Item
1.01. Entry into a Material Definitive Agreement
Power
Up Lending Group Ltd. Placement
On
July 22, 2019, Foothills Exploration, Inc. (the “Company”), closed on a convertible loan transaction with Power Up
Lending Group Ltd. (“Holder”) in the principal amount of $78,000 (the “Note”), before giving effect to
certain transactional costs including legal fees yielding a net of $78,000.
The
Holder 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 61% 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 the Holder 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. Interest shall be paid by the Company
in Common Stock (“Interest Shares”). Holder 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 based on the formula described above. 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 July 17, 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 or assigned with the following penalties/premiums:
(i) during the initial 90 calendar day period after the issuance of the Note, by making a payment to the Holder of an amount in
cash equal to 125% multiplied by the principal, plus accrued interest; (ii) during the 91
st
through 150
th
calendar day period after the issuance of the Note, by making a payment to the Holder of an amount in cash equal to 140% multiplied
by principal, plus accrued interest; (iii) during the 151
st
through 180
th
calendar day period after the
issuance of the Note, by making a payment to the Holder 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-two percent (22%) 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. Net proceeds obtained in this
transaction will be used for general corporate and working capital purposes. No broker-dealer or placement agent was retained
or involved in this transaction.
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 forms of the Securities Purchase Agreement, and the Convertible Promissory Note,
which are filed as Exhibits 10.1 and 10.2 respectively, to this report.
GS
Capital Partners, LLC Placement
On
July 24, 2019, the Company closed on a convertible redeemable loan transaction with GS Capital Partners, LLC (“GS”)
in the principal amount of $110,000 (the “Note”) with an original issue discount of $10,000, before giving effect
to certain transactional costs including legal fees yielding a net of $100,000.
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 July 23, 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.
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 July 23, 2019 and 10% Convertible Redeemable
Note dated July 23, 2019, which are filed as Exhibits 10.3 and 10.4, respectively to this report.
