which the Issuer Common Stock may be listed or quoted, or (ii) obtaining stockholder approval under the applicable
rules of The Nasdaq Stock Market or any other Principal Market on which the Issuer Common Stock may be listed or quoted.
"Exchange
Notice" - a written notice to the Investor executed by a duly authorized officer of the Issuer and including an Exchange
Request, in each case as the same may be deemed amended in accordance with Section 2.4.3.4.
"Exchange
Notice Date" - shall have the meaning specified in Section 2.4.1 of this Agreement.
"Exchange
Notice Date/Time Stamp" - shall have the meaning specified in Section 2.4.1 of this Agreement.
"Exchange
Request" - shall have the meaning specified in Section 2.1 of this Agreement.
"Exchange
Shares" - shall have the meaning specified in Section 2.1 of this Agreement.
"Exchange
Shares Delivery Period" - in relation to any given Exchange Notice, the period commencing upon the date and time indicated
in the Exchange Notice Date/Time Stamp and continuing thereafter for twenty-eight (28) Trading Hours.
"FAST
Program" - DTC's Fast Automated Securities Transfer program, participation in which is a required for DTC Eligibility.
"FINRA"
- shall mean the Financial Industry Regulatory Authority.
"Governmental
Authority" means any entity or body exercising executive, legislative, judicial, regulatory or administrative functions
of or pertaining to United States federal, state, local, or municipal government, foreign, international, multinational or other
government, including any department, commission, board, agency, bureau, subdivision, instrumentality, official or other regulatory,
administrative or judicial authority thereof, and any non-governmental regulatory body to the extent that the rules and regulations
or orders of such body have the force of Law.
"Gypsy
Swap" - any series of transactions in which, by arrangement or otherwise, the resale of an outstanding unrestricted security
by the then holder thereof results, directly or indirectly, and no matter the sequence of such transactions, in a capital infusion
into the issuing company.
"Investor"
- shall have the meaning specified in the preamble to this Agreement.
"Investor
Holding Period" - shall have the meaning specified in Section 2.1 of this Agreement.
"Issuer"
- shall have the meaning specified in the preamble to this Agreement.
"Issuer
Common Stock" - shall have the meaning specified in the fourth paragraph of the recitals to this Agreement.
"Issuer's
Share Delivery Obligation" - shall have the meaning specified in Section 2.4.3.3 of this Agreement.
"Knowledge"
- of a given Person, and with respect to any fact or matter, the actual knowledge of the directors and executive officers of such
Person and each of its Subsidiaries, together with such knowledge that such directors, executive officers and other employees
could be expected to discover after due investigation concerning the existence of the fact or matter in question.
"Law"
means any statute, law (including common law), constitution, treaty, ordinance, code, order, decree, judgment, rule, regulation
and any other binding requirement or determination of any Governmental Authority.
"Liens"
means any liens, claims, charges, security interests, mortgages, pledges, easements, conditional sale or other title retention
agreements, defects in title, covenants or other restrictions of any kind, including, any restrictions on the use, voting, transfer
or other attributes of ownership.
"Material
Adverse Effect" - with respect to any Person, any state of facts, development, event, circumstance, condition, occurrence
or effect that, individually or taken collectively with all other preceding facts, developments, events, circumstances, conditions,
occurrences or effects (a) is materially adverse to the condition (financial or otherwise), business, operations or results of
operations of such Person, or (b) impairs the ability of such Person to perform its obligations under this Agreement.
"Officer's
Certificate" - shall have the meaning specified in Section 2.4.3.2 of this
Agreement.
"Officer's
Certificate Deadline" - shall have the meaning specified in Section 2.4.3.2 of this
Agreement.
"Officer's
Certificate Delivery Obligation" - shall have the meaning specified in Section 2.4.3.2 of this Agreement.
"Order"
- any award, injunction, judgment, decree, stay, order, ruling, subpoena or verdict, or other decision entered, issued or rendered
by any Governmental Authority.
"Original
Holder" - shall have the meaning specified in the first paragraph of the recitals to this Agreement.
"OTC"
- over-the-counter.
"OTCPink"
- the OTCMarkets tier for companies that are not SEC Reporting Companies but that regularly file and make available Current Public
Information reports and that are current in such filings as of the date hereof.
"OTCQB"
- the base level OTCMarkets tier for SEC Reporting Companies.
"Ownership
Limitation" - at any given point in time, 4.99%.
"Parties"
- shall have the meaning specified in the preamble to this Agreement.
"Person"
- an individual, a corporation, a partnership, a limited liability company, a trust, an unincorporated association, Governmental
Authority, a person (including, without limitation, a "person" as defined in Section 13(d)(3) of the Exchange Act),
or any political subdivision, agency or instrumentality of a Governmental Authority, or any other entity or body.
"Pricing
Period" - in relation to any Exchange Shares, the five (5) Trading Days immediately preceding the date upon which Investor
shall have delivered to Issuer the corresponding Exchange Notice.
"Principal
Market" - as of any given date, whichever of the New York Stock Exchange, the Nasdaq Global Select Market, the Nasdaq
Global Market, the Nasdaq Capital Market, the American Stock Exchange, the OTCQB, or the OTCPink is at the time the principal
trading exchange or market for the Issuer Common Stock.
"Proceeding"
or "Proceedings" - any actions, suits, claims, hearings, arbitrations, mediations, Proceedings (public or private)
or governmental investigations that have been brought by any Governmental Authority or any other Person.
"Rule
144" - Rule 144 promulgated under the Securities Act.
"Rule
405" - Rule 405 of Regulation S-T.
"SEC"
- shall mean the U.S. Securities and Exchange Commission.
"SEC
Reporting Company" - any company with a class of common stock registered under Section 12 of the Exchange Act and that,
as of the date hereof is, and for at least the ninety (90) day period immediately preceding the date hereof has been, subject
to the periodic and other reporting requirements of either Section 13 or 15(d) of the Exchange Act.
"Securities
Act" - the Securities Act of 1933, as amended.
"Shell
Company" - a company having no or nominal operations and either (a) no or nominal assets, (b) assets consisting solely
of cash and cash equivalents, or (c) assets consisting of any
amount
of cash and cash equivalents and nominal other assets.
"Stock
Price" - on any given Trading Day, the intra-day lowest traded stock price (as reported by a direct feed service) of
the Issuer Common Stock on the Principal Market or, if the Issuer Common Stock is not traded on a Principal Market, the highest
reported bid price for the Issuer Common Stock, as provided by FINRA.
"Trading
Day" - any day during which the Principal Market shall be open for business.
"Trading
Hours" - for any given Trading Day, those hours between 9:30 am (U.S.) Eastern Time and 4:30 pm (U.S.) Eastern Time.
"Transactions"
- shall have the meaning specified in the sixth paragraph of the recitals to
this
Agreement.
"Transfer
Agent" - as of any given date, the transfer agent firm engaged by Issuer to perform securities transfer agent and related
services for the Issuer and which, as of the date of this Agreement, is Globex Transfer, LLC, 780 Deltona Blvd., Suite 202, Deltona,
FL 32725.
"Transfer
Agent Instruction Letter" - shall have the meaning specified in Section 2.4.3.1 of this Agreement.
"Transfer
Agent Instruction Delivery Deadline" - shall have the meaning specified in Section 2.4.3.1 of this Agreement.
"Transfer
Agent Instruction Delivery Requirement" - shall have the meaning specified in Section 2.4.3.1 of this Agreement.
"Transfer
Agent Legal Opinion Letter" - shall have the meaning specified in Section 2.4.3.2 of this Agreement.
2.
The 3(a)(9) Exchange(s).
2.1
Generally. Subject to the terms, conditions and limitations
of this Agreement, for so long as any amounts payable under the Debt Securities remain (i) unexchanged for shares of Issuer Common
Stock hereunder, or (ii) unpaid and outstanding (such period being deemed the "Investor Holding Period"), the
Investor shall have a continuing right in its sole and exclusive discretion, through the delivery by Investor to Issuer of an
Exchange Notice, to elect to exchange as part of a 3(a)(9) Exchange (in each instance, an "Exchange Request")
all or any part of the amount of any principal and/or accrued but unpaid interest thereon (as set forth within any such Exchange
Notice, the "Exchange Amount") for a number of fully-paid and non-assessable shares of Issuer Common Stock equal
to (x) the Exchange Amount divided by the lesser of (A) $0.0001 and (B) fifty percent (5 0%) of the Stock Price during the Pricing
Period (such result in either instance constituting the "Exchange Shares") if the Stock Price during the Pricing
Period falls below or equals $0.00049; or (y) the Exchange Amount divided by fifty percent (50%) of the Stock Price during the
Pricing Period (such result also constituting the "Exchange Shares") if the Stock Price during the Pricing Period
equals or remains above $0.0005; provided, however, in both (x) or (y) above, that any and all obligations under the Debt
Securities shall remain unaffected during such Investor Holding Period for all or any part thereof remaining unexchanged, including
without limitation any events or other terms of default. In connection with this provision, the Debt Securities Instrument shall
be deemed to have been incorporated by reference herein with all rights and obligations attendant thereto and arising thereunder
to be continuing unaffected hereby but only insofar as not in conflict at any given time with any superseding provisions of this
Agreement.
2.2
Certain Acknowledgments and Covenants. Each of Issuer and
Investor hereby (a) acknowledge that they are aware and understand that, in order to be eligible for exemption from registration
under the Securities Act, any 3(a)(9) Exchange(s) hereunder may not involve (i) any additional consideration beyond the Debt Securities
being surrendered/exchanged by the Investor, or (ii) any payment by the Issuer of any commission or other remuneration either
directly or indirectly for the solicitation of such exchange(s), and (b) covenant that any 3(a)(9) Exchange(s) hereunder shall
not involve (i) any additional consideration beyond the Debt Securities being surrendered/exchanged by the Investor, or (ii) any
payment by the Issuer of any commission or other remuneration either directly or indirectly for the solicitation of such exchange(s).
2.3
Resale Eligibility of Exchange Shares. Given the issuance date and nature of the Debt
Securities, the eligibility for resale exemption from registration of the 144 Debt Conveyance, and the fact that a duly qualified
3(a)(9) Exchange does nothing to affect the tradeability status of the securities exchanged, any Exchange Shares, upon issuance,
shall be eligible for unrestricted resale under Section 4(1) of the Securities Act.
2.4
Mechanics and Related Matters.
2.4.1
Delivery of Exchange Notice. Any given Exchange Notice shall
be deemed to have been delivered to the Issuer as of the date (the "Exchange Notice Date") and time of dispatch
by email to the Issuer as set forth on the email so dispatched, provided, however, that no reasonably compelling basis
upon which to challenge such date and time exists and has been provided to Investor (in each case, the "Exchange Notice
Date/Time Stamp").
2.4.2
Certain Exchange Notice Limitations. Anything in this Agreement
to the contrary notwithstanding, in no event shall any Exchange Notice be deemed valid (i) if and to the extent that fulfillment
of the Exchange Request contained therein would cause the aggregate number of shares of Issuer Common Stock beneficially owned
by the Investor and its affiliates, including those in relation to which it/they have a right to acquire within sixty (60) days,
to exceed the Ownership Limitation, or (ii) if at such time the Issuer Common Stock is listed or quoted on The Nasdaq Stock Market
or any other U.S. national securities exchange, and to the extent that that fulfillment of the Exchange Request contained therein
would cause the aggregate number of shares of Issuer Common Stock issued pursuant to this Agreement, when combined with all shares
of Issuer Common Stock issued pursuant to any transactions with which they may be aggregated with other transactions for purposes
of and under applicable rules of The Nasdaq Stock Market or any other Principal Market on which the Common Stock may at such time
be listed or quoted, would cause the aggregate number of shares of Issuer Common Stock that would be deemed issued pursuant to
this Agreement, to exceed the Exchange Cap. In the event that any Exchange Notice shall have been delivered by Investor to Issuer
but is invalid to any extent in accordance with the foregoing, such Exchange Notice shall be void ab initio but only to
the extent of such invalidity.
2.4.3
Delivery and Settlement of Exchange Shares.
2.4.3.1
Transfer Agent Instruction Requirement. Upon receipt of an
Exchange Notice, Issuer shall immediately, but in no event more than seventy two (72) hours (the "Transfer Agent Instruction
Delivery Deadline"), deliver a letter to Transfer Agent, by email as a .pdf attachment and with a cc (courtesy copy)
email to Investor, such letter to be in the form annexed hereto as Exhibit D and incorporated by reference herein, inclusive of
the unanimous written board consent annexed thereto (the "Transfer Agent Instruction Letter"), in each case filled
in as appropriate based on the information set forth in the corresponding Exchange Notice, or deemed set forth in the corresponding
Exchange Notice in accordance with Section 2.4.3.4 below (the "Transfer Agent Instruction Delivery Requirement").
Failure to meet the Transfer Agent Instruction Delivery Requirement shall result in an adjustment to the Exchange Amount so that
the Exchange Shares shall be a number of fully-paid and nonassessable shares of Issuer Common Stock equal to (x) the Exchange
Amount divided by (y) the lessor of (A) $0.00001 and (B) twenty percent (20%) of the Stock Price during the twenty (20) Trading
Days prior to the date of delivery of an Exchange Notice.
2.4.3.2
Officer's Certificates. In connection
with the delivery of any Exchange Shares, the cost of obtaining any formal written legal opinion reasonably requested by Transfer
Agent, including any one or more concluding that such Exchange Shares be delivered free of any restrictive legend (each, a "Transfer
Agent Legal Opinion Letter"), shall be borne by Investor, and it shall be within the exclusive discretion of Investor
as to what legal firm shall be engaged for this purpose. Promptly upon delivery via email by Investor's designated counsel to
the president and chief executive officer of Issuer
at the email address provided in Section 5 of this Agreement (but in no event more than two [2] Trading Days) (the "Officer's
Certificate Deadline") of any officer's certificates identified in such email as being required by Investor's designated
counsel for purposes of Investor's designated counsel being able to deliver the Transfer Agent Legal Opinion Letter (each, an
"Officer's Certificate"), the president and chief executive officer of Issuer shall duly execute and return to
Investor's designated counsel, in .pdf format at the email address from which the corresponding unexecuted Officer's Certificate(s)
had been received, such duly executed Officer's Certificate (the "Officer's Certificate Delivery Obligation").
In the event the Officer's Certificate Deadline is exceeded by the Issuer, the Issuer shall pay to the Investor $2,000 in cash
per day that the Officer's Certificate is exceeded.
2.4.3.3
Share Delivery Obligation. Subject only to the limitations set forth in Section 2.4.2
above and any delays in delivery to Transfer Agent of the Transfer Agent Legal Opinion Letter, and within the applicable Exchange
Share Delivery Period, Issuer shall be obligated to and shall take any and all steps required to either (a) if Transfer Agent
is not participating in the DTC FAST Program during the applicable Exchange Share Delivery Period, and/or the Exchange Shares
are not DTC Eligible, deliver for settlement to the window of Investor's brokerage account (as designated in the Transfer Agent
Instruction Letter) physical certificates representing the Exchange Shares deliverable pursuant to the corresponding Exchange
Request, or (b) if Transfer Agent is participating in the DTC FAST Program during the applicable Exchange Share Delivery Period,
and/or the Exchange Shares are DTC Eligible, cause such transfer agent to effectuate delivery and settlement of such Exchange
Shares electronically, in book-entry form, by appropriately crediting the account of the Investor's prime broker (as designated
in the Transfer Agent Instruction Letter) with DTC through its DWAC System and providing proof satisfactory to the Investor thereof
(in relation to any given Exchange Request, the "Issuer's Share Delivery Obligation").
3.
Representations and Warranties of Issuer. Issuer
hereby represents and warrants to Investor, which representations and warranties, excepting (c) below, shall be deemed to be repeated
by Issuer on each day on which any amounts payable under the Debt Securities, including interest, remain (i) unexchanged for shares
of Issuer Common Stock hereunder, or (ii) unpaid and outstanding, that:
(a)
it is a corporation duly organized, validly existing, and in good standing under the Laws
of the State of Nevada;
(b)
it has taken all requisite corporate and other action to authorize,
and it has full corporate power and authority without any required further action, to (i) carry on its present business as currently
conducted, (ii) own its properties and assets, (iii) execute, deliver, and perform all of its obligations under this Agreement,
(iv) have borrowed and to repay with interest the indebtedness evidenced by the Debt Securities, and (v) issue and deliver to
Investor or its designee any and all Exchange Shares potentially deliverable pursuant to this Agreement;
(c) its
capitalization as of the date of this Agreement includes (i) $440,000,000 shares of Issuer Common Stock authorized, of
which 432,261,787 shares are issued and outstanding, and (ii) 1,500,000 shares of Issuer preferred stock, par
value .001 per share authorized of Series A of which 1,173,041 are issued and outstanding, and 14 notes/debentures in the
combined amount of $499,800 that, in accordance with their terms, are "convertible" into capital stock of
Issuer, issued and outstanding;
(d)
the Debt Securities constitute a legal, valid and binding, and past due obligation of Issuer,
enforceable against Issuer in accordance with the terms thereof, subject to applicable bankruptcy, reorganization, insolvency,
moratorium or similar Laws affecting creditors' rights generally and subject, as to enforceability, to equitable principles of
general application (regardless of whether enforcement is sought in a proceeding in equity or at law), there is no dispute relating
to the validity of such obligation, and defenses to its validity have been waived in their entirety;
(e) the
execution, delivery and performance of this Agreement, the payment of all amounts due under the Debt Securities by Issuer,
and the consummation of the Transactions, do not and will not (i) violate any provision of its articles of incorporation or
bylaws, (ii) conflict with or result in the breach of any material provision of, or give rise to a default under, any
agreement with respect to indebtedness or of any other material agreement to which Issuer is a party or by which it or any of
its properties or assets are bound, (iii) conflict with any Law, statute, rule or regulation or any Order, judgment or ruling
of any court or other agency of government to which it is subject or any of its properties or assets may be bound or
affected, in each case except where such conflict would not have a Material Adverse Effect on Issuer, or (iv) result in the
creation or imposition of any Lien, charge, mortgage, encumbrance or other security interest or any segregation of assets or
revenues or other preferential arrangement (whether or not constituting a security interest) with respect to any present or
future assets, revenues or rights to the receipt of income of Issuer;
(f)
it is an SEC Reporting Company.
(g)
it is not a Shell Company, and, if it ever was a Shell Company,
it (i) has ceased to be a Shell Company; (ii) has filed all reports and other materials required to be filed by Section 13 or
15(d) of the Exchange Act, as applicable, during the twelve (12) month period immediately preceding the date of this Agreement
(or for such shorter period as it has been required to file such reports and materials), other than current reports on Form 8-K,
and (iii) has filed Current Form 10 Information with the SEC reflecting its status as an entity that is no longer a Shell Company,
and at least one (1) year has elapsed since such Current Form 10 Information was filed;
(h)
the Issuer Common Stock currently trades publicly on the O T C P
i n k on under the symbol "XCLK" and is not currently subject to any trading halts, suspensions, delistings or similar
actions imposed by the SEC, FINRA, or any other regulatory or similar authorities and no members of its management or board of
directors is aware or has any reason to be aware of any such threatened halts, suspensions, delistings or similar actions;
(i)
the Issuer Common Stock is currently DTC Eligible, Transfer Agent
is participating in the DTC FAST Program, and no DTC "chill" has been imposed upon the Issuer Common Stock;
(j)
its management understands what a Gypsy Swap is and that such arrangements are deemed to constitute unlawful schemes to evade
the registration requirements of the Securities Act, and has no knowledge of any such arrangements in connection with the Transactions;
(k)
there are no legal actions, suits, arbitration proceedings, investigations or other Proceedings pending or, to the reasonable
knowledge of Issuer's officers or directors, threatened against Issuer which, if resolved unfavorably would have a Material Adverse
Effect on the financial condition of Issuer or the validity or enforceability of, or Issuer's ability to perform its obligations
under, the Debt Securities and/or this Agreement; and
(l)
all governmental and other consents, authorizations, approvals, licenses and orders that were required to have been obtained by
Issuer with respect to the Debt Securities and/or its issuance were duly obtained and remain in full force and effect and all
conditions of any such consents, Authorizations, approvals, licenses and orders have been complied with.
4.
Covenants of Issuer. In addition to the other obligations hereunder and under the Debt Securities, and for so long
as any amounts payable under the Debt Securities, including interest, remain (i) unexchanged for shares of Issuer Common Stock
hereunder, or (ii) unpaid and outstanding, Issuer hereby covenants to the Investor as follows:
(a)
upon issuance, any Exchange Shares shall be duly authorized, fully
paid and
nonassessable;
(b)
it shall refrain from disclosing, and shall cause its officers,
directors, employees and agents to refrain from disclosing, any material non-public information to Investor without also disseminating
such information to the public in accordance with applicable Law, unless prior to disclosure of such information Issuer identifies
such information as being material non-public information and provides Investor with the opportunity to accept or refuse to accept
such material non-public information for review;
(c)
it shall timely file all reports required by it to be filed, in
each case in full compliance with the content requirements thereof, and shall meet all other of its obligations under the Exchange
Act;
(d)
it shall take any and all steps as may be necessary to insure that the Issuer Common Stock
continues to trade publicly and does not become the subject of any trading halts, suspensions, delistings or similar actions imposed
by the SEC, FINRA, or any other regulatory or similar authorities;
(e)
it shall take any and all steps as may be necessary to insure that the Issuer Common Stock
continues to be DTC eligible, that transfer Agent continue to participate in the DTC FAST program, and that no DTC “chill”
is imposed upon the Issuer Common Stock
(f)
it shall take any and all steps as may be necessary to insure that it avoid becoming or otherwise
being deemed by the SEC a Shell Company;
(g)
it shall not issue any shares of Issuer Common Stock under this Agreement which, when aggregated
with all other shares of Issuer Common Stock then beneficially owned by Investor and its affiliates, including those in relation
to which it/they have a right to acquire within sixty (60) days, would result in the beneficial ownership by Investor and its
affiliates to exceed the Ownership Limitation, and, upon the written or telephonic request of Investor from time to time, Issuer
shall confirm to Investor within one (1) Trading Day of such request the number of shares of Issuer Common Stock then outstanding;
(h)
it shall not initiate or otherwise execute any share buybacks of the Issuer Common Stock
that would have the effect of increasing Investor's percentage beneficial ownership together with its affiliates, including those
in relation to which it/they have a right to acquire within sixty (60) days, to exceed the Ownership Limitation;
(i)
if the Common Stock is listed or quoted on The Nasdaq Stock Market or any other U.S. national
securities exchange during the Investor Holding Period, it shall not issue any shares of Issuer Common Stock pursuant to this
Agreement to the extent that after giving effect thereto, the aggregate number of all shares of Issuer Common Stock that would
be issued pursuant to this Agreement, together with all shares of Issuer Common Stock issued pursuant to any transactions that
may be aggregated with the transactions contemplated by this Agreement under applicable rules of The Nasdaq Stock Market or any
other Principal Market on which the Issuer Common Stock may be listed or quoted, would exceed the Exchange Cap, unless and until
Issuer elects to solicit stockholder approval of the transactions contemplated by this Agreement and the stockholders of Issuer
have in fact so approved the transactions contemplated by this Agreement in accordance with the applicable rules and regulations
of The Nasdaq Stock Market, any other Principal Market on which the Issuer Common Stock may be listed or quoted, and the Issuer's
articles of incorporation and bylaws; and
(j)
it shall not knowingly be a participant in any Gypsy Swap in connection with the Transactions or otherwise.
5.
Notices. Except as otherwise expressly set forth herein, any notice, demand or request relating to any matter set forth
herein shall be made in writing and shall be deemed effective when hand delivered or when mailed, postage pre-paid by registered
or certified mail return receipt requested, when picked-up by or delivered to a recognized overnight courier service, or when
sent by email to either Issuer at its address below, or to Investor at its address below, or such other address as either Party
shall have notified the other in writing as provided herein from and after the date hereof.
If
to Issuer:
Cross
Click Media, Inc.
8275
S. Eastern Avenue
Suite
200-661
Las
Vegas, NV 89123
Attn:
Kurtis Kramarenko
If
to Investor:
Beaufort
Capital Partners LLC
660
White Plains Road, Suite 455
Tarrytown,
NY 10591
Attn:
Robert Marino
6.
Governing Law. This Agreement and the Exhibits hereto shall
be governed by and interpreted and enforced in accordance with the Laws of the State of New York, without giving effect to any
choice of Law or conflict of Laws rules or provisions (whether of the State of New York or any other jurisdiction) that would
cause the application of the Laws of any jurisdiction other than the State of New York.
7.
Headings. The descriptive headings contained in this Agreement
are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.
8.
Counterparts. This Agreement may be executed and delivered
(including by facsimile or email .pdf file format attachment transmission) in one or more counterparts, and by the different Parties
hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
9.
Integration; Modification. This Agreement, including the
Exhibits hereto, constitutes the entirety of the rights and obligations of each of the Investor and Issuer with respect to the
subject matter hereof. No provision of this Agreement may be modified except by an instrument in writing signed by the Party against
whom the enforcement of any such modification is or may be sought.
[SIGNATURES
APPEAR ON THE FOLLOWING PAGE]
IN
WITNESS WHEREOF, the Parties have caused this Agreement to be executed by the respective officers thereunto duly authorized, in
each case as of the date first written above.
"ISSUER"
CROSS
CLICK MEDIA, INC.
By:
/s/ Kurtis Kramarenko
Name: Kurtis Kramarenko
Title:
CEO
“INVESTOR”
BEAUFORT
CAPITAL PARTNERS LLC
By:
/s/ Robert Marino
Name:
Robert Marino
Title:
Managing Member
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
Principal
Amount: $32,500.00
Purchase
Price: $32,500.00 |
Issue
Date: September 24, 2014 |
CONVERTIBLE
PROMISSORY NOTE
FOR
VALUE RECEIVED, CROSS CLICK MEDIA, INC. f/k/a Co-Signer, Inc., a
Nevada
corporation (hereinafter called the "Borrower"), hereby promises to pay to the order of KBM WORLDWIDE, INC.,
a New York corporation, or registered assigns (the "Holder") the sum of $32,500.00 together with any interest as set
forth herein, on July 6, 2015 (the "Maturity Date"), and to pay interest on the unpaid principal balance hereof at the
rate of eight percent (8%) (the "Interest Rate") per annum from the date hereof (the "Issue Date") until the
same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. This Note may not be prepaid
in whole or in part except as otherwise explicitly set forth herein. Any amount of principal or interest on this Note which is
not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date thereof until the same
is paid ("Default Interest"). Interest shall commence accruing on the date that the Note is fully paid and shall be
computed on the basis of a 365-day year and the actual number of days elapsed. All payments due hereunder (to the extent not converted
into common stock, $0.001 par value per share (the "Common Stock") in accordance with the terms hereof) shall be made
in lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter give
to the Borrower by written notice made in accordance with the provisions of this Note. Whenever any amount expressed to be due
by the terms of this Note is due on any day which is not a business day, the same shall instead be due on the next succeeding
day which is a business day and, in the case of any interest payment date which is not the date on which this Note is paid in
full, the extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest
due on such date. As used in this Note, the term "business day" shall mean any day other than a Saturday, Sunday or
a day on which commercial banks in the city of New York, New York are authorized or required by law or executive order to remain
closed. Each capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain
Securities Purchase Agreement dated the date hereof, pursuant to which this Note was originally issued (the "Purchase Agreement").
This
Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive
rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.
The
following terms shall apply to this Note:
ARTICLE
I. CONVERSION RIGHTS
1.1
Conversion Right. The Holder shall have the right from time to time, and at any time during the period beginning on the
date which is one hundred eighty (180) days following the date of this Note and ending on the later of: (i) the Maturity Date
and (ii) the date of payment of the Default Amount (as defined in Article III) pursuant to Section 1.6(a) or Article III, each
in respect of the remaining outstanding principal amount of this Note to convert all or any part of the outstanding and unpaid
principal amount of this Note into fully paid and nonassessable shares of Common Stock, as such Common Stock exists on the Issue
Date, or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed
or reclassified at the conversion price (the "Conversion Price") determined as provided herein (a "Conversion");
provided, however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that
portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder
and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted
portion of the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on
conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon
the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result
in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock. For purposes
of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Regulations 13D-G thereunder, except as
otherwise provided in clause (1) of such proviso, provided, further, however, that the limitations on conversion may be
waived by the Holder upon, at the election of the Holder, not less than 61 days' prior notice to the Borrower, and the provisions
of the conversion limitation shall continue
to apply until such 61st day (or such later date, as determined by the Holder, as may be
specified in such notice of waiver). The number of shares of Common Stock to be issued upon each conversion of this Note shall
be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the date
specified in the notice of conversion, in the form attached hereto as Exhibit A (the "Notice of Conversion"), delivered
to the Borrower by the Holder in accordance with Section 1.4 below; provided that the Notice of Conversion is submitted by facsimile
or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower before 6:00 p.m., New
York, New York time on such conversion date (the "Conversion Date"). The term "Conversion Amount" means, with
respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion plus
(2) at the Holder's option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided in
this Note to the Conversion Date, plus (3) at the Holder's option, Default Interest, if any, on the amounts referred to
in the immediately preceding clauses (1) and/or (2) plus (4) at the Holder's option, any amounts owed to the Holder pursuant
to Sections 1.3 and 1.4(g) hereof.
1.2
Conversion Price.
(a)
Calculation of Conversion Price. The conversion price (the "Conversion Price") shall equal the Variable Conversion
Price (as defined herein) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower
relating to the Borrower's securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications,
extraordinary distributions and similar events). The "Variable Conversion Price" shall mean 58% multiplied by the Market
Price (as defined herein) (representing a discount rate of 42%). "Market Price" means the average of the lowest three
(3) Trading Prices (as defined below) for the Common Stock during the ten (10) Trading Day period ending on the latest complete
Trading Day prior to the Conversion Date. "Trading Price" means, for any security as of any date, the closing bid price
on the Over-the-Counter Bulletin Board, or applicable trading market (the "OTCBB") as reported by a reliable reporting
service ("Reporting Service") designated by the Holder (i.e. Bloomberg) or, if the OTCBB is not the principal trading
market for such security, the closing bid price of such security on the principal securities exchange or trading market where
such security is listed or traded or, if no closing bid price of such security is available in any of the foregoing manners, the
average of the closing bid prices of any market makers for such security that are listed in the "pink sheets" by the
National Quotation Bureau, Inc. If the Trading Price cannot be calculated for such security on such date in the manner provided
above, the Trading Price shall be the fair market value as mutually determined by the Borrower and the holders of a majority in
interest of the Notes being converted for which the calculation of the Trading Price is required in order to determine the Conversion
Price of such Notes. "Trading Day" shall mean any day on which the Common Stock is tradable for any period on the OTCBB,
or on the principal securities exchange or other securities market on which the Common Stock is then being traded.
(b)
Conversion Price During Major Announcements. Notwithstanding anything contained in Section 1.2(a) to the contrary, in the
event the Borrower (i) makes a public announcement that it intends to consolidate or merge with any other corporation (other than
a merger in which the Borrower is the surviving or continuing corporation and its capital stock is unchanged) or sell or transfer
all or substantially all of the assets of the Borrower or (ii) any person, group or entity (including the Borrower) publicly announces
a tender offer to purchase 50% or more of the Borrower's Common Stock (or any other takeover scheme) (the date of the announcement
referred to in clause (i) or (ii) is hereinafter referred to as the "Announcement Date"), then the Conversion Price
shall, effective upon the Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined
below), be equal to the lower of (x) the Conversion Price which would have been applicable for a Conversion occurring on the Announcement
Date and (y) the Conversion Price that would otherwise be in effect. From and after the Adjusted Conversion Price Termination
Date, the Conversion Price shall be determined as set forth in this Section 1.2(a). For purposes hereof, "Adjusted Conversion
Price Termination Date" shall mean, with respect to any proposed transaction or tender offer (or takeover scheme) for which
a public announcement as contemplated by this Section 1.2(b) has been made, the date upon which the Borrower (in the case of clause
(i) above) or the person, group or entity (in the case of clause (ii) above) consummates or publicly announces the termination
or abandonment of the proposed transaction or tender offer (or takeover scheme) which caused this Section 1.2(b) to become operative.
1.3
Authorized Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve
from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance
of Common Stock upon the full conversion of this Note issued pursuant to the Purchase Agreement. The Borrower is required at all
times to have authorized and reserved five times the number of shares that is actually issuable upon full conversion of the Note
(based on the Conversion Price of the Notes in effect from time to time)(the "Reserved Amount"). The Reserved Amount
shall be increased from time to time in accordance with the Borrower's obligations hereunder. The Borrower represents that upon
issuance, such shares will be duly and validly issued, fully paid and non-assessable. In addition, if the Borrower shall issue
any securities or make any change to its capital structure which would change the number of shares of Common Stock into which
the Notes shall be convertible at the then current Conversion Price, the Borrower shall at the same time make proper provision
so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive
rights, for conversion of the outstanding Notes. The Borrower (i) acknowledges that it has irrevocably instructed its transfer
agent to issue certificates for the Common Stock issuable upon conversion of this Note, and (ii) agrees that its issuance of this
Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates
to execute and issue the necessary certificates for shares of Common Stock in accordance with the terms and conditions of this
Note.
If,
at any time the Borrower does not maintain the Reserved Amount it will be considered an Event of Default under Section 3.2 of
the Note.
(a)
Mechanics of Conversion. Subject to Section 1.1, this Note may be converted by the
Holder in whole or in part at any time from time to time after the Issue Date, by (A) submitting to the Borrower a Notice of Conversion
(by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York,
New York time) and (B) subject to Section 1.4(b), surrendering this Note at the principal office of the Borrower.
(b)
Surrender of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note
in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless
the entire unpaid principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the
principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the
Holder and the Borrower, so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute
or discrepancy, such records of the Borrower shall, prima facie, be controlling and determinative in the absence of manifest
error. Notwithstanding the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer this
Note unless the Holder first physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and
deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable
transfer taxes) may request, representing in the aggregate the remaining unpaid principal amount of this Note. The Holder and
any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following
conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be
less than the amount stated on the face hereof.
(c)
Payment of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other
than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other
securities or property unless and until the person or persons (other than the Holder or the custodian in whose street name such
shares are to be held for the Holder's account) requesting the issuance thereof shall have paid to the Borrower the amount of
any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.
(d)
Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail
(or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in
this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder
certificates for the Common Stock issuable upon such conversion within three (3) business days after such receipt (the "Deadline")
(and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with
the terms hereof and the Purchase Agreement.
(e)
Obligation of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall
be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the
amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults
on its obligations under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith
terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such
conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower's obligation to issue and deliver
the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder
to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person
or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder
of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of
any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the
Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall be
the Conversion Date so long as the Notice of Conversion is received by the Borrower before 6:00 p.m., New York, New York time,
on such date.
(f)
Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock
issuable upon conversion, provided the Borrower is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer ("FAST") program, upon request of the Holder and its compliance with the provisions contained in
Section 1.1 and in this Section 1.4, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit
the Common Stock issuable upon conversion to the Holder by crediting the account of Holder's Prime Broker with DTC through its
Deposit Withdrawal Agent Commission ("DWAC") system.
(g)
Failure to Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder's right to pursue other remedies,
including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion
of this Note is not delivered by the Deadline (other than a failure due to the circumstances described in Section 1.3 above, which
failure shall be governed by such Section) the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the
Deadline that the Borrower fails to deliver such Common Stock. Such cash amount shall be paid to Holder by the
fifth day of the month following the month in which it has accrued or, at the option of
the Holder (by written notice to the Borrower by the first day of the month following the month in which it has accrued), shall
be added to the principal amount of this Note, in which event interest shall accrue thereon in accordance with the terms of this
Note and such additional principal amount shall be convertible into Common Stock in accordance with the terms of this Note. The
Borrower agrees that the right to convert is a valuable right to the Holder. The damages resulting from a failure, attempt to
frustrate, interference with such conversion right are difficult if not impossible to qualify. Accordingly the parties acknowledge
that the liquidated damages provision contained in this Section 1.4(g) are justified.
1.5
Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred
unless (i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer
agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for
opinions of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act
(or a successor rule) ("Rule 144") or (iv) such shares are transferred to an "affiliate" (as defined in Rule
144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who is an
Accredited Investor (as defined in the Purchase Agreement). Except as otherwise provided in the Purchase Agreement (and subject
to the removal provisions set forth below), until such time as the shares of Common Stock issuable upon conversion of this Note
have been registered under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities
as of a particular date that can then be immediately sold, each certificate for shares of Common Stock issuable upon conversion
of this Note that has not been so included in an effective registration statement or that has not been sold pursuant to an effective
registration statement or an exemption that permits removal of the legend, shall bear a legend substantially in the following
form, as appropriate:
"NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR
OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES."
The
legend set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer
legend if (i) the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made
without registration under the Act, which opinion shall be accepted by the Company so that the sale or transfer is effected or
(ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder
under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 144 without any restriction
as to the number of securities as of a particular date that can then be immediately sold. In the event that the Company does not
accept the opinion of counsel provided by the Holder with respect to the transfer of Securities pursuant to an exemption from
registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to Section
3.2 of the Note.
| 1.6 | Effect
of Certain Events. |
(a)
Effect of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially
all of the assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which
more than 50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of
the Borrower with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i)
be deemed to be an Event of Default (as defined in Article III) pursuant to which the Borrower shall be required to pay to the
Holder upon the consummation of and as a condition to such transaction an amount equal to the Default Amount (as defined in Article
III) or (ii) be treated pursuant to Section 1.6(b) hereof. "Person" shall mean any individual, corporation, limited
liability company, partnership, association, trust or other entity or organization.
(b)
Adjustment Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion
of all of the Notes, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different number
of shares of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance
of all or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the
Borrower, then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis
and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable
upon conversion, such stock, securities or assets which the Holder would have been entitled to receive in such transaction had
this Note been converted in full immediately prior to such transaction (without regard to
any limitations on conversion set forth herein), and in any such case appropriate provisions shall be made with respect to the
rights and interests of the Holder of this Note to the end that the provisions hereof (including, without limitation, provisions
for adjustment of the Conversion Price and of the number of shares issuable upon conversion of the Note) shall thereafter be applicable,
as nearly as may be practicable in relation to any securities or assets thereafter deliverable upon the conversion hereof. The
Borrower shall not affect any transaction described in this Section 1.6(b) unless (a) it first gives, to the extent practicable,
thirty (30) days prior written notice (but in any event at least fifteen (15) days prior written notice) of the record date of
the special meeting of shareholders to approve, or if there is no such record date, the consummation of, such merger, consolidation,
exchange of shares, recapitalization, reorganization or other similar event or sale of assets (during which time the Holder shall
be entitled to convert this Note) and (b) the resulting successor or acquiring entity (if not the Borrower) assumes by written
instrument the obligations of this Section 1.6(b). The above provisions shall similarly apply to successive consolidations, mergers,
sales, transfers or share exchanges.
(c)
Adjustment Due to Distribution. If the Borrower shall declare or make any distribution of its assets (or rights to acquire
its assets) to holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any
dividend or distribution to the Borrower's shareholders in cash or shares (or rights to acquire shares) of capital stock of a
subsidiary (i.e., a spin-off)) (a "Distribution"), then the Holder of this Note shall be entitled, upon any conversion
of this Note after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such
assets which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had
such Holder been the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to
such Distribution.
(d)
Adjustment Due to Dilutive Issuance. If, at any time when any Notes are issued and
outstanding, the Borrower issues or sells, or in accordance with this Section 1.6(d) hereof is deemed to have issued or sold,
any shares of Common Stock for no consideration or for a consideration per share (before deduction of reasonable expenses or commissions
or underwriting discounts or allowances in connection therewith) less than the Conversion Price in effect on the date of such
issuance (or deemed issuance) of such shares of Common Stock (a "Dilutive Issuance"), then immediately upon the Dilutive
Issuance, the Conversion Price will be reduced to the amount of the consideration per share received by the Borrower in such Dilutive
Issuance.
The
Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or grants any
warrants, rights or options (not including employee stock option plans), whether or not immediately exercisable, to subscribe
for or to purchase Common Stock or other securities convertible into or exchangeable for Common Stock ("Convertible
Securities") (such warrants, rights and options to purchase Common Stock or Convertible Securities are hereinafter
referred to as "Options") and the price per share for which Common Stock is issuable upon the exercise of such
Options is less than the Conversion Price then in effect, then the Conversion Price shall be equal to such price per share.
For purposes of the preceding sentence, the "price per share for which Common Stock is issuable upon the exercise of
such Options" is determined by dividing (i) the total amount, if any, received or receivable by the Borrower as
consideration for the issuance or granting of all such Options, plus the minimum aggregate amount of additional
consideration, if any, payable to the Borrower upon the exercise of all such Options, plus, in the case of Convertible
Securities issuable upon the exercise of such Options, the minimum aggregate amount of additional consideration payable upon
the conversion or exchange thereof at the time such Convertible Securities first become convertible or exchangeable, by (ii)
the maximum total number of shares of Common Stock issuable upon the exercise of all such Options (assuming full conversion
of Convertible Securities, if applicable). No further adjustment to the Conversion Price will be made upon the actual
issuance of such Common Stock upon the exercise of such Options or upon the conversion or exchange of Convertible
Securities issuable upon exercise of such Options.
Additionally,
the Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or sells any Convertible
Securities, whether or not immediately convertible (other than where the same are issuable upon the exercise of Options), and
the price per share for which Common Stock is issuable upon such conversion or exchange is less than the Conversion Price then
in effect, then the Conversion Price shall be equal to such price per share. For the purposes of the preceding sentence, the "price
per share for which Common Stock is issuable upon such conversion or exchange" is determined by dividing (i) the total amount,
if any, received or receivable by the Borrower as consideration for the issuance or sale of all such Convertible Securities, plus
the minimum aggregate amount of additional consideration, if any, payable to the Borrower upon the conversion or exchange thereof
at the time such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of
Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment to the Conversion
Price will be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities.
(e)
Purchase Rights. If, at any time when any Notes are issued and outstanding, the Borrower issues any convertible securities
or rights to purchase stock, warrants, securities or other property (the "Purchase Rights") pro rata to the record holders
of any class of Common Stock, then the Holder of this Note will be entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares of Common
Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion contained herein) immediately
before the date on which a record is taken for the grant, issuance or sale of
such Purchase Rights or, if no such record is taken, the date as of which the record holders
of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
(f)
Notice of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the
events described in this Section 1.6, the Borrower, at its expense, shall promptly compute such adjustment or readjustment and
prepare and furnish to the Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Borrower shall, upon the written request at any time of the Holder, furnish
to such Holder a like certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time in
effect and (iii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time
would be received upon conversion of the Note.
1.7
Trading Market Limitations. Unless permitted by the applicable rules and regulations
of the principal securities market on which the Common Stock is then listed or traded, in no event shall the Borrower issue upon
conversion of or otherwise pursuant to this Note and the other Notes issued pursuant to the Purchase Agreement more than the maximum
number of shares of Common Stock that the Borrower can issue pursuant to any rule of the principal United States securities market
on which the Common Stock is then traded (the "Maximum Share Amount"), which shall be 4.99% of the total shares outstanding
on the Closing Date (as defined in the Purchase Agreement), subject to equitable adjustment from time to time for stock splits,
stock dividends, combinations, capital reorganizations and similar events relating to the Common Stock occurring after the date
hereof. Once the Maximum Share Amount has been issued, if the Borrower fails to eliminate any prohibitions under applicable law
or the rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction
over the Borrower or any of its securities on the Borrower's ability to issue shares of Common Stock in excess of the Maximum
Share Amount, in lieu of any further right to convert this Note, this will be considered an Event of Default under Section 3.3
of the Note.
1.8 Status
as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than the
shares, if any, which cannot be issued because their issuance would exceed such Holder's allocated portion of the
Reserved Amount or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder's rights
as a Holder of such converted portion of this Note shall cease and terminate, excepting only the right to receive
certificates for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity
to such Holder because of a failure by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if
a Holder has not received certificates for all shares of Common Stock prior to the tenth (10th) business day after the
expiration of the Deadline with respect to a conversion of any portion of this Note for any reason, then (unless the Holder
otherwise elects to retain its status as a holder of Common Stock by so notifying the Borrower) the Holder shall regain the
rights of a Holder of this Note with respect to such unconverted portions of this Note and the Borrower shall, as soon as
practicable, return such unconverted Note to the Holder or, if the Note has not been surrendered, adjust its records to
reflect that such portion of this Note has not been converted. In all cases, the Holder shall retain all of its rights and
remedies (including, without limitation, (i) the right to receive Conversion Default Payments pursuant to Section 1.3 to the
extent required thereby for such Conversion Default and any subsequent Conversion Default and (ii) the right to have the
Conversion Price with respect to subsequent conversions determined in accordance with Section 1.3) for the Borrower's failure
to convert this Note.
1.9
Prepayment. Notwithstanding anything to the contrary contained in this Note, at any time during the period beginning on
the Issue Date and ending on the date which is thirty (30) days following the Issue Date, the Borrower shall have the right, exercisable
on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal
and accrued interest), in full, in accordance with this Section 1.9. Any notice of prepayment hereunder (an "Optional Prepayment
Notice") shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower
is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days
from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the "Optional Prepayment Date"),
the Borrower shall make payment of the Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified
by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower
exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the "Optional
Prepayment Amount") equal to 110%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus
(x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y)
Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant
to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Optional Prepayment
Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever
forfeit its right to prepay the Note pursuant to this Section 1.9.
Notwithstanding
anything to the contrary contained in this Note, at any time during the period beginning on the date which is thirty-one
(31) days following the Issue Date and ending on the date which is sixty (60) days following the Issue Date, the Borrower
shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to
prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional
Prepayment Notice shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the
Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3)
Trading Days from the date of the Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make
payment of the Second Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the
Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower
exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the "Second
Optional Prepayment Amount") equal to 115%, multiplied by the sum of: (w) the then outstanding principal amount of this
Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus
(y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the
Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay
the Second Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional
Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.
Notwithstanding
anything to the contrary contained in this Note, at any time during the period beginning on the date which is sixty-one (61) days
following the Issue Date and ending on the date which is ninety (90) days following the Issue Date, the Borrower shall have the
right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding
Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered
to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay
the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment
Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Third Optional Prepayment Amount (as defined below)
to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to
the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder
of an amount in cash (the "Third Optional Prepayment Amount") equal to 120%, multiplied by the sum of: (w) the then
outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note
to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus
(z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment
Notice and fails to pay the Third Optional Prepayment Amount due to the Holder of the Note within two (2) business days following
the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.
Notwithstanding
any to the contrary stated elsewhere herein, at any time during the period beginning on the date that is ninety-one (91) day from
the Issue Date and ending one hundred twenty (120) days following the Issue Date, the Borrower shall have the right, exercisable
on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal
and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered to the
Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note,
and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice.
On the Optional Prepayment Date, the Borrower shall make payment of the Fourth Optional Prepayment Amount (as defined below) to
or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the
Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder
of an amount in cash (the "Fourth Optional Prepayment Amount") equal to 125%, multiplied by the sum of: (w) the then
outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note
to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus
(z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment
Notice and fails to pay the Fourth Optional Prepayment Amount due to the Holder of the Note within two (2) business days following
the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.
Notwithstanding
any to the contrary stated elsewhere herein, at any time during the period beginning on the date that is one hundred twenty-one
(121) day from the Issue Date and ending one hundred fifty (150) days following the Issue Date, the Borrower shall have the right,
exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note
(principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment Notice shall be delivered
to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay
the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment
Notice. On the Optional Prepayment Date, the Borrower shall make payment of the Fifth Optional Prepayment Amount (as defined below)
to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to
the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder
of an amount in cash (the "Fifth Optional Prepayment Amount") equal to 130%, multiplied by the sum of: (w) the then
outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note
to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus
(z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment
Notice and fails to pay the Fifth Optional Prepayment Amount due to the Holder of the Note within two (2) business days following
the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.
Notwithstanding
any to the contrary stated elsewhere herein, at any time during the period beginning on the date that is one hundred
fifty-one (151) day from the Issue Date and ending one hundred eighty (180) days following the Issue Date, the Borrower shall
have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay
the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any Optional Prepayment
Notice shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is
exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days
from the date of the Optional Prepayment Notice. On the Optional Prepayment Date, the Borrower shall make payment of the
Sixth Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing
to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to
prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the "Sixth Optional Prepayment
Amount") equal to 135%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x)
accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y)
Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder
pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Sixth
Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date,
the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.
After
the expiration of one hundred eighty (180) following the date of the Note, the Borrower shall have no right of prepayment.
ARTICLE
II. CERTAIN COVENANTS
2.1
Distributions on Capital Stock. So long as the Borrower shall have any obligation under this Note, the Borrower shall not
without the Holder's written consent (a) pay, declare or set apart for such payment, any dividend or other distribution (whether
in cash, property or other securities) on shares of capital stock other than dividends on shares of Common Stock solely in the
form of additional shares of Common Stock or (b) directly or indirectly or through any subsidiary make any other payment or distribution
in respect of its capital stock except for distributions pursuant to any shareholders' rights plan which is approved by a majority
of the Borrower's disinterested directors.
2.2
Restriction on Stock Repurchases. So long as the Borrower shall have any obligation
under this Note, the Borrower shall not without the Holder's written consent redeem, repurchase or otherwise acquire (whether
for cash or in exchange for property or other securities or otherwise) in any one transaction or series of related transactions
any shares of capital stock of the Borrower or any warrants, rights or options to purchase or acquire any such shares.
2.3
Borrowings. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder's
written consent, create, incur, assume guarantee, endorse, contingently agree to purchase or otherwise become liable upon the
obligation of any person, firm, partnership, joint venture or corporation, except by the endorsement of negotiable instruments
for deposit or collection, or suffer to exist any liability for borrowed money, except (a) borrowings in existence or committed
on the date hereof and of
which the Borrower has informed Holder in writing prior to the date hereof, (b) indebtedness
to trade creditors or financial institutions incurred in the ordinary course of business or (c) borrowings, the proceeds of which
shall be used to repay this Note.
2.4
Sale of Assets. So long as the Borrower shall have any obligation under this Note,
the Borrower shall not, without the Holder's written consent, sell, lease or otherwise dispose of any significant portion of its
assets outside the ordinary course of business. Any consent to the disposition of any assets may be conditioned on a specified
use of the proceeds of disposition.
2.5
Advances and Loans. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without
the Holder's written consent, lend money, give credit or make advances to any person, firm, joint venture or corporation, including,
without limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits or advances
(a) in existence or committed on the date hereof and which the Borrower has informed Holder in writing prior to the date hereof,
(b) made in the ordinary course of business or (c) not in excess of $100,000.
ARTICLE
III. EVENTS OF DEFAULT
If
any of the following events of default (each, an "Event of Default") shall occur:
3.1
Failure to Pay Principal or Interest. The Borrower fails to pay the principal hereof
or interest thereon when due on this Note, whether at maturity, upon acceleration or otherwise.
3.2 Conversion
and the Shares. The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens in writing
that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in
accordance with the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue) (electronically
or in certificated form) any certificate for shares of Common Stock issued to the Holder upon conversion of or otherwise
pursuant to this Note as and when required by this Note, the Borrower directs its transfer agent not to transfer or delays,
impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) any
certificate for shares of Common Stock to be issued to the Holder upon conversion of or otherwise pursuant to this Note as
and when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or
hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect
thereof) on any certificate for any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to
this Note as and when required by this Note (or makes any written announcement, statement or threat that it does not intend
to honor the obligations described in this paragraph) and any such failure shall continue uncured (or any written
announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for three (3) business days
after the Holder shall have delivered a Notice of Conversion. It is an obligation of the Borrower to remain current in its
obligations to its transfer agent. It shall be an event of default of this Note, if a conversion of this Note is delayed,
hindered or frustrated due to a balance owed by the Borrower to its transfer agent. If at the option of the Holder, the
Holder advances any funds to the Borrower's transfer agent in order to process a conversion, such advanced funds shall be
paid by the Borrower to the Holder within forty eight (48) hours of a demand from the Holder.
3.3
Breach of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this
Note and any collateral documents including but not limited to the Purchase Agreement and such breach continues for a period of
ten (10) days after written notice thereof to the Borrower from the Holder.
3.4
Breach of Representations and Warranties. Any representation or warranty of the Borrower
made herein or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith (including,
without limitation, the Purchase Agreement), shall be false or misleading in any material respect when made and the breach of
which has (or with the passage of time will have) a material adverse effect on the rights of the Holder with respect to this Note
or the Purchase Agreement.
3.5
Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors,
or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business,
or such a receiver or trustee shall otherwise be appointed.
3.6
Judgments. Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary
of the Borrower or any of its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed
for a period of twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.
3.7
Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary,
for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any
subsidiary of the Borrower.
3.8
Delisting of Common Stock. The Borrower shall fail to maintain the listing of the
Common Stock on at least one of the OTCBB or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap
Market, the New York Stock Exchange, or the American Stock Exchange.
3.9
Failure to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange
Act; and/or the Borrower shall cease to be subject to the reporting requirements of the Exchange Act.
3.10
Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
3.11
Cessation of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to
pay its debts as such debts become due, provided, however, that any disclosure of the Borrower's ability to continue as a "going
concern" shall not be an admission that the Borrower cannot pay its debts as they become due.
3.12
Maintenance of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property
or other assets which are necessary to conduct its business (whether now or in the future).
3.13
Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC for any
date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result
of such restatement would, by comparison to the unrestated financial statement, have constituted a material adverse effect on
the rights of the Holder with respect to this Note or the Purchase Agreement.
3.14
Reverse Splits. The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written
notice to the Holder.
3.15
Replacement of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails
to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form
as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares
of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.
3.16 Cross-Default.
Notwithstanding anything to the contrary contained in this Note or the other related or companion documents, a breach or
default by the Borrower of any covenant or other term or condition contained in any of the Other Agreements, after the
passage of all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered a default
under this Note and the Other Agreements, in which event the Holder shall be entitled (but in no event required) to apply all
rights and remedies of the Holder under the terms of this Note and the Other Agreements by reason of a default under said
Other Agreement or hereunder. "Other Agreements" means, collectively, all agreements and instruments between, among
or by: (1) the Borrower, and, or for the benefit of, (2) the Holder and any affiliate of the Holder, including, without
limitation, promissory notes; provided, however, the term "Other Agreements" shall not include the related or
companion documents to this Note. Each of the loan transactions will be cross-defaulted with each other loan transaction and
with all other existing and future debt of Borrower to the Holder.
Upon
the occurrence and during the continuation of any Event of Default specified in Section 3.1 (solely with respect to failure
to pay the principal hereof or interest thereon when due at the Maturity Date), the Note shall become immediately due and
payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the
Default Sum (as defined herein). UPON THE OCCURRENCE AND DURING THE CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION
3.2, THE NOTE SHALL BECOME IMMEDIATELY DUE AND PAYABLE AND THE BORROWER SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS
OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO: (Y) THE DEFAULT SUM (AS DEFINED HEREIN); MULTIPLIED BY (Z) TWO (2). Upon the
occurrence and during the continuation of any Event of Default specified in Sections 3.1 (solely with respect to failure to
pay the principal hereof or interest thereon when due on this Note upon a Trading Market Prepayment Event pursuant to Section
1.7 or upon acceleration), 3.3, 3.4, 3.6, 3.8, 3.9, 3.11, 3.12, 3.13, 3.14, and/or 3. 15 exercisable through the delivery of
written notice to the Borrower by such Holders (the "Default Notice"), and upon the occurrence of an Event of
Default specified the remaining sections of Articles III (other than failure to pay the principal hereof or interest thereon
at the Maturity Date specified in Section 3,1 hereof), the Note shall become immediately due and payable and the Borrower
shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the greater of (i) 150% times
the sum of (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the
unpaid principal amount of this Note to the date of payment (the "Mandatory Prepayment Date") plus (y)
Default Interest, if any, on the amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed to the Holder
pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding principal amount of this Note to the date of payment plus
the amounts referred to in clauses (x), (y) and (z) shall collectively be known as the "Default Sum") or (ii) the
"parity value" of the Default Sum to be prepaid, where parity value means (a) the highest number of shares of
Common Stock issuable upon conversion of or otherwise pursuant to such Default Sum in accordance with Article I, treating the
Trading Day immediately preceding the Mandatory Prepayment Date as the "Conversion Date" for purposes of
determining the lowest applicable Conversion Price, unless the Default Event arises as a result of a breach in respect of a
specific Conversion Date in which case such Conversion Date shall be the Conversion Date), multiplied by (b) the
highest Closing Price for the Common Stock during the period beginning on the date of first occurrence of the Event of
Default and ending one day prior to the Mandatory Prepayment Date (the "Default Amount") and all other amounts
payable hereunder shall immediately become due and payable, all without demand, presentment or notice, all of which hereby
are expressly waived, together with all costs, including, without limitation, legal fees and expenses, of collection, and the
Holder shall be entitled to exercise all other rights and remedies available at law or in equity.
If
the Borrower fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable,
then the Holder shall have the right at any time, so long as the Borrower remains in default (and so long and to the extent that
there are sufficient authorized shares), to require the Borrower, upon written notice, to immediately issue, in lieu of the Default
Amount, the number of shares of Common Stock of the Borrower equal to the Default Amount divided by the Conversion Price then
in effect.
ARTICLE
IV. MISCELLANEOUS
4.1
Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or
privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder
are cumulative to, and not exclusive of, any rights or remedies otherwise available.
4.2
Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder
shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered
or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid,
or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party
shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder
shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting
facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where
such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during
normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by
express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first
occur. The addresses for such communications shall be:
If
to the Borrower, to:
CROSS
CLICK MEDIA, INC. f/k/a Co-Signer, Inc.
8275
South Eastern Avenue - Suite 200-661
Las
Vegas, NV 89123
Attn:
GARY R. GOTTLIEB, Secretary
facsimile:
With
a copy by fax only to (which copy shall not constitute notice):
Attn:
[attorney name]
[enter
address line 1]
[enter
city, state, zip]
facsimile:
[enter fax number]
If
to the Holder:
KBM
WORLDWIDE, INC.
80
Cuttermill Road - Suite 410 Great Neck, NY 11021
Attn:
Seth Kramer, President
e-mail:
info@kbmworldwide.com
With
a copy by fax only to (which copy shall not constitute notice):
Naidich
Wurman Birnbaum & Maday, LLP Attn: Bernard S. Feldman, Esq.
facsimile:
516-466-3555
e-mail:
dyork@nwbmlaw.com
4.3
Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and
the Holder. The term "Note" and all reference thereto, as used throughout this instrument, shall mean this instrument
(and the other Notes issued pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented, then
as so amended or supplemented.
4.4
Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit
of the Holder and its successors and assigns. Each transferee of this Note must be an "accredited investor" (as defined
in Rule 501(a) of the 1933 Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral
in connection with a bona fide margin account or other lending arrangement.
4.5
Cost of Collection. If default is made in the payment of this Note, the Borrower
shall pay the Holder hereof costs of collection, including reasonable attorneys' fees.
4.6
Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated
by this Note shall be brought only in the state courts of New York or in the federal courts located in the state and county of
Nassau. The parties to this Note hereby irrevocably waive any objection to
jurisdiction and venue of any action instituted hereunder and shall not assert any defense
based on lack of jurisdiction or venue or based upon forum non conveniens. The Borrower and Holder waive trial by jury.
The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event
that any provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith
and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably
waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this
Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any other manner permitted by law.
4.7
Certain Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding
principal amount (or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest
on such interest, the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on
this Note may be difficult to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty
and is intended to compensate the Holder in part for loss of the opportunity to convert this Note and to earn a return from the
sale of shares of Common Stock acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant
to this Note. The Borrower and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate
to the possible loss to the Holder from the receipt of a cash payment without the opportunity to convert this Note into shares
of Common Stock.
4.8
Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase
Agreement.
4.9 Notice
of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of
Common Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the
Holder with prior notification of any meeting of the Borrower's shareholders (and copies of proxy materials and other
information sent to shareholders). In the event of any taking by the Borrower of a record of its shareholders for the purpose
of determining shareholders who are entitled to receive payment of any dividend or other distribution, any right to subscribe
for, purchase or otherwise acquire (including by way of merger, consolidation, reclassification or recapitalization) any
share of any class or any other securities or property, or to receive any other right, or for the purpose of determining
shareholders who are entitled to vote in connection with any proposed sale, lease or conveyance of all or substantially all
of the assets of the Borrower or any proposed liquidation, dissolution or winding up of the Borrower, the Borrower shall mail
a notice to the Holder, at least twenty (20) days prior to the record date specified therein (or thirty (30) days prior to
the consummation of the transaction or event, whichever is earlier), of the date on which any such record is to be taken for
the purpose of such dividend, distribution, right or other event, and a brief statement regarding the amount and character of
such dividend, distribution, right or other event to the extent known at such me. The Borrower shall make a public
announcement of any event requiring notification to the Holder hereunder substantially simultaneously with the notification
to the Holder in accordance with the terms of this Section 4.9.
4.10
Remedies. The Borrower acknowledges that a breach by t of its obligations hereunder will cause irreparable harm to the
Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that
the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened
breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies
at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing
or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing
economic loss and without any bond or other security being required.
IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer this September 24, 2014.
CROSS
CLICK MEDIA, INC. f/k/a Co-Signer, Inc.
By:
/s/ Gary R. Gottlieb
GARY
R.
GOTTLIEB Secretary
EXHIBIT
A -- NOTICE OF CONVERSION
The
undersigned hereby elects to convert $____________principal amount of the Note (defined below) into that number of shares of
Common Stock to be issued pursuant to the conversion of the Note ("Common Stock") as set forth below, of CROSS
CLICK MEDIA, INC. f/k/a CoSigner, Inc., a Nevada corporation (the "Borrower") according to the conditions of the
convertible note of the Borrower dated as of September 24, 2014 (the "Note"), as of the date written below. No fee
will be charged to the Holder for any conversion, except for transfer taxes, if any.
Box
Checked as to applicable instructions:
[
] The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account
of the undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system ("DWAC Transfer").
Name
of DTC Prime Broker:
Account
Number:
[
] The undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common
Stock set forth below (which numbers are based on the Holder's calculation attached hereto) in the name(s) specified immediately
below or, if additional space is necessary, on an attachment hereto:
KBM
WORLDWIDE, INC.
80
Cuttermill Road - Suite 410
Great
Neck, NY 11021
Attention:
Certificate Delivery
e-mail:
info@kbmworldwide.com
Date
of Conversion: _____________
Applicable
Conversion Price: $____________
Number
of Shares of Common Stock to be Issued
Pursuant
to Conversion of the Notes: _____________
Amount
of Principal Balance Due remaining
Under
the Note after this conversion: _____________
KBM
WORLDWIDE, INC.
By:_____________________________
Name:
Seth Kramer
Title:
President
Date:
SECURITIES
PURCHASE AGREEMENT
This SECURITIES
PURCHASE AGREEMENT (the "Agreement"), dated as of September 24, 2014, by and
between CROSS CLICK MEDIA, INC. f/k/a Co-Signer, Inc., a Nevada
corporation, with headquarters located at 8275 South Eastern Avenue - Suite 200-661, Las Vegas, NV 89123 (the
"Company"), and KBM WORLDWIDE, INC., a New York corporation, with its
address at 80 Cuttermill Road, Suite 410, Great Neck, NY 11021 (the "Buyer").
WHEREAS:
A.
The Company and the Buyer are executing and delivering this Agreement in reliance upon the
exemption from securities registration afforded by the rules and regulations as promulgated by the United States Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "1933 Act");
B.
Buyer desires to purchase and the Company desires to issue and sell, upon the terms and
conditions set forth in this Agreement an 8% convertible note of the Company, in the form attached hereto as Exhibit A, in the
aggregate principal amount of $32,500.00 (together with any note(s) issued in replacement thereof or as a dividend thereon or
otherwise with respect thereto in accordance with the terms thereof, the "Note"), convertible into shares of common
stock, $0.001 par value per share, of the Company (the "Common Stock"), upon the terms and subject to the limitations
and conditions set forth in such Note.
C.
The Buyer wishes to purchase, upon the terms and conditions stated in this Agreement, such
principal amount of Note as is set forth immediately below its name on the signature pages hereto; and
NOW
THEREFORE, the Company and the Buyer severally (and not jointly) hereby agree as follows:
1.
Purchase and Sale of Note.
a.
Purchase of Note. On the Closing Date (as defined below), the Company shall issue and sell to the Buyer and the Buyer
agrees to purchase from the Company such principal amount of Note as is set forth immediately below the Buyer's name on the signature
pages hereto.
b.
Form of Payment. On the Closing Date (as defined below), (i) the Buyer shall pay
the purchase price for the Note to be issued and sold to it at the Closing (as defined below) (the "Purchase Price")
by wire transfer of immediately available funds to the Company, in accordance with the Company's written wiring instructions,
against delivery of the Note in the principal amount equal to the Purchase Price as is set forth immediately below the Buyer's
name on the signature pages hereto, and (ii) the Company shall deliver such duly executed Note on behalf of the Company, to the
Buyer, against delivery of such Purchase Price.
c.
Closing Date. Subject to the satisfaction (or written waiver) of the conditions thereto
set forth in Section 6 and Section 7 below, the date and time of the issuance and sale of the Note pursuant to this Agreement
(the "Closing Date") shall be 12:00 noon, Eastern Standard Time on or about September 26, 2014, or such other mutually
agreed upon time. The closing of the transactions contemplated by this Agreement (the "Closing") shall occur on the
Closing Date at such location as may be agreed to by the parties.
2.
Buyer's Representations and Warranties. The Buyer represents and warrants to the Company that:
a.
Investment Purpose. As of the date hereof, the Buyer is purchasing the Note and the
shares of Common Stock issuable upon conversion of or otherwise pursuant to the Note (including, without limitation, such additional
shares of Common Stock, if any, as are issuable (i) on account of interest on the Note, (ii) as a result of the events described
in Sections 1.3 and 1.4(g) of the Note or (iii) in payment of the Standard Liquidated Damages Amount (as defined in Section 2(f)
below) pursuant to this Agreement, such shares of Common Stock being collectively referred to herein as the "Conversion Shares"
and, collectively with the Note, the "Securities") for its own account and not with a present view towards the public
sale or distribution thereof, except pursuant to sales registered or exempted from registration under the 1933 Act; provided,
however, that by making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum
or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the 1933 Act.
b.
Accredited Investor Status. The Buyer is an "accredited investor" as that
term is defined in Rule 501(a) of Regulation D (an "Accredited Investor").
c.
Reliance on Exemptions. The Buyer understands that the Securities are being offered
and sold to it in reliance upon specific exemptions from the registration requirements of United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of, and the Buyer's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Buyer set forth herein in order to determine the availability of such exemptions
and the eligibility of the Buyer to acquire the Securities.
d.
Information. The Buyer and its advisors, if any, have been, and for so long as the
Note remain outstanding will continue to be, furnished with all materials relating to the business, finances and operations of
the Company and materials relating to the offer and sale of the Securities which have been requested by the Buyer or its advisors.
The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue to be, afforded the
opportunity to ask questions of the Company. Notwithstanding the foregoing, the Company has not disclosed to the Buyer any material
nonpublic information and will not disclose such information unless such information is disclosed to the public prior to or promptly
following such disclosure to the Buyer. Neither such inquiries nor any other due diligence investigation conducted by Buyer or
any of its advisors or representatives shall modify, amend or affect Buyer's right to rely on the Company's representations and
warranties contained in Section 3 below. The Buyer understands that its investment in the Securities involves a significant degree
of risk. The Buyer is not aware of any facts that may constitute a breach of any of the Company's representations and warranties
made herein.
e.
Governmental Review. The Buyer understands that no United States federal or state
agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Securities.
f. Transfer
or Re-sale. The Buyer understands that (i) the sale or resale of the Securities has not been and is not being registered
under the 1933 Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the
Securities are sold pursuant to an effective registration statement under the 1933 Act, (b) the Buyer shall have delivered to
the Company, at the cost of the Buyer, an opinion of counsel that shall be in form, substance and scope customary for
opinions of counsel in comparable transactions to the effect that the Securities to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration, which opinion shall be accepted by the Company, (c) the
Securities are sold or transferred to an "affiliate" (as defined in Rule 144 promulgated under the 1933 Act (or a
successor rule) ("Rule 144")) of the Buyer who agrees to sell or otherwise transfer the Securities only in
accordance with this Section 2(f) and who is an Accredited Investor, (d) the Securities are sold pursuant to Rule 144, or (e)
the Securities are sold pursuant to Regulation S under the 1933 Act (or a successor rule) ("Regulation S"), and the
Buyer shall have delivered to the Company, at the cost of the Buyer, an opinion of counsel that shall be in form, substance
and scope customary for opinions of counsel in corporate transactions, which opinion shall be accepted by the Company; (ii)
any sale of such Securities made in reliance on Rule 144 may be made only in accordance with the terms of said Rule and
further, if said Rule is not applicable, any re-sale of such Securities under circumstances in which the seller (or the
person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may
require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii)
neither the Company nor any other person is under any obligation to register such Securities under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption thereunder (in each case). Notwithstanding the
foregoing or anything else contained herein to the contrary, the Securities may be pledged as collateral in connection with a bona
fide margin account or other lending arrangement.
g.
Legends. The Buyer understands that the Note and, until such time as the Conversion Shares have been registered under the
1933 Act may be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular
date that can then be immediately sold, the Conversion Shares may bear a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of the certificates for such Securities):
"NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144 A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES."
The
legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of any Security
upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for
sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or Regulation
S without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) such
holder provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act,
which opinion shall be accepted by the Company so that the sale or transfer is effected. The Buyer agrees to sell all Securities,
including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus
delivery requirements, if any. In the event that the Company does not accept the opinion of counsel provided by the Buyer with
respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, at the Deadline,
it will be considered an Event of Default pursuant to Section 3.2 of the Note.
h.
Authorization; Enforcement. This Agreement has been duly and validly authorized.
This Agreement has been duly executed and delivered on behalf of the Buyer, and this Agreement constitutes a valid and binding
agreement of the Buyer enforceable in accordance with its terms.
i.
Residency. The Buyer is a resident of the jurisdiction set forth immediately below
the Buyer's name on the signature pages hereto.
3.
Representations and Warranties of the Company. The Company represents and warrants to the Buyer that:
a.
Organization and Qualification. The Company and each of its Subsidiaries (as defined
below), if any, is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which
it is incorporated, with full power and authority (corporate and other) to own, lease, use and operate its properties and to carry
on its business as and where now owned, leased, used, operated and conducted. Schedule 3(a) sets forth a list of all of the Subsidiaries
of the Company and the jurisdiction in which each is incorporated. The Company and each of its Subsidiaries is duly qualified
as a foreign corporation to do business and is in good standing in every jurisdiction in which its ownership or use of property
or the nature of the business conducted by it makes such qualification necessary except where the failure to be so qualified or
in good standing would not have a Material Adverse Effect. "Material Adverse Effect" means any material adverse effect
on the business, operations, assets, financial condition or prospects of the Company or its Subsidiaries, if any, taken as a whole,
or on the transactions contemplated hereby or by the agreements or instruments to be entered into in connection herewith. "Subsidiaries"
means any corporation or other organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly,
any equity or other ownership interest.
b.
Authorization; Enforcement. (i) The Company has all requisite corporate power and
authority to enter into and perform this Agreement, the Note and to consummate the transactions contemplated hereby and thereby
and to issue the Securities, in accordance with the terms hereof and thereof, (ii) the execution and delivery of this Agreement,
the Note by the Company and the consummation by it of the transactions contemplated hereby and thereby (including without limitation,
the issuance of the Note and the issuance and reservation for issuance of the Conversion Shares issuable upon conversion or exercise
thereof) have been duly authorized by the Company's Board of Directors and no further consent or authorization of the Company,
its Board of Directors, or its shareholders is required, (iii) this Agreement has been duly executed and delivered by the Company
by its authorized representative, and such authorized representative is the true and official representative with authority to
sign this Agreement and the other documents executed in connection herewith and bind the Company accordingly, and (iv) this Agreement
constitutes, and upon execution and delivery by the Company of the Note, each of such instruments will constitute, a legal, valid
and binding obligation of the Company enforceable against the Company in accordance with its terms.
c.
Capitalization. As of the date hereof, the authorized capital stock of the Company consists of: (i) 440,000,000 shares
of Common Stock, $0.001 par value per share, of which 170,282,792 shares are issued and outstanding; and (ii) 8,500,000 authorized
shares of Preferred Stock, $0.001 par value per share, of which no shares are issued and outstanding; and (iii) 1,500,000 authorized
shares of Preferred Stock - Series A, $0.001 par value per share, of which 1,173,041 shares are issued and outstanding; no shares
are reserved for issuance pursuant to the Company's stock option plans, no shares are reserved for issuance pursuant to securities
(other than the Note and three (3) prior notes in favor of the Buyer:
| (a) | prior
convertible promissory note in favor of the Buyer dated March 20, 2014 in the amount
of $42,500.00 for which 10,000,000 shares of Common Stock are presently reserved; and |
| (b) | prior
convertible promissory note in favor of the Buyer dated June 5, 2014 in the amount of
$32,500.00 for which 45,500,000 shares of Common Stock are presently reserved |
| (c) | prior
convertible promissory note in favor of the Buyer dated June 25, 2014 in the amount of
$32,500.00 for which 85,000,000 shares of Common Stock are presently reserved |
exercisable
for, or convertible into or exchangeable for shares of Common Stock and 600,000,000 shares are reserved for issuance upon
conversion of the Note (upon the filing of an amendment to the articles of incorporation of the Company increasing its
authorized shares, the Company agrees to increase the reserve for the Buyer). All of such outstanding shares of capital
stock are, or upon issuance will be, duly authorized, validly issued, fully paid and non-assessable. No shares of capital
stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any
liens or encumbrances imposed through the actions or failure to act of the Company. As of the effective date of this
Agreement, (i) there are no outstanding options, warrants, scrip, rights to subscribe for, puts, calls, rights of first
refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its
Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional
shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which
the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act
and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in
any agreement providing rights to security holders) that will be triggered by the issuance of the Note or the
Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company's Certificate of
Incorporation as in effect on the date hereof ("Certificate of Incorporation"), the Company's By-laws, as in effect
on the date hereof (the "By-laws"), and the terms of all securities convertible into or exercisable for Common
Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer
with a written update of this representation signed by the Company's Chief Executive on behalf of the Company as of the
Closing Date.
d.
Issuance of Shares. The Conversion Shares are duly authorized and reserved for issuance
and, upon conversion of the Note in accordance with its respective terms, will be validly issued, fully paid and non-assessable,
and free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive
rights or other similar rights of shareholders of the Company and will not impose personal liability upon the holder thereof.
e.
Acknowledgment of Dilution. The Company understands and acknowledges the potentially
dilutive effect to the Common Stock upon the issuance of the Conversion Shares upon conversion of the Note. The Company further
acknowledges that its obligation to issue Conversion Shares upon conversion of the Note in accordance with this Agreement, the
Note is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of
other shareholders of the Company.
f. No
Conflicts. The execution, delivery and performance of this Agreement, the Note by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for
issuance of the Conversion Shares) will not (i) conflict with or result in a violation of any provision of the Certificate of
Incorporation or By-laws, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a
default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights
of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to
which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations and regulations of any
self-regulatory organizations to which the Company or its securities are subject) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected (except for
such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or
in the aggregate, have a Material Adverse Effect). Neither the Company nor any of its Subsidiaries is in violation of its
Certificate of Incorporation, By-laws or other organizational documents and neither the Company nor any of its Subsidiaries
is in default (and no event has occurred which with notice or lapse of time or both could put the Company or any of its
Subsidiaries in default) under, and neither the Company nor any of its Subsidiaries has taken any action or failed to take
any action that would give to others any rights of termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a party or by which any property or assets of the
Company or any of its Subsidiaries is bound or affected, except for possible defaults as would not, individually or in the
aggregate, have a Material Adverse Effect. The businesses of the Company and its Subsidiaries, if any, are not being
conducted, and shall not be conducted so long as the Buyer owns any of the Securities, in violation of any law, ordinance or
regulation of any governmental entity. Except as specifically contemplated by this Agreement and as required under the 1933
Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization or order of,
or make any filing or registration with, any court, governmental agency, regulatory agency, self regulatory organization or
stock market or any third party in order for it to execute, deliver or perform any of its obligations under this
Agreement, the Note in accordance with the terms hereof or thereof or to issue and sell the Note in accordance with the terms
hereof and to issue the Conversion Shares upon conversion of the Note. All consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or
prior to the date hereof. The Company is not in violation of the listing requirements of the Over-the- Counter Bulletin Board
(the "OTCBB") and does not reasonably anticipate that the Common Stock will be delisted by the OTCBB in the
foreseeable future. The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any
of the foregoing.
g. SEC
Documents; Financial Statements. The Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "1934 Act") (all of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents (other than exhibits to such documents) incorporated by
reference therein, being hereinafter referred to herein as the "SEC Documents"). Upon written request the Company
will deliver to the Buyer true and complete copies of the SEC Documents, except for such exhibits and incorporated documents.
As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and
the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents,
at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. None of the statements made in any such SEC Documents is, or has been, required to be
amended or updated under applicable law (except for such statements as have been amended or updated in subsequent filings
prior the date hereof). As of their respective dates, the financial statements of the Company included in the SEC Documents
complied as to form in all material respects with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto. Such financial statements have been prepared in accordance with United States generally
accepted accounting principles, consistently applied, during the periods involved and fairly present in all material respects
the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth in the financial statements of the Company included in
the SEC Documents, the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred in the
ordinary course of business subsequent to June 30, 2014, and (ii) obligations under contracts and commitments incurred in the
ordinary course of business and not required under generally accepted accounting principles to be reflected in such
financial statements, which, individually or in the aggregate, are not material to the financial condition or operating
results of the Company. The Company is subject to the reporting requirements of the 1934 Act.
h.
Absence of Certain Changes. Since June 30, 2014, there has been no material adverse
change and no material adverse development in the assets, liabilities, business, properties, operations, financial condition,
results of operations, prospects or 1934 Act reporting status of the Company or any of its Subsidiaries.
i.
Absence of Litigation. There is no action, suit, claim, proceeding, inquiry or investigation
before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of
the Company or any of its Subsidiaries, threatened against or affecting the Company or any of its Subsidiaries, or their officers
or directors in their capacity as such, that could have a Material Adverse Effect. Schedule 3(i) contains a complete list and
summary description of any pending or, to the knowledge of the Company, threatened proceeding against or affecting the Company
or any of its Subsidiaries, without regard to whether it would have a Material Adverse Effect. The Company and its Subsidiaries
are unaware of any facts or circumstances which might give rise to any of the foregoing.
j.
Patents, Copyrights, etc. The Company and each of its Subsidiaries owns or possesses the requisite licenses or rights
to use all patents, patent applications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications,
service marks, service names, trade names and copyrights ("Intellectual Property") necessary to enable it to conduct
its business as now operated (and, as presently contemplated to be operated in the future); there is no claim or action by any
person pertaining to, or proceeding pending, or to the Company's knowledge threatened, which challenges the right of the Company
or of a Subsidiary with respect to any Intellectual Property necessary to enable it to conduct its business as now operated (and,
as presently contemplated to be operated in the future); to the best of the Company's knowledge, the Company's or its Subsidiaries'
current and intended products, services and processes do not infringe on any Intellectual Property or other rights held by any
person; and the Company is unaware of any facts or circumstances which might give rise to any of the foregoing. The Company and
each of its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of their Intellectual
Property.
k.
No Materially Adverse Contracts, Etc. Neither the Company nor any of its Subsidiaries is subject to any charter,
corporate or other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the
Company's officers has or is expected in the future to have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is a party to any contract or agreement which in the judgment of the Company's officers has or is expected to
have a Material Adverse Effect.
l.
Tax Status. The Company and each of its Subsidiaries has made or filed all federal, state and foreign income and all
other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent
that the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount,
shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set
aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. The Company has not executed
a waiver with respect to the statute of limitations relating to the assessment or collection of any foreign, federal, state or
local tax. None of the Company's tax returns is presently being audited by any taxing authority.
m.
Certain Transactions. Except for arm's length transactions pursuant to which the Company or any of its Subsidiaries
makes payments in the ordinary course of business upon terms no less favorable than the Company or any of its Subsidiaries could
obtain from third parties and other than the grant of stock options disclosed on Schedule 3(c), none of the officers, directors,
or employees of the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than for
services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing
of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from
any officer, director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity
in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.
n.
Disclosure. All information relating to or concerning the Company or any of its Subsidiaries set forth in this Agreement
and provided to the Buyer pursuant to Section 2(d) hereof and otherwise in connection with the transactions contemplated hereby
is true and correct in all material respects and the Company has not omitted to state any material fact necessary in order to
make the statements made herein or therein, in light of the circumstances under which they were made, not misleading. No event
or circumstance has occurred or exists with respect to the Company or any of its Subsidiaries or its or their business, properties,
prospects, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or disclosed (assuming for this purpose that the Company's
reports filed under the 1934 Act are being incorporated into an effective registration statement filed by the Company under the
1933 Act).
o.
Acknowledgment Regarding Buyer' Purchase of Securities. The Company acknowledges and agrees that the Buyer is acting
solely in the capacity of arm's length purchasers with respect to this Agreement and the transactions contemplated hereby. The
Company further acknowledges that the Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated hereby and any statement made by the Buyer or any of
its respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is not advice
or a recommendation and is merely incidental to the Buyer' purchase of the Securities. The Company further represents to the Buyer
that the Company's decision to enter into this Agreement has been based solely on the independent evaluation of the Company and
its representatives.
p.
No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf,
has directly or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances
that would require registration under the 1933 Act of the issuance of the Securities to the Buyer. The issuance of the Securities
to the Buyer will not be integrated with any other issuance of the Company's securities (past, current or future) for purposes
of any shareholder approval provisions applicable to the Company or its securities.
q.
No Brokers. The Company has taken no action which would give rise to any claim by any person for brokerage commissions,
transaction fees or similar payments relating to this Agreement or the transactions contemplated hereby.
r.
Permits; Compliance. The Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and
operate its properties and to carry on its business as it is now being conducted (collectively, the "Company Permits"),
and there is no action pending or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of
the Company Permits. Neither the Company nor any of its Subsidiaries is in conflict with, or in default or violation of, any of
the Company Permits, except for any such conflicts, defaults or violations which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. Since June 30, 2014, neither the Company nor any of its Subsidiaries
has received any notification with respect to possible conflicts, defaults or violations of applicable laws, except for notices
relating to possible conflicts, defaults or violations, which conflicts, defaults or violations would not have a Material Adverse
Effect.
s.
Environmental Matters.
(i)
There are, to the Company's knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of the Company,
no past or presentviolations of Environmental Laws (as defined below), releases of any material into the environment, actions,
activities, circumstances, conditions, events, incidents, or contractual obligations which may give rise to any common law environmental
liability or any liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or similar federal,
state, local or foreign laws and neither the Company nor any of its Subsidiaries has received any notice with respect to any of
the foregoing, nor is any action pending or, to the Company's knowledge, threatened in connection with any of the foregoing. The
term "Environmental Laws" means all federal, state, local or foreign laws relating to pollution or protection of human
health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals,
pollutants contaminants, or toxic or hazardous substances or wastes (collectively, "Hazardous Materials") into the environment,
or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses,
notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.
(ii)
Other than those that are or were stored, used or disposed of in compliance with applicable
law, no Hazardous Materials are contained on or about any real property currently owned, leased or used by the Company or any
of its Subsidiaries, and no Hazardous Materials were released on or about any real property previously owned, leased or used by
the Company or any of its Subsidiaries during the period the property was owned, leased or used by the Company or any of its Subsidiaries,
except in the normal course of the Company's or any of its Subsidiaries' business.
(iii)
There are no underground storage tanks on or under any real property owned, leased or used
by the Company or any of its Subsidiaries that are not in compliance with applicable law.
t.
Title to Property. The Company and its Subsidiaries have good and marketable title in fee simple to all real property
and good and marketable title to all personal property owned by them which is material to the business of the Company and its
Subsidiaries, in each case free and clear of all liens, encumbrances and defects except such as are described in Schedule 3(t)
or such as would not have a Material Adverse Effect. Any real property and facilities held under lease by the Company and its
Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as would not have a Material
Adverse Effect.
u.
Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any such
Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost
that would not have a Material Adverse Effect. Upon written request the Company will provide to the Buyer true and correct
copies of all policies relating to directors' and officers' liability coverage, errors and omissions coverage, and commercial
general liability coverage.
v.
Internal Accounting Controls. The Company and each of its Subsidiaries maintain a system of internal accounting controls
sufficient, in the judgment of the Company's board of directors, to provide reasonable assurance that (i) transactions are executed
in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or specific authorization and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
w.
Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee
or other person acting on behalf of the Company or any Subsidiary has, in the course of his actions for, or on behalf of, the
Company, used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political
activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate
funds; violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made any
bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or
employee.
x.
Solvency. The Company (after giving effect to the transactions contemplated by this Agreement) is solvent (i.e.,
its assets have a fair market value in excess of the amount required to pay its probable liabilities on its existing debts
as they become absolute and matured) and currently the Company has no information that would lead it to reasonably conclude that
the Company would not, after giving effect to the transaction contemplated by this Agreement, have the ability to, nor does it
intend to take any action that would impair its ability to, pay its debts from time to time incurred in connection therewith as
such debts mature. The Company did not receive a qualified opinion from its auditors with respect to its most recent fiscal year
end and, after giving effect to the transactions contemplated by this Agreement, does not anticipate or know of any basis upon
which its auditors might issue a qualified opinion in respect of its current fiscal year.
y.
No Investment Company. The Company is not, and upon the issuance and sale of the Securities as contemplated by this
Agreement will not be an "investment company" required to be registered under the Investment Company Act of 1940 (an
"Investment Company"). The Company is not controlled by an Investment Company.
z.
Breach of Representations and Warranties by the Company. If the Company breaches any of the representations or warranties
set forth in this Section 3, and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will
be considered an Event of default under Section 3.4 of the Note.
4.
COVENANTS.
a.
Best Efforts. The parties shall use their best efforts to satisfy timely each of
the conditions described in Section 6 and 7 of this Agreement.
b.
Form D; Blue Sky Laws. The Company agrees to file a Form D with respect to the Securities
as required under Regulation D and to provide a copy thereof to the Buyer promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably determine is necessary to qualify the Securities for
sale to the Buyer at the applicable closing pursuant to this Agreement under applicable securities or "blue sky" laws
of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such
action so taken to the Buyer on or prior to the Closing Date.
c.
Use of Proceeds. The Company shall use the proceeds for general working capital purposes.
d. Right
of First Refusal. Unless it shall have first delivered to the Buyer, at least seventy two (72) hours prior to the closing
of such Future Offering (as defined herein), written notice describing the proposed Future Offering ("ROFR
Notice"), including the terms and conditions thereof, identity of the proposed purchaser and proposed definitive
documentation to be entered into in connection therewith, and providing the Buyer an option during the seventy two (72) hour
period following delivery of such notice to purchase the securities being offered in the Future Offering on the same terms as
contemplated by such Future Offering (the limitations referred to in this sentence and the preceding sentence
are collectively referred to as the "Right of First Refusal") (and subject to the exceptions described below), the
Company will not conduct any equity (or debt with an equity component) financing in an amount less than $100,000
("Future Offering(s)") during the period beginning on the Closing Date and ending six (6) months following the
Closing Date. Notwithstanding anything contained herein to the contrary, the Company shall not consummate any Future Offering
with an investor, or an affiliate of such investor (collectively "Prospective Investor"), identified on an ROFR
Notice whereby the Buyer exercised its Right of First Refusal for a period of forty (45) days following such exercise; and
any subsequent offer by a Prospective Investor is subject to this Section 4(d) and the Right of First Refusal. In the event
the terms and conditions of a proposed Future Offering are amended in any respect after delivery of the notice to the Buyer
concerning the proposed Future Offering, the Company shall deliver a new notice to the Buyer describing the amended terms and
conditions of the proposed Future Offering and the Buyer thereafter shall have an option during the seventy two (72) hour
period following delivery of such new notice to purchase its pro rata share of the securities being offered on the same terms
as contemplated by such proposed Future Offering, as amended. The foregoing sentence shall apply to successive amendments to
the terms and conditions of any proposed Future Offering. The Right of First Refusal shall not apply to any transaction
involving (i) issuances of securities in a firm commitment underwritten public offering (excluding a continuous offering
pursuant to Rule 415 under the 1933 Act) or (ii) issuances of securities as consideration for a merger, consolidation or
purchase of assets, or in connection with any strategic partnership or joint venture (the primary purpose of which is not to
raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Company.
The Right of First Refusal also shall not apply to the issuance of securities upon exercise or conversion of the Company's
options, warrants or other convertible securities outstanding as of the date hereof or to the grant of additional options or
warrants, or the issuance of additional securities, under any Company stock option or restricted stock plan approved by
the shareholders of the Company.
e.
Expenses. At the Closing, the Company shall reimburse Buyer for expenses incurred
by them in connection with the negotiation, preparation, execution, delivery and performance of this Agreement and the other agreements
to be executed in connection herewith ("Documents"), including, without limitation, reasonable attorneys' and consultants'
fees and expenses, transfer agent fees, fees for stock quotation services, fees relating to any amendments or modifications of
the Documents or any consents or waivers of provisions in the Documents, fees for the preparation of opinions of counsel, escrow
fees, and costs of restructuring the transactions contemplated by the Documents. When possible, the Company must pay these fees
directly, otherwise the Company must make immediate payment for reimbursement to the Buyer for all fees and expenses immediately
upon written notice by the Buyer or the submission of an invoice by the Buyer. The Company's obligation with respect to this transaction
is to reimburse Buyer' expenses shall be $2,500.
f.
Financial Information. Upon written request the Company agrees to send or make available
the following reports to the Buyer until the Buyer transfers, assigns, or sells all of the Securities: (i) within ten (10) days
after the filing with the SEC, a copy of its Annual Report on Form 10-K its Quarterly Reports on Form 10-Q and any Current Reports
on Form 8-K; (ii) within one (1) day after release, copies of all press releases issued by the Company or any of its Subsidiaries;
and (iii) contemporaneously with the making available or giving to the shareholders of the Company, copies of any notices or other
information the Company makes available or gives to such shareholders.
g.
[INTENTIONALLY DELETED]
h. Listing.
The Company shall promptly secure the listing of the Conversion Shares upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and, so
long as the Buyer owns any of the Securities, shall maintain, so long as any other shares of Common Stock shall be so listed,
such listing of all Conversion Shares from time to time issuable upon conversion of the Note. The Company will obtain and, so
long as the Buyer owns any of the Securities, maintain the listing and trading of its Common Stock on the OTCBB or any
equivalent replacement exchange, the Nasdaq National Market ("Nasdaq"), the Nasdaq SmallCap Market ("Nasdaq
SmallCap"), the New York Stock Exchange ("NYSE"), or the American Stock Exchange ("AMEX") and will
comply in all respects with the Company's reporting, filing and other obligations under the bylaws or rules of the
Financial Industry Regulatory Authority ("FINRA") and such exchanges, as applicable. The Company shall promptly
provide to the Buyer copies of any notices it receives from the OTCBB and any other exchanges or quotation systems on which
the Common Stock is then listed regarding the continued eligibility of the Common Stock for listing on such exchanges and
quotation systems.
i.
Corporate Existence. So long as the Buyer beneficially owns any Note, the Company shall maintain its corporate existence
and shall not sell all or substantially all of the Company's assets, except in the event of a merger or consolidation or sale
of all or substantially all of the Company's assets, where the surviving or successor entity in such transaction (i) assumes the
Company's obligations hereunder and under the agreements and instruments entered into in connection herewith and (ii) is a publicly
traded corporation whose Common Stock is listed for trading on the OTCBB, Nasdaq, Nasdaq SmallCap, NYSE or AMEX.
j.
No Integration. The Company shall not make any offers or sales of any security (other than the Securities) under circumstances
that would require registration of the Securities being offered or sold hereunder under the 1933 Act or cause the offering of
the Securities to be integrated with any other offering of securities by the Company for the purpose of any stockholder approval
provision applicable to the Company or its securities.
k.
Breach of Covenants. If the Company breaches any of the covenants set forth in this Section 4, and in addition to any
other remedies available to the Buyer pursuant to this Agreement, it will be considered an event of default under Section 3.4
of the Note.
l.
Failure to Comply with the 1934 Act. So long as the Buyer beneficially owns the Note, the Company shall comply with
the reporting requirements of the 1934 Act; and the Company shall continue to be subject to the reporting requirements of the
1934 Act.
m.
Trading Activities. Neither the Buyer nor its affiliates has an open short position in the common stock of the Company
and the Buyer agree that it shall not, and that it will cause its affiliates not to, engage in any short sales of or hedging transactions
with respect to the common stock of the Company.
5.
Transfer Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent to issue
certificates, registered in the name of the Buyer or its nominee, for the Conversion Shares in such amounts as specified from
time to time by the Buyer to the Company upon conversion of the Note in accordance with the terms thereof (the
"Irrevocable Transfer Agent Instructions"). In the event that the Borrower proposes to replace its transfer agent,
the Borrower shall provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent
Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision
to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and
the Borrower. Prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares
may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then
be immediately sold, all such certificates shall bear the restrictive legend specified in Section 2(g) of this Agreement. The
Company warrants that: (i) no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section
5, and stop transfer instructions to give effect to Section 2(f) hereof (in the case of the Conversion Shares, prior to
registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to
Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately sold),
will be given by the Company to its transfer agent and that the Securities shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in this Agreement and the Note; (ii) it will not direct its
transfer agent not to transfer or delay, impair, and/or hinder its transfer agent in transferring (or
issuing)(electronically or in certificated form) any certificate for Conversion Shares to be issued to the Buyer upon
conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement; and (iii) it will not
fail to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from
removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for
any Conversion Shares issued to the Buyer upon conversion of or otherwise pursuant to the Note as and when required by the
Note and this Agreement. Nothing in this Section shall affect in any way the Buyer's obligations and agreement set forth in
Section 2(g) hereof to comply with all applicable prospectus delivery requirements, if any, upon re-sale of the Securities.
If the Buyer provides the Company, at the cost of the Buyer, with (i) an opinion of counsel in form, substance and scope
customary for opinions in comparable transactions, to the effect that a public sale or transfer of such Securities may be
made without registration under the 1933 Act and such sale or transfer is effected or (ii) the Buyer provides reasonable
assurances that the Securities can be sold pursuant to Rule 144, the Company shall permit the transfer, and, in the case of
the Conversion Shares, promptly instruct its transfer agent to issue one or more certificates, free from restrictive legend,
in such name and in such denominations as specified by the Buyer. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Buyer, by vitiating the intent and purpose of the transactions
contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this
Section 5 may be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of
this Section, that the Buyer shall be entitled, in addition to all other available remedies, to an injunction restraining
any breach and requiring immediate transfer, without the necessity of showing economic loss and without any bond or other
security being required.
6.
Conditions to the Company's Obligation to Sell. The obligation of the Company hereunder
to issue and sell the Note to the Buyer at the Closing is subject to the satisfaction, at or before the Closing Date of each of
the following conditions thereto, provided that these conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion:
a. The
Buyer shall have executed this Agreement and delivered the same to the Company.
b.
The Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above.
c.
The representations and warranties of the Buyer shall be true and correct in all material
respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties
that speak as of a specific date), and the Buyer shall have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Buyer at or
prior to the Closing Date.
d.
No litigation, statute, rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of
any of the transactions contemplated by this Agreement.
7.
Conditions to The Buyer's Obligation to Purchase. The obligation of the Buyer hereunder
to purchase the Note at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions,
provided that these conditions are for the Buyer's sole benefit and may be waived by the Buyer at any time in its sole discretion:
a. The
Company shall have executed this Agreement and delivered the same to the Buyer.
b.
The Company shall have delivered to the Buyer the duly executed Note (in such denominations
as the Buyer shall request) in accordance with Section 1(b) above.
c.
The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to a majority-in-interest
of the Buyer, shall have been delivered to and acknowledged in writing by the Company's Transfer Agent.
d.
The representations and warranties of the Company shall be true and correct in all material
respects as of the date when made and as of the Closing Date as though made at such time (except for representations and warranties
that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at
or prior to the Closing Date. The Buyer shall have received a certificate or certificates, executed by the chief executive officer
of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested
by the Buyer including, but not limited to certificates with respect to the Company's Certificate of Incorporation, By-laws and
Board of Directors' resolutions relating to the transactions contemplated hereby.
e.
No litigation, statute, rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of
any of the transactions contemplated by this Agreement.
f.
No event shall have occurred which could reasonably be expected to have a Material Adverse
Effect on the Company including but not limited to a change in the 1934 Act reporting status of the Company or the failure of
the Company to be timely in its 1934 Act reporting obligations.
g.
The Conversion Shares shall have been authorized for quotation on the OTCBB and trading
in the Common Stock on the OTCBB shall not have been suspended by the SEC or the OTCBB.
h.
The Buyer shall have received an officer's certificate described in Section 3(c) above,
dated as of the Closing Date.
8.
Governing Law; Miscellaneous.
a.
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New
York without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the
transactions contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts
located in the state and county of Nassau. The parties to this Agreement hereby irrevocably waive any objection to
jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or
venue or based upon forum non conveniens. The Company and Buyer waive trial by jury. The prevailing party shall be
entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this
Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any
law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably
waives personal service of process and consents to process being served in any suit, action or proceeding in connection with
this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner permitted by law.
b.
Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party.
c.
Headings. The headings of this Agreement are for convenience of reference only and
shall not form part of, or affect the interpretation of, this Agreement.
d.
Severability. In the event that any provision of this Agreement is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of law. Any provision hereof which may prove invalid
or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.
e.
Entire Agreement; Amendments. This Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically
set forth herein or therein, neither the Company nor the Buyer makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed
by the majority in interest of the Buyer.
f.
Notices. All notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier
service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to
such other address as such party shall have specified most recently by written notice. Any notice or other communication required
or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation
generated by the transmitting facsimile machine,
at the address or number designated below (if delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier
service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses
for such communications shall be:
If
to the Company, to:
CROSS
CLICK MEDIA, INC. f/k/a Co-Signer, Inc.
8275
South Eastern Avenue - Suite 200-661
Las
Vegas, NV 89123
Attn:
GARY R. GOTTLIEB, Secretary
facsimile:
[enter fax number]
With
a copy by fax only to (which copy shall not constitute notice):
[enter
name of law firm]
Attn:
[attorney name]
[enter
address line 1]
[enter
city, state, zip]
facsimile:
[enter fax number]
If
to the Buyer:
KBM
WORLDWIDE, INC.
80
Cuttermill Road - Suite 410
Great
Neck, NY 11021
Attn:
Seth Kramer, President
e-mail:
info@kwbmlaw.com
With
a copy by fax only to (which copy shall not constitute notice):
Naidich
Wurman Birnbaum & Maday LLP
Attn:
Judah A. Eisner, Esq.
Attn:
Bernard S. Feldman, Esq.
facsimile:
516-466-3555
e-mail:
dyork@nwbmlaw.com
Each
party shall provide notice to the other party of any change in address.
g.
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit
of the parties and their successors and assigns. Neither the Company nor the Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other. Notwithstanding the foregoing, subject to Section 2(f),
the Buyer may assign its rights hereunder to any person that purchases Securities in a private transaction from the Buyer or to
any of its "affiliates," as that term is defined under the 1934 Act, without the consent of the Company.
h.
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i.
Survival. The representations and warranties of the Company and the agreements and
covenants set forth in this Agreement shall survive the closing hereunder notwithstanding any due diligence investigation conducted
by or on behalf of the Buyer. The Company agrees to indemnify and hold harmless the Buyer and all their officers, directors, employees
and agents for loss or damage arising as a result of or related to any breach or alleged breach by the Company of any of its representations,
warranties and covenants set forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement
of expenses as they are incurred.
j.
Publicity. The Company, and the Buyer shall have the right to review a reasonable period of time before issuance of
any press releases, SEC, OTCBB or FINRA filings, or any other public statements with respect to the transactions contemplated
hereby; provided, however, that the Company shall be entitled, without the prior approval of the Buyer, to make any press
release or SEC, OTCBB (or other applicable trading market) or FINRA filings with respect to such transactions as is required by
applicable law and regulations (although the Buyer shall be consulted by the Company in connection with any such press release
prior to its release and shall be provided with a copy thereof and be given an opportunity to comment thereon).
k.
Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions
contemplated hereby.
l.
No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties
to express their mutual intent, and no rules of strict construction will be applied against any party.
m.
Remedies. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to
the Buyer by vitiating the intent and purpose
of the transaction contemplated hereby. Accordingly,
the Company acknowledges that the remedy at law for a breach of its obligations under this Agreement will be inadequate and agrees,
in the event of a breach or threatened breach by the Company of the provisions of this Agreement, that the Buyer shall be entitled,
in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction
or injunctions restraining, preventing or curing any breach of this Agreement and to enforce specifically the terms and provisions
hereof, without the necessity of showing economic loss and without any bond or other security being required.
IN
WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above
written.
KBM
WORLDWIDE, INC.
By:
/s/ Seth Kramer
Name:
Seth Kramer
Title:
President
80
Cuttermill Road - Suite 410 Great Neck, NY 11021
AGGREGATE
SUBSCRIPTION AMOUNT:
Aggregate
Principal Amount of Note: $32,500.00
Aggregate
Purchase Price: $32,500.00
Tranche
#4 K-1333 (XCLK)
September
24, 2014
FIVE9 MASTER SERVICES AGREEMENT
This Five9 Master Services
Agreement (“Agreement”), effective as of the Customer signature date below (“Effective Date”), in entered
into by and between Five9, Inc., a Delaware corporation (“Five9”), having offices 4000 Executive Parkway, Suite 400,
San Ramon, CA 94583 and CrossClick Media Inc. (“Customer”), located at 3625 W McArthur blvd, Suite 302, Santa Ana,
CA 92704.
1.
SERVICES; USE; SUPPORT
a.
Service Order. Customer may order services and products from Five9 (“Services”) by completing a service
order substantially in the form attached hereto as Addendum B (each, a “Service Order”). Customer shall complete
an initial Service Order prior to being provided access to any Services. Thereafter, Customer shall complete a Service Order for
each order of additional Services. Each Service Order shall state: (i) the services and products selected by Customer, including
any premium services or implementation services to be provided by Five9; (ii) the term of such Services (the “Order Term”);
(iii) the applicable fees; and (iv) any other special terms that may apply to the Services. Each Service Order is subject to the
terms and conditions of this Agreement. In the event of any conflict between a Service Order and this Agreement, the Service Order
will control. For the avoidance of doubt, if there are terms and conditions in this Agreement regarding subjects on which a Service
Order is silent, such silence will not constitute a conflict and the terms and conditions in the Agreement will control.
b.
Customer Information. Customer shall provide accurate, current and complete registration Customer information, including,
without limitation, Customer’s legal name, address, email address, telephone number and, where applicable, payment information
(together, “Customer Information”). Customer agrees to promptly notify Five9 of any changes in Customer Information
and to verify such information as Five9 may reasonably request.
c.
Access and Use of the Services. Subject to the terms and limitations of this Agreement, Five9 agrees to provide Customer
access to the Services as set forth on Service Order(s), up to the quantities specified on such Service Order(s), during the Order
Term and any renewals thereof, on a non-exclusive, non-transferable basis, solely for Customer’s internal business purposes.
d.
Use Restrictions. Customer agrees not to (i) license, sublicense, sell, resell, transfer, assign, distribute or otherwise
commercially exploit or make the Services available to any third party in any way; (ii) modify or make derivative works based upon
the Services; (iii) create unauthorized Internet “links” to the Services or “frame” or “mirror”
any content on any other server or wireless or Internet-based device; or (iv) reverse engineer the Services.
e.
Technical Requirements for Use of the Services. In order to utilize the Service, Customer must adhere to certain
technical specifications and acquire and maintain certain minimum hardware, software and Internet connectivity, as specified here:
http://www.five9.com/call-center-software/system-requirements.htm (“Required Equipment”). During the sales process
and prior to service activation, Five9, with Customer’s reasonable cooperation, will conduct an assessment of Customer’s
current Required Equipment. Based on this assessment, Five9 may recommend adjustments to the Required Equipment in order to meet
the minimum technical requirements to utilize the Service. Customer is ultimately responsible for implementing any recommendations
made by Five9 with respect to Required Equipment and also for the ownership and ongoing maintenance of Required Equipment. Five9’s
recommendations with respect to Required Equipment do not constitute a guarantee or warranty as to the future suitability of the
Required Equipment for operating the Services. CUSTOMER ACKNOWLEDGES AND AGREES THAT IT IS SOLELY RESPONSIBLE FOR OBTAINING AND
SUPPORTING REQUIRED EQUIPMENT AS NECESSARY TO UTILIZE THE SERVICES, AND CUSTOMER MAY NOT TERMINATE THIS AGREEMENT OR REQUEST A
REFUND BASED ON A FAILURE OF ITS HARDWARE, SOFTWARE OR INTERNET CONNECTIVITY TO PROPERLY FUNCTION WITH THE SERVICES.
f. Technical Support.
Standard technical support is available as part of the Services. Our support services and options are more fully described at www.five9.com/contact-center-services/support
with additional details on http://www.five9.com/4443. Support services may include on-line help, FAQ's, training guides and templates.
2. ACTIVATION, FEES
AND BILLING
a.
Initial Service Activation and Provisioning. Prior to the activation of the Services set forth in Customer's initial
Service Order, Customer shall pay Five9 the fees specified in the Service Order, including implementation and activation fees and
pre-paid long distance fees as applicable (collectively, the "Activation Fees"). Upon receipt of the Activation Fees,
Five9 will activate Customer's account and commence the provisioning process for the Serviced (the date of the initial activation
being the “Service Activation Date”). The initial provisioning process creates Customer’s unique account
and enables Customer to log-in and access the Services.
b.
Subsequent Service Orders. For subsequent Service Orders, Five9 shall commence the provisioning process for the additional
Services as required by such Service Orders upon receipt of the Customer signed Service Order. Five 9 will invoice Customer for
the services ordered. Payment terms are in accordance with Section 3(f) below.
c.
Order Renewals. Unless otherwise specified in a Service Order, each Service Order shall automatically renew for
additional periods equal to the length of the Order Term, unless Customer provides advance written notice (via e-mail at billing@five9.com)
of non-renewal at least thirty (30) days prior to the end of the then-current term. During any renewal period, Five9 reserves the
right to modify it Service Fees and charges for other services with at least sixty (60) days prior written notice.
d.
Fees, Customer Bill Date and Billing Cycle. Customer shall pay Five9 the recurring fees for the Services as set forth
on an applicable Service Order (“Service Fees”). Unless otherwise indicated in a Service Order or in this Agreement,
Customer shall pay all Service Fees in advance and long distance usage in arrears. The Customer's billing cycle begins on the Service
Activation Date and that same day of the month shall become the day each month that Customer shall be invoiced (the "Customer
Bill Date"). The Customer Bill Date will be the bill date for all Services ordered by Customer pursuant to this Agreement,
and partial months shall be pro-rated to the Customer Bill Date. Each invoice will include all recurring monthly Service Fees for
the next billing month, all long distance charges incurred during the prior billing month, as detailed on Addendum A, and,
if applicable, any professional services or other one-time charges for services delivered during the billing period.
e.
Prepaid Long Distance. Five9 may require that, prior to activation, Customer deposit a one-time certain amount of
prepaid long distance service fees ("Prepaid Long Distance") as stated in the Service Order. The amount will be
held as a deposit. Customer will be invoiced for long distance usage monthly in arrears as it is incurred.
f.
Payment Terms. Payment terms for fees due on a given invoice are "Due Net 30", unless otherwise stated
on the invoice. Payment of all fees (including any Service Fees and Activation Fees), whether in advance of service or for services
incurred, may be made by cash, check or wire transfer of immediately available funds to Five9. Customer shall be responsible for
all sales, value-added or similar taxes due under this Agreement. Past due balances over 60 days, including past due balances resulting
from returned checks or charge-backs, are subject to an interest charge of 1.5% per month or the maximum amount permitted by applicable
law, whichever is less.
g.
Refund Policy. Except as otherwise set forth on a Service Order, all prepaid fees under this Agreement are non refundable,
except if Customer's account is closed in good standing, under the terms of this Agreement, with all undisputed balances paid in
full, the unused balance of Prepaid Long Distance shall be refunded to Customer.
h.
Disputed Charges and Resolution of Disputes. Customer agrees to pay all undisputed charges under this Agreement without
counter-claim, set-off or deduction. In the event that Customer legitimately and reasonably disputes an invoiced amount, Customer
will provide Five9 with written notice (via e-mail at billing@five9.com) of the amount in dispute and the basis for the dispute.
Five9 agrees that it will work with Customer to reasonably and expeditiously resolve the dispute. Customer agrees that any undisputed
amounts shall remain due and payable in accordance with the normal payment terms.
i.
Waiver. Failure of Five9 to invoice Customer in a timely manner for any amounts due under this Agreement shall not
be deemed a waiver by Five9 of its rights to payment for such amounts, and all outstanding amounts shall remain due and payable
by Customer, provided that, Five9 must bill customer for all outstanding amounts owed within 45 days of any termination of this
Agreement.
3. TERM AND TERMINATION
a.
Term of this Agreement. The term of this Agreement shall commence on the Effective Date and shall continue until
terminated as provided in this Agreement (the "Term").
b.
Suspension or Termination by Five9. Five9 may suspend or cancel Customer’s access to a Service or terminate
this Agreement as follows:
| (i) | For Cessation of Services. Five9 may suspend access to any portion or feature of the Services by
providing Customer with written notice at least sixty (60) days prior to the date it intends to cease providing such service. |
| (ii) | For Delinquent Accounts. Five9 may suspend or disable Customer’s access to the services for
any accounts for which undisputed payment is delinquent, provided however the Five9 shall have provided Customer with reasonable
adequate notice and sufficient time to cure the delinquency. |
| (iii) | For Actual or Potential harm to Five9 or a Third party. Five9 may suspend or terminate Customer’s
account if Five9 has a good faith belief the Customer (x) is using the Services in a manner that may cause immediate and ongoing
harm to Five9 or to a third party, including but not limited to, actions that violate federal, state or local laws, rules or regulations,
such as compliance with “Do Not Call Lists”; (y) is compromising the security of the Service and the privacy of Five9’s
other customers; or (z) is engaging in other activity not specifically identified herein that could reasonably be construed as
causing or potentially causing harm to Five9 or a third party. Five9 agrees that in the event it becomes aware of such actions
by the Customer it will immediately notify the Customer of the unauthorized activity and either allow the Customer reasonable time
to cease the activity or, if warranted by the circumstances, immediately suspend Customer's access to the Service. |
c.
Termination by Either Party. Either party may terminate this Agreement upon thirty (30) days written notice to the
other party (i) in the event of a breach of any provision of this Agreement by the other party, provided that, during the thirty
(30) day period the breaching party fails to cure such breach (except the 30-day notice period shall not apply to Customers with
delinquent accounts or Customers engaged in unlawful activities); or (ii) at any time when Five9 is not obligated to provide and
Customer is not entitled to receive any Services.
d.
Resumption of Service. Customer's resumption of access to the Services following a suspension by Five9 for the reasons
cited above will not extend the then-current term, nor result in an extension of the period covered by the prepaid Service Fees.
Resumption of Customer's account following suspension or termination by Five9 is subject to the sole discretion of Five9. If Five9
allows Customer to resume using the Services, Customer may be subject to a reconnection fee and applicable retraining fees, and
must pay in full all outstanding account balances.
e.
Effect of Termination. Upon termination of this Agreement, (i) all rights granted hereunder shall immediately terminate
and Customer shall have no right to continue to access or use the Service, (ii) each party shall return or, at the option of the
other party, destroy or return all Confidential Information (as defined below) of the other party, as requested by the other party,
in its possession or control and (iii) Customer shall promptly pay all undisputed outstanding fees and charges associated with
Customer's account up through the date of termination, (including charges for services delivered by Five9 that have not yet been
invoiced such as local and long-distance charges), provided that Five9 reserves the right to apply any security deposit or pre-paid
charges or other amounts delivered by Customer to Five9 to satisfy any amounts owed to Five9 under the terms of this Agreement.
All outstanding payment obligations and any other obligations in this Agreement that are ongoing obligations of the parties and
intended to survive shall survive any termination or expiration of this Agreement.
4. CUSTOMER ACCOUNTS
AND SECURITY
Customer is responsible for
all authorized and unauthorized access, activities and charges associated with the Customer's account and/or password(s) with Five9,
except for unauthorized charges that can reasonably be determined to be the result of Five9's mistake, omission or negligence in
providing sufficient safeguards against unauthorized third party access to Customer's account. Customer is responsible for the
confidentiality of its password(s), for all charges incurred from the use of the Service with its password(s) and for any and all
charges made through the Customer's account by Customer's employees, agents, principals, consultants, or other entities or individuals
in the employ of or engaged by Customer regardless of the reason for such charges. If Customer, or someone to whom Customer has
given access to the Service, violates this Agreement, Customer's account may be terminated pursuant to Section 3, and Customer
will be liable for all fees, charges, and damages of any kind related thereto.
Confidential Information.
By virtue of this Agreement, either party may have access to confidential information of the other party. Confidential information
shall be all information regarding the business or financial activities of either party made available to Five9 or Customer under
or as a result of this Agreement (hereinafter "Confidential Information”). In addition, Customer's data, text,
recorded messages and/or voice conversations transmitted via the Services, financial information and any personal information
including the Customer Information, shall be the Confidential Information of Customer.
The Confidential Information
shall at times be treated by both parties with strict confidence. A party’s obligations pertaining to Confidential Information
shall not apply to information that the receiving party can document: (a) is or becomes part of the public domain through no act
or omission of the receiving party, (b) was in the receiving party’s lawful possession prior to the disclosure, (c) is lawfully
disclosed to the receiving party by a third party without restriction on disclosure, or (d) is independently developed by the receiving
party without access to or use of the disclosing party’s Confidential Information. The parties agree to hold each other’s
Confidential information in confidence during the term of this Agreement and perpetually thereafter. He receiving party agrees
not to make the disclosing party’s Confidential Information available in any form to any third party unless, and only to
the minimum extent, required by law or to satisfy governmental regulatory requirements (in which case the party seeking to make
such disclosure shall notify the other party of its intent to make such disclosure, and, to the maximum extent available, such
party shall seek protective treatment for such disclosed Confidential Information), or to use the disclosing party’s Confidential
Information for any purpose beyond the scope of this Agreement. Each party agrees to take all reasonable steps to ensure that the
other party’s Confidential Information is not disclosed or distributed by its employees or agents in violation of the terms
of this Agreement. Neither party may disclose to the public or to any third party the terms and conditions of this Agreement other
than with the express prior written consent of the other party; except that such information may be disclosed to a party's representatives,
accountants, auditors, investors, or legal advisors provided that the foregoing are bound to maintain the confidentiality of such
information.
5. DATA USE
a.
Data Use. During the normal operation of the Service, Five9 will collect and store on its systems certain information
and data provided or collected by the Customer ("Customer Data"). Solely during the Term, Customer authorizes
Five9 to store Customer Data on its secure internal systems and to use and copy Customer Data solely for the purpose of providing
the Service to Customer in accordance with this Agreement. Additionally, Customer agrees that Five9 may use non-individually identifiable
Customer Data for internal business purposes, solely to test, analyze and improve the Service both during and after the Term. Five9
will not resell or share any Customer Data with a third party without Customer's express written authorization.
b.
Data Retention. To maximize system performance, Five9 retains the right to periodically purge Customer data from
Five9 servers. Data retention practices are set forth at www.five9.com/4433.
6. EMERGENCY SERVICE
(911 CALLING) NOT PROVIDED
(a)
No Requirement to Offer Emergency Services. Customer understands and acknowledges that Five9 does not is not required
to provide Emergency Service, where "Emergency Service" is defined as services that connect a user to emergency
services personnel or a public safety answering point ("PSAP"), pursuant to applicable regulatory requirements.
In the United States, Emergency Service is provided by dialing the digits "911" on a wired or a wireless telephone. Services
provided by Five9 do not permit the dialing of "911" or any other emergency telephone numbers or a PSAP under any circumstances.
Customer recognizes and agrees that Five9 is not required to offer Emergency Service, pursuant to any applicable laws, rules or
regulations. Customer further recognizes and agrees that Five9 is not a replacement for Customer's primary telephone service. CUSTOMER
ACKNOWLEDGES AND ACCEPTS THAT FIVE9'S SERVICES DO NOT INCLUDE EMERGENCY SERVICE. CUSTOMER UNDERSTANDS AND AGREES THAT ADDITIONAL
ARRANGEMENTS WITH A THIRD PARTY MUST BE MADE BY CUSTOMER TO ACCESS EMERGENCY SERVICE.
(b)
Specific Disclaimer of Liability for Emergency Service. Five9 does not provide Emergency Service in conjunction with
the Services or any other services that may be used by Customer in connection with Five9's services. Five9, its officers, directors,
employees, shareholders, affiliates nor agents will be liable for any claim, damage, or loss arising from, or relating to, Customer's
use of Five 9's services or any other service provided hereunder to contact a PSAP or Emergency Services personnel. Customer specifically
waives, to the maximum extent permitted by applicable law, any and all such claims or causes of action, arising from or relating
to Five9's services or any other service provided hereunder to contact a PSAP or other Emergency Services personnel. Customer agrees
to defend, indemnify, and hold harmless Five9, its officers, directors, employees, shareholders, affiliates and agents from any
and all claims, losses, damages, fines, penalties, costs and expenses (including, without limitation, court costs and attorneys’
fees) arising out of the fact that Five9 does not offer Emergency Service to the Customer.
7. COMPLIANCE
WITH LAWS; “DO NOT CALL” REGULATIONS
a. Customer
agrees to comply with all federal, state and/or local law related to or connected with providing, selling, licensing and delivering
information services and telecommunications services and products. Customer assumes all liability and responsibility for its use
of the Services in compliance with any federal, state or local laws, rules or regulations pertaining to the use of telephones,
email, fax, automated telephonic equipment (e.g. “Predictive Dialer”) and other telephony and telecommunications products
and services. Customer agrees that Five9 for any claims, liabilities or expenses (including reasonable attorney’s fees) incurred
by Five9 based upon Customer’s illegal or fraudulent use of service.
b. “Do
Not Call” Compliance. If Customer is advised by any party that they do not wish to receive communications from Customer
via the Service, then Customer agrees to promptly ass those parties to its internal company-specific Do Not Call List in their
Services account, and thereafter refrain from calling such parties until such time as Customer's policies require. Customer is
solely responsible for obtaining the consent of or a release from those persons or entities, to whom or to which Customer intends
to send communications using the Service. Customer agrees to periodically review the list of recipients to be contacted, to contact
only those persons who the Customer is legally permitted to contact from Customer's customer data, and only in the manner permitted,
under federal, state and local law.
CUSTOMER SHOULD SEEK THE
ADVICE OF AN ATTORNEY REGARDING USE OF AUTOMATED TELEPHONIC EQUIPMENT AND MARKETING LAWS, PRIOR TO USE OF THE SERVICE. Additional
reference material is available at: http://www.fcc.gov/cgb/donotcall/ and http://ftc.gov/bcp/menu-tmark.htm#bized (see "Telemarketing
Sales Rule").
8. WARRANTY; DISCLAIMER
OF WARRANTY
a.
Representations and Warranties. Each party represents and warrants to the other party that (i) it has the power and authority
to enter into and perform all obligations under this Agreement and its various addenda and (ii) it will comply with all applicable
laws in its performance under this Agreement.
Warranty Disclaimer. FIVE9
IS PROVIDING THE SERVICES AS A HOSTED SERVICE AND THE SERVICES ARE DELIVERED ON AN "AS IS" AND "AS AVAILABLE"
BASIS. FlVE9 DOES NOT WARRANT THAT THE SERVICES WILL BE UNINTERRUPTED OR THAT ALL COMMUNICATIONS WILL BE DELIVERED, NOR DOES FIVE9
MAKE ANY WARRANTY AS TO ANY RESULTS THAT MAY BE OBTAINED BY USE OF THE SERVICES, FIVE9 MAKES NO WARRANTIES EXPRESSED OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, INRELATION TO THE
SERVICES. Customer understands that the Services may be inaccessible or inoperable due to scheduled periodic maintenance and upgrades;
or for reasons beyond Five9's reasonable control including but not limited to (i) Customer or Five9 equipment malfunctions; or
(ii) service interruptions caused by independent telecommunications providers that provide voice and data connectivity to Five9's
or Customer's data centers.
9. LIMITATION OF LIABILITY
UNDER NO CIRCUMSTANCES SHALL
EITHER PARTY BE LIABLE TO THE OTHER OR ANY OTHER PERSON FOR ANY IN DIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING
OUT OF OR RELATING TO THIS AGREEMENT, INCLUDING WITHOUT LIMITATION ANY LOSS, DAMAGE OR LIABILITY RELATING TO: (A) LOSS OR CORRUPTION
OF DATA; (B) INABI LITY TO ACCESS THE SERVICE; (C) PERFORMANCE RELATED DELAYS; (D) COMPUTER VIRUSES; (E) LOSS OF BUSINESS DUE TO
INOPERABILITY OR PERFORMANCE OF THE SERVICES; (F) NON -DELIVERY OR MIS-DELIVERY OF COMMUNICATIONS; (G) THE NEGLIGENT ACTS OF OTHER
FIVE9 SUBSCRIBERS; (H) ANY DEFECTS, FAILURES, ERRORS, OMISSIONS OR MISSTATEMENTS IN ANY AND ALL INFORMATION DELIVERED BY OR PROVIDED
FOR DELIVERY BY THE SERVICES; AND (I) LOSS OR LIABILITY RESULTING FROM ACTS BEYOND A PARTY'S CONTROL. EXCEPT FOR A PARTY'S BREACH
OF SECTION 4 (CONFIDENTIALITY) OR A PARTY'S INDEMNIFICATION OBLIGATIONS PURSUANT TO SECTION 10, IN NO EVENT SHALL EITHER PARTY’S
LIABILITY UNDER THIS AGREEMENT EXCEED ALL FEES PAID BY CUSTOMER TO FIVE9 IN THE ONE (1) YEAR PERIOD PRIOR TO THE DATE OF THE EVENT
THAT GAVE RISE TO THE LIABILITY.
10. INDEMNIFICATION
a. By Customer.
Customer agrees to indemnify, hold harmless and defend Five9, its shareholders, directors, officers, employees and agents from
and against any action, claim, or damage, including reasonable costs and attorney’s fees, asserted by any person, arising
out of or relating to: (i) personal injury or property damage to the extent such claims or liabilities arise out of negligent or
willful acts or omissions of Customer and/or its employees or agents in connection with their duties and responsibilities under
this Agreement; (ii)Customer’s breach of this Agreement; or (iii) Customer’s unauthorized use of the service, including
any information, communication, data or work that Customer provides in connection with Customer’s use of the Service.
b. By Five9.
Five9 agrees to indemnify, hold harmless and defend Customer, its shareholders, directors, officers employees and agents from and
against any action, claim, or damage, including reasonable costs and attorney’s fees, asserted by any person, arising out
of or relating to: (i) personal injury or property damage to the extent such claims or liabilities arise out of negligent or willful
acts or omissions of Five9 and/or its employees or agents in connection with their duties and responsibilities under this Agreement,
(ii) Five9's breach of this Agreement, or (iii) any alleged or actual infringement by the Services of any patent, trademark, or
copyright, or alleged or actual misappropriation of any trade secret, provided Customer is using the Service as authorized under
this Agreement.
c.
Procedure. An indemnified party shall (i) permit the indemnifying party to defend or settle any such claim, provided,
however that (x) the indemnifying party shall not enter into any settlement agreement that would result in any admission by the
indemnified party or payment by the indemnified party without the indemnified party's prior written consent, and (y) the indemnified
party may at its election participate in the defense of such claim, suit or the like through separate counsel at its own expense,
and (ii) provide the indemnifying party all reasonable assistance (at the expense of the indemnifying party) in connection with
the defense or settlement of any such claim, suit or the like.
11. OWNERSHIP OF MATERIALS
AND RIGHTS
The Services are proprietary
to Five9 and are protected by intellectual prope1iy laws and international intellectual property treaties. Customer's data, text,
recorded messages and/or voice conversations transmitted via the Services are proprietary to Customer. Except for the right to
access and use the Services granted by Five9 to Customer in this Agreement, nothing in this Agreement shall convey, transfer or
assign any right, title or interest in either party's Proprietary Materials to the other party. As such, each party retains exclusive
ownership of its Proprietary Materials in existence as of the Effective Date or developed by it during the Term. For purposes of
this Agreement, "Proprietary Materials" means all patents, copyrights, design rights, trademarks, service marks,
trade secrets and other worldwide intellectual property or proprietary rights owned by a party during the Term, and the software,
schematics, diagrams, information, and other tangible embodiments, if any, relating thereto. All rights not granted by Five9 herein
are expressly reserved.
12. MISCELLANEOUS
a.
Applicable Law. This Agreement shall be governed by the laws of the State of New York without reference to conflicts
of laws. Venue for any and all actions arising out of this Agreement shall be the County of Alameda, California.
b.
Amendments. No amendment of this Agreement will be binding unless it has been signed by Customer and Five9.
c.
Force Majeure. Neither party shall be held liable or responsible to the other party nor be deemed to have defaulted
under or breached this Agreement for failure or delay in fulfill in g or performing any term of this Agreement when such failure
or delay is caused by or results from causes beyond the reasonable control of the affected party, including but not limited to
fire, floods, embargoes, war, acts of war, insurrections, riots, civil com motion, strikes, lockouts or other labor disturbances,
acts of God or acts, omissions or delays in acting by any governmental authority; provided, however, that the party so affected
shall promptly notify the other party of the force majeure event and use reasonable commercial efforts to avoid or remove such
causes of non performance, and shall continue performance hereunder with reasonable dispatch whenever such causes are removed.
d.
Waiver and Severability. No failure or delay in exercising or enforcing any right or remedy hereunder by either party
shall constitute a waiver of any other right or remedy, or failure exercise thereof. If any provision of the Agreement is determined
to be invalid under any applicable statute or rule of law, it is only to that extent to be deemed omitted, and the balance of the
Agreement shall remain enforceable.
e.
Assignment. Neither party may assign this Agreement or any of its rights and obligations hereunder without the other
party’s prior written consent except that wither party may assign this Agreement to a successor in interest without requiring
such consent in the event of a reorganization, merger, consolidation or sale of all or substantially all of its assets or stock
(“Change of Control”). Any attempted assignment not in connection with a Change of Control without the non-assigning
party’s prior written consent shall be void.
f.
Attorneys’ Fees. In the event of a dispute arising out of this Agreement, the prevailing party shall be entitled
to recover it reasonable attorneys’ fees.
g.
Notices. All notices, authorizations, and requests in connection with this Agreement shall be deemed given (i) three
(3) days after they are deposited with the United States Postal Service, first-class postage prepaid; or (ii) one (1) business
day after they are sent by air express courier, or (iii) upon receipt if sent by facsimile or electronic mail (with receipt-confirmation
of successful delivery). All notices shall be delivered to Five9 via mail, facsimile, or email (currently billing@five9.com
) at its then-current corporate headquarters as listed on the Five9 website, and to Customer at its most current street, facsimile
and email address(es) as provided by Customer to Five9 in connection with Customer's registration process (or as thereafter updated
or revised in a writing delivered by Customer to Five9).
h.
Entire Agreement. Customer agrees that this Agreement, including addenda, comprises the entire understanding between
Five9 and Customer, and supersedes any prior agreements or correspondence between Customer and Five9 and/or any postings or other
notices from Five9 with respect to the subject matter of this Agreement.
i.
Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original and taken
together will constitute one single agreement between the parties with the same effect as if the signatures were upon the same
instrument.
j.
Publicity. Neither party shall make, or cause to be made, any press release or public announcement in respect of
this Agreement or the transactions contemplated by this Agreement or otherwise communicate with or through any news or other media
without the prior written consent of the other party unless such press release or public announcement is required by law or applicable
stock exchange regulation, in which case the parties to this Agreement shall, to the extent practicable, consult with each other
as to the timing and contents of any such press release, public announcement or communication.
IN WITNESS WHEREOF, the parties
hereto have duly executed this Agreement by their respective duly authorized officer.
Customer Five9,
Inc.
By: |
/s/ Joseph M. Spaziano |
By: |
/s/ Five9, Inc. |
Name: |
Joseph M. Spaziano |
Name: |
Authorized Signatory |
Title: |
CTO |
Title: |
|
Date: |
11/7/14 |
Date: |
11/7/14 |
ADDENDUM A
LOCAL AND LONG DISTANCE
RATE TABLES
Communication Charges:
Local, long distance, and any related surcharges, taxes or fees shall be billed monthly and shall cover all call activity incurred
by the customer since the previous Customer Bill Date. Local and long-distance charges accrue on a call-by-call basis. Customer
is responsible for any call activity incurred through it account. Local and long distance charges are computed and billed based
upon the automatic number identification (ANI) as the calling number and the Dialed Number Identification Service (DNIS) as the
called number and Pacific Standard Time as the originating time for each call. Customer’s billed usage includes any and all
connected calls, whether outbound or inbound, as determined by Five9’s billing system. All connections to the Five9 server
via “PSTN” (analog telephone line) rather that VoIP (internet) are billed as an outbound call for the entire connection
time, and can substantially increase the bill. All calls are billed based on carrier connection made, regardless of agent connection
to the call. Reporting of detailed call records is available from several reports, such as “CallLog1”’ in the
Administrator or Supervisor portion of the Five system.
Prior to activation, Customer
may be asked to deposit a one-time certain amount of Prepaid Long Distance as shown in the applicable Service Order. The balance
of Prepaid Long Distance is viewable to the Administrator role, in the "Snapshot" field, "Accounts"
link, of the customer login from www.five9.com.
Type |
Outbound |
Inbound |
Initial / Incremental Billing
Increments (in seconds) |
Interstate (US) |
0.01400 |
0.01900 |
6.0/6.0 |
Intrastate (US) |
0.01900 |
0.01900 |
6.0/6.0 |
Alaska |
0.11704 |
0.19360 |
6.0/6.0 |
Hawaii |
0.08160 |
0.03249 |
6.0/6.0 |
Canada |
0.01600 |
0.03944 |
30.0/6.0 |
Other 10 digit calls |
Market Rate |
Market Rate |
6.0/6.0 |
Other International |
Market Rate |
Market Rate |
Varies |
Outbound to toll free |
0.01400 |
N/A |
6.0/6.0 |
Directory Assistance |
1.00000 |
N/A |
60.0/60.0 |
Notes: All
rates quoted in US$ per minute. Interstate calls are calls where the call originates and terminates in different states based upon
the ANI and DNIS. Intrastate calls are calls where the call originates and terminates in the same state based upon the ANI and
DNIS. Different rates may apply to interstate and intrastate calls. Rates subject to change with 30 day notice; reduction in rates
may occur without notice. International calls are subject to Market Rates and 30/6 billing increment. Directory Assistance: Any
call (xxx)-555-xxxx is billed as Directory Assistance. Payphone: $0.80 connection fee per call, plus prevailing call charges. All
inbound calls, whether to 8XX "toll free" numbers or area code specific DIDs are subject to the rates shown. Detailed
call reporting is available in Five9 Call Log reports. Rate lookup feature is available in Administrator role. All rates shown
above are for comparison to "pre-tax" rates quoted by telephone providers. Actual billing rates in Call Log data and
invoicing include a surcharge relating to the cost of applicable taxes, tariffs, and other carrier fees.
Five9 recommends that Customer
'scrub' its lists prior to use to remove unwanted call numbers.
Five9 Service Order (Addendum
B)
This Service Order, collectively
with the Five9 Agreement and its addenda, the “Agreement”, is entered into by and between Five9, Inc. (Five9) and Customer
named below. This Service Order is subject to the terms and conditions of the Agreement, in the event of any conflict between this
Service Order and the Agreement, this Service Order will control. For the avoidance of doubt, if there are terms and conditions
in the Agreement regarding subjects on which this Service Order is silent, such silence will not constitute a conflict and the
terms and conditions in of doubt, of there are terms and conditions in the Agreement regarding subjects on which this Service Order
is silent, such silence will not constitute a conflict and the terms and conditions in the Agreement will control.
CUSTOMER INFORMATION |
ORDER INFORMATION |
Customer Name:
Customer Number |
CrossClick Media
73165 |
Order Type:
Order Term:
Renewal Term: |
New Domain (New Customer)
12 Months
12 Months |
Domain Name:
Domain Number: |
CrossClick Media
73165 |
Billing Frequency:
PO Required? |
Monthly
No |
|
|
|
|
Billing Address: |
3625 West McArthur Blvd, Ste 302
Santa Ana, CA 92704 |
Five9 Account Exec:
Email:
Phone: |
Kim Wimmer
kwimmer@five9.com
510-340-0952 |
Billing Contact:
Email:
Phone: |
Todd Milton Ault III
todd@crossclickmedia.com
714-795-0246 |
Quote Expires: |
11/29/2014 |
Evaluation Period
Should the services fail
to meet the specifications or Customer’s requirements during the thirty (30) day period starting date of this Service Order
(The “Evaluation Period”), Customer may cancel this Service Order and will only have payment obligation for services
used through the effective date of cancellation. Note that Customer will be invoiced for use of the Services during the Evaluation
Period.
Ramp Period
During the One Hundred Twenty
(120) day period starting from the date of this Service Order (the “Ramp Period”), Customer will be invoiced monthly
in arrears for each month’s peak usage of VCC Agent Seat Component. However, once Customer reaches 100% of ordered VCC Agent
Seat quantity (or places an order for additional VCC Agent Seats), the Ramps Period shall be considered complete and invoicing
shall continue monthly in advance for the full ordered quantity.
Invoicing Schedule
Invoice Date |
VCC Agent Seat Components – Monthly Fees |
Other Monthly Fees |
One Time Fees |
Telecom Deposit |
Signing |
$0 |
$0 |
$6,100.00 |
$3,750.00 |
First Invoice during Ramp Period (30 days after first use) |
Peak Usage for previous month |
$3,055 |
$6,100.00 |
$3,750.00 |
Remainder of Ramp Period |
Peak Usage for previous month |
$3,055 |
$6,100.00 |
N/A |
Post Ramp Period |
$14,500 |
$3,055 |
$6,100.00 |
N/A |
Change Orders
VCC Agent Seat order level
may be lowered with thirty (30) days advance notice to no lower than 85% of the VCC Agent Seat quantities ordered above. VCC Agent
Seat order level may be increased over those ordered above at any time through a separately executed Service Order.
Volume Discount
Customer will be invoiced
monthly at the following rates for the number of ordered Five9 VCC Agent Seats. Pricing is based on tier levels as shown below.
When a new tier is reached, all seats will be invoiced at the rate of the highest tier achieved.
Long Distance Usage
Customer’s inbound
and outbound calls that utilize Five9 for transport will be billed as “Long Distance” usage. Five9 may hold a deposit
against future long distance usage. Customer will be invoiced in arrears for actual usage.
Total VCC Agent Seats |
|
From |
To |
Price per VCC Agent Seat |
50 |
99 |
$130.00 |
100 |
200 |
$125.00 |
201 |
400 |
$120.00 |
401 |
600 |
$115.00 |
Professional Services
Additional Five9 Professional
Services are available as requested for $200.00 per hour
Professional Services (including
training) fees do not include travel and expenses for on-site work, Customer will be invoiced for these expenses at actual costs.
All prices are in US Dollars
Acceptance of Order
Customer |
Five9 |
Signature: /s/ Joseph M. Spaziano |
Signature |
Name: Joseph M. Spaziano |
/s/ Five9, Inc. |
Title: CTO |
|
Date: 11/7/2014 |
Date: 11/7/14 |