Item
1.01. Entry into a Material Definitive Agreement
On June 4-6, 2019, Foothills Exploration,
Inc. (the “Company”) closed on a series of convertible redeemable loan transactions with four unaffiliated lending
entities for a combined total principal amount of $249,825, before giving effect to certain transactional costs including legal
fees, yielding combined total net proceeds of $230,750.
GW
Holdings Group, LLC Placement
On
June 4, 2019, the Company closed on a convertible loan transaction with GW Holdings Group, LLC (“GW”) in the principal
amount of $86,625 (the “Note”) with an original issue discount of $7,875, before giving effect to certain transactional
costs including legal fees yielding a net of $78,750.
GW
is entitled, at its option, at any time after the 180
th
daily anniversary of the Note, to convert all or any amount
of the principal face amount of this Note then outstanding into shares of the Company’s common stock (the “Common
Stock”) at a price (“Conversion Price”) for each share of Common Stock equal to 50% of the lowest trading price
of the Common Stock as reported on the National Quotations Bureau OTC Marketplace exchange which the Company’s shares are
traded or any exchange upon which the Common Stock may be traded in the future (“Exchange”), for the twenty (20) prior
trading days including the day upon which a Notice of Conversion is received by the Company or its transfer agent (provided such
Notice of Conversion is delivered by fax or other electronic method of communication to the Company or its transfer agent after
4 P.M. Eastern Standard or Daylight Savings Time if GW wishes to include the same day closing price).
Interest
on any unpaid principal balance of this Note shall be paid at the rate of 12% per annum. In the event of a conversion pursuant
to the Note, interest shall be paid by the Company in Common Stock (“Interest Shares”). GW may, at any time, after
the 180
th
daily anniversary of the Note, send in a Notice of Conversion to the Company for Interest Shares. The dollar
amount converted into Interest Shares shall be all or a portion of the accrued interest calculated on the unpaid principal balance
of this Note to the date of such notice.
The
maturity date for this Note is May 31, 2020 (“Maturity Date”), and is the date upon which the principal sum, as well
as any accrued and unpaid interest, shall be due and payable. This Note may be prepaid with the following premiums: (i) during
the initial 60 calendar day period after the issuance of the Note, by making a payment to GW of an amount in cash equal to 125%
multiplied by the principal, plus accrued interest; (ii) during the 61
st
through 120
th
calendar day period
after the issuance of the Note, by making a payment to GW of an amount in cash equal to 135% multiplied by principal, plus accrued
interest; (iii) during the 121
st
through 180
th
calendar day period after the issuance of the Note, by making
a payment to GW of an amount in cash equal to 145% multiplied by principal, plus accrued interest.
The
Company may not prepay any amount outstanding under this Note after the 180
th
calendar day after the issuance of the
Note. Any amount of principal or interest due pursuant to this Note, which is not paid by the Maturity Date, shall bear interest
at the rate of the lesser of (i) twenty-four percent (24%) per annum or (ii) the maximum amount permitted by law from the due
date thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the date the Note is
fully paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed.
As
part of this transaction the Company also issued warrants having a five-year term to purchase 160,000 shares of the Company’s
restricted common stock at an exercise price of $0.50 per share with a cashless exercise feature. Pursuant to terms of the Note,
the Company covenanted to GW to initially reserve with its transfer agent 2.7 million shares of its Common Stock for conversions
(the “Share Reserve”). The Company further covenanted that at all times it would reserve a minimum of 400% of the
number of shares of Company common stock issuable upon conversion of the Note and the Warrant in accordance with the terms of
the Note.
The
transaction documents contain additional terms and provisions, representations and warranties, including further provisions covering
conversions of debt, remedies on default, venue, and governing law. The summary of the transactions described in this Form 8-K
is qualified in its entirety by reference to the Securities Purchase Agreement dated May 31, 2019, 12% Convertible Promissory
Note dated May 31, 2019 and Form of Warrant, which are filed as Exhibits 10.1, 10.2 and 10.3, respectively to this report.
JSJ
Investments, Inc. Placement
On
June 4, 2019, the Company closed on a convertible loan transaction with JSJ Investments, Inc. (“JSJ”) in the principal
amount of $57,000 (the “Note”), before giving effect to certain transactional costs including legal fees yielding
a net of $57,000.
JSJ
is entitled, at its option, at any time after the 180
th
daily anniversary of the Note, to convert all or any amount
of the principal face amount of this Note then outstanding into shares of the Company’s common stock (the “Common
Stock”) at a price (“Conversion Price”) for each share of Common Stock equal to 45% of the lowest trading price
of the Common Stock as reported on the National Quotations Bureau OTC Marketplace exchange which the Company’s shares are
traded or any exchange upon which the Common Stock may be traded in the future (“Exchange”), for the twenty (20) prior
trading days including the day upon which a Notice of Conversion is received by the Company or its transfer agent (provided such
Notice of Conversion is delivered by fax or other electronic method of communication to the Company or its transfer agent after
4 P.M. Eastern Standard or Daylight Savings Time if JSJ wishes to include the same day closing price).
Interest
on any unpaid principal balance of this Note shall be paid at the rate of 10% per annum. JSJ may, at any time, after the 180
th
daily anniversary of the Note, send in a Notice of Conversion to the Company.
The
maturity date for this Note is May 29, 2020 (“Maturity Date”), and is the date upon which the principal sum, as well
as any accrued and unpaid interest, shall be due and payable. This Note may be prepaid with the following premiums: (i) during
the initial 60 calendar day period after the issuance of the Note, by making a payment to JSJ of an amount in cash equal to 125%
multiplied by the principal, plus accrued interest; (ii) during the 61
st
through 120
th
calendar day period
after the issuance of the Note, by making a payment to JSJ of an amount in cash equal to 135% multiplied by principal, plus accrued
interest; (iii) during the 121
st
through 180
th
calendar day period after the issuance of the Note, by making
a payment to JSJ of an amount in cash equal to 145% multiplied by principal, plus accrued interest.
The
Company may not prepay any amount outstanding under this Note after the 180
th
calendar day after the issuance of the
Note. Any amount of principal or interest due pursuant to this Note, which is not paid by the Maturity Date, shall bear interest
at the rate of the lesser of (i) eighteen percent (18%) per annum or (ii) the maximum amount permitted by law from the due date
thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the date the Note is fully
paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed.
Pursuant
to terms of the Note, the Company covenanted to JSJ to initially reserve with its transfer agent 1.8 million shares of its Common
Stock for conversions (the “Share Reserve”). The Company further covenanted that at all times it would reserve a minimum
of eight times of the number of shares of Company common stock issuable upon conversion of the Note in accordance with the terms
of the Note.
The
transaction documents contain additional terms and provisions, representations and warranties, including further provisions covering
conversions of debt, remedies on default, venue, and governing law. The summary of the transactions described in this Form 8-K
is qualified in its entirety by reference to the 10% Convertible Promissory Note dated May 29, 2019, which is filed as Exhibit
10.4 to this report.
GS
Capital Partners, LLC Placement
On
June 4, 2019, the Company closed on a convertible redeemable loan transaction with GS Capital Partners, LLC (“GS”)
in the principal amount of $60,000 (the “Note”) with an original issue discount of $7,000, before giving effect to
certain transactional costs including legal fees yielding a net of $53,000.
GS
is entitled, at its option, at any time after the 180
th
daily anniversary of the Note, to convert all or any amount
of the principal face amount of this Note then outstanding into shares of the Company’s common stock (the “Common
Stock”) at a price (“Conversion Price”) for each share of Common Stock equal to 55% of the lowest trading price
of the Common Stock as reported on the National Quotations Bureau OTC Marketplace exchange which the Company’s shares are
traded or any exchange upon which the Common Stock may be traded in the future (“Exchange”), for the twenty-five (25)
prior trading days including the day upon which a Notice of Conversion is received by the Company or its transfer agent (provided
such Notice of Conversion is delivered by fax or other electronic method of communication to the Company or its transfer agent
after 4 P.M. Eastern Standard or Daylight Savings Time if GS wishes to include the same day closing price).
Interest
on any unpaid principal balance of this Note shall be paid at the rate of 10% per annum. Interest shall be paid by the Company
in Common Stock (“Interest Shares”). GS may, at any time, after the 180
th
daily anniversary of the Note,
send in a Notice of Conversion to the Company for Interest Shares. The dollar amount converted into Interest Shares shall be all
or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.
The
maturity date for this Note is May 31, 2020 (“Maturity Date”), and is the date upon which the principal sum, as well
as any accrued and unpaid interest, shall be due and payable. This Note may be prepaid with the following premiums: (i) during
the initial 60 calendar day period after the issuance of the Note, by making a payment to GS of an amount in cash equal to 125%
multiplied by the principal, plus accrued interest; (ii) during the 61
st
through 120
th
calendar day period
after the issuance of the Note, by making a payment to GS of an amount in cash equal to 135% multiplied by principal, plus accrued
interest; (iii) during the 121
st
through 180
th
calendar day period after the issuance of the Note, by making
a payment to GS of an amount in cash equal to 145% multiplied by principal, plus accrued interest.
The
Company may not prepay any amount outstanding under this Note after the 180
th
calendar day after the issuance of the
Note. Any amount of principal or interest due pursuant to this Note, which is not paid by the Maturity Date, shall bear interest
at the rate of the lesser of (i) twenty-four percent (24%) per annum or (ii) the maximum amount permitted by law from the due
date thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the date the Note is
fully paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed.
Pursuant
to terms of the Note, the Company covenanted to GS to initially reserve with its transfer agent 1.7 million shares of its Common
Stock for conversions (the “Share Reserve”). The Company further covenanted that at all times it would reserve a minimum
of 400% of the number of shares of Company common stock issuable upon conversion of the Note in accordance with the terms of the
Note.
The
transaction documents contain additional terms and provisions, representations and warranties, including further provisions covering
conversions of debt, remedies on default, venue, and governing law. The summary of the transactions described in this Form 8-K
is qualified in its entirety by reference to the Securities Purchase Agreement dated May 31, 2019 and 10% Convertible Redeemable
Promissory Note dated May 31, 2019, which are filed as Exhibits 10.5 and 10.6, respectively to this report.
LG
Capital Funding, LLC Placement
On
June 6, 2019, the Company closed on a convertible redeemable loan transaction with LG Capital Funding, LLC (“LG”)
in the principal amount of $46,200 (the “Note”) with an original issue discount of $4,200, before giving effect to
certain transactional costs including legal fees yielding a net of $42,000.
LG
is entitled, at its option, at any time after the 180
th
daily anniversary of the Note, to convert all or any amount
of the principal face amount of this Note then outstanding into shares of the Company’s common stock (the “Common
Stock”) at a price (“Conversion Price”) for each share of Common Stock equal to 60% of the lowest trading price
of the Common Stock as reported on the National Quotations Bureau OTC Marketplace exchange which the Company’s shares are
traded or any exchange upon which the Common Stock may be traded in the future (“Exchange”), for the twenty (20) prior
trading days including the day upon which a Notice of Conversion is received by the Company or its transfer agent (provided such
Notice of Conversion is delivered by fax or other electronic method of communication to the Company or its transfer agent after
4 P.M. Eastern Standard or Daylight Savings Time if LG wishes to include the same day closing price).
Interest
on any unpaid principal balance of this Note shall be paid at the rate of 8% per annum. Interest shall be paid by the Company
in Common Stock (“Interest Shares”). LG may, at any time, after the 180
th
daily anniversary of the Note,
send in a Notice of Conversion to the Company for Interest Shares. The dollar amount converted into Interest Shares shall be all
or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.
The
maturity date for this Note is June 4, 2020 (“Maturity Date”), and is the date upon which the principal sum, as well
as any accrued and unpaid interest, shall be due and payable. This Note may be prepaid with the following premiums: (i) during
the initial 60 calendar day period after the issuance of the Note, by making a payment to LG of an amount in cash equal to 125%
multiplied by the principal, plus accrued interest; (ii) during the 61
st
through 120
th
calendar day period
after the issuance of the Note, by making a payment to LG of an amount in cash equal to 135% multiplied by principal, plus accrued
interest; (iii) during the 121
st
through 180
th
calendar day period after the issuance of the Note, by making
a payment to LG of an amount in cash equal to 145% multiplied by principal, plus accrued interest.
The
Company may not prepay any amount outstanding under this Note after the 180
th
calendar day after the issuance of the
Note. Any amount of principal or interest due pursuant to this Note, which is not paid by the Maturity Date, shall bear interest
at the rate of the lesser of (i) twenty-four percent (24%) per annum or (ii) the maximum amount permitted by law from the due
date thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the date the Note is
fully paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed.
Pursuant
to terms of the Note, the Company covenanted to LG to initially reserve with its transfer agent 1.3 million shares of its Common
Stock for conversions (the “Share Reserve”). The Company further covenanted that at all times it would reserve a minimum
of 400% of the number of shares of Company common stock issuable upon conversion of the Note in accordance with the terms of the
Note.
The
transaction documents contain additional terms and provisions, representations and warranties, including further provisions covering
conversions of debt, remedies on default, venue, and governing law. The summary of the transactions described in this Form 8-K
is qualified in its entirety by reference to the Securities Purchase Agreement dated June 4, 2019 and 8% Convertible Redeemable
Promissory Note dated June 4, 2019, which are filed as Exhibits 10.7 and 10.8, respectively to this report.
The
sum of net proceeds obtained in the above four loan transactions were used for general corporate and working capital purposes
and also to make a $150,000 principal payment to Labrys Fund, L.P. towards the Company’s balance due pursuant to their convertible
note dated March 6, 2019. No broker-dealer or placement agent was retained or involved in any of these transactions.
