File No. 024-12538
As filed with the Securities and Exchange Commission on March 3, 2025
PART II - INFORMATION REQUIRED IN OFFERING CIRCULAR
Preliminary Offering Circular dated March 3, 2025
An offering statement pursuant to Regulation A relating to these securities has been filed with the United States Securities and Exchange Commission (the “SEC”). Information contained in this Preliminary Offering Circular is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted before the offering statement filed with the SEC is qualified. This Preliminary Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state. We may elect to satisfy our obligation to deliver a Final Offering Circular by sending you a notice within two business days after the completion of our sale to you that contains the URL where the Final Offering Circular or the offering statement in which such Final Offering Circular was filed may be obtained.
OFFERING CIRCULAR
Raadr, Inc.
(doing business as Telvantis)
1,500,000,000 Shares of Common Stock
By this Offering Circular, Raadr, Inc., a Nevada corporation, is offering for sale a maximum of 1,500,000,000 shares of its common stock (the Offered Shares), at a fixed price of $0.003 per share, pursuant to Tier 1 of Regulation A of the United States Securities and Exchange Commission (the SEC). A minimum purchase of $10,000 of the Offered Shares is required in this offering, with any additional purchase required to be in an amount of at least $1,000. This offering is being conducted on a best-efforts basis, which means that there is no minimum number of Offered Shares that must be sold by us for this offering to close; thus, we may receive no or minimal proceeds from this offering. All proceeds from this offering will become immediately available to us and may be used as they are accepted. Purchasers of the Offered Shares will not be entitled to a refund and could lose their entire investments.
Upon qualification of this offering by the SEC, a total of $1,150,000 of principal amount convertible promissory notes (the “Subject Convertible Notes”) will, by their terms, be eligible for conversion into Offered Shares (the Offered Shares issued upon conversion of the Subject Convertible Notes are referred to as the “Conversion Shares”), at the election of their respective holders, at the offering price for all of the Offered Shares, $0.003 per share converted. (See “Use of Proceeds” and “Plan of Distribution”).
This offering will commence within two days of its qualification by the SEC. This offering will terminate at the earliest of (a) the date on which the maximum offering has been sold, (b) the date which is one year from this offering circular being qualified by the SEC and (c) the date on which this offering is earlier terminated by us, in our sole discretion. (See “Plan of Distribution”).
Title of Class
of Securities Offered
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| Number of
Offered Shares
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| Price to Public
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| Commissions(1)
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| Proceeds to Company(2)
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Common Stock
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| 1,500,000,000
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| $0.003
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| $-0-
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| $4,500,000(3)(4)
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(1)We will not pay any commissions for the sale of Offered Shares in this offering. We do not intend to offer and sell the Offered Shares through registered broker-dealers or utilize finders. However, should we determine to employ a registered broker-dealer of finder, information as to any such broker-dealer or finder shall be disclosed in an amendment to this Offering Circular.
(2)Does not account for payment of expenses of this offering, which are estimated to not exceed $20,000 and which include, among other expenses, legal fees, accounting costs, administrative services, Blue Sky compliance and actual out-of-pocket expenses incurred by us in selling the Offered Shares. See “Plan of Distribution” and “Selling Shareholders.”
(3)The amount of total proceeds received by us includes a total of $1,232,500 of principal amount of the Subject Convertible Notes, plus accrued interest through the date of their respective conversions. After deducting the aggregate amount due (principal and interest) under the Convertible Notes, we will receive cash proceeds from sales of the Offered Shares equal to approximately $3,265,000. (See “Risk Factors–Risks Related to a Purchase of Offered Shares, “Use of Proceeds” and “Plan of Distribution”).
There is no escrow established for the proceeds of this offering. (See “Risk Factors - Risks Related to a Purchase of Offered Shares”).
Our common stock is quoted in the over-the-counter under the symbol “RDAR” in the OTC Pink marketplace of OTC Link. On February 28, 2025, the closing price of our common stock was $0.00085 per share.
Investing in the Offered Shares is speculative and involves substantial risks, including the superior voting rights of our outstanding shares of Series F Preferred Stock (the “Series F Preferred Stock”), which effectively precludes current and future owners of our common stock, including the Offered Shares, from influencing any corporate decision. The holders of the Series F Preferred Stock, as a class, have voting rights in all matters requiring shareholder approval equal to 66.67% of all shares eligible to vote.
Mexedia S.p.A S.B., an Italy corporation (“Mexedia SPA”), is the owner of all outstanding shares of our Series F Preferred Stock; Orlando Taddeo is the President of Mexedia SPA and, as such, holds voting and dispositive control over the shares of Series F Preferred Stock owned by Mexedia SPA. As the owner of all outstanding shares of Series F Preferred Stock, Mexedia SPA will, therefore, be able to control the management and affairs of our company, as well as matters requiring the approval by our shareholders, including the election of directors, any merger, consolidation or sale of all or substantially all of our assets, and any other significant corporate transaction. (See “Risk Factors-Risks Related to a Purchase of the Offered Shares”).
You should purchase Offered Shares only if you can afford a complete loss of your investment. See “Risk Factors,” beginning on page 4, for a discussion of certain risks that you should consider before purchasing any of the Offered Shares.
THE SEC DOES NOT PASS UPON THE MERITS OF, OR GIVE ITS APPROVAL TO, ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE SEC. HOWEVER, THE SEC HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION.
The use of projections or forecasts in this offering is prohibited. No person is permitted to make any oral or written predictions about the benefits you will receive from an investment in Offered Shares.
No sale may be made to you in this offering if you do not satisfy the investor suitability standards described in this Offering Circular under “Plan of Distribution – State Law Exemption and Offerings to Qualified Purchasers,” including “Investor Suitability Standards” thereunder (page 13). Before making any representation that you satisfy the established investor suitability standards, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.
This Offering Circular follows the disclosure format of Form S-1, pursuant to the General Instructions of Part II(a)(1)(ii) of Form 1-A.
The date of this Offering Circular is ______________, 2025.
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FOR FLORIDA RESIDENTS:
PURSUANT TO SECTION 517.061(11)(A)(5) OF THE FLORIDA STATUTES, FLORIDA INVESTORS HAVE A THREE-DAY RIGHT OF RESCISSION. IF A FLORIDA INVESTOR HAS EXECUTED A SUBSCRIPTION AGREEMENT AND TENDERED THE CONSIDERATION FOR THE PURCHASE, HE MAY ELECT, WITHIN THREE BUSINESS DAYS AFTER SIGNING THE SUBSCRIPTION AGREEMENT OR BEING FIRST NOTIFIED OF THIS RIGHT, WHICHEVER IS LATER, TO WITHDRAW FROM THE SUBSCRIPTION AGREEMENT AND RECEIVE A FULL REFUND AND RETURN (WITHOUT INTEREST) OF ANY MONEY PAID BY HIM. A FLORIDA INVESTOR’S WITHDRAWAL WILL BE WITHOUT ANY FURTHER LIABILITY TO ANY PERSON. TO ACCOMPLISH SUCH WITHDRAWAL, A FLORIDA INVESTOR NEED ONLY SEND A LETTER OR TELEGRAM TO THE COMPANY AT THE ADDRESS SET FORTH IN THIS MEMORANDUM INDICATING HIS INTENTION TO WITHDRAW. SUCH LETTER OR TELEGRAM MUST BE SENT AND POSTMARKED PRIOR TO THE END OF THE AFOREMENTIONED THIRD BUSINESS DAY. IF A FLORIDA INVESTOR SENDS A LETTER, IT IS PRUDENT TO SEND IT BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO AN OFFICER OF THE COMPANY TO ENSURE THAT IT IS RECEIVED AND ALSO TO EVIDENCE THE TIME AND DATE WHEN IT IS MAILED. SHOULD A FLORIDA INVESTOR MAKE THIS REQUEST ORALLY, HE SHOULD ASK FOR WRITTEN CONFIRMATION THAT HIS REQUEST HAS BEEN RECEIVED. THE FOREGOING IS INTENDED TO CONSTITUTE THE NOTICE REQUIRED UNDER THE FLORIDA STATUTES. ACCORDINGLY, EACH PURCHASER WILL HAVE THREE DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH PURCHASER TO VOID HIS PURCHASE OF THESE SECURITIES.
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TABLE OF CONTENTS
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The information contained in this Offering Circular includes some statements that are not historical and that are considered forward-looking statements. Such forward-looking statements include, but are not limited to, statements regarding our development plans for our business; our strategies and business outlook; anticipated development of our company; and various other matters (including contingent liabilities and obligations and changes in accounting policies, standards and interpretations). These forward-looking statements express our expectations, hopes, beliefs and intentions regarding the future. In addition, without limiting the foregoing, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words anticipates, believes, continue, could, estimates, expects, intends, may, might, plans, possible, potential, predicts, projects, seeks, should, will, would and similar expressions and variations, or comparable terminology, or the negatives of any of the foregoing, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
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The forward-looking statements contained in this Offering Circular are based on current expectations and beliefs concerning future developments that are difficult to predict. We cannot guarantee future performance, or that future developments affecting our company will be as currently anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.
All forward-looking statements attributable to us are expressly qualified in their entirety by these risks and uncertainties. These risks and uncertainties, along with others, are also described below in the Risk Factors section. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. You should not place undue reliance on any forward-looking statements and should not make an investment decision based solely on these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
OFFERING CIRCULAR SUMMARY
The following summary highlights material information contained in this Offering Circular. This summary does not contain all of the information you should consider before purchasing our common stock. Before making an investment decision, you should read this Offering Circular carefully, including the Risk Factors section and the unaudited consolidated financial statements and the notes thereto. Unless otherwise indicated, the terms we, us and our refer and relate to Raadr, Inc., a Nevada corporation, including its subsidiaries.
History
Our company was incorporated in the State of Nevada on March 29, 2006, as White Dental Supply, Inc. On January 7, 2013, our corporate name changed to Pitooey!, Inc. On October 12, 2015, our corporate name changed to Raadr, Inc.
Our Board of Directors and majority shareholder have approved a change of our corporate name to Telvantis, Inc. In the near future, we will submit an application for approval of this corporate action to FINRA. The effective time, as it relates to the stock trading market, of this corporate action, which will include a change to our trading symbol, will depend on the date on which FINRA issues its approval of our related filing. We are unable to predict the date on which FINRA will issue such approval.
Recent Change in Control
Effective October 8, 2024, a change in control of our company, in connection with our acquisitions (the “Mexedia Acquisitions”) of Telvantis, Inc. (formerly known as Mexedia, Inc.), a Florida corporation with its operations headquartered in Miami Beach, Florida (“Telvantis Florida”), and Mexedia DAC, an Ireland corporation now wholly owned by Telvantis Florida (“Mexedia DAC”) (Telvantis Florida and Mexedia DAC are referred to as the “Mexedia Companies”). Following these transactions, Mexedia SPA controls our company. However, it is intended that, as soon as possible and in keeping with applicable Italian corporate laws and applicable Euronext Growth Paris exchange rules, Mexedia SPA would distribute to its shareholders the control shares issued to it pursuant to the Acquisition Agreements.
Also in connection with the Mexedia Acquisitions, Jacob DiMartino resigned as the Sole Director and Officer of our company and the following persons were appointed: Daniel Contreras, Chief Executive Officer and Director; Orlando Taddeo, President and Director; and Daniel Gilcher, Chief Financial Officer, Secretary, Treasurer and Director. (See “Directors, Executive Officers, Promoters and Control Persons”).
Acquisitions of the Mexedia Companies. Pursuant to separate Share Exchange Agreements (the “Acquisition Agreements”), we acquired 100% ownership of Telvantis Florida by the issuance of 40,000 shares of Series F Preferred Stock to Mexedia SPA and 100% ownership of Mexedia DAC by the issuance of 35,000 shares of Series F Preferred Stock to Mexedia SPA. Except for the consideration paid under the Acquisition Agreements, the Acquisition Agreements are substantially identical and contain the following provisions, among other customary provisions:
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Regulation A Offering. Should we fail to have filed an Offering Statement on Form 1-A pursuant to Regulation A of the Securities and Exchange Commission (the “Reg A Offering”), on or before October 28th, Mexedia SPA has the right, but not the obligation, to rescind the Acquisition Agreements. This condition subsequent has been waived by Mexedia SPA.
Reg A Offering Proceeds. Should we fail to have obtained the sum of $1,500,000 in proceeds from the Reg A Offering, on or before the date that is six (6) months from the date of the SEC’s qualification of the Reg A Offering, Mexedia SPA has the right, but not the obligation, to rescind the Acquisition Agreements. This condition subsequent has been waived by Mexedia SPA.
Divestiture. Should we fail to have divested of our pre-closing operations, which divestiture shall include all debts, other than the trade payables of our company, as of the closing date of the Mexedia Acquisitions, on or before December 31, 2024, Mexedia SPA shall have the right, but not the obligation, to rescind the Acquisition Agreements. This condition has been satisfied by our company.
With the waivers and satisfaction of the conditions precedent in the Acquisition Agreements, our company’s ownership of the Mexedia Companies has fully vested.
Redemption Agreement. In connection with the Acquisition Agreements, our company and JanBella entered into the Redemption Agreement, pursuant to which JanBella sold 100% of the then-outstanding shares of Series E Preferred Stock to our company in exchange for the Redemption Note.
The principal amount of the Redemption Note is $540,000, with interest at 8% per annum and a maturity date of October 8, 2025. Under the Redemption Note, we are required to pay, on a monthly basis, 40% of the proceeds from the Reg A Offering that exceeds $100,000, until the principal and interest shall have been paid.
Following the date of payment in full of the principal balance of the Redemption Note (the “Balance Date”), we are to pay JanBella up to an additional $1,260,000 as additional principal (the “Additional Principal”), whether through monthly payments of 10% of Reg A Offering proceeds and/or, for a period of 18 months immediately following the issue date of the Redemption Note, 10% of funds obtained by our company from any third-party.
Pledge Agreement and Guaranty. In connection with the Acquisition Agreements, JanBella and Mexedia SPA entered into a pledge agreement (the “Pledge Agreement”) and a guaranty (“Guaranty”) with respect to our company’s obligations under the Redemption Note. Specifically, the Pledge Agreement and the Guaranty relate to our company’s timely payment of the $540,000 principal balance and accrued interest on the Redemption Agreement.
Share Cancellation Agreements. In connection with the Acquisition Agreements, our company entered into three separate share cancellation agreement (the “Share Cancellation Agreements”) with Dean Richards, Brenda Whitman and Christina Upham, respectively. Pursuant to the Share Cancellation Agreements, a total of 1,700,000,000 shares of our common stock were cancelled.
Series F Preferred Stock. Also in conjunction with the Mexedia Acquisitions, we designated a new Series F Preferred Stock and issued a total of 75,000 shares of such Series F Preferred Stock to Mexedia SPA, which now controls our company through its ownership of the Series F Preferred Stock. (See “Description of Securities-Series F Preferred Stock”).
New Business Focus
Following the acquisitions of the Mexedia Companies, our company has adopted the business plan of the Mexedia Companies as our company’s new business focus. Our prior business operations centered around an anti-bulling App known as “RAADR” are to be divested, in accordance with the Acquisition Agreements, which divestiture is expected to occur prior to the end of December 2024.
Our company now operates as a holding company in the telecommunications sector. Telvantis Florida and Mexedia DAC are intermediary operators that sell “segments” of telephone connections, taking place between a “calling” user and a “called” user, to other Telco operator or mobile operators. As telco operators, the volume of their revenues is closely linked to the number of interconnection agreements entered into with commercial partners, e.g. commercial contracts between telecom operators with the aim of interconnecting networks and exchanging services.
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Our customers and supplier entities are predominantly based in the United States and the principal service we provide is the termination of international voice communication between customer entities in the context of global communication. The service is provided on a strictly digital basis through the internet. The specific rates charged and destinations serviced change over time, depending on commercial opportunities and customer needs. Further, a part of our business consists of the aggregation of voice traffic from different customers to be delivered to the same supplier. We are, therefore, in principle, able to serve any network operator who generates international voice activity. (See “Business”).
Figure 1 below depicts the structure of our company, following the acquisitions of the Mexedia Companies.
Offering Summary
Securities Offered
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| 1,500,000,000 shares of common stock, par value $0.001
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Offering Price
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| $0.003 per Offered Share.
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Shares Outstanding
Before This Offering
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| 6,371,260,661 shares issued and outstanding as of the date hereof.
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Shares Outstanding
After This Offering
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| 7,871,260,661 shares issued and outstanding, assuming the sale of all Offered Shares are sold.
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Minimum Number of Shares
to Be Sold in This Offering
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| None
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Current Financial Condition
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| At December 31, 2024, our company had cash on hand of $1,431,921 (unaudited) and, for the year ended December 31, 2024, we reported revenues of $7,176,431 (unaudited) and a net loss of $32,673,750 (unaudited). The acquisition of the Mexedia Companies has transformed our company into a company that possesses adequate capital for operations and significant revenues. (See “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”).
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Disparate Voting Rights
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| Our outstanding shares of Series F Preferred Stock possess superior voting rights, which effectively precludes current and future owners of our common stock, including the Offered Shares, from influencing any corporate decision. The holders of the Series F Preferred Stock, as a class, have voting rights in all matters requiring shareholder approval equal to 66.67% of all shares eligible to vote. Mexedia SPA (Orlando Taddeo, a Director and President of our company, is the President of Mexedia SPA and, in such capacity, controls the vote and disposition of the Series F Preferred Stock), as the owner of all outstanding shares of our Series F Preferred Stock will, therefore, be able to control the management and affairs of our company, as well as matters requiring the approval by our shareholders, including the election of directors, any merger, consolidation or sale of all or substantially all of our assets, and any other significant corporate transaction. (See “Risk Factors-Risks Related to a Purchase of the Offered Shares”).
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Investor Suitability Standards
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| The Offered Shares may only be purchased by investors residing in a state in which this Offering Circular is duly qualified who have either (a) a minimum annual gross income of $70,000 and a minimum net worth of $70,000, exclusive of automobile, home and home furnishings, or (b) a minimum net worth of $250,000, exclusive of automobile, home and home furnishings.
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Market for our Common Stock
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| Our common stock is quoted in the over-the-counter market under the symbol “RDAR” in the OTC Pink marketplace of OTC Link.
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Termination of this Offering
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| This offering will terminate at the earliest of (a) the date on which the maximum offering has been sold, (b) the date which is one year from this offering circular being qualified by the SEC and (c) the date on which this offering is earlier terminated by us, in our sole discretion.
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Use of Proceeds
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| We will apply the proceeds of this offering for acquisitions, debt payment, general and administrative expenses and working capital. (See “Use of Proceeds”).
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Risk Factors
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| An investment in the Offered Shares involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investments. You should carefully consider the information included in the Risk Factors section of this Offering Circular, as well as the other information contained in this Offering Circular, prior to making an investment decision regarding the Offered Shares.
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Corporate Information
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| Our principal place of business and our principal executive offices are located at 1680 Michigan Avenue, Suite 700, Miami Beach, Florida 33139; our telephone number is 954-456-3191; our corporate website is located at www.telvantis.com. No information found on our company’s website is part of this Offering Circular.
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Continuing Reporting Requirements Under Regulation A
As a Tier 1 issuer under Regulation A, we will be required to file with the SEC a Form 1-Z (Exit Report Under Regulation A) upon the termination of this offering. We will not be required to file any other reports with the SEC following this offering.
However, during the pendency of this offering and following this offering, we intend to file quarterly and annual financial reports and other supplemental reports with OTC Markets, which will be available at www.otcmarkets.com.
All of our future periodic reports, whether filed with OTC Markets or the SEC, will not be required to include the same information as analogous reports required to be filed by companies whose securities are listed on the NYSE or NASDAQ, for example.
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RISK FACTORS
An investment in the Offered Shares involves substantial risks. You should carefully consider the following risk factors, in addition to the other information contained in this Offering Circular, before purchasing any of the Offered Shares. The occurrence of any of the following risks might cause you to lose a significant part of your investment. The risks and uncertainties discussed below are not the only ones we face, but do represent those risks and uncertainties that we believe are most significant to our business, operating results, prospects and financial condition. Some statements in this Offering Circular, including statements in the following risk factors, constitute forward-looking statements. (See “Cautionary Statement Regarding Forward-Looking Statements”).
Risks Related to Our Company
Currently, the Rule 144 safe harbor is unavailable for the resale of shares issued by us. Because our company was, in the distant past, a “shell company” as defined by Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act, pursuant to Rule 144, one year must elapse from the time a “shell company” ceases to be a “shell company” and files Form 10 information with the SEC, during which time the issuer must remain current in its filing obligations, before a restricted shareholder can resell their holdings in reliance on Rule 144.
The term “Form 10 information” means the information that is required by SEC Form 10, to register under the Exchange Act each class of securities being sold under Rule 144. The Form 10 information is deemed filed when the initial filing is made with the SEC. Under Rule 144, restricted or unrestricted securities, that were initially issued by a reporting or non-reporting shell company or a company that was at any time previously a reporting or non-reporting shell company can only be resold in reliance on Rule 144 if the following conditions are met: (1) the issuer of the securities that was formerly a reporting or non-reporting shell company has ceased to be a shell company; (2) the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; (3) the issuer of the securities has filed all reports and material required to be filed under Section 13 or 15(d) of the Exchange Act, as applicable, during the preceding twelve months (or shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and (4) at least one year has elapsed from the time the issuer filed the current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus before investing in our common stock. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed. The trading price of our common stock, when and if we trade at a later date, could decline due to any of these risks, and you may lose all or part of your investment.
Prior to our acquisitions of the Mexedia Companies, we did not have a successful operating history. Until October 2024, when we acquired the Mexedia Companies, we did not have a successful operating history. However, the Mexedia Companies have reported operating profits in past periods. Nevertheless, there is no assurance that the Mexedia Companies will continue to earn a profit from their operations.
To increase revenues, the Mexedia Companies require additional capital. We require additional working capital with which to increase the capacity of the Mexedia Companies to generate revenues. There is no assurance that we will be able to obtain sources of financing, including in this offering, in order to satisfy our working capital needs as they relate to achieving greater revenues.
A default under our $45 million credit facility agreement could result in our lender foreclosing on the Mexedia Companies, resulting in our company’s loss of ownership of the Mexedia Companies. Because substantially all of the assets of the Mexedia Companies are pledged to securitize our credit facility agreement with our lender, Fasanara Securitisation S.A., an uncured default under such credit facility could result in our company’s losing ownership of the Mexedia Companies pursuant to a foreclosure action of our lender. If such an event were to occur, our company would no longer have any business operations.
Our financial statements are not independently audited, which could result in errors and/or omissions in our financial statements if proper standards are not applied. We are not required to have our financial statements audited by a firm that is certified by the Public Company Accounting Oversight Board (“PCAOB”). As such, we do not have a third party reviewing the accounting. We may also not be up to date with all publications and releases released by the PCAOB regarding accounting standards and treatments. This circumstance could mean that our
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unaudited financials may not properly reflect up to date standards and treatments, resulting in misstated financial statements.
If we are unable to manage future expansion effectively, our business may be adversely impacted. In the future, we may experience rapid growth in our business, which could place a significant strain on our company’s infrastructure, in general, and our internal controls and other managerial, operating and financial resources, in particular. If we are unable to manage future expansion effectively, our business would be harmed. There is, of course, no assurance that we will enjoy rapid development in our business.
We currently depend on the efforts of our executive officers’ serving without current compensation; the loss of these persons could disrupt our operations and adversely affect the development of our business. Our success in establishing our products and services will depend, primarily, on the continued service of our executive officers, Daniel Contreras, Orlando Taddeo and Daniel Gilcher. We have entered into an employment agreement only with Mr. Contreras. We intend to enter into employment agreements with Messrs. Taddeo and Gilcher in the near future; terms of such employment agreements have yet to be determined. The loss of service of these persons, for any reason, could seriously impair our ability to execute our business plan, which could have a materially adverse effect on our business and future results of operations. We have not purchased any key-man life insurance.
Two of our officers do not devote all of their time to the business of our company. Our President, Orlando Taddeo, and our Chief Financial Officer, Daniel Gilcher, devote approximately 20 hours and 25 hours per week, respectively, to the business of our company. To date, these amounts of time has proven to be adequate to perform their respective duties. However, as our company grows, particularly if such growth is achieved by acquisition, it is possible that these amounts of time may not be sufficient for them to perform adequately their duties. Should such circumstance arise, it is likely that our results of operations would be negatively impacted.
Our management may encounter conflicts of interest, due to their having business interests outside our company. Due to their outside business interests, including those associated with Mexedia SPA for Orlando Taddeo and Daniel Gilcher, our officers and directors may encounter conflicts of interest. Should such a conflict of interest arise, the conflicted party will be required to resolve any such conflicts in accordance with the fiduciary duties owed to our company. There is, however, no assurance that any such conflict would be resolved successfully, in which circumstance, our company could be damaged. We are unable to make any prediction, in this regard. (See “Directors, Executive Officers, Promoters and Control Persons - Conflicts of Interest”).
If we are unable to recruit and retain key personnel, our business may be harmed. If we are unable to attract and retain key personnel, our business may be harmed. Our failure to enable the effective transfer of knowledge and facilitate smooth transitions with regard to our key employees could adversely affect our long-term strategic planning and execution.
Negative outcomes of legal proceedings may adversely affect our business and financial condition, results of operations and cash flows. We become involved in legal proceedings from time to time. While we are not currently involved in any material legal proceedings, potential future proceedings may be complicated, costly and disruptive to our business operations. We might also incur significant expenses in defending these matters or may be required to pay significant fines, awards and settlements. Any of these potential outcomes, such as judgments, awards, settlements or orders could have a material adverse effect on our business, financial condition, operating results or our ability to do business.
The business of the Mexedia Companies may be impacted by new or changing tax laws or regulations or how judicial authorities apply tax laws. In connection with the services we sell, we calculate, collect and remit various taxes, surcharges and regulatory fees to numerous governmental authorities.
Tax laws are subject to change as new laws are passed and new interpretations of the law are issued or applied. In many cases, the application of tax laws is uncertain and subject to differing interpretations, especially when evaluated against new technologies and telecommunications services, such as broadband internet access and cloud related services.
In the event that the Mexedia Companies have incorrectly calculated, assessed or remitted amounts that were due to governmental authorities, the Mexedia Companies could be subject to additional taxes, fines, penalties or other adverse actions, which could materially impact their businesses, financial condition and operating results.
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Our Board of Directors may change our policies without shareholder approval. Our policies, including any policies with respect to investments, leverage, financing, growth, debt and capitalization, will be determined by our Board of Directors or officers to whom our Board of Directors delegates such authority. Our Board of Directors will also establish the amount of any dividends or other distributions that we may pay to our shareholders. Our Board of Directors or officers to which such decisions are delegated will have the ability to amend or revise these and our other policies at any time without shareholder vote. Accordingly, our shareholders will not be entitled to approve changes in our policies, which policy changes may have a material adverse effect on our financial condition and results of operations.
Risks Related to Our Business
Alternative technologies, changes in the regulatory environment and current uncertainties in the marketplace may reduce future demand for existing telecommunication services and materially increase our capital expenditures. The telecommunications industry is experiencing significant technological change, evolving industry standards, ongoing improvements in the capacity and quality of digital technology, shorter development cycles for new products and enhancements and changes in end-user requirements and preferences. Technological advances, industry changes and changes in the regulatory environment could cause the technologies we use to become obsolete. We may not be able to respond to such changes and implement new technology on a timely basis or at an acceptable cost. Additionally, we may be required to select one developing or new technology over another and may not choose the technology that is ultimately determined to be the most economic, efficient or attractive to customers. We may also encounter difficulties in implementing new technologies, products and services and may encounter disruptions in service as a result. As a result, our financial performance may be negatively impacted.
We may not benefit from our acquisition strategy. As part of our business strategy, we regularly evaluate opportunities to enhance the value of our company by pursuing acquisitions of other businesses. Although we remain subject to financial and other covenants in our credit facility agreement that may limit our ability to pursue certain strategic opportunities, we intend to continue to evaluate and, when appropriate, pursue strategic acquisition opportunities as they arise. We cannot provide any assurance, however, with respect to the timing, likelihood, size or financial effect of any potential transaction involving our company, as we may not be successful in identifying and consummating any acquisition or in integrating any newly acquired business into our operations.
Currently, we have not entered into any agreement, oral or written, or other understanding with respect to the acquisition of any going business and/or assets.
The evaluation of business acquisition opportunities and the integration of any acquired businesses pose a number of significant risks, including the following:
•acquisitions may place significant strain on our management and financial and other resources by requiring us to expend a substantial amount of time and resources in the pursuit of acquisitions that we may not complete, or to devote significant attention to the various integration efforts of any newly acquired businesses, all of which will require the allocation of limited resources;
•acquisitions may not have a positive impact on our cash flows or financial performance;
•even if acquired businesses eventually contribute to an increase in our cash flows or financial performance, such acquisitions may adversely affect our operating results in the short term as a result of transaction-related expenses we will have to pay or the higher operating and administrative expenses we may incur in the periods immediately following an acquisition as we seek to integrate the acquired business into our operations;
•we may not be able to realize anticipated synergies, achieve the desired level of integration of the acquired business or eliminate as many redundant costs;
•we may not be able to maintain relationships with customers, suppliers and other business partners of the acquired business;
•our operating and financial systems and controls and information services may not be compatible with those of the businesses we may acquire and may not be adequate to support our integration efforts, and any steps we take to improve these systems and controls may not be sufficient;
10
•our business plans and projections used to justify the acquisitions and expansion investments may be based on assumptions of revenues per subscriber, penetration rates in specific markets where we operate and expected operating costs and these assumptions may not develop as projected, which may negatively impact our profitability or the value of our intangible assets;
•growth through acquisitions will increase our need for qualified personnel, who may not be available to us or, if they were employed by a business we acquire, remain with us after the acquisition; and
•acquired businesses may have unexpected liabilities and contingencies, which could be significant.
Disruptions of our information technology infrastructure or operations could harm our business. A disruption of our information technology infrastructure or overall operations, or the infrastructure or operations of certain vendors who provide information technology or overall operations services to us or our customers, could be caused by a natural disaster, energy or manufacturing failure, telecommunications system failure, ransomware attack, cybersecurity attack, terrorist attack, intrusion or incident or defective or improperly installed new or upgraded business management systems. Although we make significant efforts to maintain the security and integrity of the Company’s operations and information technology infrastructure, there can be no assurance that our security efforts, business impact planning and disaster recovery measures will be effective or that attempted security breaches or catastrophic disruptions would not be successful or damaging, especially in light of the growing sophistication of cyber-attacks and intrusions sponsored by state or other interests. Portions of our information technology infrastructure also may experience interruptions, delays or cessations of service or produce errors in connection with systems integration or migration work that takes place from time to time. In the event of any such disruption, we may be unable to conduct our business in the normal course. Moreover, our business involves the processing, storage and transmission of data, which would also be negatively affected by such an event. A disruption of our information technology infrastructure or operations could also cause us to lose customers and revenue, particularly during a period of heavy demand for our services. We also could incur significant expense in repairing system damage and taking other remedial measures.
We could suffer a loss of revenue and increased costs, exposure to significant liability, reputational harm and other serious negative consequences if we sustain cyber-attacks or other data security breaches that disrupt our operations or result in the dissemination of proprietary or confidential information about us or our customers or other third parties. We utilize our information technology infrastructure to manage and store various proprietary information and sensitive or confidential data relating to our operations. We routinely process, store and transmit large amounts of data for our customers, including sensitive and personally identifiable information. We depend on our information technology infrastructure to conduct business operations and provide customer services. We may be subject to data breaches and disruptions of the information technology systems we use for these purposes. Our industry has witnessed an increase in the frequency, intensity and sophistication of cybersecurity incidents caused by threat actors such as foreign governments, criminals, hacktivists, terrorists and insider threats. Threat actors may be able to penetrate our network security and misappropriate or compromise our confidential, sensitive, personal or proprietary information, or that of third parties, and engage in the unauthorized use or dissemination of such information. They may be able to create system disruptions, or cause shutdowns. Threat actors may be able to develop and deploy viruses, worms, ransomware and other malicious software programs that attack our products or otherwise exploit security vulnerabilities of our systems causing operational damage that could impact our ability to serve customers and result in financial losses. In addition, sophisticated hardware and operating system software and applications that we procure from third parties may contain defects in design or manufacture, including “bugs,” cybersecurity vulnerabilities and other problems that could unexpectedly interfere with the operation or security of our systems.
Like many other companies, we increasingly leverage third-party SaaS solutions and external service providers to help us deliver services to our customers. In the delivery of these services, we are dependent on the security infrastructure of those third-party providers. These providers are also vulnerable to the cyber-attacks possible in today’s environment. In the case where a third-party provider becomes victim to an attack it could have an impact on our operations or ability to service customers.
To date, interruptions of our information technology infrastructure and third-party suppliers have been infrequent and have not had a material impact on our operations. However, because technology is increasingly complex and cyber-attacks are increasingly sophisticated and more frequent, there can be no assurance that such incidents will not have a material adverse effect on us in the future. The consequences of a breach of our security measures or those of a third-party provider, a cyber-related service or operational disruption, or a breach of personal,
11
confidential, proprietary or sensitive data caused by a hacker or other malicious actor could be significant for us, our customers and other affected third parties. For example, the consequences could include damage to infrastructure and property, impairment of business operations, disruptions to customer service, financial costs and harm to our liquidity, costs associated with remediation, loss of revenues, loss of customers, competitive disadvantage, legal expenses associated with litigation, regulatory action, fines or penalties or damage to our brand and reputation.
In addition, the costs to us to eliminate or address the foregoing security challenges and vulnerabilities before or after a cyber-incident could be significant. In addition, our remediation efforts may not be successful and could result in interruptions, delays or cessation of service. We could also lose existing or potential customers for our services in connection with any actual or perceived security vulnerabilities in the services.
We are subject to payment processing risk. We rely on third parties to process payments from our customers. Acceptance and processing of these payment methods are subject to certain rules and regulations and require payment of interchange and other fees. To the extent there are disruptions in our payment processing systems, our revenue, operating expenses and results of operation could be adversely impacted.
Our business and operations would be adversely impacted in the event of a failure or interruption of our information technology infrastructure or as a result of a cybersecurity attack. The proper functioning of our own information technology (IT) infrastructure is critical to the efficient operation and management of our business. We may not have the necessary financial resources to update and maintain our IT infrastructure, and any failure or interruption of our IT system could adversely impact our operations. In addition, our IT is vulnerable to cyberattacks, computer viruses, worms and other malicious software programs, physical and electronic break-ins, sabotage and similar disruptions from unauthorized tampering with our computer systems. We believe that we have adopted appropriate measures to mitigate potential risks to our technology infrastructure and our operations from these IT-related and other potential disruptions. However, given the unpredictability of the timing, nature and scope of any such IT failures or disruptions, we could potentially be subject to downtimes, transactional errors, processing inefficiencies, operational delays, other detrimental impacts on our operations or ability to provide products to our customers, the compromising of confidential or personal information, destruction or corruption of data, security breaches, other manipulation or improper use of our systems and networks, financial losses from remedial actions, loss of business or potential liability, and/or damage to our reputation, any of which could have a material adverse effect on our cash flows, competitive position, financial condition or results of operations.
If we fail to comply with personal data protection and privacy laws, we could be subject to adverse publicity, government enforcement actions and/or private litigation, which could negatively affect our business and operating results. In the ordinary course of our business, we receive, process, transmit and store information relating to identifiable individuals (“personal data”), primarily employees, former employees and consumers with whom we interact. As a result, we are subject to various U.S. federal and state and foreign (E.U.) laws and regulations relating to personal data. These laws have been subject to frequent changes, and new legislation in this area may be enacted in other jurisdictions at any time. These laws impose operational requirements for companies receiving or processing personal data, and many provide for significant penalties for noncompliance. These requirements with respect to personal data have subjected and may continue in the future to subject our company to, among other things, additional costs and expenses and have required and may in the future require costly changes to our business practices and information security systems, policies, procedures and practices. Our security controls over personal data, the training of employees and vendors on data privacy and data security, and the policies, procedures and practices we implemented or may implement in the future may not prevent the improper disclosure of personal data by us or the third-party service providers and vendors whose technology, systems and services we use in connection with the receipt, storage and transmission of personal data. Unauthorized access or improper disclosure of personal data in violation of personal data protection or privacy laws could harm our reputation, cause loss of consumer confidence, subject us to regulatory enforcement actions (including fines), and result in private litigation against us, which could result in loss of revenue, increased costs, liability for monetary damages, fines and/or criminal prosecution, all of which could negatively affect our business and operating results.
We may not compete successfully with other businesses in our industry segment. The industry segment in which we compete is highly competitive and, in general, dominated by large companies. We may not be successful in competing against these competitors, many of whom have longer operating histories, significantly greater financial stability and better access to capital markets and credit than we do. There is no assurance that we will be able to compete successfully against our competition. (See “Business-Competition”).
12
Risks Related to Compliance and Regulation
We will not have reporting obligations under Sections 14 or 16 of the Securities Exchange Act of 1934, nor will any shareholders have reporting requirements of Regulation 13D or 13G, nor Regulation 14D. So long as our common shares are not registered under the Exchange Act, our directors and executive officers and beneficial holders of 10% or more of our outstanding common shares will not be subject to Section 16 of the Exchange Act. Section 16(a) of the Exchange Act requires executive officers and directors and persons who beneficially own more than 10% of a registered class of equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of common shares and other equity securities, on Forms 3, 4 and 5, respectively. Such information about our directors, executive officers and beneficial holders will only be available through periodic reports we file with OTC Markets.
Our common stock is not registered under the Exchange Act and we do not intend to register our common stock under the Exchange Act for the foreseeable future; provided, however, that we will register our common stock under the Exchange Act if we have, after the last day of any fiscal year, more than either (1) 2,000 persons; or (2) 500 shareholders of record who are not accredited investors, in accordance with Section 12(g) of the Exchange Act.
Further, as long as our common stock is not registered under the Exchange Act, we will not be subject to Section 14 of the Exchange Act, which, among other things, prohibits companies that have securities registered under the Exchange Act from soliciting proxies or consents from shareholders without furnishing to shareholders and filing with the SEC a proxy statement and form of proxy complying with the proxy rules.
The reporting required by Section 14(d) of the Exchange Act provides information to the public about persons other than the company who is making the tender offer. A tender offer is a broad solicitation by a company or a third party to purchase a substantial percentage of a company’s common stock for a limited period of time. This offer is for a fixed price, usually at a premium over the current market price, and is customarily contingent on shareholders tendering a fixed number of their shares.
In addition, as long as our common stock is not registered under the Exchange Act, our company will not be subject to the reporting requirements of Regulation 13D and Regulation 13G, which require the disclosure of any person who, after acquiring directly or indirectly the beneficial ownership of any equity securities of a class, becomes, directly or indirectly, the beneficial owner of more than 5% of the class.
There may be deficiencies with our internal controls that require improvements. Our company is not required to provide a report on the effectiveness of our internal controls over financial reporting. We are in the process of evaluating whether our internal control procedures are effective and, therefore, there is a greater likelihood of undiscovered errors in our internal controls or reported financial statements as compared to issuers that have conducted such independent evaluations.
Risks Related to Our Organization and Structure
As a non-listed company conducting an exempt offering pursuant to Regulation A, we are not subject to a number of corporate governance requirements, including the requirements for independent board members. As a non-listed company conducting an exempt offering pursuant to Regulation A, we are not subject to a number of corporate governance requirements that an issuer conducting an offering on Form S-1 or listing on a national stock exchange would be. Accordingly, we are not required to have (a) a board of directors of which a majority consists of independent directors under the listing standards of a national stock exchange, (b) an audit committee composed entirely of independent directors and a written audit committee charter meeting a national stock exchange’s requirements, (c) a nominating/corporate governance committee composed entirely of independent directors and a written nominating/ corporate governance committee charter meeting a national stock exchange’s requirements, (d) a compensation committee composed entirely of independent directors and a written compensation committee charter meeting the requirements of a national stock exchange, and (e) independent audits of our internal controls. Accordingly, you may not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of a national stock exchange.
Our holding company structure makes us dependent on our future subsidiaries for our cash flow and subordinates the rights of our shareholders to the rights of creditors of our subsidiaries, in the event of an insolvency or liquidation of any such future subsidiary. Our company, Raadr, Inc., acts as a holding company and, accordingly, substantially all of our operations are conducted through subsidiaries. Such subsidiaries are separate and
13
distinct legal entities. As a result, our cash flow depends upon the earnings of our subsidiaries. In addition, we depend on the distribution of earnings, loans or other payments by our subsidiaries. No subsidiary has any obligation to provide our company with funds for our payment obligations. If there is an insolvency, liquidation or other reorganization of any of our subsidiaries, our shareholders would have no right to proceed against their assets. Creditors of our subsidiaries would be entitled to payment in full from the sale or other disposal of the assets of such subsidiaries before our company, as a shareholder, would be entitled to receive any distribution from that sale or disposal.
Risks Related to a Purchase of the Offered Shares
There is no minimum offering and no person has committed to purchase any of the Offered Shares. We have not established a minimum offering hereunder, which means that we will be able to accept even a nominal amount of proceeds, even if such amount of proceeds is not sufficient to permit us to achieve any of our business objectives. In this regard, there is no assurance that we will sell any of the Offered Shares or that we will sell enough of the Offered Shares necessary to achieve any of our business objectives. Additionally, no person is committed to purchase any of the Offered Shares.
There is no escrow established for the proceeds of this offering. Because there is no escrow established for the proceeds of this offering, proceeds derived from sales of Offered Shares will be deposited directly into our operating account, will be available for immediate use by our company and will be immediately subject to any claims of our creditors.
The outstanding shares of our Series F Preferred Stock effectively preclude current and future owners of our common stock from influencing any corporate decision. Mexedia SPA is the owner of all outstanding shares of our Series F Preferred Stock, which provides holders of the Series F Preferred Stock, as a class, voting rights in all matters requiring shareholder approval equal to 66.67% of all shares eligible to vote. Currently, Orlando Taddeo, as President of Mexedia SPA, the owner of all outstanding shares of our Series F Preferred Stock will, therefore, be able to control the management and affairs of our company, as well as matters requiring the approval by our shareholders, including the election of directors, any merger, consolidation or sale of all or substantially all of our assets, and any other significant corporate transaction. Mexedia SPA’s ownership of all outstanding shares of our Series F Preferred Stock may also delay or prevent a future change of control of our company at a premium price, if it opposes it.
The outstanding shares of our Series F Preferred Stock, as a class, may be converted into a number of shares of our common stock equal to 75% of the post-conversion shares of common stock. Each 1,000 shares of Series F Preferred Stock have rights to convert into a number of shares of our common stock equal to one percent (1%) of the then-outstanding shares of our common stock, at any time. The effect of such rights of conversion is that their holder, Mexedia SPA, were Mexedia SPA to convert all outstanding shares of our Series F Preferred Stock into common stock, would be issued a number of shares of common stock equal to 75% of our then-outstanding shares of common stock. (See “Dilution-Ownership Dilution”).
Issuances of Conversion Shares in this offering will reduce the cash proceeds we are able to obtain. To the extent the holders of the Subject Convertible Notes elect to convert their notes into Offered Shares, the total amount of cash that we will be able to obtain in this offering would be reduced. Should we become obligated to issue a significant number of Conversion Shares, our inability to offer and sell such issued Offered Shares for cash could have a negative effect on our business and operating results. However, no prediction can be made, in this regard.
We may seek additional capital that may result in shareholder dilution or that may have rights senior to those of our common stock. From time to time, we may seek to obtain additional capital, either through equity, equity-linked or debt securities. The decision to obtain additional capital will depend on, among other factors, our business plans, operating performance and condition of the capital markets. If we raise additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to the rights of our common stock, which could negatively affect the market price of our common stock or cause our shareholders to experience dilution.
You may never realize any economic benefit from a purchase of Offered Shares. Because the market for our common stock is volatile, there is no assurance that you will ever realize any economic benefit from your purchase of Offered Shares.
14
We do not intend to pay dividends on our common stock. We intend to retain earnings, if any, to provide funds for the implementation of our business strategy. We do not intend to declare or pay any dividends in the foreseeable future. Therefore, there can be no assurance that holders of our common stock will receive cash, stock or other dividends on their shares of our common stock, until we have funds which our Board of Directors determines can be allocated to dividends.
Our shares of common stock are Penny Stock, which may impair trading liquidity. Disclosure requirements pertaining to penny stocks may reduce the level of trading activity in the market for our common stock and investors may find it difficult to sell their shares. Trades of our common stock will be subject to Rule 15g-9 of the SEC, which rule imposes certain requirements on broker-dealers who sell securities subject to the rule to persons other than established customers and accredited investors. For transactions covered by the rule, broker-dealers must make a special suitability determination for purchasers of the securities and receive the purchaser’s written agreement to the transaction prior to sale. The SEC also has rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in that security is provided by the exchange or system). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation.
The market price of our common stock is highly volatile. The market for low priced securities is generally less liquid and more volatile than securities traded on national stock markets. Wide fluctuations in market prices are not uncommon. No assurance can be given that the market for our common stock will continue. The price of our common stock may be subject to wide fluctuations in response to factors such as the following, some of which are beyond our control:
·quarterly variations in our operating results;
·operating results that vary from the expectations of investors;
·changes in expectations as to our future financial performance, including financial estimates by investors;
·reaction to our periodic filings, or presentations by executives at investor and industry conferences;
·changes in our capital structure;
·announcements of innovations or new services by us or our competitors;
·announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments;
·lack of success in the expansion of our business operations;
·announcements by third parties of significant claims or proceedings against our company or adverse developments in pending proceedings;
·additions or departures of key personnel;
·asset impairment;
·temporary or permanent inability to offer products or services; and
·rumors or public speculation about any of the above factors.
The terms of this offering were determined arbitrarily. The terms of this offering were determined arbitrarily by us. The offering price for the Offered Shares does not necessarily bear any relationship to our company’s assets, book value, earnings or other established criteria of valuation. Accordingly, the offering price of the Offered Shares should not be considered as an indication of any intrinsic value of such securities. (See “Dilution”).
You will suffer dilution in the net tangible book value of the Offered Shares you purchase in this offering. If you acquire any Offered Shares, you will suffer immediate dilution, due to the lower book value per share of our common stock compared to the purchase price of the Offered Shares in this offering. (See “Dilution”).
As an issuer of penny stock, the protection provided by the federal securities laws relating to forward looking statements does not apply to us. Although federal securities laws provide a safe harbor for forward-looking
15
statements made by a public company that files reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, we will not have the benefit of this safe harbor protection in the event of any legal action based upon a claim that the material provided by us contained a material misstatement of fact or was misleading in any material respect because of our failure to include any statements necessary to make the statements not misleading. Such an action could hurt our financial condition.
DILUTION
Ownership Dilution
The information under “Investment Dilution” below does not take into account the potential conversion of the outstanding shares of Series F Preferred Stock. Were the shares of Series F Preferred Stock to be converted into shares of common stock immediately after the sale of all of the Offered Shares, we would issue a total of approximately 23,613,781,983 shares of common stock. The outstanding shares of Series F Preferred Stock may be converted into shares of our common stock at anytime.
The conversion of the outstanding shares of Series F Preferred Stock into shares of our common stock would cause holders of our common stock, including the Offered Shares, to incur significant dilution in their ownership of our company. (See “Risk Factors-Risks Related to a Purchase of the Offered Shares,” “Description of Securities” and “Security Ownership of Certain Beneficial Owners and Management”).
Investment Dilution
Dilution in net tangible book value per share to purchasers of our common stock in this offering represents the difference between the amount per share paid by purchasers of the Offered Shares in this offering and the net tangible book value per share immediately after completion of this offering. In this offering, dilution is attributable primarily to our negative net tangible book value per share.
If you purchase Offered Shares in this offering, your investment will be diluted to the extent of the difference between your purchase price per Offered Share and the pro forma net tangible book value of our common stock after this offering. Our net tangible book value as of December 31, 2024, was $30,779,725 (unaudited), or $(0.0010) (unaudited) per share. Net tangible book value per share is equal to total assets minus the sum of total liabilities and intangible assets divided by the total number of shares outstanding.
The tables below illustrate the dilution to purchasers of Offered Shares in this offering, on a pro forma basis, assuming 100%, 75%, 50% and 25% of the Offered Shares are sold at an offering price of $0.003 per share.
Assuming the Sale of 100% of the Offered Shares
|
|
|
|
Assumed offering price per share
|
| $
| 0.003
|
|
Net tangible book value per share as of December 31, 2024 (unaudited)
|
| $
| (0.005
| )
|
Increase in net tangible book value per share after giving effect to this offering
|
| $
| 0.002
|
|
Pro forma net tangible book value per share as of December 31, 2024 (unaudited)
|
| $
| (0.003
| )
|
Dilution in net tangible book value per share to purchasers of Offered Shares in this offering
|
| $
| 0.006
|
|
Assuming the Sale of 75% of the Offered Shares
|
|
|
|
Assumed offering price per share
|
| $
| 0.003
|
|
Net tangible book value per share as of December 31, 2024 (unaudited)
|
| $
| (0.005
| )
|
Increase in net tangible book value per share after giving effect to this offering
|
| $
| 0.002
|
|
Pro forma net tangible book value per share as of December 31, 2024 (unaudited)
|
| $
| (0.003
| )
|
Dilution in net tangible book value per share to purchasers of Offered Shares in this offering
|
| $
| 0.006
|
|
Assuming the Sale of 50% of the Offered Shares
|
|
|
|
Assumed offering price per share
|
| $
| 0.003
|
|
Net tangible book value per share as of December 31, 2024 (unaudited)
|
| $
| (0.005
| )
|
Increase in net tangible book value per share after giving effect to this offering
|
| $
| 0.001
|
|
Pro forma net tangible book value per share as of December 31, 2024 (unaudited)
|
| $
| (0.004
| )
|
Dilution in net tangible book value per share to purchasers of Offered Shares in this offering
|
| $
| 0.007
|
|
16
Assuming the Sale of 25% of the Offered Shares
|
|
|
|
Assumed offering price per share
|
| $
| 0.003
|
|
Net tangible book value per share as of December 31, 2024 (unaudited)
|
| $
| (0.005
| )
|
Increase in net tangible book value per share after giving effect to this offering
|
| $
| 0.001
|
|
Pro forma net tangible book value per share as of December 31, 2024 (unaudited)
|
| $
| (0.004
| )
|
Dilution in net tangible book value per share to purchasers of Offered Shares in this offering
|
| $
| 0.007
|
|
USE OF PROCEEDS
The table below sets forth the estimated proceeds we would derive from this offering, assuming (1) the sale of 25%, 50%, 75% and 100% of the Offered Shares, (b) assuming an offering price of $0.003 and (c) assuming the payment of no sales commissions or finder’s fees. There is, of course, no guaranty that we will be successful in selling any of the Offered Shares in this offering.
|
| Assumed Percentage of Offered Shares Sold in This Offering
|
|
|
| 25%
|
|
| 50%
|
|
| 75%
|
|
| 100%
|
|
Shares of Common Stock sold
|
|
| 375,000,000
|
|
|
| 750,000,000
|
|
|
| 1,125,000,000
|
|
|
| 1,500,000,000
|
|
Gross proceeds
|
| $
| 1,125,000
|
|
| $
| 2,250,000
|
|
| $
| 3,375,000
|
|
| $
| 4,500,000
|
|
Offering expenses
|
|
| 50,000
|
|
|
| 50,000
|
|
|
| 50,000
|
|
|
| 50,000
|
|
Net proceeds
|
| $
| 1,075,000
|
|
| $
| 2,200,000
|
|
| $
| 3,325,000
|
|
| $
| 4,450,000
|
|
The table below sets forth the proceeds we would derive from the sale of all of the Offered Shares, assuming the sale of 25%, 50%, 75% and 100% of the Offered Shares, assuming the payment of no sales commissions or finder’s fees and before the payment of expenses associated with this offering of approximately $50,000, and assuming an offering price of $0.003. There is, of course, no guaranty that we will be successful in selling any of the Offered Shares.
| Use of Proceeds for Assumed Percentage
of Offered Shares Sold in This Offering
|
|
| 25%
|
| 50%
|
| 75%
|
| 100%
|
Business Acquisitions(1)
|
| $
| 200,000
|
| $
| 567,500
|
| $
| 687,500
|
| $
| 687,500
|
Redemption Note Payments(2)
|
|
| 350,000
|
|
| 840,000
|
|
| 1,175,000
|
|
| 1,800,000
|
General and Administrative Expense
|
|
| 125,000
|
|
| 125,000
|
|
| 125,000
|
|
| 125,000
|
Working Capital - Voice Business
|
|
| 200,000
|
|
| 567,500
|
|
| 687,500
|
|
| 605,000
|
|
|
| 975,000
|
|
| 2,100,000
|
|
| 2,675,000
|
|
| 3,217,500
|
Plus the cash value of the amount (principal and accrued interest attributable to the conversion of the Subject Convertible Notes(3)(4)(5)
|
|
| 100,000
|
|
| 100,000
|
|
| 650,000
|
|
| 1,232,500
|
Total
|
| $
| 1,075,000
|
| $
| 2,200,000
|
| $
| 3,325,000
|
| $
| 4,450,000
|
(1)Currently, we have not entered into any agreement, oral or written, or other understanding with respect to the acquisition of any going business and/or assets. There is no assurance that we will be able to acquire any going business and/or assets. To the extent we are unable to so-acquire a going business and/or assets, proceeds allocated for such use would be applied to sales and marketing expenses and to working capital for our voice business.
(2)The principal amount of the Redemption Note is $540,000, with interest at 8% per annum and a maturity date of October 8, 2025. Under the Redemption Note, we are required to pay, on a monthly basis, 40% of the proceeds from this offering that exceeds $100,000, until the principal and interest shall have been paid. Following the date of payment in full of the principal balance of the Redemption Note, we are to pay up to an additional $1,260,000 as additional principal, through monthly payments of 10% of the proceeds from this offering. The amounts indicated in each column in the table above are estimates.
(3)The Subject Convertible Notes were issued, as follows:
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(a)On November 15, 2024 (and amended and restated on February 17, 2025), we issued a $50,000 principal amount convertible promissory note to our Chief Executive Officer, Daniel Contreras, at 8% per annum, that is due on November 15, 2025, and is convertible at this holder’s election, into Conversion Shares. This convertible promissory note was issued in payment of a performance bonus.
(b)On November 15, 2024 (and amended and restated on February 17, 2025), we issued a $300,000 principal amount convertible promissory note to our President, Orlando Taddeo, at 8% per annum, that is due on November 15, 2025, and is convertible at this holder’s election, into Conversion Shares. This convertible promissory note was issued in payment of a performance bonus.
(c)On November 15, 2024 (and amended and restated on February 17, 2025), we issued a $300,000 principal amount convertible promissory note to our President, Orlando Taddeo, at 8% per annum, that is due on November 15, 2025, and is convertible at this holder’s election, into Conversion Shares. This convertible promissory note was issued in payment of a performance bonus.
(d)On November 15, 2024 (and amended and restated on February 17, 2025), we issued a $200,000 principal amount convertible promissory note to Otus, LLC, a company owned by our Chief Financial Officer, Daniel Gilcher, at 8% per annum, that is due on November 15, 2025, and is convertible at this holder’s election, into Conversion Shares. This convertible promissory note was issued in payment of a performance bonus.
(e)On November 15, 2024 (and amended and restated on February 17, 2025), we issued a $200,000 principal amount convertible promissory note to Otus, LLC, a company owned by our Chief Financial Officer, Daniel Gilcher, at 8% per annum, that is due on November 15, 2025, and is convertible at this holder’s election, into Conversion Shares. This convertible promissory note was issued in payment of a performance bonus.
(f)On December 9, 2024 (and amended and restated on February 17, 2025), we issued a $27,500 principal amount convertible promissory note to FirstFire Global Opportunities Fund, LLC, at 8% per annum, that is due on December 9, 2025, and is convertible at this holder’s election, into Conversion Shares. This convertible promissory note was issued in consideration of $25,000 loan.
(g)On December 5, 2024 (and amended and restated on February 17, 2025), we issued a $27,500 principal amount convertible promissory note to GW Capital Ventures, LLC, at 8% per annum, that is due on December 5, 2025, and is convertible at this holder’s election, into Conversion Shares. This convertible promissory note was issued in consideration of $25,000 loan.
(h)On December 11, 2024 (and amended and restated on February 17, 2025), we issued a $27,500 principal amount convertible promissory note to Leonite Fund I, L.P., at 8% per annum, that is due on December 11, 2025, and is convertible at this holder’s election, into Conversion Shares. This convertible promissory note was issued in consideration of $25,000 loan.
(i)On July 15, 2024, we issued a $60,000 principal amount convertible promissory note to Newlan Law Firm, PLLC at 8% per annum, that is due on July 15, 2025, and is convertible into Conversion Shares, upon the qualification of the Offering Statement of which this Offering Circular forms a part. This convertible promissory note was issued in payment of Legal Services.
(j)On July 15, 2024, we issued a $40,000 principal amount convertible promissory note to Newlan Law Firm, PLLC at 8% per annum, that is due on July 15, 2025, and is convertible into Conversion Shares, upon the qualification of the Offering Statement of which this Offering Circular forms a part. This convertible promissory note was issued in payment of Legal Services.
(4)To the extent the Subject Convertible Notes are not converted into Conversion Shares, all unissued Conversion Shares would be available for sale by us hereunder. Any proceeds derived from such sales would be applied to working capital for our voice business.
(5)While the holders of the Subject Convertible Notes listed in paragraphs 3(a) - (j) above have indicated that they do not intend to convert their Subject Convertible Notes for the foreseeable future, these persons may
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change their determination at any time and without notice to us. The stated total of Subject Convertible Notes converted in each column is for illustration purposes only.
We reserve the right to change the foregoing use of proceeds, should our management believe it to be in the best interest of our company. The allocations of the proceeds of this offering presented above constitute the current estimates of our management and are based on our current plans, assumptions made with respect to our business, general economic conditions and our future revenue and expenditure estimates.
Investors are cautioned that expenditures may vary substantially from the estimates presented above. Investors must rely on the judgment of our management, who will have broad discretion regarding the application of the proceeds of this offering. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations (if any), business developments and the rate of our growth. We may find it necessary or advisable to use portions of the proceeds of this offering for other purposes.
In the event we do not obtain the entire offering amount hereunder, we may attempt to obtain additional funds through private offerings of our securities or by borrowing funds. Currently, we do not have any committed sources of financing.
PLAN OF DISTRIBUTION
In General
Our company is offering a maximum of 1,500,000,000 Offered Shares on a best-efforts basis, at a fixed price of $0.003 per Offered Share; any funds derived from this offering will be immediately available to us for our use. There will be no refunds. This offering will terminate at the earliest of (a) the date on which the maximum offering has been sold, (b) the date which is one year from this offering being qualified by the SEC or (c) the date on which this offering is earlier terminated by us, in our sole discretion.
There is no minimum number of Offered Shares that we are required to sell in this offering. All funds derived by us from this offering will be immediately available for use by us, in accordance with the uses set forth in the Use of Proceeds section of this Offering Circular. No funds will be placed in an escrow account during the offering period and no funds will be returned, once an investor’s subscription agreement has been accepted by us.
We intend to sell the Offered Shares in this offering through the efforts of our Chief Executive Officer, Daniel Contreras. Mr. Contreras will not receive any compensation for offering or selling the Offered Shares. We believe that Mr. Contreras is exempt from registration as a broker-dealers under the provisions of Rule 3a4-1 promulgated under the Securities Exchange Act of 1934 (the Exchange Act). In particular, Mr. Contreras:
·is not subject to a statutory disqualification, as that term is defined in Section 3(a)(39) of the Securities Act; and
·is not to be compensated in connection with his participation by the payment of commissions or other remuneration based either directly or indirectly on transactions in securities; and
·is not an associated person of a broker or dealer; and
·meets the conditions of the following:
oprimarily performs, and will perform at the end of this offering, substantial duties for us or on our behalf otherwise than in connection with transactions in securities; and
owas not a broker or dealer, or an associated person of a broker or dealer, within the preceding 12 months; and
odid not participate in selling an offering of securities for any issuer more than once every 12 months other than in reliance on paragraphs (a)(4)(i) or (iii) of Rule 3a4-1 under the Exchange Act.
As of the date of this Offering Circular, we have not entered into any agreements with selling agents for the sale of the Offered Shares. However, we reserve the right to engage FINRA-member broker-dealers. In the event we engage FINRA-member broker-dealers, we expect to pay sales commissions of up to 8.0% of the gross offering proceeds from their sales of the Offered Shares. In connection with our appointment of a selling broker-dealer, we intend to enter into a standard selling agent agreement with the broker-dealer pursuant to which the broker-dealer would act as our non-exclusive sales agent in consideration of our payment of commissions of up to 8.0% on the sale of Offered Shares effected by the broker-dealer.
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Procedures for Subscribing
In General. If you are interested in subscribing for Offered Shares in this offering, please submit a request for information by e-mail to Mr. Contreras at: dcontreras@telvantis.com; all relevant information will be delivered to you by return e-mail via electronic PDF format. Additionally, this Offering Circular will be available for viewing and download 24 hours per day, 7 days per week on our website at www.telvantis.com, as well as on the SEC’s website, www.sec.gov.
Thereafter, should you decide to subscribe for Offered Shares, you are required to follow the procedures described therein, which are:
·Electronically execute and deliver to us a subscription agreement via e-mail to:
dcontreras@telvantis.com; and
·Deliver funds directly by check or by wire or electronic funds transfer via ACH
to our specified bank account.
Subscription Review Process. After we receive your complete, executed subscription agreement and the funds required under the subscription agreement have been transferred to us and shall have cleared, we have the right to review and accept or reject your subscription, in whole or in part. In determining whether to accept or reject a subscription, we will consider the following factors: whether the subscriber or an affiliate of the subscriber qualifies as a “bad actor” as defined in Rule 262(d) of the SEC; the reputation of the subscriber and its affiliates within the securities industry; our then-current need for a cash investment; the state of the securities markets, in general, and the market for our common stock, in particular.
Within three (3) days after we receive your complete, executed subscription agreement and the funds required under the subscription agreement have been transferred to us and shall have cleared, we will notify you of our decision, and the reason therefor, to reject or accept your subscription.
Rejection of Subscriptions. Should we determine to reject your subscription, we will return all monies from your rejected subscription via wire transfer (or such other method as directed by you) within one (1) business day of our notifying you of such determination, without interest or deduction.
Acceptance of Subscriptions. Should we determine to accept your subscription, we will countersign the subscription agreement and, within one (1) business day, issue and deliver the Offered Shares subscribed in accordance with your delivery instructions. Once your subscription has been accepted by us, you may not revoke or change your subscription or request the return of your subscription funds. All accepted subscription agreements are irrevocable.
An investor will become a shareholder of our company, upon our acceptance of our acceptance of a subscription, with the Offered Shares being issued immediately thereafter. For clarity, the subscription settlement will not occur until an investor’s funds have cleared and we accept an investor’s subscription.
By executing the subscription agreement and paying the total purchase price for the Offered Shares subscribed, each investor agrees to accept the terms of the subscription agreement and attests that the investor meets certain minimum financial standards. (See “State Law Exemption and Offerings to Qualified Purchasers” below).
An approved trustee must process and forward to us subscriptions made through IRAs, Keogh plans and 401(k) plans. In the case of investments through IRAs, Keogh plans and 401(k) plans, we will send the confirmation and notice of our acceptance to the trustee.
Minimum Purchase Requirements
You must initially purchase at least $10,000 of the Offered Shares in this offering. If you have satisfied the minimum purchase requirement, any additional purchase must be in an amount of at least $1,000.
State Law Exemption and Offerings to Qualified Purchasers
State Law Exemption. This Offering Circular does not constitute an offer to sell or the solicitation of an offer to purchase any Offered Shares in any jurisdiction in which, or to any person to whom, it would be unlawful to do so.
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An investment in the Offered Shares involves substantial risks and possible loss by investors of their entire investments. (See “Risk Factors”).
The Offered Shares have not yet been qualified under the securities laws of any state or jurisdiction. Currently, we plan to sell the Offered Shares in Colorado, Connecticut, Delaware, Florida, Georgia and New York. However, we may, at a later date, decide to sell Offered Shares in all or any of other states. In the case of each state in which we sell the Offered Shares, we will qualify the Offered Shares for sale with the applicable state securities regulatory body or we will sell the Offered Shares pursuant to an exemption from registration found in the applicable state’s securities, or Blue Sky, law.
Certain of our offerees may be broker-dealers registered with the SEC under the Exchange Act, who may be interested in reselling the Offered Shares to others. Any such broker-dealer will be required to comply with the rules and regulations of the SEC and FINRA relating to underwriters.
Investor Suitability Standards. The Offered Shares may only be purchased by investors residing in a state in which this Offering Circular is duly qualified who have either (a) a minimum annual gross income of $70,000 and a minimum net worth of $70,000, exclusive of automobile, home and home furnishings, or (b) a minimum net worth of $250,000, exclusive of automobile, home and home furnishings.
Issuance of Offered Shares
Upon settlement, that is, at such time as an investor’s funds have cleared and we have accepted an investor’s subscription agreement, we will either issue such investor’s purchased Offered Shares in book-entry form or issue a certificate or certificates representing such investor’s purchased Offered Shares.
Transferability of the Offered Shares
The Offered Shares will be generally freely transferable, subject to any restrictions imposed by applicable securities laws or regulations.
Advertising, Sales and Other Promotional Materials
In addition to this Offering Circular, subject to limitations imposed by applicable securities laws, we expect to use additional advertising, sales and other promotional materials in connection with this offering. These materials may include information relating to this offering, articles and publications concerning industries relevant to our business operations or public advertisements and audio-visual materials, in each case only as authorized by us. In addition, the sales material may contain certain quotes from various publications without obtaining the consent of the author or the publication for use of the quoted material in the sales material. Although these materials will not contain information in conflict with the information provided by this Offering Circular and will be prepared with a view to presenting a balanced discussion of risk and reward with respect to the Offered Shares, these materials will not give a complete understanding of our company, this offering or the Offered Shares and are not to be considered part of this Offering Circular. This offering is made only by means of this Offering Circular and prospective investors must read and rely on the information provided in this Offering Circular in connection with their decision to invest in the Offered Shares.
DESCRIPTION OF SECURITIES
General
Our authorized capital stock consists of (1) 15,000,000,000 shares of common stock, $0.001 par value per share, and (2) 100,000,000 shares of preferred stock, $0.001 par value per share, of which 75,000 shares are designated Series F Preferred Stock.
As of the date of this Offering Circular, there were 6,371,260,661 shares of our common stock issued and outstanding, held by approximately 100 holders of record; and 75,000 shares of Series F Preferred Stock issued and outstanding held by one (1) holder.
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Common Stock
General. The holders of our common stock currently have (a) equal ratable rights to dividends from funds legally available therefore, when, as and if declared by our Board of Directors; (b) are entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of the affairs of our company; (c) do not have preemptive, subscriptive or conversion rights and there are no redemption or sinking fund provisions or rights applicable thereto; and (d) are entitled to one non-cumulative vote per share on all matters on which shareholders may vote. Our Bylaws provide that, at all meetings of the shareholders for the election of directors, a plurality of the votes cast shall be sufficient to elect. On all other matters, except as otherwise required by Nevada law or our Articles of Incorporation, as amended, a majority of the votes cast at a meeting of the shareholders shall be necessary to authorize any corporate action to be taken by vote of the shareholders.
Non-cumulative Voting. Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in such event, the holders of the remaining shares will not be able to elect any of our directors.
Pre-emptive Rights. As of the date of this Offering Circular, no holder of any shares of our common stock or Series A Super Voting Preferred Stock has pre-emptive or preferential rights to acquire or subscribe for any unissued shares of any class of our capital stock not disclosed herein.
Dividend Policy. We have never declared or paid any dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future.
Shareholder Meetings. Our bylaws provide that special meetings of shareholders may be called only by our Board of Directors, the chairman of the board, or our president, or as otherwise provided under Nevada law.
Series F Preferred Stock
Designation and Amount. 75,000 shares were designated as Series F Preferred Stock.
Voting Rights. The holders of the Series F Preferred Stock shall, as a class, have rights in all matters requiring shareholder approval to a number of votes equal to two (2) times the sum of: (a) the total number of shares of common stock which are issued and outstanding at the time of any election or vote by the shareholders; plus (b) the number of votes allocated to shares of Preferred Stock issued and outstanding of any other class that shall have voting rights.
Dividends. The Series F Preferred Stock shall be treated pari passu with the Company’s common stock, except that the dividend on each share of Series F Preferred Stock shall be equal to the amount of the dividend declared and paid on each share of the Company’s common stock multiplied by the conversion rate.
Conversion Rate. The Series F Preferred Stock shall be convertible into shares of the Company’s common stock, as follows: each share of Series F Preferred Stock shall be convertible at any time into a number of shares of the Company’s common stock that equals 0.001 percent (0.001%) of the number of issued and outstanding shares of the Company’s common stock outstanding on the date of conversion, such that 1,000 shares of Series F Preferred Stock would convert into one percent (1%) of the number of issued and outstanding shares of the Company’s common stock outstanding on the date of conversion. A holder of shares of Series F Preferred Stock shall be required to convert all of such holder’s shares of Series F Preferred Stock, should any such holder exercise his, her or its rights of conversion.
Transfer Agent
Manhattan Transfer Registrar Co. is the transfer agent for our common stock. Manhattan Transfer Registrar Co.’s address is One Grand Central Place, 60 East 42nd Street, Suite 1201, New York, New York 10165; its telephone number is 631-928-7655; its website is www.mtrco.com. No information found on Manhattan Transfer Registrar Co.’s website is part of this Offering Circular.
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BUSINESS
History of Our Company
Our company was incorporated in the State of Nevada on March 29, 2006, as White Dental Supply, Inc. On January 7, 2013, our corporate name changed to Pitooey!, Inc. On October 12, 2015, our corporate name changed to Raadr, Inc.
Our Board of Directors and majority shareholder have approved a change of our corporate name to Telvantis, Inc. In the near future, we will submit an application for approval of this corporate action to FINRA. The effective time, as it relates to the stock trading market, of this corporate action, which will include a change to our trading symbol, will depend on the date on which FINRA issues its approval of our related filing. We are unable to predict the date on which FINRA will issue such approval.
Recent Change in Control
Effective October 8, 2024, a change in control of our company, in connection with our acquisitions (the Mexedia Acquisitions) of Mexedia, Inc., a Florida corporation with its operations headquartered in Miami, Florida (Telvantis Florida), and Mexedia DAC, an Ireland corporation now wholly owned by Telvantis Florida (Mexedia DAC) (Telvantis Florida and Mexedia DAC are referred to as the Mexedia Companies). Following these transactions, Mexedia SPA controls our company. However, it is intended that, as soon as possible and in keeping with applicable Italian corporate laws and applicable Euronext Growth Paris exchange rules, Mexedia SPA would distribute to its shareholders the control shares issued to it pursuant to the Acquisition Agreements.
Also In connection with the Mexedia Acquisitions, Jacob DiMartino resigned as the Sole Director and Officer of our company and the following persons were appointed: Daniel Contreras, Chief Executive Officer and Director; Orlando Taddeo, President and Director; and Daniel Gilcher, Chief Financial Officer, Secretary, Treasurer and Director. (See “Directors, Executive Officers, Promoters and Control Persons”).
Acquisitions of the Mexedia Companies. Pursuant to separate Share Exchange Agreements (the “Acquisition Agreements”), we acquired 100% ownership of Telvantis Florida by the issuance of 40,000 shares of Series F Preferred Stock to Mexedia SPA and 100% ownership of Mexedia DAC by the issuance of 35,000 shares of Series F Preferred Stock to Mexedia SPA. Except for the consideration paid under the Acquisition Agreements, the Acquisition Agreements are substantially identical and contain the following provisions, among other customary provisions:
Regulation A Offering. Should we fail to have filed an Offering Statement on Form 1-A pursuant to Regulation A of the Securities and Exchange Commission (the “Reg A Offering”), on or before October 28th, Mexedia SPA has the right, but not the obligation, to rescind the Acquisition Agreements. This condition subsequent has been waived by Mexedia SPA.
Reg A Offering Proceeds. Should we fail to have obtained the sum of $1,500,000 in proceeds from the Reg A Offering, on or before the date that is six (6) months from the date of the SEC’s qualification of the Reg A Offering, Mexedia SPA has the right, but not the obligation, to rescind the Acquisition Agreements. This condition subsequent has been waived by Mexedia SPA.
Divestiture. Should we fail to have divested of our pre-closing operations, which divestiture shall include all debts, other than the trade payables of our company, as of the closing date of the Mexedia Acquisitions, on or before December 31, 2024, Mexedia SPA shall have the right, but not the obligation, to rescind the Acquisition Agreements. This condition has been satisfied by our company.
With the waivers and satisfaction of the conditions precedent in the Acquisition Agreements, our company’s ownership of the Mexedia Companies has fully vested.
Redemption Agreement. In connection with the Acquisition Agreements, our company and JanBella entered into the Redemption Agreement, pursuant to which JanBella sold 100% of the then-outstanding shares of Series E Preferred Stock to our company in exchange for the Redemption Note.
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The principal amount of the Redemption Note is $540,000, with interest at 8% per annum and a maturity date of October 8, 2025. Under the Redemption Note, we are required to pay, on a monthly basis, 40% of the proceeds from the Reg A Offering that exceeds $100,000, until the principal and interest shall have been paid.
Following the date of payment in full of the principal balance of the Redemption Note (the “Balance Date”), we are to pay JanBella up to an additional $1,260,000 as additional principal (the “Additional Principal”), whether through monthly payments of 10% of Reg A Offering proceeds and/or, for a period of 18 months immediately following the issue date of the Redemption Note, 10% of funds obtained by our company from any third-party.
Pledge Agreement and Guaranty. In connection with the Acquisition Agreements, JanBella and Mexedia SPA entered into a pledge agreement (the “Pledge Agreement”) and a guaranty (“Guaranty”) with respect to our company’s obligations under the Redemption Note. Specifically, the Pledge Agreement and the Guaranty relate to our company’s timely payment of the $540,000 principal balance and accrued interest on the Redemption Agreement.
Share Cancellation Agreements. In connection with the Acquisition Agreements, our company entered into three separate share cancellation agreement (the “Share Cancellation Agreements”) with Dean Richards, Brenda Whitman and Christina Upham, respectively. Pursuant to the Share Cancellation Agreements, a total of 1,700,000,000 shares of our common stock were cancelled.
Series F Preferred Stock. Also in conjunction with the Mexedia Acquisitions, we designated a new Series F Preferred Stock and issued a total of 75,000 shares of such Series F Preferred Stock to Mexedia SPA, which now controls our company through its ownership of the Series F Preferred Stock. (See “Description of Securities-Series F Preferred Stock).
New Business Focus
Following the acquisitions of the Mexedia Companies, our company has adopted the business plan of the Mexedia Companies as our company’s new business focus. Our prior business operations centered around an anti-bulling App known as “RAADR” are to be divested, in accordance with the Acquisition Agreements, which divestiture is expected to occur prior to the end of December 2024.
Our company now operates as a holding company in the telecommunications sector. Telvantis Florida and Mexedia DAC are intermediary operators that sell “segments” of telephone connections, taking place between a “calling” user and a “called” user, to other Telco operator or mobile operators. As telco operators, the volume of their revenues is closely linked to the number of interconnection agreements entered into with commercial partners, e.g. commercial contracts between telecom operators with the aim of interconnecting networks and exchanging services.
Figure 1 below depicts the structure of our company, following the acquisitions of the Mexedia Companies.
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History of the Mexedia Companies
Phonetime, Inc. (“Phonetime”) was incorporated in the State of Florida in 2006 and has operated as a telecommunications sales company since its incorporation. Prior to its being acquired by Telvantis Florida in 2023, Phonetime had established a robust wholesale voice services business on its proprietary digital infrastructure (or backbone).
Matchcom Telecommunication, Inc. (“Matchcom”) was incorporated in the State of Delaware in 2018 and has operated as a telecommunications sales company since its incorporation.
Telvantis, Inc., Telvantis Florida (formerly Mexedia, Inc.), was incorporated on September 9, 2020, in the State of Florida as a wholly-owned subsidiary of Mexedia SPA. In forming Telvantis Florida, it was Mexedia SPA’s stated purpose to seek acquisition opportunities in the telecommunications industry in the U.S. market. Due to the lingering effects of the Covid-19 pandemic, these efforts were unsuccessful throughout 2020 and 2021. During 2022, however, Mexedia SPA engaged in extensive discussions and negotiations with Tellza, Inc., a telecommunications holding company and then-owner of our now subsidiaries, Phonetime and Matchcom Telecommunications.
As a combined enterprise, Phonetime and Matchcom had, at that time, an extensive history and a strong wholesale voice business portfolio, including well-known global operators and an excellent reputation in the telecommunications marketplace, as well as extensive network of contacts and stable agreements with customers and suppliers.
As a result of the negotiations with Tellza, Inc., effective January 1, 2023, Televantis Florida acquired 100% of the stock of both Phonetime and Matchcom Communications, with many of their employees continuing to work for Phonetime and Matchcom Communications to this day, driving the growth of Telvantis Florida’s voice business in the U.S. Since the acquisition, Telvantis Florida has continued to expand its U.S.-based digital infrastructure to support its growth.
Plan of Business
In connection with our acquisitions of the Mexedia Companies, our company now operates as a holding company in the telecommunications sector. Telvantis Florida and Mexedia DAC are intermediary operators that sell “segments” of telephone connections, taking place between a “calling” user and a “called” user, to other Telco operator or mobile operators. As telco operators, the volume of their revenues is closely linked to the number of interconnection agreements entered into with commercial partners, e.g. commercial contracts between telecom operators with the aim of interconnecting networks and exchanging services.
In addition, we believe that there are available significant business acquisition opportunities within our industry segment. It is our estimation that any such acquisition opportunity would require us to deliver funds as part of the acquisition. Should we sell at least 50% of the Offered Shares in this offering, our management believes our company would be positioned to make one or more such acquisitions (no current agreement, written or otherwise exists, in this regard). However, there is no assurance that we will obtain sufficient funds in this offering, or from other sources, that would permit us to make any such acquisition.
With the proceeds of this offering, we intend to increase our working capital position, such that we will be able to increase our revenues, which are, in large measure, a function of our levels of available working capital, from time to time.
We believe that the proceeds of this offering will satisfy our cash requirements for at least the next twelve months.
Principal Market
The principal market for our telecommunications services and products is the United States, with additional sales generated in other developed countries stemming from United States customer affiliations. Our business focus is purely one business-to-business communications and we engage with the world’s largest network operators (mostly through their United States subsidiaries), as well as smaller local providers to send and receive large volumes of voice traffic between these entities.
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Our customers and supplier entities are predominantly based in the United States and the principal service we provide is the termination of international voice communication between customer entities in the context of global communication. The service is provided on a strictly digital basis through the internet. The specific rates charged and destinations serviced change over time, depending on commercial opportunities and customer needs. Further, a part of our business consists of the aggregation of voice traffic from different customers to be delivered to the same supplier. We are, therefore, in principle, able to serve any network operator who generates international voice activity.
Customers
The overwhelming majority of Telvantis Florida’s customers are U.S.-based companies or U.S.-based subsidiaries of international companies, with eight of our 10 largest customers falling into these categories. No single customer of Telvantis Florida represents more than 10% of its total revenues.
Current Operations
Overview. The Mexedia Companies provide connectivity for two distinct target customers: (1) mobile operators and (2) enterprises:
•Mobile operators are offered voice traffic wholesale services, while enterprises are provided messaging services and certain value-added services that are upsold to existing and new clients.
•Services are offered through a multichannel CPaaS platform which integrates different communication channels across voice and message and efficiently manages all customers’ communication activities.
Mexedia Companies’ Communication Platform as a Service (CPaaS). The Mexedia Companies’ CPaaS is a cloud-based platform for mobile operators and enterprises which integrates different voice and messaging communication channels. Mobile operators are offered global network connectivity through the Mexedia Companies’ proprietary voice wholesale software, a business that is continuously contracted on large volumes. Enterprises are provided with a range of messaging services to efficiently communicate with their customers through traditional SMS and messaging applications, e.g., Whatsapp and Viber, while being offered a range of additional value-added services within the same technical infrastructure.
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The Mexedia Companies’ CPaaS platform offers a comprehensive suite of communication services for enterprises and mobile operators spanning both message and voice traffic. Hosted through a proprietary data platform in Stockholm, Sweden, the CPaaS platform minimizes reliance on third-party cloud services, to enable full system control and continuous maintenance by the Mexedia Companies. Mobile operators typically connect to the platform via direct switches to the MNO cloud while enterprises typically connect via an API through their CRM, facilitating their direct communication with customers while bypassing intermediary operators.
Wholesale of voice traffic is offered to mobile operators and enabled through the Mexedia Companies’ automated wholesale software. The wholesale software automatically selects the optimal route for each call and message based on certain criteria, e.g., cost, quality, capacity and availability. The software continuously monitors changes in price, quality, availability and traffic limits of traffic providers, adjusts routes accordingly and manages billing on behalf of its users.
Messaging services are offered to the Mexedia Companies’ enterprise clients seeking an efficient way to communicate with its customers through different messaging channels. The CPaaS solution offers channel unification by integrating traditional application-to-peer (“A2P”) SMS messaging and OTT messaging, e.g., Whatsapp and Viber, onto one platform. In addition, various add-on services are offered and upsold to enterprise clients on the platform, including number filtering, number validation and unsubscribing services.
Mobile Operators - Voice Wholesale. The Mexedia Companies offer large volume connectivity to mobile network operators (“MNOs”) for voice traffic at a wholesale level. Wholesale of voice traffic is enabled through The Mexedia Companies’ cloud-based automated wholesale software which is connected to the core digital switchboards of more than 300 MNOs globally. The Mobile Operator segment operates on a volume-based model and facilitates connections between sending and receiving operators across international networks.
The Mobile Operator segment mainly handles voice traffic and focuses on providing large volume connectivity to MNOs for voice traffic and text aggregation businesses for SMS traffic. The Mexedia Companies connect sending parties to receiving parties outside their network and generates a profit margin on each connection. The mobile operator offering is volume-based where the Mexedia Companies are connected to the core digital switchboards of more than 300 MNOs globally via a cloud-based wholesale software application. Voice and text traffic currently accounts for approximately 96% and 4%, respectively, of Mobile Operator revenues. Voice traffic remains stable, whereas text traffic is a fast-growing part of the Mobile Operator segment. The Mobile Operator segment maintains a consistent customer base of companies in the telecommunications sector and a relatively strong customer retention record.
Automated Voice Wholesale Software. The Mexedia Companies’ automated voice wholesale software delivers a comprehensive call routing solution for mobile operators, integrating essential functionalities to optimize traffic routing efficiency across different mobile networks. The voice wholesale software dashboard presents essential key operational statistics for a specified period, encompassing, e.g., total calls, revenues, connected calls, costs, margins, total minutes and live platform sessions. The dashboard provides a comprehensive overview of top suppliers,
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i.e., frequently used traffic providers, with additional information on quality, volumes, costs and margins, as well as top destinations and customers, providing insights into routes, quality, volumes and margins.
Specifically, the automated voice wholesale software offers:
•Data Collection and Analysis: data collection and analysis of service providers, e.g., rates, connection quality, and available capacity.
•Call Routing Execution: following a routing decision, voice calls are routed via the selected provider to reach the desired destination.
•Monitoring and Adjustments: continuous monitoring and adjusting of routes based on changes in price, quality, availability and traffic limits.
•Billing: based on clients’ contracts with providers.
•Credit and Traffic Control: ensures the credit limits and maximum routed volume thresholds of clients are not exceeded.
•Least-cost Routing Decision: selects the most efficient route for each voice call based on preceding analysis and clients’ set limits.
Enterprises - Messaging. The Mexedia Companies leverage their technology, regulatory approvals and experience in the Mobile Operator segment to provide text-based communication to medium and large-sized enterprises. The Mexedia Companies’ direct connectivity to operators eliminates the need for intermediary operators between enterprises and their customers, thereby reducing operational costs.
The Enterprise segment strategically leverages the Mexedia Companies’ direct operator connectivity, technical infrastructure, and regulatory expertise to enable direct text-based communication between enterprises and customers, bypassing intermediary operators. The offering comprises both Messaging and Value-Added Services provided to enterprises for effective customer communication with customers via different channels. Messaging Services represent the core offering and include an SMS platform and a two-way SMS feature while Value-Added Services comprise of add-ons products, e.g., phone number filtering and subscription features, and are upsold to existing clients. The Enterprise segment actively triggers both revenue and cost synergies by harmonizing operations with the Mobile Operator segment, achieving operational efficiency and minimizing the investment required for organic growth.
Messaging Services. The Mexedia Companies’ automated messaging software offers the services described below.
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•Campaign Portal: Enables enterprises to automate SMS campaigns in real-time through a user-friendly API connection. Utilizing SS7 and SMPP connectivity, the Mexedia Companies ensure optimal routing for high-volume SMS traffic, enhancing reliability. Offers enterprises a simple interface for designing and sending SMS messages to customers without requiring an API interface.
•Two-Way SMS: Two-way SMS facilitates customer communication by enabling customers to provide feedback on support, sales and general inquiries. Enhances brand image and customer satisfaction, positively impacting the overall bottom-line business. Fosters a customer-centric approach by reinforcing the enterprise’s commitment to personalized service.
•Voice Engage: Voice Engage enables enterprises to broadcast messages worldwide through direct voice calls to customer mobile or land line phones. Enterprises can broadcast pre-recorded audio or convert text to a chosen language through Text-To-Speech (TTS). The voice solution includes a control panel for making customer journeys, utilizing key-press responses for interactive experiences.
•Messaging Portal.
•Broadcast Messenger. A robust white-label bulk communication tool offering cost-effective, compliant messaging that fosters creativity without compromising on restrictions.
•Mexedia Messenger. A two-way messenger platform providing enterprises with full control of their communication in a branded, familiar and secure solution.
•2FA & OTP: Empowers enterprises with an extra layer of security for user logins, mitigating the risk of fraudulent website access. The API facilitates user identity confirmation through OTP sent via SMS, ensuring a secure process where users validate received codes. Enables enterprises to bolster security, authenticate user identities and minimize the vulnerability to unauthorized access attempts.
Value-Added Services. The Mexedia Companies’ automated messaging software offers the value-added services described below.
•Optimyze™: Phone number verification and filtering solution integrated within the SMS platform for efficient database management. Particularly important for enterprises with large phone number databases that are constantly being updated. Continuous database maintenance and updates mitigates unnecessary costs, with an automatic provision of invalid numbers via API ensuring seamless, manual-free updates to in-house systems.
•Number Validation: Powerful tool ensuring an up-to-date customer number database, supporting smart decisions and cost savings crucial for business efficiency. Enterprises benefit from the tool’s capability to facilitate smart decision-making, fostering cost savings. Streamline number validation with automated routines and logical checks, effortlessly filtering out invalid numbers from the phone number database.
•UN5UB™: Provides enterprises with an opt-out solution, allowing their customers to easily choose not to receive messages. Fully multilingual tool offering extensive customization options, including branding, 2FA message, buttons and an optional unsubscribe reason in various formats.
•Subscribe: Facilitates seamless engagement with subscribers, verifying mobile numbers via two-factor authentication. Facilitates a GDPR-compliant method to seamlessly and securely transition subscribers from various channels to a designated mobile number list, enabling subsequent messaging through SMS or IM campaigns.
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Strengths and Weaknesses
We believe our company possesses the following competitive strengths and weaknesses:
Competitive Strengths
•we enjoy a strong customer retention track record.
•our Enterprise customer base engages in an array of industries, including fintech, igaming, banking, finance and healthcare.
•our services offerings are of a high quality and the quality of our customer service is high.
•we enjoy relatively low overhead costs.
Competitive Weaknesses
•our brand name recognition is not as strong as many of our competitors.
•our capital levels vary during operating periods, which causes our revenues to fluctuate and, during period of low capital levels, to be impaired.
•our debt payment obligations under our credit facility agreement could, over time, impair our cash flows available for operations.
Cyber Risk Management and Strategy
We use, store and process data for and about our customers, employees, partners and suppliers. We have not yet implemented a formal cybersecurity risk management program designed to identify, assess and mitigate risks from cybersecurity threats to this data, our systems and business operations. We intend to implement a cybersecurity risk management program during 2025.
Risks from cybersecurity threats have, to date, not materially affected us, our business strategy, results of operations or financial condition.
Regulatory Considerations
Telvantis Florida and Mexedia DAC are subject to varying degrees of regulation, as discussed below.
Telvantis Florida. Telecommunication operators in Florida are primarily regulated under Chapter 364, Florida Statutes and are subject to the supervisory powers of the Public Service Commission (“PSC”). Currently, With the approval of the “Regulatory Reform Act” (“Act”), effective July 1, 2011, most of the PSC retail oversight authority over the telecommunications wireline companies were eliminated, yet the PSC’s authority over telco operators issues was maintained. The Act eliminated most of the retail regulation of local exchange telecommunications services by the PSC, including the elimination of rate caps on all retail telecommunications services; elimination of telecommunications-related consumer protection and assistance duties of the PSC; and elimination of the PSC’s remaining oversight of telecommunications service quality.
Incumbent local exchange companies and competitive local exchange companies enter into interoperators contracts, which are generally called interconnection agreements. Parties to interconnection agreements are expected to negotiate rates, terms, and conditions wherever possible, and to petition the PSC in the event an agreement cannot be reached. Pursuant to Florida Regulation and U.SA. Federal regulation, Telvantis Florida is entitled to freely carry out its telecommunication business without the need to obtain any authorization, license or certification.
Mexedia DAC.
The UE Regulatory Framework. At EU level, the framework on telecommunications regulation includes Directives, Regulations, Recommendations and Communications.
The telecommunication market started to be liberalized to competition in the early 90’s and, in particular, the competition of public voice telephony and public network infrastructure began in 1998.
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The previous regulatory framework proved to be inadequate towards the new market needs and, therefore, a new set of Directives was adopted in 2002, regulating all forms of fixed and wireless telecommunications, data transmission and broadcasting:
•Framework Directive (Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002), adopted in order to establish a common regulatory framework for electronic communications networks and services. The Framework Directive obliges, among other things, National Regulatory Authorities to run market analyses before imposing appropriate obligations on individual operators having Significant Market Power (“SMP”), to ensure a competitive market;
•Authorization Directive (Directive 2002/20/EC of the European Parliament and of the Council of 7 March 2002) concerning authorizations for electronic communications networks and services. Such Directive sets out that the provision of electronic communications networks or the provision of electronic communications services may only be subject to a general authorization. As a consequence, authorized undertakings are entitled to (i) provide electronic communications networks and services and (ii) have their application for the necessary rights to install facilities considered. Furthermore, undertakings providing for electronic communication networks have the right to negotiate interconnection with, and where applicable obtain access to or interconnection from, other providers of publicly available communications networks and services covered by a general authorization anywhere in the Europe under the conditions of and in accordance with the Access Directive;
•Access Directive (Directive 2002/19/EC of the European Parliament and of the Council of 7 March 2002) concerning the access to and interconnection of electronic communications networks and associated facilities. In this regard, operators of public communications networks have a right and, when requested by other authorized undertakings, an obligation to negotiate interconnection with each other for the purpose of providing publicly available electronic communications services, in order to ensure provision and interoperability of services throughout the Community;
•Universal Service Directive (Directive 2002/22/EC of the European Parliament and of the Council of 7 March 2002) regulating the universal service and users’ rights relating to electronic communications networks and services;
•E-Privacy Directive (Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002) regarding the processing of personal data and the protection of privacy in the electronic communications sector. Aim of such Directive is to ensure an equivalent level of protection of fundamental rights and freedoms, and in particular the right to privacy, with respect to the processing of personal data in the electronic communication sector and to ensure the free movement of such data and of electronic communication equipment and services in the Community.
Once again, the EU legal framework was revised in 2009, with the aim of defining a new European regulatory framework for the sector, adapting it to the constant evolving needs of the market. In particular the following Directives were adopted:
•Directive 2009/140/EC of the European Parliament and of the Council of 25 November 2009, which has partially amended the Framework Directives, the Access Directive and the Authorization Directive;
•Directive 2009/136/EC of the European Parliament and of the Council of 25 November 2009, which has partially amended the Universal Service Directive, the E-Privacy Directive and Regulation (EC) No 2006/2004 on cooperation between national authorities responsible for the enforcement of consumer protection laws.
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Legislation in Ireland. The primary legal sources for the regulation of the telecommunications sector in Ireland are the following:
•the Telecommunications (Miscellaneous Provisions) Act, 1996, that made provision for the establishment of the office of Director of Telecommunications Regulation, for the transfer of functions from the Minister to the Director, for the imposition of a levy on providers of telecommunications services and for the regulation of tariffs for certain telecommunications services. In addition, the act amended the Postal and Telecommunications Services Act, 1983, and provided for related matters;
•the Communications Regulation Act, 2002 that provides for the establishment of a body to be known as the Commission for Communications Regulation, for the definition of its functions, for the dissolution of the office of the Director of Telecommunications Regulation, for the transfer of the functions of the Director of Telecommunications Regulation to the Commission for Communications Regulation. In addition, the act established further provisions in respect of the opening of public roads for electronic communications infrastructure, provided for the sharing of infrastructure, repealed certain enactments and provisions of enactments and provided for connected matters;
•the Communications Regulation (Amendment) Act 2007 that amended (i) the Communications Regulation Act 2002 in order to confer additional functions on the Commission for Communications Regulation;
•the S.I. No. 333/2011 - European Communities (Electronic Communications Networks and Services) (Framework) Regulations 2011, giving effect to the Framework Directive, and the amendments to that Directive as introduced by Directive 2009/140/EC of the European Parliament and of the Council of 25 November 2009;
•the S.I. No. 334/2011 - European Communities (Electronic Communications Networks and Services) (Access) Regulations 2011, giving effect to the Access Directive, and the amendments to that Directive as introduced by Directive 2009/140/EC of the European Parliament and of the Council of 25 November 2009;
•the S.I. No. 335/2011 - European Communities (Electronic Communications Networks and Services) (Authorization) Regulations 2011, giving effect to the Authorization Directive, and the amendments to that Directive as introduced by Directive 2009/140/ EC of the European Parliament and of the Council of 25 November 2009;
•the S.I. No. 336/2011 - European Communities (Electronic Communications Networks and Services) (Privacy and Electronic Communications) Regulations 2011, giving effect to the Eprivacy Directive, and the amendments to that Directive as introduced by Directive 2009/136/EC of the European Parliament and of the Council of 25 November 2009.
Pursuant to the foregoing rules, Mexedia DAC was authorized to provide electronic communications services in Ireland by means of an authorization granted by the Irish Commission for Communications Regulation on April 26, 2018.
Competition
Our telco operations are conducted in a highly competitive market, characterized by the presence of numerous competitors that operate in the sector of telecommunications electronic termination services, both at national and international levels. We may not be successful in competing against these competitors, many of whom have longer operating histories, significantly greater financial stability and better access to capital markets and credit than we do. There is no assurance that we will be able to compete successfully against our competition.
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Intellectual Properties
We do not own any patents. We are the owner of proprietary software programs and numerous tradenames, including “Mexedia” and “Telvantis,” for which we intend to apply for a trademark from the USPTO, in the near future.
Properties
Telvantis Florida leases approximately 1,100 square feet of office space in Miami Beach, Florida, at a monthly rental of $4,750. Our principal corporate offices are located at this location. These premises are expected to be adequate for the operations of Telvantis Florida, as well as for our company’s principal corporate officers, for the foreseeable future. In this regard, as our business provides services in the digital domain, we do not require a large office space to house our operations, as we lease our digital infrastructure, such as servers, in multiple secure locations. Additionally, many of our employees make use of the opportunity to work remotely, thereby lessening our need for office space. During 2025, it is possible that Telvantis Florida would add a small office in New York, to support increased sales. No final determination has been made in this regard.
Mexedia DAC leases approximately 1.000 square feet of office space in Dublin, Ireland, at a monthly rental of $5.240. These premises are expected to be adequate for the operations of Mexedia DAC for the foreseeable future.
We own no real property.
Employees
We have 12 employees, including our executive officers. We believe our relations with our employees to be good and have never experienced a work stoppage.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement
The following discussion and analysis should be read in conjunction with our unaudited financial statements and related notes, beginning on page F-1 of this Offering Circular.
Our actual results may differ materially from those anticipated in the following discussion, as a result of a variety of risks and uncertainties, including those described under Cautionary Statement Regarding Forward-Looking Statements and Risk Factors. We assume no obligation to update any of the forward-looking statements included herein.
Recent Change in Control
Effective October 8, 2024, a change in control of our company, in connection with our acquisitions (the Mexedia Acquisitions) of Mexedia, Inc., a Florida corporation with its operations headquartered in Miami, Florida (Telvantis Florida), and Mexedia DAC, an Ireland corporation now wholly owned by Telvantis Florida (Mexedia DAC) (Telvantis Florida and Mexedia DAC are referred to as the Mexedia Companies). Following these transactions, Mexedia SPA controls our company. However, it is intended that, as soon as possible and in keeping with applicable Italian corporate laws and applicable Euronext Growth Paris exchange rules, Mexedia SPA would distribute to its shareholders the control shares issued to it pursuant to the Acquisition Agreements.
Also In connection with the Mexedia Acquisitions, Jacob DiMartino resigned as the Sole Director and Officer of our company and the following persons were appointed: Daniel Contreras, Chief Executive Officer and Director; Orlando Taddeo, President and Director; and Daniel Gilcher, Chief Financial Officer, Secretary, Treasurer and Director. (See “Directors, Executive Officers, Promoters and Control Persons”).
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Acquisitions of the Mexedia Companies. Pursuant to separate Share Exchange Agreements (the “Acquisition Agreements”), we acquired 100% ownership of Telvantis Florida by the issuance of 40,000 shares of Series F Preferred Stock to Mexedia SPA and 100% ownership of Mexedia DAC by the issuance of 35,000 shares of Series F Preferred Stock to Mexedia SPA. Except for the consideration paid under the Acquisition Agreements, the Acquisition Agreements are substantially identical and contain the following provisions, among other customary provisions:
Regulation A Offering. Should we fail to have filed an Offering Statement on Form 1-A pursuant to Regulation A of the Securities and Exchange Commission (the “Reg A Offering”), on or before October 28th, Mexedia SPA has the right, but not the obligation, to rescind the Acquisition Agreements. This condition subsequent has been waived by Mexedia SPA.
Reg A Offering Proceeds. Should we fail to have obtained the sum of $1,500,000 in proceeds from the Reg A Offering, on or before the date that is six (6) months from the date of the SEC’s qualification of the Reg A Offering, Mexedia SPA has the right, but not the obligation, to rescind the Acquisition Agreements. This condition subsequent has been waived by Mexedia SPA.
Divestiture. Should we fail to have divested of our pre-closing operations, which divestiture shall include all debts, other than the trade payables of our company, as of the closing date of the Mexedia Acquisitions, on or before December 31, 2024, Mexedia SPA shall have the right, but not the obligation, to rescind the Acquisition Agreements. This condition has been satisfied by our company.
With the waivers and satisfaction of the conditions precedent in the Acquisition Agreements, our company’s ownership of the Mexedia Companies has fully vested.
Redemption Agreement. In connection with the Acquisition Agreements, our company and JanBella entered into the Redemption Agreement, pursuant to which JanBella sold 100% of the then-outstanding shares of Series E Preferred Stock to our company in exchange for the Redemption Note.
The principal amount of the Redemption Note is $540,000, with interest at 8% per annum and a maturity date of October 8, 2025. Under the Redemption Note, we are required to pay, on a monthly basis, 40% of the proceeds from the Reg A Offering that exceeds $100,000, until the principal and interest shall have been paid.
Following the date of payment in full of the principal balance of the Redemption Note (the “Balance Date”), we are to pay JanBella up to an additional $1,260,000 as additional principal (the “Additional Principal”), whether through monthly payments of 10% of Reg A Offering proceeds and/or, for a period of 18 months immediately following the issue date of the Redemption Note, 10% of funds obtained by our company from any third-party.
Pledge Agreement and Guaranty. In connection with the Acquisition Agreements, JanBella and Mexedia SPA entered into a pledge agreement (the “Pledge Agreement”) and a guaranty (“Guaranty”) with respect to our company’s obligations under the Redemption Note. Specifically, the Pledge Agreement and the Guaranty relate to our company’s timely payment of the $540,000 principal balance and accrued interest on the Redemption Agreement.
Share Cancellation Agreements. In connection with the Acquisition Agreements, our company entered into three separate share cancellation agreement (the “Share Cancellation Agreements”) with Dean Richards, Brenda Whitman and Christina Upham, respectively. Pursuant to the Share Cancellation Agreements, a total of 1,700,000,000 shares of our common stock were cancelled.
Series F Preferred Stock. Also in conjunction with the Mexedia Acquisitions, we designated a new Series F Preferred Stock and issued a total of 75,000 shares of such Series F Preferred Stock to Mexedia SPA, which now controls our company through its ownership of the Series F Preferred Stock. (See “Description of Securities-Series F Preferred Stock”).
New Business Focus
Following the acquisitions of the Mexedia Companies, our company has adopted the business plan of the Mexedia Companies as our company’s new business focus. Our prior business operations centered around an anti-bulling App known as “RAADR” are to be divested, in accordance with the Acquisition Agreements, which divestiture is expected to occur prior to the end of December 2024.
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Our company now operates as a holding company in the telecommunications sector. Telvantis Florida and Mexedia DAC are intermediary operators that sell “segments” of telephone connections, taking place between a “calling” user and a “called” user, to other Telco operator or mobile operators. As telco operators, the volume of their revenues is closely linked to the number of interconnection agreements entered into with commercial partners, e.g. commercial contracts between telecom operators with the aim of interconnecting networks and exchanging services.
The principal market for our telecommunications services and products is the United States, with additional sales generated in other developed countries stemming from United States customer affiliations. Our business focus is purely one business-to-business communications and we engage with the world’s largest network operators (mostly through their United States subsidiaries), as well as smaller local providers to send and receive large volumes of voice traffic between these entities.
Our customers and supplier entities are predominantly based in the United States and the principal service we provide is the termination of international voice communication between customer entities in the context of global communication. The service is provided on a strictly digital basis through the internet. The specific rates charged and destinations serviced change over time, depending on commercial opportunities and customer needs. Further, a part of our business consists of the aggregation of voice traffic from different customers to be delivered to the same supplier. We are, therefore, in principle, able to serve any network operator who generates international voice activity (See “Business”).
Plan of Operation
In connection with our acquisitions of the Mexedia Companies, our company now operates as a holding company in the telecommunications sector. Telvantis Florida and Mexedia DAC are intermediary operators that sell “segments” of telephone connections, taking place between a “calling” user and a “called” user, to other Telco operator or mobile operators. As telco operators, the volume of their revenues is closely linked to the number of interconnection agreements entered into with commercial partners, e.g. commercial contracts between telecom operators with the aim of interconnecting networks and exchanging services.
In addition, we believe that there are available significant business acquisition opportunities within our industry segment. It is our estimation that any such acquisition opportunity would require us to deliver funds as part of the acquisition. Should we sell at least 50% of the Offered Shares in this offering, our management believes our company would be positioned to make one or more such acquisitions (no current agreement, written or otherwise exists, in this regard). However, there is no assurance that we will obtain sufficient funds in this offering, or from other sources, that would permit us to make any such acquisition.
With the proceeds of this offering, we intend to increase our working capital position, such that we will be able to increase our revenues, which are, in large measure, a function of our levels of available working capital, from time to time.
We believe that the proceeds of this offering will satisfy our cash requirements for at least the next twelve months.
Basis of Presentation
Effective October 8, 2024, our company acquired the Mexedia Companies. From at least 2012 until our acquisition of the Mexedia Companies, our company had not been a “shell company.” However, during that extended period of time, our company did not generate significant revenues.
In addition to information concerning our company, this section presents information concerning the each of the Mexedia Companies, Telvantis Florida and Mexedia DAC, for the periods and as of the dates indicated.
For the year ended December 31, 2024, the operating results and financial condition of our company reflect those of the Mexedia Companies.
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Results of Operations
Our Company For the Years Ended December 31, 2024 and 2023
Pursuant to the Acquisition Agreements, our operations as they existed prior to the October 8, 2024, acquisitions of the Mexedia Companies were divested as of December 31, 2024. Our reported operating results and financial condition for the year ended December 31, 2024, include the Mexedia Companies from October 8, 2024, forward. The operations of our company prior to such date, which were divested effective December 31, 2024, were relatively insignificant, as compared to those of Telvantis Florida and Mexedia DAC. Operating results of our company beginning January 1, 2025, will reflect only those of Telvantis Florida and Mexedia DAC, on a consolidated basis.
Years Ended December 31, 2024 (“Fiscal 2024”) and 2023 (“Fiscal 2023”). Our results of operations for Fiscal 2024 provide an indication of our operations for periods after December 31, 2024, as compared to prior periods that do not include the operations of the Mexedia Companies. Our telecom business is low-margin, high-volume in nature, requiring increased levels of operating capital to increase sales revenues. Currently, we have a $45 million credit facility that has allowed for sustained operations. Nevertheless, we will be required to obtain significant additional capital, including in this offering, in order to expand capacity for sales volumes. There is no assurance that we will be successful in garnering any such additional capital.
During Fiscal 2024, we generated $7,192,705 (unaudited) in revenues and recognized $7,707,625 (unaudited) in cost of sales, resulting in a gross loss of $514,920 (unaudited). Because we are unable to predict the timing of our obtaining additional capital, if at all, we are unable to predict our level of revenues for all of 2025 and, therefore, our future ability to earn a profit. Our operating expenses for Fiscal 2024 totaled $1,161,666 (unaudited), which were comprised of $122,311 (unaudited) in sales and marketing expense, $282,275 (unaudited) in amortization expense, $110,889 (unaudited) in executive compensation and $646,191 (unaudited) in general and administrative expense, resulting in a loss from operations of $1,676,586 (unaudited). Other expense during Fiscal 2024 totaled $26,245,776 (unaudited), which were comprised of $37,900 (unaudited) in loss on anti-dilution clause, $793,628 (unaudited) in interest and financing expense and $31,908,247 (unaudited) in a one-time charge associated with the write-off of certain accounts receivable, offset by $5,460,066 (unaudited) in gain on write-off of debt and $1,033,933 in change in fair value of derivative liability (unaudited), resulting in a net loss of $27,903,412 (unaudited).
During Fiscal 2023, we did not generate any revenues. Our operating expenses for Fiscal 2023 totaled $559,709 (unaudited), which were comprised of $225,000 (unaudited) in executive compensation and $334,709 (unaudited) in general and administrative expense, resulting in a loss from operations of $559,709 (unaudited). Other expense during Fiscal 2023 totaled $139,446 (unaudited), which were comprised of $2,720,000 (unaudited) in loss on forbearance agreement, $270,542 (unaudited) in loss on anti-dilution clause, $261,852 (unaudited) in interest and financing expense, offset by $3,112,948 (unaudited) change in fair value of derivative liability (unaudited), resulting in a net loss of $699,155 (unaudited).
Information Concerning Telvantis Florida Prior to the Acquisition Agreements
Six Months Ended June 30, 2024 (“Interim 2024” and 2023 (“Interim 2023”).
Revenues. For Interim 2024 and Interim 2024, Telvantis Florida generated revenues of $17,663,834 (unaudited) and $100,000,366 (unaudited).
Cost of Sales. For Interim 2024 and Interim 2024, Telvantis Florida incurred cost of sales of $16,948,183 (unaudited) and $96,485,394 (unaudited), respectively.
Gross Profit. For Interim 2024 and Interim 2024, Telvantis Florida reported a gross profit of $715,651 (unaudited) and $3,514,972 (unaudited), respectively.
Operating Expenses. For Interim 2024, Telvantis Florida operating expenses totaled $1,352,490 (unaudited) and consisted of $564,000 (unaudited) in depreciation and amortization and $787,940 (unaudited) in general and administrative expenses. For Interim 2023, Telvantis Florida operating expenses totaled $1,483,558 (unaudited) and consisted of $23,428 (unaudited) in other expenses and $1,460,130 (unaudited) in general and administrative expenses.
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Profit/Loss From Operations. For Interim 2024 and Interim 2023, Telvantis Florida incurred a loss from operations of $636,839 (unaudited) and reported a net profit from operations of $2,031,414 (unaudited), respectively.
Net Profit/Loss. For Interim 2024, we incurred a net loss of $630,531 (unaudited). For Interim 2023, we reported a net profit of $1,271,469 (unaudited).
Years Ended December 31, 2023 and 2022.
Revenues. For the years ended December 31, 2023 and 2022, Telvantis Florida generated $215,325,822 (unaudited) and $276,535 (unaudited) in revenues, respectively.
Cost of Sales. For the years ended December 31, 2023 and 2022, Telvantis Florida incurred cost of sales of $207,738,077 (unaudited) and $-0- (unaudited), respectively.
Gross Profit. For the years ended December 31, 2023 and 2022, Telvantis Florida reported a gross profit of $7,587,745 (unaudited) and $276,535 (unaudited), respectively.
Operating Expenses. For the year ended December 31, 2023, Telvantis Florida operating expenses totaled $3,797,790 (unaudited) and consisted of $1,703,710 (unaudited) in salaries and benefits, $326,550 (unaudited) in professional fees, $200,971 (unaudited) in bad debt expense, $1,129,100 (unaudited) in amortization expense and $437,459 (unaudited) in other operating expenses. For the year ended December 31, 2022, Telvantis Florida operating expenses totaled $439,270 (unaudited) and consisted of $148,265 (unaudited) in salaries and benefits, $35,575 (unaudited) in professional fees and $255,430 (unaudited) in other operating expenses.
Profit/Loss From Operations. For the years ended December 31, 2023 and 2022, Telvantis Florida reported a profit from operations of $3,789,955 (unaudited) and incurred an loss from operations of $162,735 (unaudited), respectively.
Other Expenses. For the year ended December 31, 2023, Telvantis Florida reported finance costs of $1,928,631 (unaudited) and tax expense of $528,344.
Net Profit/Loss. For the year ended December 31, 2023, we reported a net profit of $1,332,983 (unaudited). For the year ended December 31, 2022, Telvantis Florida incurred a net loss of $162,735.
Information Concerning Mexedia DAC Prior to the Acquisition Agreements
Six Months Ended June 30, 2024 (“Interim 2024” and 2023 (“Interim 2023”).
Revenues. For Interim 2024 and Interim 2024, Mexedia DAC generated revenues of $19,290,476 (unaudited) and $39,768,401 (unaudited).
Cost of Sales. For Interim 2024 and Interim 2024, Mexedia DAC incurred cost of sales of $17,729,909 (unaudited) and $35,091,883 (unaudited), respectively.
Gross Profit. For Interim 2024 and Interim 2024, Mexedia DAC reported a gross profit of $1,560,567 (unaudited) and $4,676,519 (unaudited), respectively.
Operating Expenses. For Interim 2024, Mexedia DAC operating expenses totaled $676,772 (unaudited) comprised entirely of general and administrative expenses. For Interim 2023, our operating expenses totaled $1,717,390 (unaudited) comprised entirely of general and administrative expenses.
Profit From Operations. For Interim 2024 and Interim 2023, Mexedia DAC reported a profit from operations of $883,795 (unaudited) and $2,959,129 (unaudited), respectively.
Other Income/Expense. For Interim 2024 and Interim 2023, Mexedia DAC incurred finance costs of $3,100,749 (unaudited) and $1,786,459 (unaudited), respectively, other non-operating income of $80,812 (unaudited) and $3,466 (unaudited), respectively, and other non-operating expense of $292,567 (unaudited) and $99,042 (unaudited), respectively.
37
Net Profit/Loss. For Interim 2024, Mexedia DAC incurred a net loss of $2,428,709 (unaudited). For Interim 2023, Mexedia DAC reported a net profit of $942,456 (unaudited).
Years Ended December 31, 2023 and 2022. During 2023, we completed the development of our RAADR App and had a small number of non-paying users. While the RAADR App is currently available in the Apple Store, due to a lack of capital, we have not yet commenced marketing and sales activities.
Revenues. For the years ended December 31, 2023 and 2022, Mexedia DAC generated revenues of $112,626,233 (unaudited) and $140,871,413 (unaudited), respectively.
Cost of Sales. For the years ended December 31, 2023 and 2022, Mexedia DAC incurred cost of sales of $102,949,336 (unaudited) and $127,696,740 (unaudited), respectively.
Gross Profit. For the years ended December 31, 2023 and 2022, Mexedia DAC reported a gross profit of $9,676,897 (unaudited) and $13,714,673 (unaudited), respectively.
Operating Expenses. For the year ended December 31, 2023, Mexedia DAC operating expenses totaled $3,823,761 (unaudited) comprised entirely of general and administrative expenses. For the year ended December 31, 2022, Mexedia DAC operating expenses totaled $4,107,763 (unaudited) comprised entirely of general and administrative expenses.
Profit From Operations. For the years ended December 31, 2023 and 2022, we reported a profit from operations of $6,023,934 (unaudited) and $9,063,928 (unaudited), respectively.
Other Expenses. For the years ended December 31, 2023 and 2022, we incurred interest payable and other similar expenses of $4,402,570 (unaudited) and $9,063,928 (unaudited), respectively.
Net Profit. For the year ended December 31, 2023, we reported a net profit of $1,431,309 (unaudited) and $5,263,323 (unaudited), respectively.
Financial Condition, Liquidity and Capital Resources
Our Company
At December 31, 2024. At December 31, 2024, our company had current liabilities of $43,987,298 (unaudited), comprised of $1,431,921 (unaudited) in cash, $41,040,385 (unaudited) in accounts receivable and other current assets of $1,514,992 (unaudited), current liabilities of $89,868,685 (unaudited), comprised of $86,078,362 (unaudited) in accounts payable, $528,341 (unaudited) in income taxes payable, $198 (unaudited) in accrued provider costs, $75,000 (unaudited) in loans payable, $900,000 (unaudited) in amounts due to Fasanara and $286,785 (unaudited) in other current liabilities, and a working capital deficit of $43,881,387 (unaudited), compared to December 31, 2023, when our company had $13,364 in cash and a working capital deficit of $10,341,129 (unaudited).
Recent Transactions Affecting Our Balance Sheet.
Credit Facility. Effective October 31, 2024, Mexedia DAC, Phonetime and Matchcom became obligors under a $45 million credit facility (the “Fasanara Facility”) established to supplement the cash flow of Telvantis Florida (Mexedia DAC is only an administrative support entity). The liquidity provided by the Fasanara Facility is expected to facilitate sales growth of Telvantis Florida. Substantially all of the assets of the Mexedia Companies are pledged to securitize the Fasanara Facility. The credit facility agreement is with Fasanara Securitisation S.A. (“Fasanara”). An uncured default under the Fasanara Facility could result in our company’s losing ownership of the Mexedia Companies pursuant to a foreclosure action of Fasanarar. If such an event were to occur, our company would no longer have any business operations. (See “Risk Factors – Risks Related to Our Company”).
Share Cancellation Agreements. In connection with the Acquisition Agreements, our company entered into the Share Cancellation Agreements, pursuant to which a total of 1,700,000,000 shares of our common stock were cancelled in October 2024.
Settlement of Convertible Promissory Notes. During October and November 2024, we entered into settlement agreements with each holder of our then-outstanding convertible promissory notes, all of which had conversion rights
38
at conversion prices averaging approximately 60% below market prices for our common stock. Pursuant to these agreements, we issued a total of 2,273,000,000 shares in payment of a total of approximately $1,053,817 of indebtedness, including default interest and penalties, represented by such convertible promissory notes. After completion of these settlements, we had no outstanding convertible instruments.
Convertible Promissory Notes. In December 2024, we issued three convertible promissory notes to third parties, each with a principal amount of $27,500, a total principal amount of $82,500 (a total of $7,500 of OID), in consideration of three separate loans of $25,000, a total loan amount of $75,000. These notes bear interest at 8% per annum and are due in December 2025. These notes are convertible into our common stock at any time during the period beginning on the earlier of (a) the day immediately following the SEC’s qualification of a Regulation A Offering of our company and (b) the date that is 180 days immediately following their respective issue dates at a 25% discount to the then-market price of our common stock; provided, however, that, should the holders elect to convert into shares qualified in a Regulation A Offering of our company, the conversion price shall be the fixed offering price for our common stock in such Regulation A Offering.
Divestiture. Effective December 31, 2024, pursuant to a Share Exchange Agreement (the “Divestiture Agreement”), we sold our company’s pre-change-in-control operations to New Generation Consumer Group, Inc., a publicly-traded Delaware corporation (symbol: NGCG), in exchange for 100,000,000 shares, or approximately 7%, of NGCG’s common stock, which shares were valued at $0.0006 per share, the closing price of NGCG’s common stock on December 31, 2024, or $60,000, in the aggregate. However, for financial reporting purposes, we have assigned no value to such shares in our accompanying financial statements, given their restricted nature and expect two-year holding period. At the time of closing of the Divestiture Agreement, the sole officer and director of NCGC was Jacob DiMartino, the former officer and director of our company. No standard method of valuation was used in determining the number of shares of NGCG common stock that was issued by NGCG to our company. (See “Certain Relationships and Related Transactions”).
This divestiture is expected to have a net positive effect on our company, due to such divested operations’ lack of revenues and associated operational and administrative expenses.
Information Concerning Telvantis Florida Prior to the Acquisition Agreements
At June 30, 2024. At June 30, 2024, Telvantis Florida had $46,041 (unaudited) in cash and a working capital deficit of $4,896,852 (unaudited), compared to December 31, 2023, when Telvantis Florida had $24,303 in cash and a working capital deficit of $5,408,158 (unaudited).
At December 31, 2023. At December 31, 2023, Telvantis Florida had $24,303 (unaudited) in cash and a working capital deficit of $5,408,158, (unaudited), compared to December 31, 2022, when Telvantis Florida had $25,267 in cash and working capital of $2,551,396 (unaudited).
Information Concerning Mexedia DAC Prior to the Acquisition Agreements
At June 30, 2024. At June 30, 2024, Mexedia DAC had $82,067 (unaudited) in cash and a working capital deficit of $1,993,676 (unaudited), compared to December 31, 2023, when Mexedia DAC had $98,617 in cash and working capital of $1,880,454 (unaudited).
At December 31, 2023. At December 31, 2023, Mexedia DAC had $98,617 (unaudited) in cash and working capital of $1,880,454 (unaudited), compared to December 31, 2022, when Mexedia DAC had $2,307,680 in cash and working capital of $5,358,636 (unaudited).
Contractual Obligations
To date, we have not entered into any significant long-term obligations that require us to make monthly cash payments.
Capital Expenditures
We made no capital expenditures during the years ended December 31, 2024 and 2023. Without the proceeds from this offering, or from other sources, no such expenditures are expected to be made during the remainder of 2025.
39
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Directors and Executive Officers
The following table sets forth certain information concerning our company’s executive management.
Name
|
| Age
|
| Positions(1)
|
Daniel Contreras
|
| 66
|
| Chief Executive Officer and Director
|
Orlando Taddeo
|
| 50
|
| President and Director
|
Daniel Gilcher
|
| 37
|
| Chief Financial Officer, Secretary, Treasurer and Director
|
(1)Messrs. Contreras, Taddeo and Gilcher meet regularly in our Miami Beach, Florida, headquarters for in-person meetings, where they set corporate policy in their roles as directors of our company and its subsidiaries (prior to our company’s acquisition Telvantis Florida, these persons would meet regularly in Miami Beach for in-person meetings as the directors of Telvantis Florida.
Our company’s Board of Directors appoints our executive officers. Our directors serve until the earlier occurrence of the election of their respective successors at the next meeting of shareholders, death, resignation or removal by the Board of Directors. Officers serve at the discretion of our Board of Directors. There exist no family relationships between the listed officers and directors. Certain information regarding the backgrounds of each of our officers and directors is set forth below.
Daniel Contreras - Chief Executive Officer and Director. Mr. Contreras is a multi-cultural financial executive with over 30 years of experience with Global 500 and start-up companies in the Telecom/Technology/FinTech sectors, developing them from design to multimillion dollar enterprises. Mr. Contreras is a strategic and entrepreneurially-driven global financial management leader with strong expertise in developing multi-functional teams with an applied management style.
Prior to the Mexedia Acquisitions, Mr. Contreras served as CEO for Telvantis Florida, providing financial services to companies in the telecom and technology sector. Previously, has was CEO and CFO of the “CIMA Telecom Group” of companies, a $1.4B international, privately-held integrated telecommunications services group based in Coral Gables, Florida. From 1994 to 2000, he served as VP Finance & Administration for “start-up” AmericaTel, where he was instrumental in developing the company from the ground up to a multinational telecommunication services provider, and with over $350 million in annualized revenues. From 1990 and 1994, Mr. Contreras was Financial Manager of Minera Escondida, the largest copper ore mine operation and foreign direct investment in Chile. Previously to that, Mr. Contreras held the position of Financial Controller responsible for the Country of Chile’s financial operations for ING Bank (Netherlands) and worked as a Bank Analyst for Regions Bank (f/k/a Landmark Bancshares in St. Louis, Missouri). He holds a Bachelor of Science Degree in Business Administration with Emphasis in Finance from St. Louis University, St. Louis, Missouri, and a Master Degree in Business Administration (MBA) from Fontbonne University, St. Louis, Missouri.
Mr. Contreras, as Chief Executive Officer of our company, directs, controls and coordinates our business activities, including those of our subsidiaries, from our Miami Beach, Florida, offices. Since Telvantis Florida’s acquisition of Phonetime and Matchcom in 2023, Mr. Contreras has performed his corporate assignments from Telvantis Florida’s, now our company’s, Miami Beach, Florida, headquarters. Mr. Contreras began his in-person service with Telvantis Florida, upon its acquisition of Phonetime and Matchcom. Mr. Contreras devotes all of his time to the business of our company.
Orlando Taddeo - President and Director. Born in Formia, Italy, in 1974, Mr. Taddeo is an entrepreneur who has been a key player in successful ventures in the innovation and telecommunications market for 30 years, both in Italy and abroad. In recent years, he has led the growth of Airtime Partecipazioni, a publicly-traded company in Paris, which, last May, changed its name to “Mexedia” (Mexedia SPA) and became a Benefit Company, leading it to now being a tech company that offers innovative technologies in an integrated ecosystem that allows it to manage all customer communication activities. Since 2021, he has been a member of the B20, the business forum through which companies and their associations produce policy recommendations for the G20, and which represents 6.5 million companies from all sectors and all sizes.
Mr. Taddeo devotes at least 20 hours per week to his duties as President of our company; approximately 50% of this time is in person in our Miami Beach, Florida, headquarters; the balance of the time, he performs his duties
40
from Rome, Italy. Mr. Taddeo began his in-person service with Telvantis Florida, upon its acquisition of Phonetime and Matchcom. (See “Risk Factors-Risks Related to Our Company”).
Daniel Gilcher - Chief Financial Officer, Secretary Treasurer and Director. Mr. Gilcher currently serves as Chief Financial Officer of Mexedia SPA. Prior to joining Mexedia SPA, Mr. Gilcher served as the Interim CFO for a digital healthcare company from Israel, where he was responsible for complex capital raising structures and a going-public transaction. Prior to these operational roles, he advised a broad range of global companies on capital allocation and other strategic initiatives, including as the responsible party of a special situations fund. Mr. Gilcher’s career started as a buy-side equity analyst and portfolio manager for small/mid caps in Frankfurt, Germany. He received his MBA from the Indian Institute of Management, Ahmedabad, India. He also holds an MSc in Finance from EBS University, Germany, where he was a Gold Scholar. Mr. Gilcher graduated in 2009 from Johannes-Gutenberg University, Mainz, Germany, with an M.A. in Politics, Psychology and Philosophy.
Mr. Gilcher devotes at least 25 hours per week to his duties as Chief Financial Officer of our company; currently and until such time as his U.S. work visa is obtained, Mr. Gilcher spends approximately 10% of this time in person in our Miami Beach, Florida, headquarters, with the balance of that time spent in Frankfurt, Germany. Mr. Gilcher began his in-person service with Telvantis Florida in April 2024. (See “Risk Factors-Risks Related to Our Company”).
Key Employees
Maickel Abdou – Chief Executive Officer of Telvantis Florida. Mr. Abdou was hired as Chief Executive Officer of Telvantis Florida in November 1, 2024, with the primary charge of increasing overall sales of Telvantis Florida, with an emphasis on its voice service products. From January 2021 until he joined Telvantis Florida, Mr. Abdou was Regional Director for sales of Apelby Communications, a global provider of ICT (information and communications technology) and telecommunications services specializing in the wholesale purchase and sale of international voice traffic services, gaming services, data centers, software and outsourcing services for retail customers and ICT solutions between operators. From 2011 until January 2021, Mr. Abdou served as a Vice President of PCCW Global, a leading communications service provider, offering the latest mobility, voice and data solutions to multinational enterprises, telecommunications partners, cloud and application service providers.
Based in Wayne, New Jersey, Mr. Maickel performs his duties as Chief Executive Officer of Telvantis Florida, largely on a remote basis with occasional visits to our headquarters in Miami Beach, Florida.
Sonja Maggi – Telvantis Florida, Head of Voice. In her position with Telvantis Florida, Ms. Maggi oversees sales of voice service products. From 2006 to March 2023, she served as Vice President - Carrier Relations of Phonetime, Inc., which was acquired by Telvantis Florida in March 2023. Since March 2023, Ms. Maggi has served as Head of Voice for Telvantis Florida.
Based in Long Beach, New York, Ms. Maggi performs her duties as Head of Voice for Telvantis Florida, largely on a remote basis with occasional visits to our headquarters in Miami Beach, Florida.
Employment Agreement
In November 2024, we entered into an employment agreement (the “Contreras Agreement”), pursuant to which Mr. Contreras is paid an annual salary of $100,000 and is paid an additional $2,111 per month to cover Mr. Contreras’ health insurance premiums and similar items.
Conflicts of Interest
At the present time, we do not foresee any direct conflict between our officers and directors, their other business interests and their involvement in our company.
Corporate Governance
We do not have a separate Compensation Committee, Audit Committee or Nominating Committee. These functions are conducted by our Board of Directors acting as a whole.
41
During the year ended December 31, 2024, our Board of Directors held two meetings, and took all other necessary actions by written consent in lieu of a meeting.
Independence of Board of Directors
None of our Directors is independent, within the meaning of definitions established by the SEC or any self-regulatory organization. We are not currently subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include independent directors.
Shareholder Communications with Our Board of Directors
Our company welcomes comments and questions from our shareholders. Shareholders should direct all communications to our Chief Executive Officer, Daniel Contreras, at our executive offices. However, while we appreciate all comments from shareholders, we may not be able to respond individually to all communications. We attempt to address shareholder questions and concerns in our press releases and documents filed with OTC Markets, so that all shareholders have access to information about us at the same time. Mr. Contreras collects and evaluates all shareholder communications. All communications addressed to our directors and executive officers will be reviewed by those parties, unless the communication is clearly frivolous.
Code of Ethics
As of the date of this Offering Circular, our Board of Directors has not adopted a code of ethics with respect to our directors, officers and employees.
EXECUTIVE COMPENSATION
As of the date of this Offering Circular, there are no annuity, pension or retirement benefits proposed to be paid to officers, directors or employees of our company, pursuant to any presently existing plan provided by or contributed to by our company.
The following table summarizes information concerning the compensation awarded, paid to or earned by, our executive officers.
| Name and Principal Position
| Year
Ended
12/31
| Salary
($)
| Bonus
($)
| Stock
Awards
($)
| Option
Awards
($)
| Non-Equity Incentive Plan Compensation
($)
| Non-qualified
Deferred
Compensation
Earnings
($)
| All Other Compen-
sation
($)
| Total
($)
|
|
| Jacob DiMartino
Former Chief
Executive Officer
| 2024
2023
| 90,000(1)
180,000
| ---
---
| ---
---
| ---
---
| ---
---
| ---
---
| ---
---
| 90,000(1)
180,000
|
|
| Daniel Contreras(2)
Chief Executive Officer
| 2024
2023
| 16,667
---
| ---
---
| ---
---
| ---
---
| ---
---
| ---
---
| ---
---
| 16,667
---
|
|
| Orlando Taddeo(2)
President
| 2024
2023
| ---
---
| ---
---
| ---
---
| ---
---
| ---
---
| ---
---
| ---
---
| ---
---
|
|
| Daniel Gilcher(2)
Chief Financial Officer
and Secretary
| 2024
2023
| ---
---
| ---
---
| ---
---
| ---
---
| ---
---
| ---
---
| ---
---
| ---
---
|
|
(1)This amount was accrued through June 30, 2024, and subsequently.
(2)This officer did not take office until October 2024.
Employment Agreements
We have not entered into an employment agreement with any of our executive officers. However, in the near future, it is expected that we will enter into an employment agreement with each of such persons, although none of the terms of such employment agreements has been determined.
42
Outstanding Option Awards
The following table provides certain information regarding unexercised options to purchase common stock, stock options that have not vested and equity-incentive plan awards outstanding as of the date of this Offering Circular, for each named executive officer.
| Option Awards
| Stock Awards
|
|
Name
| Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
| Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
| Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
| Option
Exercise
Price ($)
| Option
Expiration
Date
| Number of
Shares or
Units of
Stock That
Have Not
Vested (#)
| Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
| Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (#)
| Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested ($)
|
|
Daniel Contreras
| ---
| ---
| ---
| N/A
| N/A
| ---
| ---
| ---
| ---
|
|
Orlando Taddeo
| ---
| ---
| ---
| N/A
| N/A
| ---
| ---
| ---
| ---
|
|
Daniel Gilcher
| ---
| ---
| ---
| N/A
| N/A
| ---
| ---
| ---
| ---
|
|
Long-Term Incentive Plans
We currently have no long-term incentive plans.
Director Compensation
Our directors receive no compensation for their serving in such capacity.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the date of this Offering Circular, information regarding beneficial ownership of our common stock by the following: (a) each person, or group of affiliated persons, known by our company to be the beneficial owner of more than five percent of any class of our voting securities; (b) each of our directors; (c) each of the named executive officers; and (d) all directors and executive officers as a group. Beneficial ownership is determined in accordance with the rules of the SEC, based on voting or investment power with respect to the securities. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock underlying convertible instruments, if any, held by that person are deemed to be outstanding if the convertible instrument is exercisable within 60 days of the date hereof.
Name of Shareholder
|
| Number of
Shares
Beneficially
Owned
|
| % Beneficially
Owned(1)
|
| Number of
Shares
Beneficially
Owned
|
| % Beneficially
Owned(2)
|
| Effective
Voting Power
|
Common Stock
Executive Officers & Directors
|
|
|
|
|
|
|
|
|
|
|
Daniel Contreras
|
| 1,666,667(3)
|
| *
|
| 1,666,667(4)
|
| *
|
|
|
Orlando Taddeo(5)
|
| 19,313,781,983(6)
|
| 75.78%
|
| 23,813,781,983(7)
|
| 75.63%
|
| See Note 13
and Note 14
|
Daniel Gilcher
|
| 133,333,333(8)
|
| *
|
| 133,333,333(9)
|
| *
|
|
|
Officers and directors, as a
group (3 persons)
|
| 19,448,781,983(10)
|
| 76.31%
|
| 23,948,781,983(11)
|
| 76.06%
|
|
|
5% or Greater Shareholders
Mexedia S.p.A. S.B.(12)
|
| 19,113,781,983(6)
|
| 75.00%
|
| 23,948,781,983(7)
|
| 75.00%
|
|
|
Series F Preferred Stock(13)
Mexedia S.p.A. S.B.(12)
|
| 75,000
|
| 100%
|
| 75,000
|
| 100%
|
| See Note 13
and Note 14
|
* Less than 1%
43
(1)Based on 25,485,042,644 shares outstanding, which includes (a) 6,371,260,661 issued shares and (b) 19,113,781,983 unissued shares that underlie currently convertible shares of Series F Preferred Stock and currently convertible promissory notes, before this offering.
(2)Based on 31,485,042,644 shares outstanding, which includes (a) 7,871,260,661 issued shares, assuming the sale of all of the Offered Shares (including 383,333,000 Offered Shares issued in payment of $1,150,000 of convertible promissory notes – see “Use of Proceeds”), and (b) 23,613,781,983 unissued shares that underlie convertible shares of Series F Preferred Stock, after this offering.
(3)None of the indicated shares is issued, but underlie a currently convertible promissory note. (See “Use of Proceeds”).
(4)Assumes the indicated shares are issued in this offering in payment of a promissory note. (See “Use of Proceeds”).
(5)Mr. Taddeo is the President of Mexedia S.p.A. S.B., a publicly-held Italy corporation listed for trading on the Euronext Growth Paris exchange, of which he is also the majority shareholder. As President, Mr. Taddeo possesses dispositive and voting control of the shares of Series F Preferred Stock.
(6)None of the indicated shares is issued, but underlie the currently convertible shares of Series A Preferred Stock (as to 19,313,781,983 of such shares) and currently convertible promissory notes (as to 200,000,000 of such shares) (See “Use of Proceeds”).
(7)23,613,781,983 of such shares are not issued, but underlie the currently convertible shares of Series A Preferred Stock; assumes 200,000,000 of such shares are issued in this offering in payment of promissory notes. (See “Use of Proceeds”).
(8)None of the indicated shares is issued, but underlie currently convertible promissory notes. (See “Use of Proceeds”).
(9)Assumes the indicated shares are issued in this offering in payment of promissory notes. (See “Use of Proceeds”).
(10)None of the indicated shares is issued, but underlie the currently convertible shares of Series A Preferred Stock (as to 19,113,781,983 of such shares) and currently convertible promissory notes (as to 383,333,333 of such shares) (See “Use of Proceeds”).
(11)23,813,781,983 of such shares are not issued, but underlie the currently convertible shares of Series A Preferred Stock; assumes 383,333,333 of such shares are issued in this offering in payment of promissory notes. (See “Use of Proceeds”).
(12)Orlando Taddeo is the President of Mexedia S.p.A. S.B., a publicly-held Italy corporation listed for trading on the Euronext Growth Paris exchange, of which he is also the majority shareholder. As President, Mr. Taddeo possesses dispositive and voting control of the shares of Series F Preferred Stock. The address of this shareholder is Via di Affogalasino, 105, 00148 Rome, Italy.
(13)Due to the superior voting rights of the Series F Preferred Stock, Orlando Taddeo, as the President of Mexedia S.p.A. S.B., the owner of all outstanding shares of the Series F Preferred Stock, will, therefore, be able to control the management and affairs of our company, as well as matters requiring the approval by our shareholders, including the election of directors, any merger, consolidation or sale of all or substantially all of our assets, and any other significant corporate transaction.
(14)The holders of the Series F Preferred Stock, as a class, have voting rights in all matters requiring shareholder approval equal to 66.67% of all shares eligible to vote. Each share of Series F Preferred Stock shall be convertible at any time into a number of shares of our common stock that equals 0.001 percent (0.001%) of the number of issued and outstanding shares of our common stock outstanding on the date of conversion, such that 1,000 shares of Series F Preferred Stock would convert into one percent (1%) of the number of issued and outstanding shares of our common stock outstanding on the date of conversion.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Change-in-Control Transaction
Effective October 8, 2024, a change in control of our company, in connection with our acquisitions (the Mexedia Acquisitions) of Mexedia, Inc., a Florida corporation with its operations headquartered in Miami, Florida (Telvantis Florida), and Mexedia DAC, an Ireland corporation now wholly owned by Telvantis Florida (Mexedia DAC) (Telvantis Florida and Mexedia DAC are referred to as the Mexedia Companies). Following these transactions, Mexedia SPA controls our company. However, it is expected that, in the near future, Mexedia SPA will distribute to its shareholders the control shares issued to it pursuant to the Acquisition Agreements.
Also In connection with the Mexedia Acquisitions, Jacob DiMartino resigned as the Sole Director and Officer of our company and the following persons were appointed: Daniel Contreras, Chief Executive Officer and Director; Orlando Taddeo, President and Director; and Daniel Gilcher, Chief Financial Officer, Secretary, Treasurer and Director. (See “Directors, Executive Officers, Promoters and Control Persons”).
44
Acquisitions of the Mexedia Companies. Pursuant to separate Share Exchange Agreements (the Acquisition Agreements), we acquired 100% ownership of Telvantis Florida by the issuance of 40,000 shares of Series F Preferred Stock to Mexedia SPA and 100% ownership of Mexedia DAC by the issuance of 35,000 shares of Series F Preferred Stock to Mexedia SPA. Except for the consideration paid under the Acquisition Agreements, the Acquisition Agreements are substantially identical and contain the following provisions, among other customary provisions:
Regulation A Offering. Should we fail to have filed an Offering Statement on Form 1-A pursuant to Regulation A of the Securities and Exchange Commission (the Reg A Offering), on or before October 28th, Mexedia SPA has the right, but not the obligation, to rescind the Acquisition Agreements. This condition subsequent has been waived by Mexedia SPA.
Reg A Offering Proceeds. Should we fail to have obtained the sum of $1,500,000 in proceeds from the Reg A Offering, on or before the date that is six (6) months from the date of the SEC’s qualification of the Reg A Offering, Mexedia SPA has the right, but not the obligation, to rescind the Acquisition Agreements. This condition subsequent has been waived by Mexedia SPA.
Divestiture. Should we fail to have divested of our pre-closing operations, which divestiture shall include all debts, other than the trade payables of our company, as of the closing date of the Mexedia Acquisitions, on or before December 31, 2024, Mexedia SPA shall have the right, but not the obligation, to rescind the Acquisition Agreements. This condition has been satisfied by our company.
With the waivers and satisfaction of the conditions precedent in the Acquisition Agreements, our company’s ownership of the Mexedia Companies has fully vested.
Redemption Agreement. In connection with the Acquisition Agreements, our company and JanBella entered into the Redemption Agreement, pursuant to which JanBella sold 100% of the then-outstanding shares of Series E Preferred Stock to our company in exchange for the Redemption Note.
The principal amount of the Redemption Note is $540,000, with interest at 8% per annum and a maturity date of October 8, 2025. Under the Redemption Note, we are required to pay, on a monthly basis, 40% of the proceeds from the Reg A Offering that exceeds $100,000, until the principal and interest shall have been paid.
Following the date of payment in full of the principal balance of the Redemption Note (the “Balance Date”), we are to pay JanBella up to an additional $1,260,000 as additional principal (the “Additional Principal”), whether through monthly payments of 10% of Reg A Offering proceeds and/or, for a period of 18 months immediately following the issue date of the Redemption Note, 10% of funds obtained by our company from any third-party.
Pledge Agreement and Guaranty. In connection with the Acquisition Agreements, JanBella and Mexedia SPA entered into a pledge agreement (the Pledge Agreement) and a guaranty (Guaranty) with respect to our company’s obligations under the Redemption Note. Specifically, the Pledge Agreement and the Guaranty relate to our company’s timely payment of the $540,000 principal balance and accrued interest on the Redemption Agreement.
Share Cancellation Agreements. In connection with the Acquisition Agreements, our company entered into three separate share cancellation agreement (the Share Cancellation Agreements) with Dean Richards, Brenda Whitman and Christina Upham, respectively. Pursuant to the Share Cancellation Agreements, a total of 1,700,000,000 shares of our common stock were cancelled.
Series F Preferred Stock. Also in conjunction with the Mexedia Acquisitions, we designated a new Series F Preferred Stock and issued a total of 75,000 shares of such Series F Preferred Stock to Mexedia SPA, which now controls our company through its ownership of the Series F Preferred Stock. (See “Description of Securities-Series F Preferred Stock”).
Officer Bonuses
In November 2024, the Company paid bonuses to its executive officers, as follows:
•We issued a $50,000 principal amount convertible promissory note to our Chief Executive Officer, Daniel Contreras, in payment of a performance bonus, which convertible promissory note was amended and restated on February 17, 2025.
45
•We issued a $300,000 principal amount convertible promissory note to our President, Orlando Taddeo, in payment of a performance bonus, which convertible promissory note was amended and restated on February 17, 2025.
•We issued a $300,000 principal amount convertible promissory note to our President, Orlando Taddeo, in payment of a bonus associated with Mexedia DAC’s debt restructuring, which convertible promissory note was amended and restated on February 17, 2025.
•We issued a $200,000 principal amount convertible promissory note to our Chief Financial Officer, Daniel Gilcher, in payment of a performance bonus (this note was issued in the name of Otus, LLC, a company owned by Mr. Gilcher), which convertible promissory note was amended and restated on February 17, 2025.
•We issued a $200,000 principal amount convertible promissory note to our Chief Financial Officer, Daniel Gilcher, in payment of a bonus associated with Mexedia DAC’s debt restructuring (this note was issued in the name of Otus, LLC, a company owned by Mr. Gilcher), which convertible promissory note was amended and restated on February 17, 2025.
Each of these convertible promissory notes is convertible into Conversion Shares. (See “Use of Proceeds”).
Employment Agreement
In November 2024, we entered into an employment agreement (the “Contreras Agreement”), pursuant to which Mr. Contreras is paid an annual salary of $100,000 and is paid an additional $2,111 per month to cover Mr. Contreras’ health insurance premiums and similar items.
Divestiture
Effective December 31, 2024, pursuant to a Share Exchange Agreement (the “Divestiture Agreement”), we sold our company’s pre-change-in-control operations to New Generation Consumer Group, Inc., a publicly-traded Delaware corporation (symbol: NGCG), in exchange for 100,000,000 shares, or approximately 7%, of NGCG’s common stock, which shares were valued at $0.0006 per share, the closing price of NGCG’s common stock on December 31, 2024, or $60,000, in the aggregate. However, for financial reporting purposes, we have assigned no value to such shares in our accompanying financial statements, given their restricted nature and expect two-year holding period. At the time of closing of the Divestiture Agreement, the sole officer and director of NCGC was Jacob DiMartino, the former officer and director of our company. No standard method of valuation was used in determining the number of shares of NGCG common stock that was issued by NGCG to our company.
Guaranty by Director
In November 2022, our former CEO, Jacob DiMartino, guaranteed our performance under a promissory note, $112,500 principal amount (the “JanBella Note”), issued to JanBella Group, LLC (“JanBella”), by which we obtained $100,000 in cash proceeds. As part of his guaranty, Mr. DiMartino pledged his shares of our then-outstanding Series E Preferred Stock, through which shares he possessed voting control of our company. At the time of our acquisition of the Mexedia Companies, we were in default under the JanBella Note. In conjunction with our acquisition of the Mexedia Companies, JanBella foreclosed on Mr. DiMartino’s pledge and, subsequently, entered into the Redemption Agreement.
LEGAL MATTERS
Certain legal matters with respect to the Offered Shares offered by this Offering Circular will be passed upon by Newlan Law Firm, PLLC. Newlan Law Firm, PLLC is the holder of two convertible promissory notes in the principal amounts of $60,000 and $40,000, respectively. These notes were issued by our company in payment of legal services, pursuant to a legal services agreement, and are convertible into Conversion Shares in this offering. (See “Use of Proceeds”).
46
WHERE YOU CAN FIND MORE INFORMATION
We have filed an offering statement on Form 1-A with the SEC under the Securities Act with respect to the common stock offered by this Offering Circular. This Offering Circular, which constitutes a part of the offering statement, does not contain all of the information set forth in the offering statement or the exhibits and schedules filed therewith. For further information with respect to us and our common stock, please see the offering statement and the exhibits and schedules filed with the offering statement. Statements contained in this Offering Circular regarding the contents of any contract or any other document that is filed as an exhibit to the offering statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the offering statement. The offering statement, including its exhibits and schedules, may be inspected without charge at the public reference room maintained by the SEC, located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549, and copies of all or any part of the offering statement may be obtained from such offices upon the payment of the fees prescribed by the SEC. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. The SEC also maintains an Internet website that contains all information regarding companies that file electronically with the SEC. The address of the site is www.sec.gov.
47
INDEX TO FINANCIAL STATEMENTS
RAADR, INC.
Unaudited Financial Statements for the Years Ended December 31, 2024 and 2023
TELVANTIS VOICE SERVICES, INC. (formerly Mexedia, Inc.) AND SUBSIDIARIES
Unaudited Consolidated Financial Statements for the Six Months Ended June 30, 2024 and 2023
Unaudited Consolidated Financial Statements for the Years Ended December 31, 2023 and 2022
MEXEDIA, DAC
Unaudited Consolidated Financial Statements for the Six Months Ended June 30, 2024 and 2023
Unaudited Consolidated Financial Statements for the Years Ended December 31, 2023 and 2022
48
RAADR, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(unaudited)
| December 31, 2024
|
| December 31, 2023
|
ASSETS
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
Cash
| $
| 1,431,921
|
| $
| 13,364
|
Accounts receivable
|
| 41,040,385
|
|
| ---
|
Other current assets
|
| 1,514,992
|
|
| ---
|
Total Current Assets
|
| 43,987,298
|
|
| 13,364
|
Fixed Assets, Net
|
| 134,861
|
|
| ---
|
Total Fixed Assets
|
| 134,861
|
|
| ---
|
Other Assets
|
|
|
|
|
|
IP, net
|
| 12,665,467
|
|
| ---
|
Loans receivable
|
| 5,488,418
|
|
| ---
|
Total Other Assets
|
| 18,153,885
|
|
| ---
|
Total Assets
| $
| 62,276,044
|
| $
| 13,364
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
Accrued expenses
| $
| ---
|
| $
| 3,164,552
|
Accounts payable
|
| 86,078,362
|
|
| 525,269
|
Advances
|
| ---
|
|
| 105,700
|
Preferred stock to be issued
|
| ---
|
|
| 259,900
|
Common stock to be issued
|
| ---
|
|
| 1,066,138
|
Line of credit
|
| ---
|
|
| 38,998
|
Convertible notes payable
|
| 82,500
|
|
| 1,701,018
|
Notes payable
|
| ---
|
|
| 757,863
|
Notes payable - related party
|
| ---
|
|
| 118,104
|
Derivative liabilities
|
| ---
|
|
| 2,616,951
|
Income taxes payable
|
| 528,341
|
|
| ---
|
Accrued provider costs
|
| 198
|
|
| ---
|
Loans payable
|
| 75,000
|
|
| ---
|
Due to Fasanara
|
| 900,000
|
|
| ---
|
Other current liabilities
|
| 286,785
|
|
| ---
|
Total Current Liabilities
|
| 87,951,185
|
|
| 10,354,493
|
Long-Term Liabilities
|
|
|
|
|
|
Notes payable
|
| ---
|
|
| 146,769
|
Total Long-Term Liabilities
|
| ---
|
|
| 146,769
|
Total Liabilities
|
| 87,951,185
|
|
| 10,501,262
|
|
|
|
|
|
|
Stockholders’ Equity (Deficit)
|
|
|
|
|
|
Series A Preferred Stock, par value $.001, 20,000,000 shares
authorized, -0- shares and -0- shares issued and outstanding as
of December 31, 2024 and 2023, respectively
|
| 1
|
|
| 1
|
Series E Preferred Stock , par value $.001, 1,000,000 shares
authorized, 1,000,000 shares and -0- shares issued and outstanding
as of December 31, 2024 and 2023, respectively
|
| 1,000
|
|
| 1,000
|
Series F Preferred Stock, par value $.001, 75,000 shares authorized,
75,000 shares and -0- shares issued and outstanding as of
December 31, 2024 and 2023, respectively
|
| 75
|
|
| ---
|
Common Stock, par value $.001, 15,000,000,000 shares authorized,
6,371,260,661 shares and 2,346,499,236 shares issued and
outstanding as of December 31, 2024 and 2023, respectively
|
| 6,371,261
|
|
| 2,346,501
|
Additional paid-in capital
|
| 32,861,547
|
|
| 24,170,213
|
Accumulated deficit
|
| (64,909,025)
|
|
| (37,005,613)
|
Total Stockholders’ Equity (Deficit)
|
| (25,675,141)
|
|
| (10,487,898)
|
Total Liabilities and Stockholders’ Equity (Deficit)
| $
| 62,276,044
|
| $
| 13,364
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-1
RAADR, INC. AND SUBSIDIARIES
Consolidated Statement of Profit and Loss
For the Years Ended December 31, 2024 and 2023
(unaudited)
| Year Ended December 31,
|
| 2024
|
| 2023
|
|
|
|
|
|
|
Revenues
| $
| 7,192,705
|
| $
| ---
|
Cost of sales
|
| (7,707,625)
|
|
| ---
|
Gross profit (loss)
|
| (514,920)
|
|
| ---
|
Operating expenses
|
|
|
|
|
|
Sales and marketing
|
| 122,311
|
|
| ---
|
Amortization expense
|
| 282,275
|
|
| ---
|
Executive compensation
|
| 110,889
|
|
| 225,000
|
General and administrative
|
| 646,191
|
|
| 334,709
|
Total operating expenses
|
| 1,161,666
|
|
| 559,709
|
Operating profit (loss)
|
| (1,676,586)
|
|
| (559,709)
|
Other income (expense)
|
|
|
|
|
|
Loss on forbearance agreement
|
| ---
|
|
| (2,720,000)
|
Loss on anti-dilution clause
|
| (37,900)
|
|
| (270,542)
|
Gain on write-off of debt
|
| 5,460,066
|
|
| ---
|
Change in fair value of derivative liability
|
| 1,033,933
|
|
| 3,112,948
|
Interest and financing expense
|
| (793,628)
|
|
| (261,852)
|
Other expenses
|
| (31,908,247)
|
|
| ---
|
Total other income (expense)
|
| (26,245,776)
|
|
| (139,446)
|
Profit (loss) before tax expense
|
| (27,903,412)
|
|
| (699,155)
|
Tax expense
|
| ---
|
|
| ---
|
Net profit (loss)
| $
| (27,903,412)
|
| $
| (699,155)
|
|
|
|
|
|
|
Net loss per common share
|
|
|
|
|
|
Basic and Diluted
| $
| (0.00)
|
| $
| (0.00)
|
Weighted average common shares outstanding
|
|
|
|
|
|
Basic and Diluted
|
| 4,957,249,879
|
|
| 827,335,589
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-2
RAADR, INC. AND SUBSIDIARIES
Consolidated Statement of Changes in Equity
For the Year Ended December 31, 2024 and 2023
(unaudited)
| Series A
| Series E
| Series F
| Common Stock
|
|
| Shares
| Amount
| Shares
| Amount
| Shares
| Amount
| Shares
| Amount
| Additional
Paid-in
Capital
| Accumulated
Deficit
| Total
|
Balance, December 31, 2022
| ---
| $ 1
| 1,000,000
| $ 1,000
| ---
| $ ---
| 82,634,170
| $ 82,636
| $ 23,005,273
| $ (36,954,799)
| $ (13,865,890)
|
Common stock issued for conversion of convertible notes
| ---
| ---
| ---
| ---
| ---
| ---
| 137,174,000
| 137174
| (94,184)
|
| 50,454
|
Issuance of common stock for compensation
| ---
| ---
| ---
| ---
| ---
| ---
| 127,820,746
| 127821
| 173,703
|
| 301,524
|
Issuance of common stock for cash
| ---
| ---
| ---
| ---
| ---
| ---
| 89,500,000
| 89500
| 4,250
|
| 93,750
|
Issuance of common stock for anti-dilution clause
| ---
| ---
| ---
| ---
| ---
| ---
| 209,370,320
| 209370
| 61,171
|
| 270,541
|
Issuance of common stock for forbearance upon defaulted notes
| ---
| ---
| ---
| ---
| ---
| ---
| 1,700,000,000
| 1,700,000
| 1,020,000
|
| 2,720,000
|
Net profit (loss)
| ---
| ---
| ---
| ---
| ---
| ---
| ---
| ---
| ---
| (50,813)
| (50,813)
|
Balance, December 31, 2023
| ---
| 1
| 1,000,000
| 1,000
| ---
| ---
| 2,346,499,236
| 2,346,501
| 24,170,213
| (37,005,612)
| (10,487,898)
|
Issuance of common stock for cash
| ---
| ---
| ---
| ---
| ---
| ---
| 450,000,000
| 450,000
| (405,000)
| ---
| 45,000
|
Common stock issued for conversion of convertible notes
| ---
| ---
| ---
| ---
| ---
| ---
| 427,000,000
| 427,000
| (375,520)
| ---
| 51,480
|
Issuance of common stock for cash
| ---
| ---
| ---
| ---
| ---
| ---
| 1,040,000,000
| 1,040,000
| (936,000)
| ---
| 104,000
|
Issuance of common stock for anti-dilution clause
| ---
| ---
| ---
| ---
| ---
| ---
| 94,750,468
| 94,750
| (75,800)
| ---
| 18,950
|
Issuance of common stock for compensation
| ---
| ---
| ---
| ---
| ---
| ---
| 100,000,000
| 100,000
| (80,000)
| ---
| 20,000
|
Issuance of common stock for anti-dilution clause
| ---
| ---
|
| ---
| ---
| ---
| 94,500,000
| 94,500
| (75,800)
| ---
| 18,700
|
Redemption of Series E Preferred Stock
| ---
| ---
| (1,000,000)
| ---
| ---
| ---
| ---
| ---
| ---
| ---
| ---
|
Issuances of Series F Preferred Stock in acquisitions
| ---
| ---
| ---
| ---
| 75,000
| 75
| ---
| ---
| 1,671,770
| ---
| 1,671,845
|
Common stock issued for conversion of convertible notes
| ---
| ---
| ---
| ---
| ---
| ---
| 1,645,611,000
| 1,645,611
| (1,481,050)
| ---
| 164,561
|
Cancellation of common stock
| ---
| ---
| ---
| ---
| ---
| ---
| (1,700,000,000)
| ---
| ---
| ---
| ---
|
Common stock issued for debt settlement agreements
| ---
| ---
| ---
| ---
| ---
| ---
| 1,898,000,000
| 1,898,000
| (972,153)
| ---
| 925,847
|
Net profit (loss)
| ---
| ---
| ---
| ---
| ---
| ---
|
|
| ---
| (27,903,412)
| (27,903,412)
|
Balance, December 31, 2024
| ---
| $ 1
| ---
| $ ---
| 75,000
| $ ---
| 6,371,260,661
| $ 6,371,261
| $ 32,861,547
| $ (64,909,025)
| $ (25,675,141)
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-3
RAADR, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Year Ended December 31, 2024 and 2023
(unaudited)
| Year Ended December 31,
|
| 2024
|
| 2023
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
Net loss
| $
| (27,903,412)
|
| $
| (50,813)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
Depreciation
|
| ---
|
|
| 1,828
|
Change in fair value of derivative liabilities
|
| 1,033,933
|
|
| (3,828,593)
|
Stock-based compensation
|
| 20,000
|
|
| 301,524
|
Loss on forbearance agreement
|
| ---
|
|
| 2,720,000
|
Loss on anti-dilution clause
|
| 37,900
|
|
| 270,541
|
Gain on write-off of debt
|
| 5,460,066
|
|
| ---
|
Write-off of other items
|
| 31,908,247
|
|
| ---
|
Effect of changes in:
|
|
|
|
|
|
Accounts payable
|
| 262,588
|
|
| 16,518
|
Pre-paid expenses
|
| 3,780
|
|
| 331,016
|
Net cash provided by (used in) operating activities
|
| 1,173,307
|
|
| (237,979)
|
|
|
|
|
|
|
Investing activities
|
| ---
|
|
| ---
|
Net cash provided by (used in) investing activities
|
| ---
|
|
| ---
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
Proceeds from issuance of convertible notes payable
|
| 96,250
|
|
| 126,150
|
Payments on line of credit
|
| ---
|
|
| (2,936)
|
Proceeds from notes payable
|
| ---
|
|
| 33,508
|
Proceeds from sale of common stock
|
| 149,000
|
|
| 93,750
|
Net cash provided by (used in) financing activities
|
| 245,250
|
|
| 250,472
|
Net increase (decrease) in cash
|
| 1,418,557
|
|
| 12,493
|
Cash at beginning of period
|
| 13,364
|
|
| 871
|
Cash at end of period
| $
| 1,431,921
|
| $
| 13,364
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
|
|
Cash paid during the year for interest
|
|
|
|
|
|
Cash paid during the year for income taxes paid
| $
| ---
|
| $
| ---
|
| $
| 198
|
| $
| ---
|
Non-cash investing and financing activities:
|
|
|
|
|
|
Conversions of notes payable
| $
| ---
|
| $
| 50,454
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-4
RAADR, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
December 31, 2024
Note 1 – NATURE OF OPERATIONS
Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements (“U.S. GAAP”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements.
In the opinion of the Company’s management, the accompanying unaudited financial statements contain all of the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of Raadr, Inc., a Nevada corporation (the “Company”) as of December 31, 2024 and 2023, and the results of operations and cash flows for the periods presented.
Management acknowledges its responsibility for the preparation of the accompanying unaudited financial statements which reflect all adjustments, consisting of normal recurring adjustments, considered necessary in its opinion for a fair statement of its financial position and the results of its operations for the periods presented.
Note 2 – GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
As shown in the accompanying financial statements, as of December 31, 2024, the Company had cash on hand of $1,431,412 and working capital deficit of $43,963,887. During the year ended December 31, 2024, the net loss was $27,903,412, which included a one-time charge of $31,908,247 associated with the write-off of certain accounts receivable.
The Company has incurred significant losses since its inception and has not demonstrated an ability to generate sufficient revenues from the sales of its products or services to achieve profitable operations. There can be no assurance that profitable operations will ever be achieved, or if achieved, could be sustained on a continuing basis. In making this assessment we performed a comprehensive analysis of our current circumstances including: our financial position, our cash flows and cash usage forecasts for the twelve months ended December 31, 2024, and our current capital structure including equity-based instruments and our obligations and debts.
The Company expects to continue to incur significant losses from operations and have negative cash flows from operating activities for the near-term. These losses could be significant as the Company has not yet generated revenues, but has continuing operating expenses including, but not limited to, compensation costs, professional fees, software development costs and regulatory fees.
Management’s current business plan is primarily to: (i) pursue additional capital raising opportunities, (ii) continue to explore and execute prospective partnering ; and (iii) identify unique market opportunities that represent potential positive short-term cash flow.
The Company’s existence is dependent upon management’s ability to establish profitable operations and to obtain additional funding sources. There can be no assurance that the Company’s financing efforts will result in profitable operations or the resolution of the Company’s liquidity problems.
If the Company does not obtain additional capital, the Company will be required to reduce the scope of its business development activities or cease operations. The Company continues to explore obtaining additional capital financing and the Company is closely monitoring its cash balances, cash needs, and expense levels.
These factors create substantial doubt about the Company’s ability to continue as a going concern within the twelve-month period subsequent to the date that these financial statements are issued. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
F-5
Note 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Segments and Concentrations
The Company uses the “management approach” to identify its reportable segments. The management approach requires companies to report segment financial information consistent with information used by management for making operating decisions and assessing performance as the basis for identifying the Company’s reportable segments. The Company manages its business as one reportable segment.
Organization
The Company was organized March 29, 2006, under the laws of the State of Nevada, as White Dental Supply, Inc. On December 27, 2012, the Company formed two wholly owned subsidiaries, Choice One Mobile, Inc. and PITOOEY! Mobile, Inc., under the laws of the State of Nevada. On January 7, 2013, the Board of Directors of the Company authorized and a majority of the stockholders of the Company ratified, by written consent, resolutions to change the name of the Company to PITOOEY!, Inc. The name change was effective with the State of Nevada February 7, 2013. On February 6, 2013, the Company formed a wholly owned subsidiary, Rockstar Digital, Inc., under the laws of the State of Nevada. On October 31, 2013, the Company, as part of its settlement agreement with the employees of Rockstar Digital, ceased operations of its wholly owned subsidiary, Rockstar Digital, Inc. On July 29, 2015, the Company changed their name to Raadr, Inc. The name change was effective with the State of Nevada on July 29, 2015.
Business
Until October 8, 2024, the Company offered a unique software tool in www.raadr.com that allows individuals to monitor social media activity online.
Effective October 8, 2024, a change in control of the Company, in connection with our acquisitions (the Mexedia Acquisitions) of Telvantis Voice Services, Inc. (formerly Mexedia, Inc.), a Florida corporation with its operations headquartered in Miami, Florida (Telvantis Florida), and Mexedia DAC, an Ireland corporation now wholly owned by Telvantis Florida (Mexedia DAC) (Telvantis Florida and Mexedia DAC are referred to as the Mexedia Companies). Following these transactions, Mexedia SPA controls the Company. However, it is intended that, as soon as possible and in keeping with applicable Italian corporate laws and applicable Euronext Growth Paris exchange rules, Mexedia SPA would distribute to its shareholders the control shares issued to it pursuant to the Acquisition Agreements.
Effective December 31, 2024, the Company divested its pre-Acquisition Agreements business, by selling its discreet subsidiary, Signature Apps, Inc., a Colorado corporation, to New Generation Consumer Group, Inc., a publicly-traded Delaware corporation (symbol: NGCG). NCGC issued 100,000,000 shares of its common stock to the Company, in such transaction.
Use of Estimates and Assumptions
Preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates, and those estimates may be material.
Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and other assumptions, which include both quantitative and qualitative assessments that it believes to be reasonable under the circumstances.
Significant estimates during the nine months ended September 30, 2024 and 2023, respectively, include, allowance for doubtful accounts and other receivables, inventory reserves and classifications, valuation of loss contingencies, valuation of stock-based compensation, estimated useful lives related to property and equipment, impairment of intangible assets, implicit interest rate in right-of-use operating leases, uncertain tax positions, and the valuation allowance on deferred tax assets.
Cash
For purposes of the statements of cash flows, the Company considers all highly liquid instruments with a maturity of six months or less at the purchase date and money market accounts to be cash equivalents.
At December 31, 2024 and 2023, respectively, the Company did not have any cash equivalents.
F-6
The Company is exposed to credit risk on its cash and cash equivalents in the event of default by the financial institutions to the extent account balances exceed the amount insured by the FDIC, which is $250,000.
At December 31, 2024 and 2023, respectively, the Company did not experience any losses on cash balances in excess of FDIC insured limits.
Fair Value of Financial Instruments
The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) ASC 820, Fair Value Measurements. ASC 820 provides a framework for measuring fair value and requires disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Company’s principal or, in absence of a principal, most advantageous market for the specific asset or liability.
The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value.
The three tiers are defined as follows:
·Level 1 – Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets;
·Level 2 – Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and
·Level 3 – Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions.
The determination of fair value and the assessment of a measurement’s placement within the hierarchy requires judgment. Level 3 valuations often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation methodologies applied to unobservable management estimates and assumptions. Management’s assumptions could vary depending on the asset or liability valued and the valuation method used. Such assumptions could include estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods. The Company may also engage external advisors to assist us in determining fair value, as appropriate. Although the Company believes that the recorded fair value of our financial instruments is appropriate, these fair values may not be indicative of net realizable value or reflective of future fair values. The Company’s financial instruments, including cash, accounts payable and accrued expenses, and convertible notes payable, are carried at historical cost. As of December 31, 2024 and 2023, respectively, the derivative liabilities are considered a level 2 item.
ASC 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (“fair value option”). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding financial instruments.
Leases
We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities – current and operating lease liabilities - noncurrent on the balance sheets. The initial lease liability is equal to the future fixed minimum lease payments discounted using the Company’s incremental borrowing rate, on a secured basis. The initial measurement of the right-of-use asset is equal to the initial lease liability plus any initial direct costs.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.
F-7
Derivative Liabilities
The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic No. 480, (“ASC 480”), “Distinguishing Liabilities from Equity” and FASB ASC Topic No. 815, (“ASC 815”) “Derivatives and Hedging”. Derivative liabilities are adjusted to reflect fair value at each reporting period, with any increase or decrease in the fair value recorded in the results of operations (other income/expense) as a gain or loss on the change in fair value of derivative liabilities. The Company uses a binomial pricing model to determine fair value of these instruments.
Upon conversion or repayment of a debt instrument in exchange for shares of common stock, where the embedded conversion option has been bifurcated and accounted for as a derivative liability (generally convertible debt and warrants), the Company records the shares of common stock at fair value, relieves all related debt, derivative liabilities, and any remaining unamortized debt discounts, and where appropriate recognizes a net gain or loss on debt extinguishment (debt based derivative liabilities). In connection with any extinguishments of equity based derivative liabilities (typically warrants), the Company records an increase to additional paid-in capital for any remaining liability balance extinguished.
Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date.
Income Taxes
The Company accounts for income tax using the asset and liability method prescribed by ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.
The Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes”. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities.
At December 31, 2024 and 2023, respectively, the Company had no uncertain tax positions that qualify for either recognition or disclosure in the financial statements.
The Company recognizes interest and penalties related to uncertain income tax positions in other expense. No interest and penalties related to uncertain income tax positions were recorded for the years ended December 31, 2024 and 2023, respectively.
Advertising Costs
Advertising costs are expensed as incurred. Advertising costs are included as a component of general and administrative expense in the statements of operations.
The Company recognized $122,311 and $-0- in marketing and advertising costs during the years ended December 31, 2024 and 2023, respectively.
Stock-Based Compensation
The Company accounts for our stock-based compensation under ASC 718 “Compensation – Stock Compensation” using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.
The Company uses the fair value method for equity instruments granted to non-employees and uses the Black-Scholes model for measuring the fair value of options.
F-8
The fair value of stock-based compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.
When determining fair value of stock options, the Company considers the following assumptions in the Black-Scholes model:
·Exercise price,
·Expected dividends,
·Expected volatility,
·Risk-free interest rate; and
·Expected life of option
Basic and Diluted Earnings (Loss) per Share
Basic earnings per share is calculated using the two-class method and is computed by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding and certain other shares committed to be, but not yet issued. Net earnings available to common shareholders represent net earnings to common shareholders reduced by the allocation of earnings to participating securities. Losses are not allocated to participating securities. Common shares outstanding and certain other shares committed to be, but not yet issued, include restricted stock and restricted stock units (“RSUs”) for which no future service is required.
Diluted earnings per share is calculated under both the two-class and treasury stock methods, and the more dilutive amount is reported. Diluted earnings per share is computed by taking the sum of net earnings available to common shareholders, dividends on preferred shares and dividends on dilutive mandatorily redeemable convertible preferred shares, divided by the weighted average number of common shares outstanding and certain other shares committed to be, but not yet issued, plus all dilutive common stock equivalents outstanding during the period (stock options, warrants, convertible preferred stock, and convertible debt).
Preferred shares and unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and, therefore, are included in the earnings allocation in computing earnings per share under the two-class method of earnings per share.
Unvested shares of common stock are excluded from the denominator in computing net loss per share.
Restricted stock and RSUs granted as part of share-based compensation contain nonforfeitable rights to dividends and dividend equivalents, respectively, and therefore, prior to the requisite service being rendered for the right to retain the award, restricted stock and RSUs meet the definition of a participating security. RSUs granted under an executive compensation plan are not considered participating securities as the rights to dividend equivalents are forfeitable.
Related Parties
Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.
In November 2024, the Company entered into an employment agreement with its Chief Executive Officer, pursuant to which Mr. Contreras is paid an annual salary of $100,000 and is paid an additional $2,111 per month to cover Mr. Contreras’ health insurance premiums and similar items.
Recent Pronouncements
Management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s consolidated financial statement presentation or disclosures.
F-9
Note 4 - Promissory Notes
Convertible Promissory Notes
Commencing in December 2015 and through June 2018, the Company issued various convertible promissory notes to third parties in the amount of $276,838 to be used for operations. In addition, these convertible promissory notes include various default provisions in which increase the interest rate to rates ranging from 12% to 35% and at times the principal balance at rates ranging from 5% to 50%. Additionally, most convertible promissory notes have prepayment penalties in which range from 15% to 50%.
In April, 2020, a total of $90,000 in convertible notes were received. The notes bear an interest rate of 10% and mature on April 1, 2021. The notes are convertible into common stock based upon a 50% discount to the lowest traded price within the 20 trading days preceding the conversion. The note contains various prepayment and default provisions, similar to those disclosed above.
On July 23, 2020, the Company entered into a convertible note payable with a third party for proceeds of $25,000. The convertible note incurs interest at 20% per annum, is due 180 days from the date of issuance and is convertible upon issuance into shares of the Company’s common stock at a 50% discount to the average closing bid price during the preceding 10 trading days. The note contains various prepayment and default provisions, similar to those disclosed above.
During the year ended December 31, 2021, the Company entered into convertible notes payable totaling $329,536. The terms of the notes range from six months to one year, interest ranging from 8-20% and conversion prices with discounts of up to 50% of the lowest bid prices in the ten days prior to conversion.
At various times during the year ended December 31, 2022, the Company entered into convertible notes payable totaling $150,900 receiving proceeds of $126,150. The terms of the notes range from six months to one year, interest ranging from 8% - $20% and conversion prices ranging from $0.00005 - $0.000025.
During the year ended December, 2023, the Company entered into convertible notes payable totaling $927,646 receiving proceeds of $927,646. The terms of the notes range from six months to one year, interest ranging from 8% - 20% and conversion prices with discounts of up to 65% of the average lowest bid prices in the ten days prior to conversion.
During the six months ended June 30, 2024, the Company entered into two convertible notes payable totaling $21,250, receiving proceeds of $21,250. The terms of the notes are for six months, interest at 20% and conversion prices with discounts of up to 65% of the average lowest bid prices in the ten days prior to conversion.
Other Loans
On July 13, 2020, the Company entered into a $150,000 loan with the Small Business Administration. The note incurs interest at 3.75% per annum with principal and interest due over the period of thirty years. The note is secured by substantially all of the Company’s asset and requires the funds to be used for operational purposes. As of December 31, 2023, the remaining principal balance was $147,500. As of June 30, 2024, the Company has determined that the debt exceeds the statute of limitations for collection and as such as written off the amount owed and it is included in the gain from write off of debt.
During the year ended December 31, 2022, the Company issued $209,145 in short-term promissory notes to various parties with interest rates ranging from 20%-50%. The Company also issued approximately $40,000 in short-term promissory notes to various third parties for expenses paid by the third parties on behalf of the Company. These mature on demand or on various dates from April 2022 through September 2022. During the year ended December 31, 2022, the Company repaid approximately $37,558 of these promissory notes. During 2024, the Company has determined that the debt exceeds the statute of limitations for collection and as such as written off the amount owed and it is included in the gain from write off of debt.
During the year ended December 31, 2022, the Company also entered into two 18-month business loan agreements totaling $160,000. The loans require fixed weekly payments of principal and interest totaling $2,897 through November 2023 and have effective interest rates ranging from 34% to 63%. These loans are also secured by substantially all assets of the Company and have various default provisions as defined within the agreement, whereby the debt can be called immediately. As certain of these default provisions have been triggered, the full amount of the remaining principal balance of the loans of $145,942 as of December 31, 2023, has been presented as current although default has not been called by the lender. Net proceeds of $158,175 were received from these loans. An additional $8,000 was paid to a third party for brokering the deal. The on-issuance discount and additional fees paid were recorded as a discount to the loans and are being amortized over the life of the loan. During the year ended December 31, 2022, all of the discount was amortized to interest. During 2024, the Company has determined that the debt exceeds the statute of limitations for collection and as such as written off the amount owed and it is included in the gain from write off of debt.
F-10
Demand Notes Issued to Related Parties
The Company has various notes outstanding to related parties totaling $30,659 as of December 31, 2023. These notes are due on demand and have no stated interest rate. The Company records imputed interest in connection with these related party notes. During 2024, the Company has determined that the debt exceeds the statute of limitations for collection and as such as written off the amount owed and it is included in the gain from write-off of debt.
Advances
As of December 31, 2023, the Company previously received advances from a third parties totaling $105,700. These advances bear interest at 20% per annum and are due 90 days after the funds are received. As of the date of this filing, these advances are considered in default as they are past their maturity date. During 2024, the Company has determined that the debt exceeds the statute of limitations for collection and as such as written off the amount owed and it is included in the gain from write-off of debt.
Line of Credit
During the year ended December 31, 2022, the Company took out a business line of credit with a financial institution that provides a credit line of up to $35,000. Advances under this line incur interest as an annual rate of 12.25% plus various other periodic finance charges. As of December 31, 2023, $38,998 was outstanding on the line of credit, respectively. During 2024, the Company has determined that the debt exceeds the statute of limitations for collection and as such as written off the amount owed and it is included in the gain from write-off of debt.
Note 5 - Capital
Authorized Shares
As of December 31, 2024, the Company is authorized to issue 15,000,000,000 shares of $0.001 par value common stock and 101,000,000 shares of $0.001 par value preferred stock (of which 20,000,000 have been designated as Series A Preferred Stock, 1,000,000 have been designated as Series E Preferred Stock, 75,000 have been designated as Series F Preferred Stock and 7,925,000 shares of preferred stock are available for the Company to assign or designate such provisions or preferences as may be assigned by the Board of Directors).
Series F Preferred Stock
Designation and Amount. 75,000 shares were designated as Series F Preferred Stock.
Voting Rights. The holders of the Series F Preferred Stock shall, as a class, have rights in all matters requiring shareholder approval to a number of votes equal to two (2) times the sum of: (a) the total number of shares of common stock which are issued and outstanding at the time of any election or vote by the shareholders; plus (b) the number of votes allocated to shares of Preferred Stock issued and outstanding of any other class that shall have voting rights.
Dividends. The Series F Preferred Stock shall be treated pari passu with the Company’s common stock, except that the dividend on each share of Series F Preferred Stock shall be equal to the amount of the dividend declared and paid on each share of the Company’s common stock multiplied by the conversion rate.
Conversion Rate. The Series F Preferred Stock shall be convertible into shares of the Company’s common stock, as follows: each share of Series F Preferred Stock shall be convertible at any time into a number of shares of the Company’s common stock that equals 0.001 percent (0.001%) of the number of issued and outstanding shares of the Company’s common stock outstanding on the date of conversion, such that 1,000 shares of Series F Preferred Stock would convert into one percent (1%) of the number of issued and outstanding shares of the Company’s common stock outstanding on the date of conversion. A holder of shares of Series F Preferred Stock shall be required to convert all of such holder’s shares of Series F Preferred Stock, should any such holder exercise his, her or its rights of conversion.
Note 6 - Related Party Transactions
As of December 31, 2023, the amount included within accrued liabilities related to payroll due to the Company’s form Chief Executive Officer, was $617,921, respectively. Effective June 30, 2024, the Company determined that the amount owing to its former Chief Executive Officer in the total amount of $$752,921 should be written off and such amount was included in the gain on write-off of debt for the year ended December 31, 2024.
F-11
Note 7 – Acquisitions; Change in Control
Effective October 8, 2024, a change in control of our company, in connection with our acquisitions (the Mexedia Acquisitions) of Mexedia, Inc., a Florida corporation with its operations headquartered in Miami, Florida (Telvantis Florida), and Mexedia DAC, an Ireland corporation now wholly owned by Telvantis Florida (Mexedia DAC) (Telvantis Florida and Mexedia DAC are referred to as the Mexedia Companies). Following these transactions, Mexedia SPA controls our company. However, it is intended that, as soon as possible and in keeping with applicable Italian corporate laws and applicable Euronext Growth Paris exchange rules, Mexedia SPA would distribute to its shareholders the control shares issued to it pursuant to the Acquisition Agreements.
Also In connection with the Mexedia Acquisitions, Jacob DiMartino resigned as the Sole Director and Officer of our company and the following persons were appointed: Daniel Contreras, Chief Executive Officer and Director; Orlando Taddeo, President and Director; and Daniel Gilcher, Chief Financial Officer, Secretary, Treasurer and Director.
Acquisitions of the Mexedia Companies. Pursuant to separate Share Exchange Agreements (the “Acquisition Agreements”), we acquired 100% ownership of Telvantis Florida by the issuance of 40,000 shares of Series F Preferred Stock to Mexedia SPA and 100% ownership of Mexedia DAC by the issuance of 35,000 shares of Series F Preferred Stock to Mexedia SPA. Except for the consideration paid under the Acquisition Agreements, the Acquisition Agreements are substantially identical and contain the following provisions, among other customary provisions:
Regulation A Offering. Should we fail to have filed an Offering Statement on Form 1-A pursuant to Regulation A of the Securities and Exchange Commission (the “Reg A Offering”), on or before October 28th, Mexedia SPA has the right, but not the obligation, to rescind the Acquisition Agreements. This condition subsequent has been waived by Mexedia SPA.
Reg A Offering Proceeds. Should we fail to have obtained the sum of $1,500,000 in proceeds from the Reg A Offering, on or before the date that is six (6) months from the date of the SEC’s qualification of the Reg A Offering, Mexedia SPA has the right, but not the obligation, to rescind the Acquisition Agreements. This condition subsequent has been waived by Mexedia SPA.
Divestiture. Should we fail to have divested of our pre-closing operations, which divestiture shall include all debts, other than the trade payables of our company, as of the closing date of the Mexedia Acquisitions, on or before December 31, 2024, Mexedia SPA shall have the right, but not the obligation, to rescind the Acquisition Agreements. This condition has been satisfied by our company.
Effective December 31, 2024, pursuant to a Share Exchange Agreement (the “Divestiture Agreement”), the company sold its pre-change-in-control operations to New Generation Consumer Group, Inc., a publicly-traded Delaware corporation (symbol: NGCG), in exchange for 100,000,000 shares, or approximately 7%, of NGCG’s common stock, which shares were valued at $0.0006 per share, the closing price of NGCG’s common stock on December 31, 2024, or $60,000, in the aggregate. However, for financial reporting purposes, we have assigned no value to such shares in the accompanying financial statements, given their restricted nature and expect two-year holding period. At the time of closing of the Divestiture Agreement, the sole officer and director of NCGC was Jacob DiMartino, the former officer and director of our company. No standard method of valuation was used in determining the number of shares of NGCG common stock that was issued by NGCG to our company.
Redemption Agreement. In connection with the Acquisition Agreements, our company and JanBella entered into the Redemption Agreement, pursuant to which JanBella sold 100% of the then-outstanding shares of Series E Preferred Stock to our company in exchange for the Redemption Note.
The principal amount of the Redemption Note is $540,000, with interest at 8% per annum and a maturity date of October 8, 2025. Under the Redemption Note, we are required to pay, on a monthly basis, 40% of the proceeds from the Reg A Offering that exceeds $100,000, until the principal and interest shall have been paid.
Following the date of payment in full of the principal balance of the Redemption Note (the “Balance Date”), we are to pay JanBella up to an additional $1,260,000 as additional principal (the “Additional Principal”), whether through monthly payments of 10% of Reg A Offering proceeds and/or, for a period of 18 months immediately following the issue date of the Redemption Note, 10% of funds obtained by our company from any third-party.
Pledge Agreement and Guaranty. In connection with the Acquisition Agreements, JanBella and Mexedia SPA entered into a pledge agreement (the “Pledge Agreement”) and a guaranty (“Guaranty”) with respect to our company’s obligations under the Redemption Note. Specifically, the Pledge Agreement and the Guaranty relate to our company’s timely payment of the $540,000 principal balance and accrued interest on the Redemption Agreement.
F-12
Share Cancellation Agreements. In connection with the Acquisition Agreements, our company entered into three separate share cancellation agreement (the “Share Cancellation Agreements”) with Dean Richards, Brenda Whitman and Christina Upham, respectively. Pursuant to the Share Cancellation Agreements, a total of 1,700,000,000 shares of our common stock were cancelled.
Note 8 – Fourth Quarter 2024 Transactions Affecting the Company’s Balance Sheet
Credit Facility. Effective October 31, 2024, Mexedia DAC, Phonetime and Matchcom became obligors under a $45 million credit facility (the “Fasanara Facility”) established to supplement the cash flow of Telvantis Florida (Mexedia DAC is only an administrative support entity). The liquidity provided by the Fasanara Facility is expected to facilitate sales growth of Telvantis Florida. Substantially all of the assets of the Mexedia Companies are pledged to securitize the Fasanara Facility. The credit facility agreement is with Fasanara Securitisation S.A. (“Fasanara”). An uncured default under the Fasanara Facility could result in our company’s losing ownership of the Mexedia Companies pursuant to a foreclosure action of Fasanarar. If such an event were to occur, our company would no longer have any business operations.
Share Cancellation Agreements. In connection with the Acquisition Agreements, our company entered into the Share Cancellation Agreements, pursuant to which a total of 1,700,000,000 shares of our common stock were cancelled in October 2024.
Settlement of Convertible Promissory Notes. During October and November 2024, we entered into settlement agreements with every holder of our outstanding convertible promissory notes, all of which had conversion rights at conversion prices averaging approximately 60% below market prices for our common stock. Pursuant to these agreements, we issued a total of 2,273,000,000 shares in payment of a total of approximately $1,053,817 of indebtedness, including default interest and penalties, represented by such convertible promissory notes.
Convertible Promissory Notes – December 2024.
In December 2024, the Company issued three convertible promissory notes to third parties, each with a principal amount of $27,500, a total principal amount of $82,500 (a total of $7,500 of OID), in consideration of three separate loans of $25,000, a total loan amount of $75,000. These notes bear interest at 8% per annum and are due in December 2025. These notes are convertible into Company common stock at any time during the period beginning on the earlier of (a) the day immediately following the SEC’s qualification of a Regulation A Offering of the Company and (b) the date that is 180 days immediately following their respective issue dates at a 25% discount to the then-market price of the Company’s common stock; provided, however, that, should the holders elect to convert into shares qualified in a Company Regulation A Offering, the conversion price shall be the fixed offering price for the Company’s common stock in such Regulation A Offering.
Note 9 – Subsequent Events
Waivers of Condition Subsequent. Pursuant to each of the Acquisition Agreements with respect to the Mexedia Companies, Mexedia SPA had a right of rescission, should the Company fail to have obtained the sum of $1,500,000 in proceeds from the Reg A Offering, on or before the date that is six (6) months from the date of the SEC’s qualification of the Company’s Reg A Offering. In February 2025, this condition subsequent was waived by Mexedia SPA. With the waivers and satisfaction of the conditions precedent in the Acquisition Agreements, the Company’s ownership of the Mexedia Companies has fully vested.
F-13
MEXEDIA, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(unaudited)
| June 30, 2024
|
| December 31, 2023
|
ASSETS
|
|
|
|
|
|
NON-CURRENT ASSETS
|
|
|
|
|
|
Intangible assets, net
| $
| 11,692,611
|
| $
| 12,257,161
|
TOTAL NON-CURRENT ASSETS
|
| 11,692,611
|
|
| 12,257,161
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
Prepaid expenses and other current assets
|
| 232,225
|
|
| 8,668
|
Accounts receivable, net
|
| 28,300,087
|
|
| 31,360,759
|
Cash
|
| 46,041
|
|
| 24,303
|
TOTAL CURRENT ASSETS
|
| 28,578,354
|
|
| 31,393,730
|
TOTAL ASSETS
| $
| 40,270,965
|
| $
| 43,650,891
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
Deferred tax liability
| $
| 528,341
|
| $
| 528,341
|
Accounts payable
|
| 31,169,028
|
|
| 36,117,779
|
Accrued provider costs
|
| 1,776,864
|
|
| ---
|
Accrued expenses
|
| 973
|
|
| 155,768
|
TOTAL CURRENT LIABILITIES
|
| 33,475,206
|
|
| 36,801,888
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
|
Due to related party
|
| 6,252,327
|
|
| 5,675,040
|
TOTAL LIABILITIES
|
| 39,727,533
|
|
| 42,476,928
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
EQUITY
|
| 543,432
|
|
| 1,173,963
|
TOTAL LIABILITIES AND EQUITY
| $
| 40,270,965
|
| $
| 43,650,891
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-14
MEXEDIA, INC. AND SUBSIDIARIES
Consolidated Statement of Profit and Loss
For the Six Months Ended June 30, 2024 and 2023
(unaudited)
| Six Months Ended June 30,
|
| 2024
|
| 2023
|
|
|
|
|
|
|
REVENUES, NET
| $
| 17,663,834
|
| $
| 100,000,366
|
COST OF SALES
|
| (16,948,183)
|
|
| (96,485,394)
|
GROSS PROFIT
|
| 715,651
|
|
| 3,514,972
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
Depreciation and amortization
|
| 564,000
|
|
| -
|
Other expenses
|
| -
|
|
| 23,428
|
General and administrative expenses
|
| 787,940
|
|
| 1,460,130
|
TOTAL OPERATING EXPENSES
|
| 1,352,490
|
|
| 1,483,558
|
|
|
|
|
|
|
OPERATING PROFIT (LOSS)
|
| (636,839)
|
|
| 2,031,414
|
|
|
|
|
|
|
FINANCE COSTS
|
| 6,308
|
|
| (855,448)
|
|
|
|
|
|
|
OTHER NON-OPERATING INCOME
|
| -
|
|
| 120,433
|
|
|
|
|
|
|
OTHER NON-OPERATING EXPENSES
|
| -
|
|
| (18,930)
|
|
|
|
|
|
|
PROFIT (LOSS) BEFORE TAX EXPENSE
|
| (630,531)
|
|
| 1,277,469
|
|
|
|
|
|
|
TAX EXPENSE
|
| -
|
|
| (6,000)
|
|
|
|
|
|
|
NET PROFIT (LOSS)
| $
| (630,531)
|
| $
| 1,271,469
|
|
|
|
|
|
|
NET LOSS PER COMMON SHARE
|
|
|
|
|
|
Basic
| $
| (6,305)
|
| $
| 12,715
|
Diluted
| $
| (6,305)
|
| $
| 12,715
|
|
|
|
|
|
|
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
|
|
|
|
|
|
Basic
|
| 100
|
|
| 100
|
Diluted
|
| 100
|
|
| 100
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-15
MEXEDIA, INC. AND SUBSIDIARIES
Consolidated Statement of Changes in Equity
For the Six Months Ended June 30, 2024 and 2023
(unaudited)
| Common Stock
|
| Retained Earnings
(Accumulated Deficit)
|
| Total
|
|
|
|
|
|
|
|
|
|
Balances at January 1, 2023
| $
| 100
|
| $
| (159,120)
|
| $
| (159,120)
|
Net profit (loss)
|
| -
|
|
| 1,271,469
|
|
| 1,271,469
|
Balances at June 30, 2023
| $
| 100
|
| $
| 1,112,349
|
| $
| 1,112,349
|
|
|
|
|
|
|
|
|
|
Balances at January 1, 2024
| $
| 100
|
| $
| 1,173,963
|
| $
| 1,173,963
|
Net profit (loss)
|
| -
|
|
| (630,531)
|
|
| (630,531)
|
Balances at June 30, 2024
| $
| 100
|
| $
| 543,432
|
| $
| 543,432
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-16
MEXEDIA, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2024 and 2023
(unaudited)
| Six Months Ended June 30,
|
| 2024
|
| 2023
|
|
|
|
|
|
|
Statement of changes in cashflows
|
|
|
|
|
|
Net income (loss)
| $
| (630,531)
|
| $
| 1,271,469
|
Adjustments:
|
|
|
|
|
|
Provision for doubtful accounts
|
| -
|
|
| -
|
Interest expense
|
| -
|
|
| -
|
Amortization of intangible assets
|
| 564,550
|
|
| -
|
Provision for income taxes
|
| -
|
|
| -
|
Changes in operating assets and liabilities
|
| -
|
|
| -
|
Prepaid expenses and other current assets
|
| (223,557)
|
|
| 1,323,566
|
Accounts receivable
|
| 3,060,671
|
|
| 21,411,300
|
Accounts payable
|
| (4,948,751)
|
|
| (24,236,719)
|
Accrued expenses
|
| 1,622,069
|
|
| 290,210
|
Net cash - operating activities
|
| (555,549)
|
|
| 59,826
|
|
|
|
|
|
|
Cash acquired via business combination, net of cash paid of $250,000
|
| -
|
|
| 1,171,875
|
Net cash - investing activities
|
| -
|
|
| 1,171,875
|
|
|
|
|
|
|
Due to related party
|
| 577,287
|
|
| -
|
Net cash - financing activities
|
| 577,287
|
|
| -
|
|
|
|
|
|
|
Net change in cash
|
| 21,738
|
|
| 1,231,701
|
Cash - beginning of period
|
| 24,303
|
|
| 25,267
|
Cash - end of period
| $
| 46,041
|
| $
| 1,256,968
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-17
MEXEDIA, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
June 30, 2024
1.ORGANIZATION AND DESCRIPTION OF BUSINESS
Mexedia, Inc. is a Florida Corporation organized in 2020. On January 1, 2023, Mexedia, Inc. acquired all the shares of Phonetime, Inc. and Matchcom Telecommunications, Inc. (collectively referred as the “Company”). The Company is a technology company in the areas of customer-management and telecom and provides retail and wholesale voice services and value-added platform services such as analytics, automation, and engagement.
The address of the Company’s registered office is 1680 Michigan Avenue, Suite 700, Miami Beach Florida 33139.
2.SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.
The Company has a calendar year-end reporting date.
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and International Accounting Standards as issued by the International Accounting Standards Board (IASB) and Interpretations (collectively IFRSs).
Functional and Presentation Currency
These consolidated financial statements are presented in United States dollars, which is the Company’s functional currency.
Liquidity
The Company’s primary source of liquidity are the cash flows generated from operations and advances from related parties. These sources of liquidity are needed to fund the operations of the Company and its working capital requirements. Management believes the existing sources of cash will be sufficient to support the Company’s existing operations through at least twelve months from the date of the report.
Use of Estimates
The preparation of consolidated financial statements in conformity with IFRS requires the use of certain accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. Although these estimations, based on management’s knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results, and those differences may be material,
Concentrations of Credit Risk
Cash
Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash deposits in excess of the Federal Deposit Insurance Corporation (“FDIC”) insured limit of $250,000. The Company generally limits its exposure by placing its deposits with quality financial institutions located in the United States. However, at times, such cash balances may be in excess of insured amounts.
F-18
Revenues
The Company relies on a significant portion of its revenue from major customers. Revenues from two customers represented 30% of the Company’s revenues for the six-months ended June 30, 2024. An adverse change in the Company’s relationship with these customers could have a material effect on the Company’s business, financial position, and results of operations.
Accounts Receivable
As of June 30, 2024, two customers. each of which accounted for more than 10% of the Company’s accounts receivable, accounted for 55% of total accounts receivable in aggregate.
Revenue Recognition
The Company recognizes revenue when a customer obtains control of the promised goods or services. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five-step model in order to determine this amount: (t) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services the Company transfers to the customer. At contract inception, management reviews the contract to determine which performance obligations must be delivered and which of these performance obligations are distinct. The Company recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied.
Accounts Receivable
The Company records accounts receivable in the ordinary course of business related to its sale of telecommunication products and services. The Company grants credit to various businesses and individuals located primarily in the United States and Europe. Accounts receivables are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to valuation allowance based on historical experience and management’s assessment of the status of individual accounts. Balances that are still outstanding after management has made reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable.
Accrued Revenue
Accrued revenue (unbilled accounts receivable) consists of revenue meeting the revenue recognition criteria but not yet invoiced at period end due to contract terms.
Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price over the fair values underlying net assets acquired in an acquisition. Goodwill is allocated to a cash generating unit (CGU), or a group of CGUs, which cannot be larger than an operating segment before aggregation. A CGU is the smallest identifiable group of assets that generates largely independent cash flows.
Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of profit and loss in the caption amortization expense.
Goodwill is tested at least annually for impairment or more frequently if an impairment indicator is present. An impairment loss is measured as the difference between the carrying amount of the CGU, including goodwill, and its recoverable amount. The recoverable amount is the higher of fair value less cost of disposal or value in use. Any impairment loss for a CGU is allocated first to any goodwill and then pro rata to other assets in the CGU. However, no asset is written down to below its known recoverable amount. There was no impairment of goodwill for the year ended June 30, 2024.
Intangible assets are to be tested for impairment if there is an indicator of impairment during the course of or at the end of the reporting period. During the period ended June 30, 2024, management believes there was no indicator of impairment of the intangible assets.
F-19
Accounts Payables and Accrued Expenses
Liabilities for accounts payable and other amounts are normally settled on 30 - 90-day terms and carried at cost which is the fair value of the consideration to be paid for goods and services received.
Financial Instruments
Financial instruments are initially recorded at cost, and consist of cash, accounts receivable, due from/to related parties, and accounts payable and accrued expenses. As of June 30, 2024, the carrying value of these financial instruments approximates their fair value due to their short-term nature
Income Taxes
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. In assessing the recoverability of deferred tax assets, the Company relies on forecasted assumptions. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction directly in equity. Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, are recognized subsequently if new information about facts and circumstances change. The adjustment is either treated as a reduction in goodwill (as long as it does not exceed goodwill) if it was incurred during the measurement period or recognized in profit or loss.
The Company offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered
Some judgment is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognizes liabilities for anticipated tax based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made,
Subsequent Events
The Company has evaluated subsequent events through August 15, 2024, which is the date the consolidated financial statements were available to be issued.
3.CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows:
Accounts Receivable
The Company assesses at each consolidated statement of financial position date the impact of the IFRS 9 simplified approach used to measure expected credit losses using a lifetime expected credit loss provision for trade receivables. As of June 30, 2024, the Company had no provisions for expected credit loss.
F-20
Goodwill and Intangible Assets
Assumptions and estimates at arriving at goodwill and intangible assets including the fair value of the assets acquired and liabilities assumed, the fair value of consideration transferred, and the estimated useful lives of the intangible assets.
4.RELATED PARTY TRANSACTIONS
Mexedia, Ltd.
Due to Related Parties
The Company from time to time is advanced monies for operational purposes by Mexedia, Ltd., a related entity through common ownership. As of June 30, 2024, the Company owed Mexedia Ltd. $6,252,327. This balance carries no interest and is due on demand. However, the Company does not expect to repay these balances over the next twelve months and as such has classified the balance as non-current on the accompanying statement of financial position.
5.BUSINESS COMBINATIONS
On January 1, 2023, the Company acquired two separate businesses as part of a single transaction. The acquisition was accounted for as a business combination using the acquisition method of accounting.
The Company entered into a Purchase Agreement (the “Agreement”) to purchase all of the outstanding shares of Phonetime, Inc. and Matchcom Telecommunications, Inc. (collectively referred to as the “Sellers”). The initial aggregate purchase consideration on the date of acquisition transferred to the Sellers totaled $3,000,000. Subsequent to the acquisition date, but during the measurernent period, management became aware that certain account receivables that were contingent of the final payment of $2,500,000, were not collected. As a result, management believes the Company is not entitled to make that payment based on the terms of the contract. Additionally, management believes the second payment of $250,000, due twelve months after closing, is also not due since management believes that payment was also tied to the collection of the same receivables. Therefore, management has adjusted the consideration due and the related goodwill amount to account for foregoing these payments. As a result, the eventual purchase price subsequent to the measurement period adjustments amounted to $250,000.
The purchase price for the acquisition has been allocated to the tangible assets acquired and liabilities assumed based upon their estimated fair values as of the Closing Date. There were no identifiable intangible assets. The excess of the purchase price over the estimated fair value of the tangible acquired and liabilities assumed has been recorded as goodwill.
The fair value of the acquired accounts receivable above approximates the carrying value of accounts receivable due to the short-term nature of the expected timeframe to collect amounts due to the Company and the contractual cash flows, which are expected to be collected related to these receivables.
Acquisition-related expenses were expensed as incurred. The results of operations are included in the consolidated financial statements of the Company from the date of acquisition.
6.COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company leases office space in Miami Beach, Florida under a one-year operating lease through March 2025. The lease calls for monthly lease payments of approximately $3,500.
Litigation
In the ordinary course of business, the Company may become a party to various claims, legal actions and complaints. In the opinion of management, there were no matters that would have a material adverse effect on the consolidated financial condition of the Company as of June 30, 2024.
7.COMMON STOCK
As of June 30, 2024, the Company has authorized and issued 100 common stock shares with a par value of $1.00.
F-21
8.SUBSEQUENT EVENT
The Company has evaluated subsequent events through August 15, 2024, the date these consolidated financial statements were available to be issued.
F-22
MEXEDIA, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(unaudited)
| December 31, 2023
|
| December 31, 2022
|
ASSETS
|
|
|
|
|
|
NON-CURRENT ASSETS
|
|
|
|
|
|
Intangible assets, net
| $
| 10,646,900
|
| $
| ---
|
Goodwill
|
| 1,610,261
|
|
| ---
|
TOTAL NON-CURRENT ASSETS
|
| 12,257,161
|
|
| ---
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
Prepaid expenses and other current assets
|
| 8,668
|
|
| 2,908
|
Accounts receivable, net
|
| 31,360,759
|
|
| ---
|
Cash
|
| 24,303
|
|
| 25,267
|
Loan to Phonetime, Inc.
|
| ---
|
|
| 2,550,000
|
Other assets, purchase deposit
|
| ---
|
|
| 250,137
|
TOTAL CURRENT ASSETS
|
| 31,393,730
|
|
| 2,578,175
|
TOTAL ASSETS
| $
| 43,650,891
|
| $
| 2,828,312
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
Deferred tax liability
| $
| 528,341
|
| $
| 2,004
|
Accounts payable
|
| 12,961,856
|
|
| 24,775
|
Accrued expenses
|
| 23,311,691
|
|
| ---
|
TOTAL CURRENT LIABILITIES
|
| 36,801,888
|
|
| 26,779
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
|
Due to related party
|
| 5,675,040
|
|
| 2,692,387
|
TOTAL LIABILITIES
|
| 42,476,928
|
|
| 2,719,166
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
EQUITY
|
| 1,173,963
|
|
| 109,146
|
TOTAL LIABILITIES AND EQUITY
| $
| 43,650,891
|
| $
| 2,828,312
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-23
MEXEDIA, INC. AND SUBSIDIARIES
Consolidated Statement of Profit and Loss
For the Years Ended December 31, 2023 and 2022
(unaudited)
| Years Ended December 31,
|
| 2023
|
| 2022
|
|
|
|
|
|
|
REVENUES, NET
| $
| 215,325,822
|
| $
| 276,535
|
COST OF SALES
|
| 207,738,077
|
|
| ---
|
GROSS PROFIT
|
| 7,587,745
|
|
| 276,535
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
Salaries and benefits
|
| 1,703,710
|
|
| 148,265
|
Professional fees
|
| 326,550
|
|
| 35,575
|
Bad debt expense
|
| 200,971
|
|
| ---
|
Amortization expense
|
| 1,129,100
|
|
| ---
|
Other operating expenses
|
| 437,459
|
|
| 255,430
|
TOTAL OPERATING EXPENSES
|
| 3,797,790
|
|
| 439,270
|
|
|
|
|
|
|
OPERATING PROFIT (LOSS)
|
| 3,789,955
|
|
| (162,735)
|
|
|
|
|
|
|
FINANCE COSTS
|
| (1,928,631)
|
|
| ---
|
|
|
|
|
|
|
PROFIT BEFORE TAX EXPENSE
|
| 1,861,324
|
|
| (162,735)
|
|
|
|
|
|
|
TAX EXPENSE
|
| (528,344)
|
|
| ---
|
|
|
|
|
|
|
PROFIT (LOSS)
| $
| 1,332,983
|
| $
| (162,735)
|
|
|
|
|
|
|
NET LOSS PER COMMON SHARE
|
|
|
|
|
|
Basic
| $
| 13,330
|
| $
| (1,627)
|
Diluted
| $
| 13,330
|
| $
| (1,627)
|
|
|
|
|
|
|
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
|
|
|
|
|
|
Basic
|
| 100
|
|
| 100
|
Diluted
|
| 100
|
|
| 100
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-24
MEXEDIA, INC. AND SUBSIDIARIES
Consolidated Statement of Changes in Equity
For the Years Ended December 31, 2023 and 2022
(unaudited)
| Common Stock
|
| Retained Earnings
(Accumulated Deficit)
|
| Total
|
|
|
|
|
|
|
|
|
|
Balances at January 1, 2022
| $
| -
|
| $
| -
|
| $
| -
|
Issuance of common stock
|
| -
|
|
| -
|
|
| -
|
Net loss
|
| -
|
|
| -
|
|
| -
|
Balances at December 31, 2022
| $
| 100
|
| $
| (159,120)
|
| $
| (159,020)
|
Net income
|
| -
|
|
| 1,332,983
|
|
| 1,332,983
|
Balances at December 31, 2023
| $
| 100
|
| $
| 1,173,863
|
| $
| 1,173,863
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-25
MEXEDIA, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2023 and 2022
(unaudited)
| Years Ended December 31,
|
| 2023
|
| 2022
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
Net income (loss)
| $
| 1,322,983
|
| $
| (162,735)
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
|
|
Provision for doubtful accounts
|
| 200,971
|
|
| ---
|
Interest expense
|
| 378,201
|
|
| 179,960
|
Amortization of intangible assets
|
| 1,129,100
|
|
| ---
|
Provision for income taxes
|
| 528,341
|
|
| ---
|
Changes in operating assets and liabilities
|
|
|
|
|
|
Prepaid expenses and other current assets
|
| 2,146,732
|
|
| 2,908
|
Accounts receivable
|
| 29,919,255
|
|
| ---
|
Accounts payable
|
| (20,514,338)
|
|
| ---
|
Accrued expenses
|
| (18,844,084)
|
|
| 137
|
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
| (3,722,839)
|
|
| 20,270
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
Decrease in due from related party
|
| 2,950,000
|
|
| ---
|
Cash acquired via business combination, net of cash paid of $250,000
|
| 1,171,875
|
|
| ---
|
Purchase deposit for business combination
|
| ---
|
|
| (250,000)
|
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
| 4,121,875
|
|
| (250,000)
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
Decrease in due to related party
|
| (400,000)
|
|
| 2,692,387
|
Loan granted to commercial partner
|
| ---
|
|
| (2,550,000)
|
NET CASH USED IN FINANCING ACTIVITIES
|
| (400,000)
|
|
| 142,387
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH
|
| (964)
|
|
| (87,343)
|
CASH, BEGINNING OF PERIOD
|
| 25,267
|
|
| 112,610
|
CASH, END OF PERIOD
| $
| 24,303
|
| $
| 25,267
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-26
MEXEDIA, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2023 and 2022
1.ORGANIZATION AND DESCRIPTION OF BUSINESS
Mexedia, Inc. is a Florida Corporation organized in 2020. On January 1, 2023, Mexedia, Inc. acquired all the shares of Phonetime, Inc. and Matchcom Telecommunications, Inc. (collectively referred as the “Company”). The Company is a technology company in the areas of customer-management and telecom and provides retail and wholesale voice services and value-added platform services such as analytics, automation, and engagement.
The address of the Company’s registered office is 1680 Michigan Avenue, Suite 700, Miami Beach Florida 33139.
2.SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.
The Company has a calendar year-end reporting date.
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and International Accounting Standards as issued by the International Accounting Standards Board (IASB) and Interpretations (collectively IFRSs).
Functional and Presentation Currency
These consolidated financial statements are presented in United States dollars, which is the Company’s functional currency.
Liquidity
The Company’s primary source of liquidity are the cash flows generated from operations and advances from related parties. These sources of liquidity are needed to fund the operations of the Company and its working capital requirements. Management believes the existing sources of cash will be sufficient to support the Company’s existing operations through at least twelve months from the date of the report.
Use of Estimates
The preparation of consolidated financial statements in conformity with IFRS requires the use of certain accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. Although these estimations, based on management’s knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results, and those differences may be material,
Concentrations of Credit Risk
Cash
Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash deposits in excess of the Federal Deposit Insurance Corporation (“FDIC”) insured limit of $250,000. The Company generally limits its exposure by placing its deposits with quality financial institutions located in the United States. However, at times, such cash balances may be in excess of insured amounts.
Revenues
The Company relies on a significant portion of its revenue from major customers. Revenues from two customers represented 30% of the Company’s revenues for the year ended December 31, 2023. An adverse change in the Company’s relationship with these customers could have a material effect on the Company’s business, financial position, and results of operations.
F-27
Accounts Receivable
As of December 31, 2023, two customers. each of which accounted for more than 10% of the Company’s accounts receivable, accounted for 55% of total accounts receivable in aggregate.
Revenue Recognition
Under IFRS 15, the Company recognizes revenue when a customer obtains control of the promised goods or services. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five-step model in order to determine this amount: (t) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iV) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services the Company transfers to the customer. At contract inception, once the contract is determined to be within the scope of IFRS 15, management reviews the contract to determine which performance obligations must be delivered and which of these performance obligations are distinct. The Company recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied.
The following is a description of the business units, from which the Company generates its revenues.
•Carrier sales - reflects the sales of Wholesale Voice over the Internet protocol (VoIP) traffic It consists of large sales volumes (minutes of traffic, destinations, and rates) of traffic exchanged with our customers. The Company is responsible for raising or “buying” the forecasted traffic to sell to its customers.
•SMS sales - Similarly as VoIP sales, SMS or “Short Messaging Services” includes the sale of messages on a wholesale basis to the Company’s customers, for termination within their network of suppliers.
•Late fees - amounts charged for delinquent accounts and contractual agreements.
The table below sets forth the Company’s revenue disaggregated within each business unit for the year ended December 31, 2023:
Carrier
|
| $
| 210,076,611
|
SMS
|
|
| 5,198,306
|
Late Fees
|
|
| 50,905
|
|
| $
| 215,325,822
|
Accounts Receivable
The Company records accounts receivable in the ordinary course of business related to its sale of telecommunication products and services. The Company grants credit to various businesses and individuals located primarily in the United States and Europe. Accounts receivables are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to valuation allowance based on historical experience and management’s assessment of the status of individual accounts. Balances that are still outstanding after management has made reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. Management has reserved approximately $95,000 towards the allowance for doubtful accounts as of December 31, 2023.
Accrued Revenue
Accrued revenue (unbilled accounts receivable) consists of revenue meeting the revenue recognition criteria but not yet invoiced at period end due to contract terms.
Business Combinations
The Company accounts for business combinations in accordance with IFRS 3, Business Combinations (“IFRS 3”), which requires that the Company allocates the purchase price to the tangible and intangible assets acquired and the liabilities assumed based on estimated fair values. This guidance requires the Company to make significant estimates and assumptions, including fair value estimates, as of the acquisition date and to adjust those estimates as necessary during the measurement period (defined as the period, not to exceed one year, in which the Company may adjust the provisional amounts recognized for an acquisition). Should the initial accounting for an acquisition be incomplete by the end of a reporting period that falls within the measurement period, the Company reports provisional amounts in its consolidated financial statements. During the measurement period, the Company adjusts the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known,
F-28
would have affected the measurement of the amounts recognized as of that date, and the Company records those adjustments to its consolidated financial statements.
Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price over the fair values underlying net assets acquired in an acquisition. Under International Accounting Standard (“IAS”) 36, goodwill is allocated to a cash generating unit (CGU), or a group of CGUs, which cannot be larger than an operating segment before aggregation. A CGU is the smallest identifiable group of assets that generates largely independent cash flows.
Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of profit and loss in the caption amortization expense.
Under IAS 36, goodwill is tested at least annually for impairment or more frequently if an impairment indicator is present. An impairment loss is measured as the difference between the carrying amount of the CGU, including goodwill, and its recoverable amount. The recoverable amount is the higher of fair value less cost of disposal or value in use. Any impairment loss for a CGU is allocated first to any goodwill and then pro rata to other assets in the CGU. However, no asset is written down to below its known recoverable amount. There was no impairment of goodwill for the year ended December 31, 2023
Intangible assets are to be tested for impairment if there is an indicator of impairment during the course of or at the end of the reporting period. During 2023, management believes there was no indicator of impairment of the intangible assets.
Accounts Payables and Accrued Expenses
Liabilities for accounts payable and other amounts are normally settled on 30 - 90-day terms and carried at cost which is the fair value of the consideration to be paid for goods and services received.
Financial Instruments
Financial instruments are initially recorded at cost, and consist of cash, accounts receivable, due from/to related parties, and accounts payable and accrued expenses. As of December 31, 2023, the carrying value of these financial instruments approximates their fair value due to their short-term nature
Income Taxes
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. In assessing the recoverability of deferred tax assets, the Company relies on forecasted assumptions. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction directly in equity. Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, are recognized subsequently if new information about facts and circumstances change. The adjustment is either treated as a reduction in goodwill (as long as it does not exceed goodwill) if it was incurred during the measurement period or recognized in profit or loss.
The Company offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered
Some judgment is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognizes liabilities for anticipated tax based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts
F-29
that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made,
Offsetting
As of December 31, 2023, the Company offset a portion of accounts receivable and accounts payable, A right to offset is a debtor’s right, by contract or otherwise, to settle or otherwise eliminate all or a portion of an amount due to a creditor by applying against that amount an amount due from the creditor. Two conditions must exist for an entity to offset a financial liability (and thus present the net amount on the balance sheet). The entity must both: 1) Currently have a legally enforceable right to offset and 2) Intent either to settle on a net basis or to realize the asset and settle the liability simultaneously Management believes both of these conditions exist on December 31, 2023.
Offsetting of accounts receivable - As of December 31, 2023:
|
| Gross amounts of
recognized assets
|
| Gross amounts offset
in the consolidated
balance sheet
|
| Net amounts of assets
presented in the
consolidated
balance sheets
|
Accounts receivable
|
| $ 36,513,193
|
| $ (5,152,434)
|
| $ 31,360,759
|
Offsetting of accounts payable - As of December 31, 2023:
|
| Gross amounts of
recognized liabilities
|
| Gross amounts offset
in the consolidated
balance sheet
|
| Net amounts of assets
presented in the
consolidated
balance sheets
|
Accounts payable
|
| $ 18,114,290
|
| $ (5,152,434)
|
| $ 12,961,856
|
Foreign Currency
The Company’s functional currency is the U.S. dollar. Gains and losses from translation of foreign currency financial statements into U.S. dollars are included in current results of operations. Gains and Iosses resulting from foreign currency transactions are also included in current results of operations.
Standards, Amendments, and Interpretations to Existing Standards That are Not Yet Effective
The Company has not applied the following new or revised standards, amendments and interpretations to existing standards that have been issued but are not yet effective:
•Classification of liabilities as current or non-current and non-current liabilities with covenants (Amendments to IAS 1)
•Supplier finance arrangements (IAS 7 and IFRS 7)
•Lease liability in a sale and leaseback (Amendments to IFRS 16)
•Lack of exchangeability (Amendments to IAS 21)
The Company’s management does not expect that the adoption of these standards or interpretations in future periods will have a material impact on the financial statements of the Company.
Subsequent Events
The Company has evaluated subsequent events through March 18, 2024, which is the date the consolidated financial statements were available to be issued.
F-30
3.CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows:
Accounts Receivable
The Company assesses at each consolidated statement of financial position date the impact of the IFRS 9 simplified approach used to measure expected credit losses using a lifetime expected credit loss provision for trade receivables. As of December 31, 2023, the Company has a provision for expected credit loss of approximately $95,000.
Goodwill and Intangible Assets
Assumptions and estimates at arriving at goodwill and intangible assets including the fair value of the assets acquired and liabilities assumed, the fair value of consideration transferred, and the estimated useful lives of the intangible assets.
4.ACCOUNTS RECEIVABLE
Accounts receivable consist of the following at December 31, 2023:
Billed accounts receivable, net
|
| $
| 18,904,934
|
Unbilled accounts receivable
|
|
| 12,455,825
|
|
| $
| 31,360,759
|
5.RELATED PARTY TRANSACTIONS
Mexedia, Ltd.
Due to Related Parties
The Company from time to time is advanced monies for operational purposes by Mexedia, Ltd., a related entity through common ownership. As of December 31, 2023, the Company owes Mexedia, Ltd. $5,675,040. This balance bears interest at 6.00% and is due on demand. However, the Company does not expect to repay these balances over the next twelve months and as such has classified the balance as non-current on the accompanying statement of financial position
Interest expense related to these advances totaled approximately $378,000 for the year ended December 31, 2023 and is included within the caption finance costs in the accompanying consolidated statement of profit and loss.
Accounts Receivable, net - Related Parties
As of December 31, 2023, $529,473 of unbilled accounts receivable were due from Mexedia, Ltd. This balance is included within the caption accounts receivable, net in the accompanying consolidated statement of financial position.
Accounts Payable - Related Parties
As of December 31, 2023, accounts payable to Mexedia, Ltd, total $2,758,303. This balance is included within the caption accounts payable in the accompanying consolidated balance sheet.
Sales - Related Parties
During 2023, the Company sold approximately $17,073,536 of services to Mexedia, Ltd.
Purchases- Related Parties
During 2023, the Company purchased approximately $5,313,000 of services from Mexedia, Ltd.
F-31
6.BUSINESS COMBINATIONS
On January 1, 2023, the Company acquired two separate businesses as part of a single transaction The acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with IFRS 3, Business Combinations.
The Company entered into a Purchase Agreement (the “Agreement”) to purchase all of the outstanding shares of Phonetime, Inc. and Matchcom Telecommunications, Inc. (collectively referred to as the “Sellers”). The initial aggregate purchase consideration on the date of acquisition transferred to the Sellers totaled $3,000,000. Subsequent to the acquisition date, but during the measurernent period, management became aware that certain account receivables that were contingent of the final payment of $2,500,000, were not collected. As a result, management believes the Company is not entitled to make that payment based on the terms of the contract. Additionally, management believes the second payment of $250,000, due twelve months after closing, is also not due since management believes that payment was also tied to the collection of the same receivables. Therefore, management has adjusted the consideration due and the related goodwill amount to account for foregoing these payments. As a result, the eventual purchase price subsequent to the measurement period adjustments amounted to $250,000.
Cash deposit held in escrow:
|
| $
| 250,000
|
Twelve months from date of closing:
|
|
| 250,000
|
Should certain accounts receivable be collected as described in the purchase agreement:
|
|
| 2,500,000
|
Initial purchase price:
|
|
| 3,000,000
|
Measurement period adjustments:
|
|
| (2,750,000)
|
Adjusted purchase price:
|
| $
| 250,000
|
The purchase price for the acquisition has been allocated to the tangible assets acquired and liabilities assumed based upon their estimated fair values as of the Closing Date. There were no identifiable intangible assets. The excess of the purchase price over the estimated fair value of the tangible acquired and liabilities assumed has been recorded as goodwill
Fair values of assets acquired, and liabilities assumed, net of measurement period adjustments of $2,750,000:
Customer relationships
|
| $
| 10,321,000
|
Goodwill
|
|
| 1,610,261
|
Tradenames
|
|
| 1,455,000
|
Goodwill and identifiable intangible assets acquired
|
|
| 13,386,261
|
Cash
|
|
| 1,421,875
|
Accounts receivable
|
|
| 61,480,985
|
Prepaid expenses and other current assets
|
|
| 1,902,492
|
Accounts payable and accrued expenses
|
|
| (75,041,613)
|
Due to related parties
|
|
| (2,900,000)
|
Net working capital deficit assumed
|
|
| (2,900,000)
|
Purchase price
|
| $
| 250,000
|
The fair value of the acquired accounts receivable above approximates the carrying value of accounts receivable due to the short-term nature of the expected timeframe to collect amounts due to the Company and the contractual cash flows, which are expected to be collected related to these receivables.
Acquisition related expenses were expensed as incurred. The results of operations are included in the consolidated financial statements of the Company from the date of acquisition.
F-32
7.GOODWILL AND INTANGIBLE ASSETS
As of December 31, 2023, the Company has the following amounts related to goodwill and intangible assets:
| Goodwill
|
| Customer
relationships
|
| Tradenames
|
| Total
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
Balances at January 1, 2023
| $
| ---
|
| $
| ---
|
| $
| ---
|
| $
| ---
|
Acquisitions
|
| 1,610,261
|
|
| 10,321,000
|
|
| 1,455,000
|
|
| 13,386,261
|
Balances at December 31, 2023
| $
| 1,610,261
|
| $
| 10,321,000
|
| $
| 1,455,000
|
| $
| 13,386,261
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Amortization
|
|
|
|
|
|
|
|
|
|
|
|
Balances at January 1, 2023
| $
| ---
|
| $
| ---
|
| $
| ---
|
| $
| ---
|
Amortization
|
| ---
|
|
| 1,032,000
|
|
| 97,000
|
|
| 1,129,100
|
Balances at December 31, 2023
| $
| 1,610,261
|
| $
| 1,032,000
|
| $
| 97,000
|
| $
| 1,129,100
|
Carrying amounts at January 1, 2023
| $
| ---
|
| $
| ---
|
| $
| ---
|
| $
| ---
|
Carrying amounts at December 31, 2023
| $
| 1,610,261
|
| $
| 9,288,900
|
| $
| 1,358,000
|
| $
| 12,257,161
|
The Company’s estimated useful lives for its intangible assets is as follows:
|
| Useful lives
|
Goodwill
|
| Annual impairment test
|
Customer relationships
|
| 10
|
Tradenames
|
| 15
|
Amortization expense for the year ended December 31, 2023, totaled $1,129,100. The following table represents the total estimated amortization of intangible assets for the five succeeding years and thereafter:
For the Years Ending
December 31,
|
| Estimated
Amortization
|
2024
|
| 1,129,100
|
2025
|
| 1,129,100
|
2026
|
| 1,129,100
|
2027
|
| 1,129,100
|
2028
|
| 1,129,100
|
Thereafter
|
| 5,001,400
|
Total
|
| 10,646,900
|
8.ACCRUED EXPENSES
Accrued expenses consists of the following at December 31, 2023:
Accrued telecommunication costs
|
| $
| 22,253,616
|
Other accrued expenses
|
|
| 1,058,075
|
|
| $
| 23,311,691
|
9.INCOME TAXES
The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
Uncertain tax positions are recognized only when the Company believes it is more likely than not that the tax position will be upheld on examination by the taxing authorities based on the merits of the position. The Company has no material unrecognized tax benefits and no adjustments to its consolidated financial position, results of operations or cash flows were required as of December 31, 2023.
The Company’s tax return for the year ended December 31, 2023 remains subject to examination by federal and state tax jurisdictions. No income tax returns are currently under examination by taxing authorities. The Company recognizes interest and penalties, if any,
F-33
related to uncertain tax positions in income tax expense. The Company did not have any accrued interest or penalties associated with uncertain tax positions as of December 31, 2023.
The federal and state income tax provision (benefit) is summarized as follows:
| 2023
|
|
|
Federal:
| $
| 437,765
|
Current
|
| (42,738)
|
Deferred
|
| 385,027
|
|
|
|
State:
|
| 90,576
|
Current
|
| (8,843)
|
Deferred
|
| 81,733
|
|
|
|
Change in valuation allowance of deferred tax assets
|
| 51,580
|
Income tax
| $
| 528,341
|
No benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. At December 31, 2023, the Company had approximately $8,200 of net operating losses.
The components of the Company’s deferred tax assets are as follows:
| 2023
|
Deferred income tax assets:
|
|
Related party interest expense
| $
| 95,855
|
Allowance for bad debts
|
| 24,148
|
Amortization
|
| (27,208)
|
Net operating losses
|
| 1,726,600
|
|
| 1,819,395
|
|
|
|
Valuation allowance of deferred tax assets
|
| (1,819,395)
|
Net deferred tax asset
| $
| ---
|
A reconciliation of the provision for income taxes with amounts determined by applying the statutory U.S. federal income tax rate to income before income taxes is as follows:
| 2023
|
|
|
Computed tax at the federal rate of 21%
| $
| 390,878
|
State taxes, net of federal benefit
|
| 80,875
|
Related party interest expenses
|
| 95,855
|
Allowance for bad debts
|
| 24,148
|
Amortization
|
| (27,208)
|
Operating loss carryforwards
|
| (41,215)
|
Permanent differences
|
| 5,008
|
Provision for income taxes
| $
| 528,341
|
Effective income tax rate
|
| 25.35%
|
At December 31, 2023, the Company has available unused net operating losses and investment tax credits carryforwards that may be applied against future taxable income and that expire as follows:
Year of Expiration
|
| Net Operating Loss
Carryforwards
|
Indefinite
|
| $
| (8,225)
|
F-34
10.COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company leases office space in Miami Beach, Florida under a one-year operating lease through March 2024. The lease calls for monthly lease payments of approximately $3,500.
For the year ended December 31, 2023, total rent expense for the Company totaled approximately $3,000.
Management believes IFRS 16 did not have a material impact on the Company’s operations due the Company not having any material leases.
Litigation
In the ordinary course of business, the Company may become a party to various claims, legal actions and complaints. In the opinion of management, there were no matters that would have a material adverse effect on the consolidated financial condition of the Company as of December 31, 2023.
11.COMMON STOCK
As of December 31, 2023, the Company has authorized and issued 100 common stock shares with a par value of $1.00.
12.POST REPORTING DATE EVENTS
No post reporting date events have occurred between the reporting date and the date of authorization of these consolidated financial statements, which would require adjusting the consolidated financial statements.
13.AUTHORIZATION OF FINANCIAL STATEMENTS
For the year ended December 31, 2023, the consolidated financial statements of the Company were approved by Daniel Contreras, Chief Executive Officer, on March 18, 2024.
14.SUBSEQUENT EVENT
The Company has evaluated subsequent events through March 18, 2024, the date these consolidated financial statements were available to be issued.
During February 2024, in an effort to streamline operations and better serve its customer base, Phonetime, Inc. transferred substantially all of its customers contracts to Mexedia, Inc. and to Mexedia, Ltd. (also a related entity through common ownership).
F-35
MEXEDIA DESIGNATED ACTIVITY COMPANY
UNAUDITED STATEMENT OF FINANCIAL POSITION
AS AT JUNE 30, 2024
|
| June 30, 2024
|
| December 31, 2023
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
Property, plant and equipment
|
| $
| 52,547
|
| $
| 57,664
|
Goodwill
|
|
| -
|
|
| -
|
Other intangible assets
|
|
| 75,000
|
|
| 75,000
|
Investments in associates
|
|
| -
|
|
| -
|
Other non-current assets
|
|
| 9,752
|
|
| 9,751
|
Deferred taxes
|
|
| -
|
|
| -
|
|
|
| 137,299
|
|
| 142,415
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Inventories
|
|
| -
|
|
| -
|
Trade receivables
|
|
| 39,552,279
|
|
| 40,702,777
|
Short-term loans
|
|
| 12,407,443
|
|
| 13,715,040
|
Taxes and other current assets
|
|
| 1,982,837
|
|
| 558,452
|
Cash and cash equivalents
|
|
| 82,067
|
|
| 98,617
|
Accruals
|
|
| 82,904
|
|
| 93,965
|
|
|
| 54,107,530
|
|
| 55,168,851
|
Total assets
|
| $
| 54,244,829
|
| $
| 55,311,266
|
|
|
|
|
|
|
|
Equity and liabilities
|
|
|
|
|
|
|
Equity
|
| $
|
|
| $
|
|
Share capital
|
|
| 1,000
|
|
| 1,000
|
Other reserves
|
|
| 2,000,000
|
|
| 2,000,000
|
Translation difference
|
|
| -
|
|
| -
|
Retained earnings
|
|
| (1,440,668)
|
|
| (1,575,264)
|
Net profit (loss) for the financial period
|
|
| (2,428,709)
|
|
| 1,585,133
|
Equity attributable to equity owners of the Group
|
|
| (1,868,377)
|
|
| 2,010,869
|
Minority interests
|
|
| -
|
|
| -
|
|
|
| (1,868,377)
|
|
| 2,010,869
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
Long-term borrowings
|
|
| -
|
|
| -
|
Financial debt on repurchase of minority interests
|
|
| -
|
|
| -
|
Deferred tax liabilities
|
|
| -
|
|
| -
|
Retirement benefits obligations
|
|
| -
|
|
| -
|
Provisions for other liabilities
|
|
| 12,000
|
|
| 12,000
|
Total non-current liabilities
|
|
| 12,000
|
|
| 12,000
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Short-term borrowings
|
|
| 41,791,319
|
|
| 41,821,898
|
Trade payables
|
|
| 9,584,136
|
|
| 7,488,264
|
Taxes payable
|
|
| 15,162
|
|
| 204,042
|
Other current liabilities
|
|
| 4,710,589
|
|
| 3,774,193
|
Accruals
|
|
| -
|
|
| -
|
Total current liabilities
|
|
| 56,101,206
|
|
| 53,288,397
|
Total equity and liabilities
|
| $
| 54,244,829
|
| $
| 55,311,266
|
The accompanying notes are an integral part of these unaudited financial statements.
F-36
MEXEDIA DESIGNATED ACTIVITY COMPANY
UNAUDITED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2024
|
| June 30, 2024
|
| June 30, 2023
|
|
|
|
|
|
|
|
Revenue
|
| $
| 19,290,476
|
| $
| 39,768,401
|
Cost of sales
|
|
| (17,729,909)
|
|
| (35,091,883)
|
Gross profit
|
|
| 1,560,567
|
|
| 4,676,519
|
|
|
|
|
|
|
|
General and administration
|
|
| (630,898)
|
|
| (1,596,106)
|
Other income
|
|
| -
|
|
| -
|
Other expenses
|
|
| (40,757)
|
|
| (39,255)
|
Depreciation and amortization
|
|
| (5,117)
|
|
| (82,029)
|
Operating profit (loss)
|
|
| 883,795
|
|
| 2,959,129
|
|
|
|
|
|
|
|
Finance income (costs)
|
|
| (3,100,749)
|
|
| (1,786,459)
|
Other non-operating income
|
|
| 80,812
|
|
| 3,466
|
Other non-operating expenses
|
|
| (292,567)
|
|
| (99,042)
|
Profit (loss) before taxation
|
|
| (2,428,709)
|
|
| 1,077,093
|
|
|
|
|
|
|
|
Income taxes
|
|
| -
|
|
| (134,637)
|
Net profit (loss) for the financial period
|
| $
| (2,428,709)
|
| $
| 942,456
|
The accompanying notes are an integral part of these unaudited financial statements.
F-37
MEXEDIA DESIGNATED ACTIVITY COMPANY
UNAUDITED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2024
| Notes
|
| Share
Capital
|
| Revaluation
Reserve
|
| Profit and
Loss Reserves
|
| Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2023
|
|
| $
| 1,000
|
| $
| 2,000,000
|
| $
| 5,263,968
|
| $
| 7,264,968
|
Net profit (loss)
|
|
|
| -
|
|
| -
|
|
| 942,456
|
|
| 942,456
|
Balance at 30 June 2023
|
|
| $
| 1,000
|
| $
| 2,000,000
|
| $
| 6,206,424
|
| $
| 8,207,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2024
|
|
| $
| 1,000
|
| $
| 2,000,000
|
| $
| 11,431,955
|
| $
| 3,432,955
|
Net profit (loss)
|
|
|
| -
|
|
| -
|
|
| (2,428,709)
|
|
| (2,428,709)
|
Balance at 30 June 2024
|
|
| $
| 1,000
|
| $
| 2,000,000
|
| $
| 9,003,246
|
| $
| 1,004,246
|
The accompanying notes are an integral part of these unaudited financial statements.
F-38
MEXEDIA DESIGNATED ACTIVITY COMPANY
UNAUDITED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2024
|
| June 30, 2024
|
| June 30, 2023
|
|
|
|
|
|
|
|
A) Cash flows from current activities
|
|
|
|
|
|
|
Profit (loss) for the period
|
| $
| (2,428,709)
|
| $
| 942,456
|
Income tax
|
|
| -
|
|
| 134,637
|
Payable (receivable) interest
|
|
| 3,100,749
|
|
| 1,786,459
|
1) Profit (loss) for the year before income tax, interest, dividends and capital gains/losses from convenances
|
|
| 672,040
|
|
| 2,863,552
|
Adjustments to non monetary items that were not offset in the net working capital
|
|
|
|
|
| -
|
Provisions
|
|
| -
|
|
| (3,000)
|
Other non-monetary items
|
|
| 67,298
|
|
| 134,587
|
Fixed asset depreciation/amortisation
|
|
| 5,117
|
|
| 82,029
|
Total adjustments for non-monetary items that were not offset in the net working capital
|
|
| 72,415
|
|
| 213,616
|
2) Cash flow before changing net working capital
|
|
| 744,455
|
|
| 3,077,168
|
Changes to the net working capital
|
|
|
|
|
|
|
Decrease/(increase) in trade receivables
|
|
| (6,278,394)
|
|
| (9,360,222)
|
Increase/(decrease) in trade payables
|
|
| 7,017,724
|
|
| (1,664,151)
|
Decrease/(increase) from prepayments and accrued income
|
|
| 483,872
|
|
| 615,378
|
Increase/(decrease) from accruals and deferred income
|
|
| -
|
|
| -
|
Other decreases/(other increases) in net working capital
|
|
| 1,693,985
|
|
| (4,612,428)
|
Total changes to net working capital
|
|
| 2,917,187
|
|
| (15,021,423)
|
3) Cash flow after changes to net working capital
|
|
| 3,661,642
|
|
| (11,944,255)
|
Other adjustments
|
|
|
|
|
|
|
Interest received/(paid)
|
|
| (46)
|
|
| (1,331,192)
|
(Var of reserves)
|
|
|
|
|
|
|
Total other adjustments
|
|
| (46)
|
|
| (1,331,192)
|
Cash flow from current activities (A)
|
|
| 3,661,596
|
|
| (13,275,447)
|
B) Cash flows from investments
|
|
|
|
|
|
|
Tangible fixed assets
|
|
|
|
|
|
|
(Investments)
|
|
| 10,233
|
|
| 10,234
|
Intangible fixed assets
|
|
|
|
|
|
|
(Investments)
|
|
| -
|
|
| (75,000)
|
Financial fixed assets
|
|
|
|
|
|
|
(Investments)
|
|
| -
|
|
| -
|
Cash flows from investments (B)
|
|
| 10,233
|
|
| (64,766)
|
C) Cash flows from financing activities
|
|
|
|
|
|
|
Loan capital
|
|
|
|
|
|
|
New loans
|
|
| (2,018,761)
|
|
| 14,260,574
|
Equity
|
|
|
|
|
|
|
Capital increase payments
|
|
| -
|
|
| -
|
Cash flows from financing activities (C)
|
|
|
|
|
| 14,260,574
|
Increase (decrease) in liquid assets (A ± B ± C)
|
|
| 1,653,068
|
|
| 920,360
|
Liquid assets at the end of the year
|
|
|
|
|
|
|
Bank and post office deposits
|
|
| 79,922
|
|
| 918,215
|
Cash and valuables in hand
|
|
| 2,145
|
|
| 2,145
|
Total liquid assets at the end of the year
|
|
| 82,067
|
|
| 920,360
|
The accompanying notes are an integral part of these unaudited financial statements.
F-39
MEXEDIA DESIGNATED ACTIVITY COMPANY
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2024
1Accounting policies
Company information
Mexedia Designated Activity Company is a limited company domiciled and incorporated in the Republic of Ireland. The registered office is 17 Clanwilliam Square, Grand Canal Quay, Dublin 2 and its company registration number is 601653.
1.1 Accounting convention
The financial statements are prepared in dollars; the functional currency of the company is euros. Monetary amounts in these financial statements are rounded to the nearest dollar.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2 Going concern
At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3 Turnover
Turnover is recognized at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
1.4 Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognized at cost and are subsequently measured at cost less accumulated amortization and accumulated impairment losses.
Intangible assets acquired on business combinations are recognized separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortization is recognized so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Software
| Over 15 years
|
Development costs
| Over 8 years
|
1.5 Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognized so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold land and buildings
| 8 years
|
Fixtures and fittings
| 8 years
|
Computers
| 8 years
|
F-40
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.6 Impairment of fixed assets
Assets not measured at fair value are reviewed for any indication that the asset may be impaired at each statement of financial position date. If such indication exists, the recoverable amount of the asset, or the asset’s cash generating unit, is estimated and compared to the carrying amount. Where the carrying amount exceeds its recoverable amount, an impairment loss is recognized in profit or loss unless the asset is carried at a revalued amount where the impairment loss is a revaluation decrease.
1.7 Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.8 Financial instruments
Financial instruments are recognized in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle on a net basis or to realize the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortized cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognized at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest.
1.9 Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognized as liabilities once they are no longer at the discretion of the company.
1.10 Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognized for all timing differences and deferred tax assets are recognized to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognized if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
F-41
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realized. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.11 Employee benefits
The costs of short-term employee benefits are recognized as a liability and an expense, unless those costs are required to be recognized as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognized in the period in which the employee’s services are received.
Termination benefits are recognized immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.12 Foreign exchange
Transactions in currencies other than euros are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
2Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognized in the financial statements.
Going Concern
The directors have prepared budgets and cash flows for a period of at least twelve months from the date of the approval of the financial statements which demonstrate that there is no material uncertainty regarding the company’s ability to meet its liabilities as they fall due, and to continue as a going concern. On this basis the directors consider it appropriate to prepare the financial statements on a going concern basis. Accordingly, these financial statements do not include any adjustments to the carrying amounts and classification of assets and liabilities that may arise if the company was unable to continue as a going concern.
Useful lives of Tangible Fixed Assets
Long-lived assets comprising primarily of property, plant and machinery and fixtures and fittings represent a significant portion of total assets. The annual depreciation charge depends primarily on the estimated lives of each type of asset and, in certain circumstances, estimates of residual values. The directors regularly review these useful lives and change them if necessary to reflect current conditions. In determining these useful lives management consider technological change, patterns of consumption, physical condition and expected economic utilization of the assets. Changes in the useful lives can have a significant impact on the depreciation charge for the financial year.
F-42
3Interest payable and similar expenses
| Six Months Ended June 30,
|
| 2024
|
| 2023
|
|
|
|
|
|
|
Finance interest
| $
| 2,516,418
|
| $
| 1,977,970
|
Other interest
|
| 4,735
|
|
| 15,903
|
| $
| 2,521,153
|
| $
| 1,993,872
|
4Debtors
| June 30, 2024
|
| June 30, 2023
|
Amounts falling due with one year:
|
|
|
|
|
|
|
|
|
|
|
|
Trade debtors
| $
| 42,991,609
|
| $
| 40,040,852
|
Corporation tax recoverable
|
| 2,155,259
|
|
| 455,408
|
Amounts owed by group undertakings
|
| 13,035,264
|
|
| 10,799,952
|
Other debtors
|
| 13,486,351
|
|
| 1,406,286
|
Prepayments
|
| 682,925
|
|
| 2,867,501
|
| $
| 72,351,408
|
| $
| 55,569,999
|
5Creditors: amounts falling due within one year
| June 30, 2024
|
| June 30, 2023
|
|
|
|
|
|
|
Trade creditors
| $
| 8,532,680
|
| $
| 3,088,035
|
Amounts owed to group undertakings
|
| 16,304
|
|
| 16,129
|
Corporation tax
|
| 0
|
|
| 0
|
VAT
|
| 2,628,310
|
|
| 0
|
PAYE and social security
|
| 4,758
|
|
| 3,134
|
Other creditors
|
| 48,149,823
|
|
| 45,259,245
|
Accruals
|
| 0
|
|
| 0
|
| $
| 59,331,877
|
| $
| 48,366,544
|
6Related party transactions
Included in debtors are various balances owed to Mexedia DAC from connected parties, these may be summarized as follows:
Amounts due:
Heritage Ventures Limited (common director) – At 6/30/24: $3,949,855
Mexedia Inc (group company) - At 6/30/24: $5,702,588
Amounts owed:
Heritage Ventures Limited (common director) shares - At 6/30/24: $16,304
Heritage Ventures Limited (common director) security deposit - At 6/30/24: $3,260
Mexedia Spa (group company) - At 6/30/24: $5,091,840
7Subsequent events
In October 2024, the company was acquired by Raadr, Inc., a U.S. publicly-traded corporation.
F-43
MEXEDIA DESIGNATED ACTIVITY COMPANY
UNAUDITED STATEMENT OF FINANCIAL POSITION
AS AT DECEMBER 31, 2023
| Notes
|
| 2023
|
| 2022
|
|
|
|
|
|
|
|
|
Fixes assets
|
|
|
|
|
|
|
|
Intangible assets
| 9
|
| $
| 1,712,500
|
| $
| 1,827,083
|
Tangible assets
| 10
|
|
| 67,275
|
|
| 79,249
|
|
|
|
| 1,779,775
|
|
| 1,906,332
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Debtors
| 11
|
|
| 54,722,747
|
|
| 38,028,150
|
Cash at bank and in hand
|
|
|
| 68,040
|
|
| 2,307,680
|
|
|
|
| 54,790,787
|
|
| 40,335,830
|
|
|
|
|
|
|
|
|
Creditors: amounts falling due within one year
| 12
|
|
| (53,137,607)
|
|
| (34,977,194)
|
|
|
|
|
|
|
|
|
Net current assets
|
|
|
| 1,653,180
|
|
| 5,358,636
|
|
|
|
|
|
|
|
|
Net assets
|
|
| $
| 3,432,955
|
| $
| 7,264,968
|
|
|
|
|
|
|
|
|
Capital and reserves
|
|
|
|
|
|
|
|
Called up share capital presented as equity
| 13
|
| $
| 1,000
|
| $
| 1,000
|
Revaluation reserve
| 14
|
|
| 2,000,000
|
|
| 2,000,000
|
Profit and loss reserves
| 15
|
|
| 1,431,955
|
|
| 5,263,968
|
|
|
|
|
|
|
|
|
Total equity
|
|
| $
| 3,432,955
|
| $
| 7,264,968
|
The accompanying notes are an integral part of these unaudited financial statements.
F-44
MEXEDIA DESIGNATED ACTIVITY COMPANY
UNAUDITED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2023
The income statement has been prepared on the basis that all operations are continuing operations.
| Notes
|
| 2023
|
| 2022
|
|
|
|
|
|
|
|
|
Turnover
|
|
| $
| 112,626,233
|
| $
| 140,871,413
|
Cost of sales
|
|
|
| (102,949,336)
|
|
| (127,696,740)
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
| 9,676,897
|
|
| 13,714,673
|
|
|
|
|
|
|
|
|
Administrative expenses
|
|
|
| (3,823,761)
|
|
| (4,107,763)
|
Other operating income/(expenses)
|
|
|
| 170,798
|
|
| (2,982)
|
|
|
|
|
|
|
|
|
Operating profit
| 3
|
|
| 6,023,934
|
|
| 9,063,928
|
|
|
|
|
|
|
|
|
Interest payable and similar expenses
| 6
|
|
| (4,402,570)
|
|
| (3,042,846)
|
|
|
|
|
|
|
|
|
Profit before taxation
|
|
|
| 1,621,364
|
|
| 6,021,082
|
|
|
|
|
|
| $
|
|
Tax on profit
| 7
|
|
| (190,055)
|
|
| (757,759)
|
|
|
|
|
|
|
|
|
Profit for the financial year
|
|
| $
| 1,431,309
|
| $
| 5,263,323
|
The accompanying notes are an integral part of these unaudited financial statements.
F-45
MEXEDIA DESIGNATED ACTIVITY COMPANY
UNAUDITED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2023
| Notes
|
| Share
Capital
|
| Revaluation
Reserve
|
| Profit and
Loss Reserves
|
| Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2022
|
|
| $
| 1,000
|
| $
| 2,000,000
|
| $
| 2,915,946
|
| $
| 4,916,946
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 December 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit and total comprehensive income
|
|
|
| -
|
|
| -
|
|
| 5,263,323
|
|
| 5,263,323
|
Dividends
| 8
|
|
| -
|
|
| -
|
|
| (2,915,301)
|
|
| (2,915,301)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 December 2022
|
|
|
| 1,000
|
|
| 2,000,000
|
|
| 5,263,968
|
|
| 7,264,968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 December 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit and total comprehensive income
|
|
|
| -
|
|
| -
|
|
| 1,431,309
|
|
| 1,431,309
|
Dividends
| 8
|
|
| -
|
|
| -
|
|
| (5,263,322)
|
|
| (5,263,322)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 December 2023
|
|
| $
| 1,000
|
| $
| 2,000,000
|
| $
| 11,431,955
|
| $
| 3,432,955
|
The accompanying notes are an integral part of these unaudited financial statements.
F-46
MEXEDIA DESIGNATED ACTIVITY COMPANY
UNAUDITED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2023
| Notes
|
| 2023
|
| 2022
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
Cash generated from operations
| 19
|
| $
| 8,474,652
|
| $
| 3,121,505
|
Interest paid
|
|
|
| (4,402,570)
|
|
| (3,042,846)
|
Income taxes paid
|
|
|
| (1,010,900)
|
|
| (284,109)
|
|
|
|
|
|
|
|
|
Net cash inflow/(outflow) from operating activities
|
|
|
| 3,061,182
|
|
| (205,450)
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
Purchase of intangible assets
|
|
|
| (37,500)
|
|
| (37,500)
|
Purchase of tangible fixed assets
|
|
|
| -
|
|
| (991)
|
Proceeds from disposal of subsidiaries
|
|
|
| -
|
|
| 85
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
| (37,500)
|
|
| 5,358,636
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
Dividends paid
|
|
|
| (5,263,322)
|
|
| (2,915,301)
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
| (5,263,322)
|
|
| (2,915,301)
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
| (2,239,640)
|
|
| (3,159,157)
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of year
|
|
|
| 2,307,680
|
|
| 5,466,837
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year
|
|
| $
| 68,040
|
| $
| 2,307,680
|
The accompanying notes are an integral part of these unaudited financial statements.
F-47
MEXEDIA DESIGNATED ACTIVITY COMPANY
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
1Accounting policies
Company information
Mexedia Designated Activity Company is a limited company domiciled and incorporated in the Republic of Ireland. The registered office is 17 Clanwilliam Square, Grand Canal Quay, Dublin 2 and its company registration number is 601653.
1.1 Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2014.
The financial statements are prepared in euros, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest dollar.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2 Going concern
At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3 Turnover
Turnover is recognized at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
1.4 Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognized at cost and are subsequently measured at cost less accumulated amortization and accumulated impairment losses.
Intangible assets acquired on business combinations are recognized separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortization is recognized so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Software
| Over 15 years
|
Development costs
| Over 8 years
|
1.5 Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognized so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold land and buildings
| 8 years
|
Fixtures and fittings
| 8 years
|
Computers
| 8 years
|
F-48
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.6 Impairment of fixed assets
Assets not measured at fair value are reviewed for any indication that the asset may be impaired at each statement of financial position date. If such indication exists, the recoverable amount of the asset, or the asset’s cash generating unit, is estimated and compared to the carrying amount. Where the carrying amount exceeds its recoverable amount, an impairment loss is recognized in profit or loss unless the asset is carried at a revalued amount where the impairment loss is a revaluation decrease.
1.7 Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.8 Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognized in the company’s statement of financial position when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortized cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognized at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest.
1.9 Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognized as liabilities once they are no longer at the discretion of the company.
1.10 Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognized for all timing differences and deferred tax assets are recognized to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognized if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
F-49
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realized. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.11 Employee benefits
The costs of short-term employee benefits are recognized as a liability and an expense, unless those costs are required to be recognized as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognized in the period in which the employee’s services are received.
Termination benefits are recognized immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.12 Foreign exchange
Transactions in currencies other than euros are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
2Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognized in the financial statements.
Going Concern
The directors have prepared budgets and cash flows for a period of at least twelve months from the date of the approval of the financial statements which demonstrate that there is no material uncertainty regarding the company’s ability to meet its liabilities as they fall due, and to continue as a going concern. On this basis the directors consider it appropriate to prepare the financial statements on a going concern basis. Accordingly, these financial statements do not include any adjustments to the carrying amounts and classification of assets and liabilities that may arise if the company was unable to continue as a going concern.
Useful lives of Tangible Fixed Assets
Long-lived assets comprising primarily of property, plant and machinery and fixtures and fittings represent a significant portion of total assets. The annual depreciation charge depends primarily on the estimated lives of each type of asset and, in certain circumstances, estimates of residual values. The directors regularly review these useful lives and change them if necessary to reflect current conditions. In determining these useful lives management consider technological change, patterns of consumption, physical condition and expected economic utilization of the assets. Changes in the useful lives can have a significant impact on the depreciation charge for the financial year.
F-50
3Operating profit
| 2023
|
| 2022
|
Operating profit for the year is stated after charging:
|
|
|
|
|
|
|
|
|
|
|
|
Exchange losses
| $
| 11,768
|
| $
| 82,310
|
Fees payable to the company’s auditor for the audit of the company’s financial statements
|
| 22,765
|
|
| 19,950
|
Depreciation of owned tangible fixed assets
|
| 11,974
|
|
| 11,965
|
Amortization of intangible assets
| $
| 152,083
|
| $
| 152,084
|
4Employees
The average monthly number of persons (including directors) employed by the company during the year was:
| 2023
Number
|
| 2022
Number
|
|
|
|
|
|
|
Directors
|
| 1
|
|
| 1
|
Other
|
| 2
|
|
| 2
|
Total
|
| 3
|
|
| 3
|
Their aggregate remuneration comprised:
| 2023
|
| 2022
|
|
|
|
|
|
|
Wages and salaries
| $
| 145,691
|
| $
| 160,851
|
Social security costs
|
| 26,943
|
|
| 18,352
|
| $
| 172,634
|
| $
| 179,203
|
5Directors’ Remuneration
| 2023
|
| 2022
|
|
|
|
|
|
|
Remuneration for qualifying services
| $
| 77,000
|
| $
| 77,000
|
6Interest payable and similar expenses
| 2023
|
| 2022
|
|
|
|
|
|
|
Finance interest
| $
| 4,373,361
|
| $
| 3,004,658
|
Other interest
|
| 29,209
|
|
| 38,188
|
| $
| 4,402,570
|
| $
| 3,042,846
|
F-51
7Taxation
| 2023
|
| 2022
|
Current tax
|
|
|
|
|
|
Corporation tax on profits for the current period
| $
| 190,055
|
| $
| 757,759
|
| 2023
|
| 2022
|
|
|
|
|
|
|
Profit before taxation
| $
| 1,621,364
|
| $
| 6,021,082
|
|
|
|
|
|
|
Expected tax charge based on standard rate of corporation tax of 12.50% (2022: 12.50%)
| $
| 202,671
|
| $
| 752,635
|
Tax effect of expenses that are not deductible in determining taxable profit
|
| 3,651
|
|
| 18,899
|
Tax effect of income not taxable in determining taxable profit
|
| (75)
|
|
| (75)
|
Permanent capital allowances in excess of depreciation
|
| (36,255)
|
|
| (35,669)
|
Depreciation on assets not qualifying for tax allowances
|
| 3,565
|
|
| 1,496
|
Amortization on assets not qualifying for tax allowances
|
| 19,010
|
|
| 19,011
|
Other non-reversing timing differences
|
| -
|
|
| 1,462
|
|
|
|
|
|
|
Taxation charge for the year
| $
| 192,567
|
| $
| 757,759
|
|
|
|
|
|
|
Taxation charge in the financial statements
| $
| 190,055
|
| $
| 757,759
|
|
|
|
|
|
|
Reconciliation - the current year tax charge does not reconcile to the above analysis. Please review figures in the database.
| $
| 2,512
|
| $
| -
|
8Dividends
| 2023
|
| 2022
|
|
|
|
|
|
|
Final paid/outstanding
| $
| 5,263,322
|
| $
| 2,915,301
|
9Intangible fixed assets
| Software
|
| Development
Costs
|
| Total
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
At 1 January 2023
| $
| 2,000,000
|
| $
| 187,500
|
| $
| 2,187,500
|
Additions - internally developed
|
| -
|
|
| 37,500
|
|
| 37,500
|
|
|
|
|
|
|
|
|
|
At 31 December 2023
|
| 2,000,000
|
|
| 225,000
|
|
| 2,225,000
|
|
|
|
|
|
|
|
|
|
Amortization and impairment
|
|
|
|
|
|
|
|
|
At 1 January 2023
|
| 266,667
|
|
| 93,750
|
|
| 360,417
|
Amortization charged for the year
|
| 133,333
|
|
| 18,750
|
|
| 152,083
|
|
|
|
|
|
|
|
|
|
At 31 December 2023
|
| 400,000
|
|
| 112,500
|
|
| 512,500
|
|
|
|
|
|
|
|
|
|
Carrying amount
|
|
|
|
|
|
|
|
|
At 31 December 2023
|
| 1,600,000
|
|
| 112,500
|
|
| 1,712,500
|
|
|
|
|
|
|
|
|
|
At 31 December 2022
| $
| 1,733,333
|
| $
| 93,750
|
| $
| 1,827,083
|
F-52
10Tangible fixed assets
| Leasehold
land and
buildings
|
| Fixtures and
fittings
|
| Computers
|
| Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2023 and 31 December 2023
| $
| 13,925
|
| $
| 75,948
|
| $
| 5,921
|
| $
| 95,794
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2023
|
| 2,573
|
|
| 13,023
|
|
| 949
|
|
| 16,545
|
Depreciation charged in the year
|
| 1,741
|
|
| 9,493
|
|
| 740
|
|
| 11,974
|
|
|
|
|
|
|
|
|
|
|
|
|
at 31 December 2023
|
| 4,314
|
|
| 22,516
|
|
| 1,689
|
|
| 28,519
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amount
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2023
|
| 9,611
|
|
| 53,432
|
|
| 4,232
|
|
| 67,275
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2022
| $
| 11,352
|
| $
| 6,295
|
| $
| 4,972
|
| $
| 79,249
|
11Debtors
| 2023
|
| 2022
|
Amounts falling due with one year:
|
|
|
|
|
|
|
|
|
|
|
|
Trade debtors
| $
| 40,654,524
|
| $
| 28,587,750
|
Corporation tax recoverable
|
| 159,572
|
|
| -
|
Amounts owed by group undertakings
|
| 9,212,143
|
|
| 4,871,520
|
Other debtors
|
| 3,674,842
|
|
| 4,020,446
|
Prepayments
|
| 1,021,666
|
|
| 548,434
|
| $
| 54,722,747
|
| $
| 38,028,150
|
Amounts receivable from group companies are unsecured, interest-free, have no fixed date of repayment and are repayable on demand.
12Creditors: amounts falling due within one year
| 2023
|
| 2022
|
|
|
|
|
|
|
Trade creditors
| $
| 7,488,256
|
| $
| 3,897,599
|
Amounts owed to group undertakings
|
| 3,682,134
|
|
| 1,233,301
|
Corporation tax
|
| -
|
|
| 661,273
|
VAT
|
| -
|
|
| 22,568
|
PAYE and social security
|
| 8,374
|
|
| 12,119
|
Other creditors
|
| 41,891,469
|
|
| 29,150,424
|
Accruals
|
| 67,374
|
|
| (90)
|
| $
| 53,137,607
|
| $
| 34,977,194
|
Amounts owed to group companies are unsecured, interest-free, have no fixed date of repayment and are repayable on demand.
Other creditors: Included in other creditors are loan balances which have been advanced to the company by Lenderwize Limited. The total outstanding at the year end to Lenderwize Limited was $41,791,319 (2022 - $29,048,069). Interest charged by Lenderwize Limited in the current year was $4,373,334 (2022 - $3,000,863).
F-53
13Share capital
| 2023
Number
|
| 2022
Number
|
| 2023
|
| 2022
|
Ordinary share capital Authorized equity
Issued and fully paid
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares of $1 each
|
| 1,000
|
|
| 1,000
|
| $
| 1,000
|
| $
| 1,000
|
14Revaluation reserve
| 2023
|
| 2022
|
|
|
|
|
|
|
At the beginning and end of the year
| $
| 2,000,000
|
| $
| 2,000,000
|
15Profit and loss reserves
| 2023
|
| 2022
|
|
|
|
|
|
|
At the beginning of the year
| $
| 5,263,968
|
| $
| 2,915,946
|
Profit for the year
|
| 1,431,309
|
|
| 5,263,323
|
Dividends declared and paid in the year/outstanding at year end
|
| (5,263,322)
|
|
| (2,915,301)
|
| $
| 1,431,955
|
| $
| 5,263,968
|
16Events after the reporting date
There are no post balance sheet adjustments which require disclosure.
17Related party transactions
Included in debtors are various balances owed to Mexedia DAC from connected parties, these may be summarized as follows:
Amounts due:
Heritage Ventures Limited (common director) - $4,039,855 (2022: $2,027,855)
Mexedia Inc (group company) - $5,172,288 (2022: $2,843,665)
Amounts owed:
Heritage Ventures Limited (common director) shares - $15,000 (2022: $15,000)
Heritage Ventures Limited (common director) security deposit - $3,000 (2022: $3,000)
Mexedia Spa (group company) - $3,644,134 (2022: $1,215,301)
Trade debtor intercompany balances:
Mexedia Inc (group company) - $558,002 (2022: $206,377)
Mexedia Spa (group company) - $12,492 (2022: $Nil)
Opt1mize Technologies Limited (common control) - $591,826 (2022: $584,763)
18Ultimate controlling party
Mexedia Limited is a wholly owned subsidiary of Mexedia SPA S.B, an Italian company. The majority shareholder in Mexedia SPA S.B, via a holding company structure, is Mr Orlando Taddeo who may be regarded as the ultimate controlling party of Mexedia Limited.
F-54
19Cash generated from operations
| 2023
|
| 2022
|
|
|
|
|
|
|
Profit for the year after tax
| $
| 1,431,309
|
| $
| 5,263,323
|
|
|
|
|
|
|
Adjustments for:
|
|
|
|
|
|
Taxation charged
|
| 190,055
|
|
| 757,759
|
Finance costs
|
| 4,402,570
|
|
| 3,042,846
|
Amortization and impairment of intangible assets
|
| 152,083
|
|
| 152,084
|
Depreciation and impairment of tangible fixed assets
|
| 11,974
|
|
| 11,965
|
|
|
|
|
|
|
Movements in working capital:
|
|
|
|
|
|
Increase in debtors
|
| (16,535,025)
|
|
| (13,733,710)
|
Increase in creditors
|
| 18,821,686
|
|
| 7,627,238
|
|
|
|
|
|
|
Cash generated from operations
| $
| 8,474,652
|
| $
| 3,121,505
|
20Analysis of changes in net funds
| 1 January
2023
|
| Cash flows
|
| 31 December
2023
|
|
|
|
|
|
|
|
|
|
Cash at bank and in hand
| $
| 2,307,680
|
| $
| (2,239,640)
|
| $
| 68,040
|
21Approval of financial statements
The directors approved the financial statements on 11 March 2024.
F-55
PART III EXHIBITS
Exhibit No.
| Description of Exhibit
|
|
|
2. Charter and Bylaws
|
2.1*
| Articles of Incorporation
|
2.2*
| Certificate of Change (Increase Authorized) dated June 19, 2018
|
2.3*
| Certificate of Designation (Creation of Series A Preferred) dated January 3, 2013
|
2.4*
| Certificate of Amendment (Name Change to Pitooey!, Inc.) dated January 18, 2013
|
2.5*
| Certificate of Amendment (Name Change to Raadr, Inc.) dated June 29, 2015
|
2.6*
| Certificate of Designation (Creation of Series E Preferred) dated January 27, 2016
|
2.7*
| Certificate of Amendment (Increase in Authorized) dated March 21, 2016
|
2.8*
| Certificate of Amendment (Increase in Authorized) dated May 9, 2016
|
2.9*
| Certificate of Amendment (Increase in Authorized) dated May 3, 2017
|
2.10*
| Certificate of Amendment (Increase in Authorized) dated August 4, 2017
|
2.10.1*
| Certificate of Amendment (Increase in Authorized) dated May 6, 2022
|
2.10.2*
| Certificate of Amendment (Reverse Split: 1-for-1,000) dated August 31, 2022
|
2.10.3*
| Certificate of Amendment (Reverse Split: 1-for-100) dated September 28, 2022
|
2.10.4+
| Certificate of Amendment (Increase in Authorized) dated December 1, 2022
|
2.10.5+
| Certificate of Designation (Creation of Series F Preferred) dated October 8, 2024
|
2.11*
| Bylaws
|
|
|
3. Instruments Defining the Rights of Securityholders
|
3.1*
| Promissory Note issued by the Company to JanBella Group, LLC and Guaranty between JanBella Group, LLC and Jacob DiMartino
|
3.2+
| Secured Promissory Note dated October 8, 2024, principal amount $540,000.00, in favor of JanBella Group, LLC
|
3.3+
| Convertible Promissory Note dated November 15, 2024, $50,000 principal amount, issued in favor of Daniel Contreras
|
3.4+
| Convertible Promissory Note dated November 15, 2024, $300,000 principal amount, issued in favor of Orlando Taddeo
|
3.5+
| Convertible Promissory Note dated November 15, 2024, $200,000 principal amount, issued in favor of OTUS, LLC
|
3.6+
| Convertible Promissory Note dated November 15, 2024, $300,000 principal amount, issued in favor of Orlando Taddeo
|
3.7+
| Convertible Promissory Note dated November 15, 2024, $200,000 principal amount, issued in favor of OTUS, LLC
|
3.8+
| Convertible Promissory Note dated July 15, 2024, $60,000 principal amount, issued in favor of Newlan Law Firm, PLLC
|
3.9+
| Convertible Promissory Note dated July 15, 2024, $40,000 principal amount, issued in favor of Newlan Law Firm, PLLC
|
3.10+
| Amendment No. 1 to the Promissory Note dated November 18, 2022, in favor of Boot Capital, LLC
|
3.11+
| Second Amendment to Senior Secured Convertible Promissory Note dated July 29, 2021, in favor of Leonite Fund I, LP
|
3.12+
| Convertible Promissory Note dated October 1, 2024, $25,000 principal amount, issued in favor of FirstFire Global Opportunity Fund, LLC
|
3.13#
| Amended and Restated Convertible Promissory Note, $50,000 principal amount, issued in favor of Daniel Contreras
|
3.14#
| Amended and Restated Convertible Promissory Note, $300,000 principal amount, issued in favor of Orlando Taddeo
|
3.15#
| Amended and Restated Convertible Promissory Note, $200,000 principal amount, issued in favor of OTUS, LLC
|
3.16#
| Amended and Restated Convertible Promissory Note, $300,000 principal amount, issued in favor of Orlando Taddeo
|
3.17#
| Amended and Restated Convertible Promissory Note, $200,000 principal amount, issued in favor of OTUS, LLC
|
3.18#
| Amended and Restated Convertible Promissory Note, $25,000 principal amount, issued in favor of FirstFire Global Opportunities Fund, LLC
|
3.19#
| Convertible Promissory Note, dated December 5, 2025, $27,500 principal amount, issued in favor of GW Capital Ventures, LLC
|
3.20#
| Convertible Promissory Note, dated December 11, 2025, $27,500 principal amount, issued in favor of Leonite Fund I, LP
|
II-1
3.21#
| Convertible Promissory Note, dated December 9, 2025, $27,500 principal amount, issued in favor of FirstFire Global Opportunities Fund, LLC
|
3.22#
| Amended and Restated Convertible Promissory Note, $27,500 principal amount, issued in favor of FirstFire Global Opportunities Fund, LLC
|
3.23#
| Amended and Restated Convertible Promissory Note, $27,500 principal amount, issued in favor of GW Capital Ventures, LLC
|
3.24#
| Amended and Restated Convertible Promissory Note, $27,500 principal amount, issued in favor of Leonite Fund I, LP
|
|
|
4. Subscription Agreement
|
4.1#
| Form of Subscription Agreement
|
|
6. Material Agreements
|
6.1*
| Forbearance Agreement between the Company and Dean Richards
|
6.2*
| Forbearance Agreement between the Company and Tina Upham
|
6.3*
| Forbearance Agreement between the Company and Brenda Whitman
|
6.4+
| Stock Cancellation Agreement between the Company and Dean Richards
|
6.5+
| Stock Cancellation Agreement between the Company and Tina Upham
|
6.6+
| Stock Cancellation Agreement between the Company and Brenda Whitman
|
6.7+
| Redemption Agreement between the Company and JanBella Group, LLC
|
6.8+
| Pledge Agreement between Mexedia S.p.A. S.B. and JanBella Group, LLC
|
6.9+
| Guaranty of Mexedia S.p.A. S.B.
|
6.10+
| Settlement Agreement between the Company and FirstFire Global Opportunities Fund, LLC
|
6.11+
| Settlement Agreement between the Company and FirstFire Global Opportunities Fund, LLC
|
6.12+
| Global Settlement Agreement between the Company and Leonite Fund I, LP
|
6.13+
| Global Settlement Agreement between the Company and IBH Capital, LLC
|
6.14+
| Settlement Agreement between the Company and GW Holdings Group, LLC
|
6.15+
| Legal Services Agreement between the Company and Newlan Law Firm, PLLC
|
6.16+
| Facility Agreement among Mexedia, DAC, Matchcom Telecommunication Inc. and Phonetime Inc., as Borrowers/Obligors, and Fasanara Securitisation S.A., Acting for and on Behalf of its Compartment H, as Lender
|
6.17+
| Settlement Agreement between the Company and Boot Capital, LLC
|
6.18+
| Employment Agreement between Mexedia, Inc. a Daniel Contreras
|
6.19+
| Employment Agreement between Mexedia, Inc. and Maickel Abdou
|
6.20+
| Letter Agreement between Mexedia, Inc. and Sonya Maggi
|
6.21#
| Securities Purchase Agreement dated December 9, 2024, between the Company and FirstFire Global Opportunities Fund, LLC
|
6.22#
| Securities Purchase Agreement dated December 5, 2024, between the Company and GW Capital Ventures, LLC
|
6.23#
| Securities Purchase Agreement dated December 11, 2024, between the Company and Leonite Fund I, LP
|
|
|
7. Plan of acquisition, reorganization, arrangement, liquidation or succession
|
7.1+
| Share Exchange Agreement among the Company, Mexedia, Inc. and Mexedia S.p.A. S.B.
|
7.1.1+
| Amendment No. 1 to Share Exchange Agreement among the Company, Mexedia, Inc. and Mexedia S.p.A. S.B.
|
7.2+
| Share Exchange Agreement among the Company, Mexedia DAC and Mexedia S.p.A. S.B.
|
7.2.1+
| Amendment No. 1 to Share Exchange Agreement among the Company, Mexedia, DAC and Mexedia S.p.A. S.B.
|
7.3+
| Stock Purchase Agreement between the Company and New Generation Consumer Group, Inc.
|
|
|
11. Consents
|
11.1+
| Consent of Newlan Law Firm, PLLC (see Exhibit 12.1)
|
|
|
12. Opinion re: Legality
|
12.1+
| Opinion of Newlan Law Firm, PLLC
|
__________________________
# Filed herewith.
+ Filed previously.
* Incorporated by reference as indicated.
II-2
SIGNATURES
Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this offering statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Miami Beach, State of Florida, on March 3, 2025.
| RAADR, INC.
|
|
|
| By:
| /s/ Daniel Contreras
|
|
| Daniel Contreras
|
|
| Chief Executive Officer
|
This Offering Statement has been signed by the following persons in the capacities and on the dates indicated.
/s/ Daniel Contreras
|
|
|
Daniel Contreras
|
| March 3, 2025
|
Chief Executive Officer (Principal
|
|
|
Executive Officer) and Director
|
|
|
/s/ Orlando Taddeo
|
|
|
Orlando Taddeo
|
| March 3, 2025
|
President and Director
|
|
|
/s/ Daniel Gilcher
|
|
|
Daniel Gilcher
|
| March 3, 2025
|
Chief Financial Officer (Principal Accounting Officer),
|
|
|
Secretary, Treasurer and Director
|
|
|
II-3
THIS NOTE, AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE APPLICABLE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES LAWS, OR UNLESS AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE MAKER, IS OBTAINED TO THE EFFECT THAT SUCH PLEDGE, SALE, ASSIGNMENT OR TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS.
RAADR, INC.
FIRST AMENDED AND RESTATED
8% CONVERTIBLE PROMISSORY NOTE
FOR VALUE RECEIVED, Raadr, Inc., a Nevada corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of Daniel Contreras, or registered assigns (the “Holder”), the sum of $50,000.00 together with any interest as set forth herein, on November 15, 2025 (the “Maturity Date”), including 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.
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 eighteen percent (18%) per annum from the due date thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the date that the Holder pays the full Purchase Price to the Borrower 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.
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
1.1Conversion Right. The Holder shall have the right from time to time, and at any time during the period beginning on the earlier of (a) the day immediately following the SEC’s qualification of a Regulation A Offering under the Securities Act of 1933, as amended (the “Securities Act”), of the Borrower and (b) the date that is 180 days immediately following the Issue Date to convert all or any part of the outstanding and unpaid amount of this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or, in the event of a recapitalization or merger, 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”) [The foregoing is not a ratchet provision; in the event of a recapitalization or merger, if common shareholder receive any other shares or interests, i.e., shares of a different issuer in the event of a merger, the Note will convert into such shares. That is the Note conversion rights will follow the merger]; 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. The beneficial ownership limitations on conversion as set forth in the section may NOT be waived by the Holder. 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,
FIRST AMENDED AND RESTATED 8% CONVERTIBLE PROMISSORY NOTE | PAGE 1
notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the “Conversion Date”); however, if the Notice of Conversion is sent after 6:00pm, New York, New York time the Conversion Date shall be the next business day. 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) 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 1.4 hereof.
1.1.1Rights of Qualification. The Holder shall have the right, which may be exercised at the Holder’s sole discretion, to convert any amount due under this Note into shares that have been qualified in any Regulation A Offering under the Securities Act of Borrower during the term of any such Regulation A Offering. The number of qualified shares to be issued upon any such conversion shall be in accordance with Section 1.2 of this Note. In conjunction with the rights granted to the Holder under this Section 1.1.1, Borrower shall, as may be required and while any amount due under this Note remains outstanding, qualify and allocate a sufficient number of shares of Common Stock to repay the remaining balance under the Note in full.
1.2Conversion 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 75% multiplied by the Market Price (as defined herein) (representing a discount rate of 25%). “Market Price” means the closing price for the Common Stock on the trading day immediately preceding the date of any conversion. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTC, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.
Notwithstanding the foregoing paragraph, should the Holder exercise its conversion rights pursuant to Section 1.1.1 of this Note, the Conversion Price shall be equal to the then-current offering price of the applicable Regulation A Offering Statement.
1.3Authorized 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 four and one half times the number of shares that would be issuable upon full conversion of the Note (assuming that the 4.99% limitation set forth in Section 1.1 is not in effect) (based on the respective Conversion Price of the Note (as defined in Section 1.2) in effect from time to time, initially 1,000,000 shares) (the “Reserved Amount”). The Reserved Amount shall be increased (or decreased with the written consent of the Holder) 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 Note. 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.
1.4Method of Conversion.
(a)Mechanics of Conversion. As set forth in Section 1.1 hereof, from time to time, and at any time, ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount, 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 (upon payment in full of any amounts owed hereunder).
(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.
8% CONVERTIBLE PROMISSORY NOTE | PAGE 2
(c)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. 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 hereunder, 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.
(d)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 set forth herein, 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.
(e)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 (3 business days after receipt of Conversion Notice) due to action and/or inaction of the Borrower, the Borrower shall pay to the Holder $500 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock (the “Fail to Deliver Fee”); provided; however that the Fail to Deliver Fee shall not be due if the failure is a result of a third party (i.e., transfer agent; and not the result of any failure to pay such transfer agent) despite the best efforts of the Borrower to effect delivery of 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(e) are justified.
1.5Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless: (i) the Borrower or its transfer agent shall have been furnished by the Holder 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 (such as Rule 144 or a successor rule) (“Rule 144”); or (ii) 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).
1.6Effect 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 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). “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.
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(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 Note, 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, ten (10) days prior written notice (but in any event at least five (5) 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 Note. 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. [NOTE: This is not a ratchet provision, it simply prohibits the issuer from effecting a distribution of assets or stock while attempting to avoid conversion or payment of the note (i.e., in the event of an asset distribution which renders the company a shell company, without the foregoing language, although it would be a default, the note holder would be left with little other remedies to attempt to be repaid from the spin off entity). Note that the language does not change the conversion price formula.]
1.7Prepayment. This Note may be prepaid at any time without penalty. The Holder’s conversion rights herein shall not be affected in any way until the Note is fully paid (funds received by the Holder).
ARTICLE II. CERTAIN COVENANTS
2.1Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, 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 not be unreasonably withheld as long as such disposition does not render the Borrower a “shell company” as such term is defined in Rule 144.
ARTICLE III. EVENTS OF DEFAULT
If any of the following events of default (each, an “Event of Default”) shall occur:
3.1Failure to Pay Principal and Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity or upon acceleration and such breach continues for a period of five (5) days after written notice from the Holder.
3.2Conversion 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
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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.
3.3Breach 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 twenty (20) days after written notice thereof to the Borrower from the Holder.
3.4Breach 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.
3.5Receiver 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.
3.6Bankruptcy. 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.
3.7Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC (which specifically includes the quotation platforms maintained by the OTC Markets Group) or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.
3.8[Omitted].
3.9Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
3.10Cessation of Operations. Any cessation of operations by Borrower rendering the Borrower a “shell company” as such term is defined in Rule 144, 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.
3.11Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with OTC Markets at any time after 180 days after the Issuance Date for any date or period until this Note is no longer outstanding, if the result of such restatement would, by comparison to the un-restated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note.
3.12Replacement 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.
3.13Cross-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.
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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 or upon acceleration), 3.3, 3.4, 3.7, 3.8, 3.10, 3.11, 3.12, 3.13, and/or 3.14 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 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 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 and the details of the determination of such amount, 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
4.1Failure 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.
4.2Notices. 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:
Raadr, Inc.
1680 Michigan Avenue, Suite 700, Miami Beach, Florida 33139
Attention: Chief Financial Officer
E-mail: dgilcher@mexedia.com
If to the Holder:
Daniel Contreras
1680 Michigan Avenue, Suite 700, Miami Beach, Florida 33139
E-mail: dcontreras@mexedia.com
4.3Amendments. 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.
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4.4Assignability. 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 Securities and Exchange Commission). Notwithstanding anything in this Note to the contrary, this Note may be assigned by the Holder without the consent of the Borrower.
4.5Cost 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.
4.6Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Nevada 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 Nevada or in the federal courts located in Las Vegas, Nevada . 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 Note, any agreement or any other document delivered in connection with this Note 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 Note 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.
4.7Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.
4.8Remedies. 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 First Amended and Restated 8% Convertible Promissory Note to be signed in its name by its duly authorized officer on February 17, 2025.
RAADR, INC.
By: /s/ Daniel Contreras
Daniel Contreras
Chief Executive Officer
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EXHIBIT A
FORM OF NOTICE OF CONVERSION
The undersigned hereby elects to convert $_________ principal amount and $_________ of accrued interest 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 Raadr, Inc., a Nevada corporation (the “Borrower”), according to the conditions of the convertible note of the Borrower dated as of November 15, 2024, , and amended and restated on February 17, 2025 (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:
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: ______________
[ Name of Holder ] ________________________________________________________________
By: __________________________________________________
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THIS NOTE, AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE APPLICABLE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES LAWS, OR UNLESS AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE MAKER, IS OBTAINED TO THE EFFECT THAT SUCH PLEDGE, SALE, ASSIGNMENT OR TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS.
RAADR, INC.
FIRST AMENDED AND RESTATED 8%
CONVERTIBLE PROMISSORY NOTE
FOR VALUE RECEIVED, Raadr, Inc., a Nevada corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of Orlando Taddeo, or registered assigns (the “Holder”), the sum of $300,000.00 together with any interest as set forth herein, on November 15, 2025 (the “Maturity Date”), including 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.
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 eighteen percent (18%) per annum from the due date thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the date that the Holder pays the full Purchase Price to the Borrower 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.
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
1.1Conversion Right. The Holder shall have the right from time to time, and at any time during the period beginning on the earlier of (a) the day immediately following the SEC’s qualification of a Regulation A Offering under the Securities Act of 1933, as amended (the “Securities Act”), of the Borrower and (b) the date that is 180 days immediately following the Issue Date to convert all or any part of the outstanding and unpaid amount of this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or, in the event of a recapitalization or merger, 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”) [The foregoing is not a ratchet provision; in the event of a recapitalization or merger, if common shareholder receive any other shares or interests, i.e., shares of a different issuer in the event of a merger, the Note will convert into such shares. That is the Note conversion rights will follow the merger]; 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. The beneficial ownership limitations on conversion as set forth in the section may NOT be waived by the Holder. 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,
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notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the “Conversion Date”); however, if the Notice of Conversion is sent after 6:00pm, New York, New York time the Conversion Date shall be the next business day. 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) 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 1.4 hereof.
1.1.1Rights of Qualification. The Holder shall have the right, which may be exercised at the Holder’s sole discretion, to convert any amount due under this Note into shares that have been qualified in any Regulation A Offering under the Securities Act of Borrower during the term of any such Regulation A Offering. The number of qualified shares to be issued upon any such conversion shall be in accordance with Section 1.2 of this Note. In conjunction with the rights granted to the Holder under this Section 1.1.1, Borrower shall, as may be required and while any amount due under this Note remains outstanding, qualify and allocate a sufficient number of shares of Common Stock to repay the remaining balance under the Note in full.
1.2Conversion 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 75% multiplied by the Market Price (as defined herein) (representing a discount rate of 25%). “Market Price” means the closing price for the Common Stock on the trading day immediately preceding the date of any conversion. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTC, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.
Notwithstanding the foregoing paragraph, should the Holder exercise its conversion rights pursuant to Section 1.1.1 of this Note, the Conversion Price shall be equal to the then-current offering price of the applicable Regulation A Offering Statement.
1.3Authorized 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 four and one half times the number of shares that would be issuable upon full conversion of the Note (assuming that the 4.99% limitation set forth in Section 1.1 is not in effect) (based on the respective Conversion Price of the Note (as defined in Section 1.2) in effect from time to time, initially 1,000,000 shares) (the “Reserved Amount”). The Reserved Amount shall be increased (or decreased with the written consent of the Holder) 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 Note. 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.
1.4Method of Conversion.
(a)Mechanics of Conversion. As set forth in Section 1.1 hereof, from time to time, and at any time, ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount, 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 (upon payment in full of any amounts owed hereunder).
(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.
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(c)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. 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 hereunder, 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.
(d)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 set forth herein, 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.
(e)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 (3 business days after receipt of Conversion Notice) due to action and/or inaction of the Borrower, the Borrower shall pay to the Holder $500 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock (the “Fail to Deliver Fee”); provided; however that the Fail to Deliver Fee shall not be due if the failure is a result of a third party (i.e., transfer agent; and not the result of any failure to pay such transfer agent) despite the best efforts of the Borrower to effect delivery of 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(e) are justified.
1.5Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless: (i) the Borrower or its transfer agent shall have been furnished by the Holder 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 (such as Rule 144 or a successor rule) (“Rule 144”); or (ii) 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).
1.6Effect 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 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). “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.
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(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 Note, 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, ten (10) days prior written notice (but in any event at least five (5) 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 Note. 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. [NOTE: This is not a ratchet provision, it simply prohibits the issuer from effecting a distribution of assets or stock while attempting to avoid conversion or payment of the note (i.e., in the event of an asset distribution which renders the company a shell company, without the foregoing language, although it would be a default, the note holder would be left with little other remedies to attempt to be repaid from the spin off entity). Note that the language does not change the conversion price formula.]
1.7Prepayment. This Note may be prepaid at any time without penalty. The Holder’s conversion rights herein shall not be affected in any way until the Note is fully paid (funds received by the Holder).
ARTICLE II. CERTAIN COVENANTS
2.1Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, 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 not be unreasonably withheld as long as such disposition does not render the Borrower a “shell company” as such term is defined in Rule 144.
ARTICLE III. EVENTS OF DEFAULT
If any of the following events of default (each, an “Event of Default”) shall occur:
3.1Failure to Pay Principal and Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity or upon acceleration and such breach continues for a period of five (5) days after written notice from the Holder.
3.2Conversion 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
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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.
3.3Breach 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 twenty (20) days after written notice thereof to the Borrower from the Holder.
3.4Breach 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.
3.5Receiver 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.
3.6Bankruptcy. 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.
3.7Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC (which specifically includes the quotation platforms maintained by the OTC Markets Group) or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.
3.8[Omitted].
3.9Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
3.10Cessation of Operations. Any cessation of operations by Borrower rendering the Borrower a “shell company” as such term is defined in Rule 144, 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.
3.11Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with OTC Markets at any time after 180 days after the Issuance Date for any date or period until this Note is no longer outstanding, if the result of such restatement would, by comparison to the un-restated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note.
3.12Replacement 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.
3.13Cross-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.
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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 or upon acceleration), 3.3, 3.4, 3.7, 3.8, 3.10, 3.11, 3.12, 3.13, and/or 3.14 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 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 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 and the details of the determination of such amount, 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
4.1Failure 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.
4.2Notices. 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:
Raadr, Inc.
1680 Michigan Avenue, Suite 700, Miami Beach, Florida 33139
Attention: Chief Financial Officer
E-mail: dgilcher@mexedia.com
If to the Holder:
Orlando Taddeo
c/o 1680 Michigan Avenue, Suite 700, Miami Beach, Florida 33139
E-mail: ottadeo@mexedia.com
4.3Amendments. 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
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(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.
4.4Assignability. 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 Securities and Exchange Commission). Notwithstanding anything in this Note to the contrary, this Note may be assigned by the Holder without the consent of the Borrower.
4.5Cost 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.
4.6Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Nevada 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 Nevada or in the federal courts located in Las Vegas, Nevada . 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 Note, any agreement or any other document delivered in connection with this Note 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 Note 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.
4.7Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.
4.8Remedies. 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 First Amended and Restated 8% Convertible Promissory Note to be signed in its name by its duly authorized officer on February 17, 2025.
RAADR, INC.
By: /s/ Daniel Contreras
Daniel Contreras
Chief Executive Officer
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EXHIBIT A
FORM OF NOTICE OF CONVERSION
The undersigned hereby elects to convert $_________ principal amount and $_________ of accrued interest 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 Raadr, Inc., a Nevada corporation (the “Borrower”), according to the conditions of the convertible note of the Borrower dated as of November 15, 2024, , and amended and restated on February 17, 2025 (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:
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: ______________
[ Name of Holder ] ________________________________________________________________
By: __________________________________________________
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THIS NOTE, AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE APPLICABLE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES LAWS, OR UNLESS AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE MAKER, IS OBTAINED TO THE EFFECT THAT SUCH PLEDGE, SALE, ASSIGNMENT OR TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS.
RAADR, INC.
FIRST AMENDED AND RESTATED
8% CONVERTIBLE PROMISSORY NOTE
FOR VALUE RECEIVED, Raadr, Inc., a Nevada corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of OTUS, LLC, or registered assigns (the “Holder”), the sum of $200,000.00 together with any interest as set forth herein, on November 15, 2025 (the “Maturity Date”), including 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.
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 eighteen percent (18%) per annum from the due date thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the date that the Holder pays the full Purchase Price to the Borrower 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.
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
1.1Conversion Right. The Holder shall have the right from time to time, and at any time during the period beginning on the earlier of (a) the day immediately following the SEC’s qualification of a Regulation A Offering under the Securities Act of 1933, as amended (the “Securities Act”), of the Borrower and (b) the date that is 180 days immediately following the Issue Date to convert all or any part of the outstanding and unpaid amount of this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or, in the event of a recapitalization or merger, 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”) [The foregoing is not a ratchet provision; in the event of a recapitalization or merger, if common shareholder receive any other shares or interests, i.e., shares of a different issuer in the event of a merger, the Note will convert into such shares. That is the Note conversion rights will follow the merger]; 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. The beneficial ownership limitations on conversion as set forth in the section may NOT be waived by the Holder. 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,
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notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the “Conversion Date”); however, if the Notice of Conversion is sent after 6:00pm, New York, New York time the Conversion Date shall be the next business day. 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) 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 1.4 hereof.
1.1.1Rights of Qualification. The Holder shall have the right, which may be exercised at the Holder’s sole discretion, to convert any amount due under this Note into shares that have been qualified in any Regulation A Offering under the Securities Act of Borrower during the term of any such Regulation A Offering. The number of qualified shares to be issued upon any such conversion shall be in accordance with Section 1.2 of this Note. In conjunction with the rights granted to the Holder under this Section 1.1.1, Borrower shall, as may be required and while any amount due under this Note remains outstanding, qualify and allocate a sufficient number of shares of Common Stock to repay the remaining balance under the Note in full.
1.2Conversion 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 75% multiplied by the Market Price (as defined herein) (representing a discount rate of 25%). “Market Price” means the closing price for the Common Stock on the trading day immediately preceding the date of any conversion. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTC, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.
Notwithstanding the foregoing paragraph, should the Holder exercise its conversion rights pursuant to Section 1.1.1 of this Note, the Conversion Price shall be equal to the then-current offering price of the applicable Regulation A Offering Statement.
1.3Authorized 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 four and one half times the number of shares that would be issuable upon full conversion of the Note (assuming that the 4.99% limitation set forth in Section 1.1 is not in effect) (based on the respective Conversion Price of the Note (as defined in Section 1.2) in effect from time to time, initially 1,000,000 shares) (the “Reserved Amount”). The Reserved Amount shall be increased (or decreased with the written consent of the Holder) 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 Note. 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.
1.4Method of Conversion.
(a)Mechanics of Conversion. As set forth in Section 1.1 hereof, from time to time, and at any time, ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount, 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 (upon payment in full of any amounts owed hereunder).
(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.
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(c)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. 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 hereunder, 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.
(d)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 set forth herein, 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.
(e)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 (3 business days after receipt of Conversion Notice) due to action and/or inaction of the Borrower, the Borrower shall pay to the Holder $500 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock (the “Fail to Deliver Fee”); provided; however that the Fail to Deliver Fee shall not be due if the failure is a result of a third party (i.e., transfer agent; and not the result of any failure to pay such transfer agent) despite the best efforts of the Borrower to effect delivery of 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(e) are justified.
1.5Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless: (i) the Borrower or its transfer agent shall have been furnished by the Holder 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 (such as Rule 144 or a successor rule) (“Rule 144”); or (ii) 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).
1.6Effect 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 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). “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.
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(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 Note, 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, ten (10) days prior written notice (but in any event at least five (5) 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 Note. 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. [NOTE: This is not a ratchet provision, it simply prohibits the issuer from effecting a distribution of assets or stock while attempting to avoid conversion or payment of the note (i.e., in the event of an asset distribution which renders the company a shell company, without the foregoing language, although it would be a default, the note holder would be left with little other remedies to attempt to be repaid from the spin off entity). Note that the language does not change the conversion price formula.]
1.7Prepayment. This Note may be prepaid at any time without penalty. The Holder’s conversion rights herein shall not be affected in any way until the Note is fully paid (funds received by the Holder).
ARTICLE II. CERTAIN COVENANTS
2.1Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, 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 not be unreasonably withheld as long as such disposition does not render the Borrower a “shell company” as such term is defined in Rule 144.
ARTICLE III. EVENTS OF DEFAULT
If any of the following events of default (each, an “Event of Default”) shall occur:
3.1Failure to Pay Principal and Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity or upon acceleration and such breach continues for a period of five (5) days after written notice from the Holder.
3.2Conversion 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
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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.
3.3Breach 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 twenty (20) days after written notice thereof to the Borrower from the Holder.
3.4Breach 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.
3.5Receiver 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.
3.6Bankruptcy. 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.
3.7Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC (which specifically includes the quotation platforms maintained by the OTC Markets Group) or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.
3.8[Omitted].
3.9Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
3.10Cessation of Operations. Any cessation of operations by Borrower rendering the Borrower a “shell company” as such term is defined in Rule 144, 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.
3.11Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with OTC Markets at any time after 180 days after the Issuance Date for any date or period until this Note is no longer outstanding, if the result of such restatement would, by comparison to the un-restated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note.
3.12Replacement 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.
3.13Cross-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.
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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 or upon acceleration), 3.3, 3.4, 3.7, 3.8, 3.10, 3.11, 3.12, 3.13, and/or 3.14 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 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 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 and the details of the determination of such amount, 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
4.1Failure 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.
4.2Notices. 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:
Raadr, Inc.
1680 Michigan Avenue, Suite 700, Miami Beach, Florida 33139
Attention: Chief Financial Officer
E-mail: dgilcher@mexedia.com
If to the Holder:
OTUS, LLC
1680 Michigan Avenue, Suite 700, Miami Beach, Florida 33139
E-mail: dgilcher@mexedia.com
4.3Amendments. 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
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(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.
4.4Assignability. 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 Securities and Exchange Commission). Notwithstanding anything in this Note to the contrary, this Note may be assigned by the Holder without the consent of the Borrower.
4.5Cost 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.
4.6Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Nevada 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 Nevada or in the federal courts located in Las Vegas, Nevada . 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 Note, any agreement or any other document delivered in connection with this Note 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 Note 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.
4.7Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.
4.8Remedies. 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 First Amended and Restated 8% Convertible Promissory Note to be signed in its name by its duly authorized officer on February 17, 2025.
RAADR, INC.
By: /s/ Daniel Contreras
Daniel Contreras
Chief Executive Officer
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EXHIBIT A
FORM OF NOTICE OF CONVERSION
The undersigned hereby elects to convert $_________ principal amount and $_________ of accrued interest 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 Raadr, Inc., a Nevada corporation (the “Borrower”), according to the conditions of the convertible note of the Borrower dated as of November 15, 2024, , and amended and restated on February 17, 2025 (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:
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: ______________
[ Name of Holder ] ________________________________________________________________
By: __________________________________________________
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THIS NOTE, AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE APPLICABLE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES LAWS, OR UNLESS AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE MAKER, IS OBTAINED TO THE EFFECT THAT SUCH PLEDGE, SALE, ASSIGNMENT OR TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS.
RAADR, INC.
FIRST AMENDED AND RESTATED
8% CONVERTIBLE PROMISSORY NOTE
FOR VALUE RECEIVED, Raadr, Inc., a Nevada corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of Orlando Taddeo, or registered assigns (the “Holder”), the sum of $300,000.00 together with any interest as set forth herein, on November 15, 2025 (the “Maturity Date”), including 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.
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 eighteen percent (18%) per annum from the due date thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the date that the Holder pays the full Purchase Price to the Borrower 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.
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
1.1Conversion Right. The Holder shall have the right from time to time, and at any time during the period beginning on the earlier of (a) the day immediately following the SEC’s qualification of a Regulation A Offering under the Securities Act of 1933, as amended (the “Securities Act”), of the Borrower and (b) the date that is 180 days immediately following the Issue Date to convert all or any part of the outstanding and unpaid amount of this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or, in the event of a recapitalization or merger, 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”) [The foregoing is not a ratchet provision; in the event of a recapitalization or merger, if common shareholder receive any other shares or interests, i.e., shares of a different issuer in the event of a merger, the Note will convert into such shares. That is the Note conversion rights will follow the merger]; 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. The beneficial ownership limitations on conversion as set forth in the section may NOT be waived by the Holder. 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,
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notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the “Conversion Date”); however, if the Notice of Conversion is sent after 6:00pm, New York, New York time the Conversion Date shall be the next business day. 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) 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 1.4 hereof.
1.1.1Rights of Qualification. The Holder shall have the right, which may be exercised at the Holder’s sole discretion, to convert any amount due under this Note into shares that have been qualified in any Regulation A Offering under the Securities Act of Borrower during the term of any such Regulation A Offering. The number of qualified shares to be issued upon any such conversion shall be in accordance with Section 1.2 of this Note. In conjunction with the rights granted to the Holder under this Section 1.1.1, Borrower shall, as may be required and while any amount due under this Note remains outstanding, qualify and allocate a sufficient number of shares of Common Stock to repay the remaining balance under the Note in full.
1.2Conversion 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 75% multiplied by the Market Price (as defined herein) (representing a discount rate of 25%). “Market Price” means the closing price for the Common Stock on the trading day immediately preceding the date of any conversion. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTC, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.
Notwithstanding the foregoing paragraph, should the Holder exercise its conversion rights pursuant to Section 1.1.1 of this Note, the Conversion Price shall be equal to the then-current offering price of the applicable Regulation A Offering Statement.
1.3Authorized 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 four and one half times the number of shares that would be issuable upon full conversion of the Note (assuming that the 4.99% limitation set forth in Section 1.1 is not in effect) (based on the respective Conversion Price of the Note (as defined in Section 1.2) in effect from time to time, initially 1,000,000 shares) (the “Reserved Amount”). The Reserved Amount shall be increased (or decreased with the written consent of the Holder) 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 Note. 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.
1.4Method of Conversion.
(a)Mechanics of Conversion. As set forth in Section 1.1 hereof, from time to time, and at any time, ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount, 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 (upon payment in full of any amounts owed hereunder).
(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.
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(c)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. 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 hereunder, 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.
(d)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 set forth herein, 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.
(e)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 (3 business days after receipt of Conversion Notice) due to action and/or inaction of the Borrower, the Borrower shall pay to the Holder $500 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock (the “Fail to Deliver Fee”); provided; however that the Fail to Deliver Fee shall not be due if the failure is a result of a third party (i.e., transfer agent; and not the result of any failure to pay such transfer agent) despite the best efforts of the Borrower to effect delivery of 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(e) are justified.
1.5Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless: (i) the Borrower or its transfer agent shall have been furnished by the Holder 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 (such as Rule 144 or a successor rule) (“Rule 144”); or (ii) 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).
1.6Effect 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 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). “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.
FIRST AND RESTATED 8% CONVERTIBLE PROMISSORY NOTE | PAGE 3
(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 Note, 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, ten (10) days prior written notice (but in any event at least five (5) 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 Note. 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. [NOTE: This is not a ratchet provision, it simply prohibits the issuer from effecting a distribution of assets or stock while attempting to avoid conversion or payment of the note (i.e., in the event of an asset distribution which renders the company a shell company, without the foregoing language, although it would be a default, the note holder would be left with little other remedies to attempt to be repaid from the spin off entity). Note that the language does not change the conversion price formula.]
1.7Prepayment. This Note may be prepaid at any time without penalty. The Holder’s conversion rights herein shall not be affected in any way until the Note is fully paid (funds received by the Holder).
ARTICLE II. CERTAIN COVENANTS
2.1Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, 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 not be unreasonably withheld as long as such disposition does not render the Borrower a “shell company” as such term is defined in Rule 144.
ARTICLE III. EVENTS OF DEFAULT
If any of the following events of default (each, an “Event of Default”) shall occur:
3.1Failure to Pay Principal and Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity or upon acceleration and such breach continues for a period of five (5) days after written notice from the Holder.
3.2Conversion 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
8% CONVERTIBLE PROMISSORY NOTE | PAGE 4
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.
3.3Breach 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 twenty (20) days after written notice thereof to the Borrower from the Holder.
3.4Breach 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.
3.5Receiver 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.
3.6Bankruptcy. 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.
3.7Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC (which specifically includes the quotation platforms maintained by the OTC Markets Group) or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.
3.8[Omitted].
3.9Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
3.10Cessation of Operations. Any cessation of operations by Borrower rendering the Borrower a “shell company” as such term is defined in Rule 144, 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.
3.11Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with OTC Markets at any time after 180 days after the Issuance Date for any date or period until this Note is no longer outstanding, if the result of such restatement would, by comparison to the un-restated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note.
3.12Replacement 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.
3.13Cross-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.
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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 or upon acceleration), 3.3, 3.4, 3.7, 3.8, 3.10, 3.11, 3.12, 3.13, and/or 3.14 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 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 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 and the details of the determination of such amount, 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
4.1Failure 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.
4.2Notices. 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:
Raadr, Inc.
1680 Michigan Avenue, Suite 700, Miami Beach, Florida 33139
Attention: Chief Financial Officer
E-mail: dgilcher@mexedia.com
If to the Holder:
Orlando Taddeo
c/o 1680 Michigan Avenue, Suite 700, Miami Beach, Florida 33139
E-mail: otaddeo@mexedia.com
4.3Amendments. 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
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(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.
4.4Assignability. 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 Securities and Exchange Commission). Notwithstanding anything in this Note to the contrary, this Note may be assigned by the Holder without the consent of the Borrower.
4.5Cost 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.
4.6Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Nevada 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 Nevada or in the federal courts located in Las Vegas, Nevada . 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 Note, any agreement or any other document delivered in connection with this Note 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 Note 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.
4.7Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.
4.8Remedies. 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 First Amended and Restated 8% Convertible Promissory Note to be signed in its name by its duly authorized officer on February 17, 2025.
RAADR, INC.
By: /s/ Daniel Contreras
Daniel Contreras
Chief Executive Officer
FIRST AND RESTATED 8% CONVERTIBLE PROMISSORY NOTE | PAGE 7
EXHIBIT A
FORM OF NOTICE OF CONVERSION
The undersigned hereby elects to convert $_________ principal amount and $_________ of accrued interest 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 Raadr, Inc., a Nevada corporation (the “Borrower”), according to the conditions of the convertible note of the Borrower dated as of November 15, 2024, , and amended and restated on February 17, 2025 (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:
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: ______________
[ Name of Holder ] ________________________________________________________________
By: __________________________________________________
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THIS NOTE, AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE APPLICABLE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES LAWS, OR UNLESS AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE MAKER, IS OBTAINED TO THE EFFECT THAT SUCH PLEDGE, SALE, ASSIGNMENT OR TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS.
RAADR, INC.
FIRST AMENDED AND RESTATED
8% CONVERTIBLE PROMISSORY NOTE
FOR VALUE RECEIVED, Raadr, Inc., a Nevada corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of OTUS, LLC, or registered assigns (the “Holder”), the sum of $200,000.00 together with any interest as set forth herein, on November 15, 2025 (the “Maturity Date”), including 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.
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 eighteen percent (18%) per annum from the due date thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the date that the Holder pays the full Purchase Price to the Borrower 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.
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
1.1Conversion Right. The Holder shall have the right from time to time, and at any time during the period beginning on the earlier of (a) the day immediately following the SEC’s qualification of a Regulation A Offering under the Securities Act of 1933, as amended (the “Securities Act”), of the Borrower and (b) the date that is 180 days immediately following the Issue Date to convert all or any part of the outstanding and unpaid amount of this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or, in the event of a recapitalization or merger, 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”) [The foregoing is not a ratchet provision; in the event of a recapitalization or merger, if common shareholder receive any other shares or interests, i.e., shares of a different issuer in the event of a merger, the Note will convert into such shares. That is the Note conversion rights will follow the merger]; 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. The beneficial ownership limitations on conversion as set forth in the section may NOT be waived by the Holder. 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,
FIRST AMENDED AND RESTATED 8% CONVERTIBLE PROMISSORY NOTE | PAGE 1
notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the “Conversion Date”); however, if the Notice of Conversion is sent after 6:00pm, New York, New York time the Conversion Date shall be the next business day. 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) 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 1.4 hereof.
1.1.1Rights of Qualification. The Holder shall have the right, which may be exercised at the Holder’s sole discretion, to convert any amount due under this Note into shares that have been qualified in any Regulation A Offering under the Securities Act of Borrower during the term of any such Regulation A Offering. The number of qualified shares to be issued upon any such conversion shall be in accordance with Section 1.2 of this Note. In conjunction with the rights granted to the Holder under this Section 1.1.1, Borrower shall, as may be required and while any amount due under this Note remains outstanding, qualify and allocate a sufficient number of shares of Common Stock to repay the remaining balance under the Note in full.
1.2Conversion 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 75% multiplied by the Market Price (as defined herein) (representing a discount rate of 25%). “Market Price” means the closing price for the Common Stock on the trading day immediately preceding the date of any conversion. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTC, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.
Notwithstanding the foregoing paragraph, should the Holder exercise its conversion rights pursuant to Section 1.1.1 of this Note, the Conversion Price shall be equal to the then-current offering price of the applicable Regulation A Offering Statement.
1.3Authorized 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 four and one half times the number of shares that would be issuable upon full conversion of the Note (assuming that the 4.99% limitation set forth in Section 1.1 is not in effect) (based on the respective Conversion Price of the Note (as defined in Section 1.2) in effect from time to time, initially 1,000,000 shares) (the “Reserved Amount”). The Reserved Amount shall be increased (or decreased with the written consent of the Holder) 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 Note. 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.
1.4Method of Conversion.
(a)Mechanics of Conversion. As set forth in Section 1.1 hereof, from time to time, and at any time, ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount, 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 (upon payment in full of any amounts owed hereunder).
(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.
8% CONVERTIBLE PROMISSORY NOTE | PAGE 2
(c)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. 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 hereunder, 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.
(d)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 set forth herein, 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.
(e)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 (3 business days after receipt of Conversion Notice) due to action and/or inaction of the Borrower, the Borrower shall pay to the Holder $500 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock (the “Fail to Deliver Fee”); provided; however that the Fail to Deliver Fee shall not be due if the failure is a result of a third party (i.e., transfer agent; and not the result of any failure to pay such transfer agent) despite the best efforts of the Borrower to effect delivery of 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(e) are justified.
1.5Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless: (i) the Borrower or its transfer agent shall have been furnished by the Holder 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 (such as Rule 144 or a successor rule) (“Rule 144”); or (ii) 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).
1.6Effect 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 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). “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.
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(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 Note, 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, ten (10) days prior written notice (but in any event at least five (5) 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 Note. 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. [NOTE: This is not a ratchet provision, it simply prohibits the issuer from effecting a distribution of assets or stock while attempting to avoid conversion or payment of the note (i.e., in the event of an asset distribution which renders the company a shell company, without the foregoing language, although it would be a default, the note holder would be left with little other remedies to attempt to be repaid from the spin off entity). Note that the language does not change the conversion price formula.]
1.7Prepayment. This Note may be prepaid at any time without penalty. The Holder’s conversion rights herein shall not be affected in any way until the Note is fully paid (funds received by the Holder).
ARTICLE II. CERTAIN COVENANTS
2.1Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, 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 not be unreasonably withheld as long as such disposition does not render the Borrower a “shell company” as such term is defined in Rule 144.
ARTICLE III. EVENTS OF DEFAULT
If any of the following events of default (each, an “Event of Default”) shall occur:
3.1Failure to Pay Principal and Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity or upon acceleration and such breach continues for a period of five (5) days after written notice from the Holder.
3.2Conversion 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
8% CONVERTIBLE PROMISSORY NOTE | PAGE 4
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.
3.3Breach 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 twenty (20) days after written notice thereof to the Borrower from the Holder.
3.4Breach 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.
3.5Receiver 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.
3.6Bankruptcy. 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.
3.7Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC (which specifically includes the quotation platforms maintained by the OTC Markets Group) or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.
3.8[Omitted].
3.9Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
3.10Cessation of Operations. Any cessation of operations by Borrower rendering the Borrower a “shell company” as such term is defined in Rule 144, 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.
3.11Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with OTC Markets at any time after 180 days after the Issuance Date for any date or period until this Note is no longer outstanding, if the result of such restatement would, by comparison to the un-restated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note.
3.12Replacement 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.
3.13Cross-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.
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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 or upon acceleration), 3.3, 3.4, 3.7, 3.8, 3.10, 3.11, 3.12, 3.13, and/or 3.14 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 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 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 and the details of the determination of such amount, 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
4.1Failure 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.
4.2Notices. 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:
Raadr, Inc.
1680 Michigan Avenue, Suite 700, Miami Beach, Florida 33139
Attention: Chief Financial Officer
E-mail: dgilcher@mexedia.com
If to the Holder:
Otus, LLC
1680 Michigan Avenue, Suite 700, Miami Beach, Florida 33139
E-mail: dgilcher@mexedia.com
4.3Amendments. 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
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(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.
4.4Assignability. 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 Securities and Exchange Commission). Notwithstanding anything in this Note to the contrary, this Note may be assigned by the Holder without the consent of the Borrower.
4.5Cost 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.
4.6Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Nevada 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 Nevada or in the federal courts located in Las Vegas, Nevada . 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 Note, any agreement or any other document delivered in connection with this Note 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 Note 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.
4.7Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.
4.8Remedies. 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 First Amended and Restated 8% Convertible Promissory Note to be signed in its name by its duly authorized officer on February 17, 2025.
RAADR, INC.
By: /s/ Daniel Contreras
Daniel Contreras
Chief Executive Officer
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EXHIBIT A
FORM OF NOTICE OF CONVERSION
The undersigned hereby elects to convert $_________ principal amount and $_________ of accrued interest 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 Raadr, Inc., a Nevada corporation (the “Borrower”), according to the conditions of the convertible note of the Borrower dated as of November 15, 2024, and amended and restated on February 17, 2025 (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:
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: ______________
[ Name of Holder ] ________________________________________________________________
By: __________________________________________________
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THIS NOTE, AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE APPLICABLE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES LAWS, OR UNLESS AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE MAKER, IS OBTAINED TO THE EFFECT THAT SUCH PLEDGE, SALE, ASSIGNMENT OR TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS.
|
RAADR, INC.
8% CONVERTIBLE PROMISSORY NOTE
Principal Amount: $25,000.00
| Issuance Date: October 1, 2024
|
Issuance Date: October 1, 2024
Amended and Restated: February 17, 2025
FOR VALUE RECEIVED, Raadr, Inc., a Nevada corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of FirstFire Global Opportunity Fund, LLC, or registered assigns (the “Holder”), the sum of $25,000.00 together with any interest as set forth herein, on October 1, 2025 (the “Maturity Date”), including 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.
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 eighteen percent (18%) per annum from the due date thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the date that the Holder pays the full Purchase Price to the Borrower 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.
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
1.1Conversion Right. Upon an Event of Default that shall not have been cured, 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, or (ii) the date of payment of the Default Amount (as defined in Article III), each in respect of the remaining outstanding amount of this Note to convert all or any part of the outstanding and unpaid amount of this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or, in the event of a recapitalization or merger, 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”) [The foregoing is not a ratchet provision; in the event of a recapitalization or merger, if common shareholder receive any other shares or interests, i.e., shares of a different issuer in the event of a merger, the Note will convert into such shares. That is the Note conversion rights will follow the merger]; 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
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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. The beneficial ownership limitations on conversion as set forth in the section may NOT be waived by the Holder. 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”); however, if the Notice of Conversion is sent after 6:00pm, New York, New York time the Conversion Date shall be the next business day. 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) 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 1.4 hereof.
1.1.1Rights of Qualification. The Holder shall have the right, which may be exercised at the Holder’s sole discretion, to convert any amount due under this Note into shares of any qualified Regulation A Offering under the Securities Act of 1933, as amended (the “Securities Act”) of Borrower during the term of the any such Regulation A Offering. The number of shares to be issued upon any such conversion shall be in accordance with Section 1.2 of this Note. In conjunction with the rights granted to the Holder under this Section 1.1.1, Borrower shall, as may be required and while any amount due under this Note remains outstanding, (1) identify the Holder as a selling shareholder in each of its Regulation A Offering Circulars; and (2) qualify and allocate a sufficient number of shares of Common Stock to repay the remaining balance under the Note in full.
1.2Conversion 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 75% multiplied by the Market Price (as defined herein) (representing a discount rate of 25%). “Market Price” means the closing price for the Common Stock on the trading day immediately preceding the date of any conversion. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTC, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.
Notwithstanding the foregoing paragraph, should the Holder exercise its conversion rights pursuant to Section 1.1.1 of this Note, the Conversion Price shall be equal to the then-current offering price of the applicable Regulation A Offering Statement.
1.3Authorized 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 four and one half times the number of shares that would be issuable upon full conversion of the Note (assuming that the 4.99% limitation set forth in Section 1.1 is not in effect) (based on the respective Conversion Price of the Note (as defined in Section 1.2) in effect from time to time, initially 1,000,000 shares) (the “Reserved Amount”). The Reserved Amount shall be increased (or decreased with the written consent of the Holder) 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 Note. 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.
1.4Method of Conversion.
(a)Mechanics of Conversion. As set forth in Section 1.1 hereof, from time to time, and at any time, ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount, 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)
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subject to Section 1.4(b), surrendering this Note at the principal office of the Borrower (upon payment in full of any amounts owed hereunder).
(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.
(c)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. 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 hereunder, 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.
(d)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 set forth herein, 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.
(e)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 (3 business days after receipt of Conversion Notice) due to action and/or inaction of the Borrower, the Borrower shall pay to the Holder $500 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock (the “Fail to Deliver Fee”); provided; however that the Fail to Deliver Fee shall not be due if the failure is a result of a third party (i.e., transfer agent; and not the result of any failure to pay such transfer agent) despite the best efforts of the Borrower to effect delivery of 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(e) are justified.
1.5Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless: (i) the Borrower or its transfer agent shall have been furnished by the Holder 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 (such as Rule 144 or a successor rule) (“Rule 144”); or (ii) 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).
1.6Effect 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
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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 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). “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 Note, 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, ten (10) days prior written notice (but in any event at least five (5) 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 Note. 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. [NOTE: This is not a ratchet provision, it simply prohibits the issuer from effecting a distribution of assets or stock while attempting to avoid conversion or payment of the note (i.e., in the event of an asset distribution which renders the company a shell company, without the foregoing language, although it would be a default, the note holder would be left with little other remedies to attempt to be repaid from the spin off entity). Note that the language does not change the conversion price formula.]
1.7Prepayment. This Note may be prepaid at any time without penalty. The Holder’s conversion rights herein shall not be affected in any way until the Note is fully paid (funds received by the Holder).
ARTICLE II. CERTAIN COVENANTS
2.1Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, 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 not be unreasonably withheld as long as such disposition does not render the Borrower a “shell company” as such term is defined in Rule 144.
ARTICLE III. EVENTS OF DEFAULT
If any of the following events of default (each, an “Event of Default”) shall occur:
3.1Failure to Pay Principal and Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity or upon acceleration and such breach continues for a period of five (5) days after written notice from the Holder.
3.2Conversion 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
8% CONVERTIBLE PROMISSORY NOTE | PAGE 4
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.
3.3Breach 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 twenty (20) days after written notice thereof to the Borrower from the Holder.
3.4Breach 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.
3.5Receiver 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.
3.6Bankruptcy. 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.
3.7Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC (which specifically includes the quotation platforms maintained by the OTC Markets Group) or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.
3.8[Omitted].
3.9Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
3.10Cessation of Operations. Any cessation of operations by Borrower rendering the Borrower a “shell company” as such term is defined in Rule 144, 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.
3.11Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with OTC Markets at any time after 180 days after the Issuance Date for any date or period until this Note is no longer outstanding, if the result of such restatement would, by comparison to the un-restated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.
3.12Replacement 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.
3.13Cross-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
FIRST AMENDED AND RESTATED 8% CONVERTIBLE PROMISSORY NOTE | PAGE 5
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 SHALLBECOME 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 or upon acceleration), 3.3, 3.4, 3.7, 3.8, 3.10, 3.11, 3.12, 3.13, and/or 3.14 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 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 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 and the details of the determination of such amount, 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
4.1Failure 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.
4.2Notices. 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:
Raadr, Inc.
7950 E. Redfield Road, Unit 210, Scottsdale, Arizona 85260
Attention: Chief Executive Officer
E-mail: ir@raadr.com
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If to the Holder:
FirstFire Global Opportunity Fund, LLC
1040 1st Avenue, New York, New York 10022
Attention: Eli Fireman, Managing Member
E-mail: eli@firstfirecap.com
4.3Amendments. 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.
4.4Assignability. 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 Securities and Exchange Commission). Notwithstanding anything in this Note to the contrary, this Note may be assigned by the Holder without the consent of the Borrower.
4.5Cost 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.
4.6Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Nevada 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 Nevada or in the federal courts located in Las Vegas, Nevada . 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 Note, any agreement or any other document delivered in connection with this Note 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 Note 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.
4.7Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.
4.8Remedies. 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 First Amended and Restated 8% Convertible Promissory Note to be signed in its name by its duly authorized officer on February 17, 2025.
RAADR, INC.
By: /s/ Daniel Contreras
Daniel Contreras
Chief Executive Officer
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EXHIBIT A
FORM OF NOTICE OF CONVERSION
The undersigned hereby elects to convert $_________ principal amount and $_________ of accrued interest 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 Raadr, Inc., a Nevada corporation (the “Borrower”), according to the conditions of the convertible note of the Borrower dated as of October 1, 2024, and amended and restated on February 17, 2025 (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:
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:
|
|
[ Name of Holder ]
By: _________________________
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THIS NOTE, AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE APPLICABLE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES LAWS, OR UNLESS AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE MAKER, IS OBTAINED TO THE EFFECT THAT SUCH PLEDGE, SALE, ASSIGNMENT OR TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS.
|
The Issue Price of this Note Is $27,500.00
the Original Issue Discount Is $2,500.00
Principal Amount: $27,500.00
| Issuance Date: December 5, 2024
|
Purchase Price: $25,000.00
|
|
RAADR, INC.
8% CONVERTIBLE PROMISSORY NOTE
FOR VALUE RECEIVED, Raadr, Inc., a Nevada corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of GW Capital Ventures, LLC, or registered assigns (the “Holder”), the sum of $27,000.00 together with any interest as set forth herein, on December 5, 2024 (the “Maturity Date”), including 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.
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 eighteen percent (18%) per annum from the due date thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the date that the Holder pays the full Purchase Price to the Borrower 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.
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
1.1Conversion Right. Upon an Event of Default that shall not have been cured, 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, or (ii) the date of payment of the Default Amount (as defined in Article III), each in respect of the remaining outstanding amount of this Note to convert all or any part of the outstanding and unpaid amount of this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or, in the event of a recapitalization or merger, 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”) [The foregoing is not a ratchet provision; in the event of a recapitalization or merger, if common shareholder receive any other shares or interests, i.e., shares of a different issuer in the event of a merger, the Note will convert into such shares. That is the Note conversion rights will follow the merger]; 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
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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. The beneficial ownership limitations on conversion as set forth in the section may NOT be waived by the Holder. 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”); however, if the Notice of Conversion is sent after 6:00pm, New York, New York time the Conversion Date shall be the next business day. 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) 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 1.4 hereof.
1.1.1Rights of Qualification. The Holder shall have the right, which may be exercised at the Holder’s sole discretion, to convert any amount due under this Note into shares of any qualified Regulation A Offering under the Securities Act of 1933, as amended (the “Securities Act”) of Borrower during the term of the any such Regulation A Offering. The number of shares to be issued upon any such conversion shall be in accordance with Section 1.2 of this Note. In conjunction with the rights granted to the Holder under this Section 1.1.1, Borrower shall, as may be required and while any amount due under this Note remains outstanding, (1) identify the Holder as a selling shareholder in each of its Regulation A Offering Circulars; and (2) qualify and allocate a sufficient number of shares of Common Stock to repay the remaining balance under the Note in full.
1.2Conversion 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 75% multiplied by the Market Price (as defined herein) (representing a discount rate of 25%). “Market Price” means the closing price for the Common Stock on the trading day immediately preceding the date of any conversion. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTC, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.
Notwithstanding the foregoing paragraph, should the Holder exercise its conversion rights pursuant to Section 1.1.1 of this Note, the Conversion Price shall be equal to the then-current offering price of the applicable Regulation A Offering Statement.
1.3Authorized 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 four and one half times the number of shares that would be issuable upon full conversion of the Note (assuming that the 4.99% limitation set forth in Section 1.1 is not in effect) (based on the respective Conversion Price of the Note (as defined in Section 1.2) in effect from time to time, initially 1,000,000 shares) (the “Reserved Amount”). The Reserved Amount shall be increased (or decreased with the written consent of the Holder) 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 Note. 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.
1.4Method of Conversion.
(a)Mechanics of Conversion. As set forth in Section 1.1 hereof, from time to time, and at any time, ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount, 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
8% CONVERTIBLE PROMISSORY NOTE | PAGE 2
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 (upon payment in full of any amounts owed hereunder).
(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.
(c)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. 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 hereunder, 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.
(d)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 set forth herein, 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.
(e)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 (3 business days after receipt of Conversion Notice) due to action and/or inaction of the Borrower, the Borrower shall pay to the Holder $500 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock (the “Fail to Deliver Fee”); provided; however that the Fail to Deliver Fee shall not be due if the failure is a result of a third party (i.e., transfer agent; and not the result of any failure to pay such transfer agent) despite the best efforts of the Borrower to effect delivery of 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(e) are justified.
1.5Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless: (i) the Borrower or its transfer agent shall have been furnished by the Holder 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 (such as Rule 144 or a successor rule) (“Rule 144”); or (ii) 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).
1.6Effect of Certain Events.
FIRST AMENDED AND RESTATED 8% CONVERTIBLE PROMISSORY NOTE | PAGE 3
(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 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). “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 Note, 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, ten (10) days prior written notice (but in any event at least five (5) 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 Note. 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. [NOTE: This is not a ratchet provision, it simply prohibits the issuer from effecting a distribution of assets or stock while attempting to avoid conversion or payment of the note (i.e., in the event of an asset distribution which renders the company a shell company, without the foregoing language, although it would be a default, the note holder would be left with little other remedies to attempt to be repaid from the spin off entity). Note that the language does not change the conversion price formula.]
1.7Prepayment. This Note may be prepaid at any time without penalty. The Holder’s conversion rights herein shall not be affected in any way until the Note is fully paid (funds received by the Holder).
ARTICLE II. CERTAIN COVENANTS
2.1Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, 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 not be unreasonably withheld as long as such disposition does not render the Borrower a “shell company” as such term is defined in Rule 144.
ARTICLE III. EVENTS OF DEFAULT
If any of the following events of default (each, an “Event of Default”) shall occur:
3.1Failure to Pay Principal and Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity or upon acceleration and such breach continues for a period of five (5) days after written notice from the Holder.
3.2Conversion 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
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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.
3.3Breach 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 twenty (20) days after written notice thereof to the Borrower from the Holder.
3.4Breach 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.
3.5Receiver 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.
3.6Bankruptcy. 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.
3.7Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC (which specifically includes the quotation platforms maintained by the OTC Markets Group) or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.
3.8[Omitted].
3.9Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
3.10Cessation of Operations. Any cessation of operations by Borrower rendering the Borrower a “shell company” as such term is defined in Rule 144, 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.
3.11Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with OTC Markets at any time after 180 days after the Issuance Date for any date or period until this Note is no longer outstanding, if the result of such restatement would, by comparison to the un-restated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.
3.12Replacement 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.
3.13Cross-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
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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 SHALLBECOME 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 or upon acceleration), 3.3, 3.4, 3.7, 3.8, 3.10, 3.11, 3.12, 3.13, and/or 3.14 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 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 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 and the details of the determination of such amount, 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
4.1Failure 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.
4.2Notices. 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:
Raadr, Inc.
1680 Michigan Avenue, Suite 700
Miami Beach, Florida 33139
Attention: Chief Financial Officer
E-mail: dgilcher@mexedia.com
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If to the Holder:
GW Capital Ventures, LLC
427 Kingston Avenue
Brooklyn, New York 11225
Attention: Noah Weinstein
E-mail: inbox@gwholdingsgroup.com
4.3Amendments. 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.
4.4Assignability. 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 Securities and Exchange Commission). Notwithstanding anything in this Note to the contrary, this Note may be assigned by the Holder without the consent of the Borrower.
4.5Cost 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.
4.6Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Nevada 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 Nevada or in the federal courts located in Las Vegas, Nevada . 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 Note, any agreement or any other document delivered in connection with this Note 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 Note 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.
4.7Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.
4.8Remedies. 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 First Amended and Restated 8% Convertible Promissory Note to be signed in its name by its duly authorized officer on February 17, 2025.
RAADR, INC.
By: /s/ Daniel Contreras
Daniel Contreras
Chief Executive Officer
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EXHIBIT A
FORM OF NOTICE OF CONVERSION
The undersigned hereby elects to convert $_________ principal amount and $_________ of accrued interest 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 Raadr, Inc., a Nevada corporation (the “Borrower”), according to the conditions of the convertible note of the Borrower dated as of December 5, 2024, and amended and restated on February 17, 2025 (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:
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:
|
|
[ Name of Holder ]
By: _________________________
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THIS NOTE, AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE APPLICABLE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES LAWS, OR UNLESS AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE MAKER, IS OBTAINED TO THE EFFECT THAT SUCH PLEDGE, SALE, ASSIGNMENT OR TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS.
The Issue Price of this Note Is $27,500.00
the Original Issue Discount Is $2,500.00
Principal Amount: $27,500.00 Issue Date: December 11, 2024
Purchase Price: $25,000.00
RAADR, INC.
8% CONVERTIBLE PROMISSORY NOTE
FOR VALUE RECEIVED, Raadr, Inc., a Nevada corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of Leonite Fund I, LP, or registered assigns (the “Holder”), the sum of $27,500.00 together with any interest as set forth herein, on December 11, 2025 (the “Maturity Date”), including 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. This note (the “Note”) shall contain an original issue discount (“OID”) of $2,500.00, which shall be included in the Principal Amount of this Note.
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 eighteen percent (18%) per annum from the due date thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the date that the Holder pays the full Purchase Price to the Borrower 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.
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:
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ARTICLE I. CONVERSION RIGHTS
1.1Conversion Right. The Holder shall have the right from time to time, and at any time beginning on the Issue Date to convert all or any part of the outstanding and unpaid amount of this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or, in the event of a recapitalization or merger, 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”) [The foregoing is not a ratchet provision; in the event of a recapitalization or merger, if common shareholder receive any other shares or interests, i.e., shares of a different issuer in the event of a merger, the Note will convert into such shares. That is the Note conversion rights will follow the merger]; 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. The beneficial ownership limitations on conversion as set forth in the section may NOT be waived by the Holder. 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”); however, if the Notice of Conversion is sent after 6:00pm, New York, New York time the Conversion Date shall be the next business day. 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) 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 1.4 hereof.
1.1.1Rights of Qualification. The Holder shall have the right, which may be exercised at the Holder’s sole discretion, to convert any amount due under this Note into shares of any qualified Regulation A Offering under the Securities Act of 1933, as amended (the “Securities Act”) of Borrower during the term of the any such Regulation A Offering. The number of shares to be issued upon any such conversion shall be in accordance with Section 1.2 of this Note. In conjunction with the rights granted to the Holder under this Section 1.1.1, Borrower shall, as may
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be required and while any amount due under this Note remains outstanding, (1) identify the Holder as a selling shareholder in each of its Regulation A Offering Circulars; and (2) qualify and allocate a sufficient number of shares of Common Stock to repay the remaining balance under the Note in full.
1.2Conversion 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 75% multiplied by the Market Price (as defined herein) (representing a discount rate of 25%). “Market Price” means the closing price for the Common Stock on the trading day immediately preceding the date of any conversion. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTC, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.
Notwithstanding the foregoing paragraph, should the Holder exercise its conversion rights pursuant to Section 1.1.1 of this Note, the Conversion Price shall be equal to the then-current offering price of the applicable Regulation A Offering Statement.
1.3Authorized 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 four and one half times the number of shares that would be issuable upon full conversion of the Note (assuming that the 4.99% limitation set forth in Section 1.1 is not in effect) (based on the respective Conversion Price of the Note (as defined in Section 1.2) in effect from time to time, initially 27,500,000 shares) (the “Reserved Amount”). The Reserved Amount shall be increased (or decreased with the written consent of the Holder) 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 Note. 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.
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1.4Method of Conversion.
(a)Mechanics of Conversion. As set forth in Section 1.1 hereof, from time to time, and at any time, ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount, 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 (upon payment in full of any amounts owed hereunder).
(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.
(c)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. 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 hereunder, 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.
(d)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
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set forth herein, 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.
(e)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 (3 business days after receipt of Conversion Notice) due to action and/or inaction of the Borrower, the Borrower shall pay to the Holder $500 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock (the “Fail to Deliver Fee”); provided; however that the Fail to Deliver Fee shall not be due if the failure is a result of a third party (i.e., transfer agent; and not the result of any failure to pay such transfer agent) despite the best efforts of the Borrower to effect delivery of 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(e) are justified.
1.5Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless: (i) the Borrower or its transfer agent shall have been furnished by the Holder 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 (such as Rule 144 or a successor rule) (“Rule 144”); or (ii) 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).
1.6Effect 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 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). “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.
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(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 Note, 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, ten (10) days prior written notice (but in any event at least five (5) 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 Note. 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. [NOTE: This is not a ratchet provision, it simply prohibits the issuer from effecting a distribution of assets or stock while attempting to avoid conversion or payment of the note (i.e., in the event of an asset distribution which renders the company a shell company, without the foregoing language, although it would be a default, the note holder would be left with little other remedies to attempt to be repaid from the spin off entity). Note that the language does not change the conversion price formula.]
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1.7Prepayment. This Note may be prepaid at any time without penalty. The Holder’s conversion rights herein shall not be affected in any way until the Note is fully paid (funds received by the Holder).
ARTICLE II. CERTAIN COVENANTS
2.1Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, 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 not be unreasonably withheld as long as such disposition does not render the Borrower a “shell company” as such term is defined in Rule 144.
ARTICLE III. EVENTS OF DEFAULT
If any of the following events of default (each, an “Event of Default”) shall occur:
3.1Failure to Pay Principal and Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity or upon acceleration and such breach continues for a period of five (5) days after written notice from the Holder.
3.2Conversion 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.
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3.3Breach 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 twenty (20) days after written notice thereof to the Borrower from the Holder.
3.4Breach 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.
3.5Receiver 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.
3.6Bankruptcy. 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.
3.7Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC (which specifically includes the quotation platforms maintained by the OTC Markets Group) or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.
3.8[Omitted].
3.9Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
3.10Cessation of Operations. Any cessation of operations by Borrower rendering the Borrower a “shell company” as such term is defined in Rule 144, 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.
3.11Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with OTC Markets at any time after 180 days after the Issuance Date for any date or period until this Note is no longer outstanding, if the result of such restatement would, by comparison to the un-restated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note.
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3.12Replacement 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.
3.13Cross-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 or upon acceleration), 3.3, 3.4, 3.7, 3.8, 3.10, 3.11, 3.12, 3.13, and/or 3.14 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 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 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,
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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 and the details of the determination of such amount, 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
4.1Failure 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.
4.2Notices. 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:
Raadr, Inc.
1680 Michigan Avenue, Suite 700
Miami Beach, Florida 33139
Attention: Chief Financial Officer
E-mail: dgilcher@mexedia.com
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If to the Holder:
Leonite Fund I, LP
600 East Crescent Ave, Suite 203
Upper Saddle River, NJ 07458
Attention: Avi Geller
E-mail: avi@leonitecap.com
4.3Amendments. 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.
4.4Assignability. 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 Securities and Exchange Commission). Notwithstanding anything in this Note to the contrary, this Note may be assigned by the Holder without the consent of the Borrower.
4.5Cost 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.
4.6Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Nevada 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 Nevada or in the federal courts located in Las Vegas, Nevada . 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 Note, any agreement or any other document delivered in connection with this Note 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 Note 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.
4.7Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.
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4.8Remedies. 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 on December 11, 2024.
RAADR, INC.
By: /s/ Daniel Contreras
Daniel Contreras
Chief Executive Officer
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EXHIBIT A
FORM OF NOTICE OF CONVERSION
The undersigned hereby elects to convert $_________ principal amount and $_________ of accrued interest 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 Raadr, Inc., a Nevada corporation (the “Borrower”), according to the conditions of the convertible note of the Borrower dated as of December 11, 2024 (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:
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: ______________________________
[ Name of Holder ] _______________________________________
By: ___________________________________________________
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THIS NOTE, AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE APPLICABLE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES LAWS, OR UNLESS AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE MAKER, IS OBTAINED TO THE EFFECT THAT SUCH PLEDGE, SALE, ASSIGNMENT OR TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS.
The Issue Price of this Note Is $27,500.00
the Original Issue Discount Is $2,500.00
Principal Amount: $27,500.00Issue Date: December 9, 2024
Purchase Price: $25,000.00
RAADR, INC.
8% CONVERTIBLE PROMISSORY NOTE
FOR VALUE RECEIVED, Raadr, Inc., a Nevada corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of FirstFire Global Opportunity Fund, LLC, or registered assigns (the “Holder”), the sum of $27,000.00 together with any interest as set forth herein, on December 9, 2025 (the “Maturity Date”), including 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. This note (the “Note”) shall contain an original issue discount (“OID”) of $2,500.00, which shall be included in the Principal Amount of this Note.
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 eighteen percent (18%) per annum from the due date thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the date that the Holder pays the full Purchase Price to the Borrower 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.
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:
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ARTICLE I. CONVERSION RIGHTS
1.1Conversion Right. The Holder shall have the right from time to time, and at any time beginning on the Issue Date to convert all or any part of the outstanding and unpaid amount of this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or, in the event of a recapitalization or merger, 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”) [The foregoing is not a ratchet provision; in the event of a recapitalization or merger, if common shareholder receive any other shares or interests, i.e., shares of a different issuer in the event of a merger, the Note will convert into such shares. That is the Note conversion rights will follow the merger]; 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. The beneficial ownership limitations on conversion as set forth in the section may NOT be waived by the Holder. 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”); however, if the Notice of Conversion is sent after 6:00pm, New York, New York time the Conversion Date shall be the next business day. 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) 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 1.4 hereof.
1.1.1Rights of Qualification. The Holder shall have the right, which may be exercised at the Holder’s sole discretion, to convert any amount due under this Note into shares of any qualified Regulation A Offering under the Securities Act of 1933, as amended (the “Securities Act”) of Borrower during the term of the any such Regulation A Offering. The number of shares to be issued upon any such conversion shall be in accordance with Section 1.2 of this Note. In conjunction with the rights granted to the Holder under this Section 1.1.1, Borrower shall, as may
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be required and while any amount due under this Note remains outstanding, (1) identify the Holder as a selling shareholder in each of its Regulation A Offering Circulars; and (2) qualify and allocate a sufficient number of shares of Common Stock to repay the remaining balance under the Note in full.
1.2Conversion 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 75% multiplied by the Market Price (as defined herein) (representing a discount rate of 25%). “Market Price” means the closing price for the Common Stock on the trading day immediately preceding the date of any conversion. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTC, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.
Notwithstanding the foregoing paragraph, should the Holder exercise its conversion rights pursuant to Section 1.1.1 of this Note, the Conversion Price shall be equal to the then-current offering price of the applicable Regulation A Offering Statement.
1.3Authorized 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 four and one half times the number of shares that would be issuable upon full conversion of the Note (assuming that the 4.99% limitation set forth in Section 1.1 is not in effect) (based on the respective Conversion Price of the Note (as defined in Section 1.2) in effect from time to time, initially 27,500,000 shares) (the “Reserved Amount”). The Reserved Amount shall be increased (or decreased with the written consent of the Holder) 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 Note. 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.
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1.4Method of Conversion.
(a)Mechanics of Conversion. As set forth in Section 1.1 hereof, from time to time, and at any time, ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount, 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 (upon payment in full of any amounts owed hereunder).
(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.
(c)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. 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 hereunder, 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.
(d)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
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set forth herein, 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.
(e)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 (3 business days after receipt of Conversion Notice) due to action and/or inaction of the Borrower, the Borrower shall pay to the Holder $500 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock (the “Fail to Deliver Fee”); provided; however that the Fail to Deliver Fee shall not be due if the failure is a result of a third party (i.e., transfer agent; and not the result of any failure to pay such transfer agent) despite the best efforts of the Borrower to effect delivery of 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(e) are justified.
1.5Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless: (i) the Borrower or its transfer agent shall have been furnished by the Holder 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 (such as Rule 144 or a successor rule) (“Rule 144”); or (ii) 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).
1.6Effect 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 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). “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.
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(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 Note, 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, ten (10) days prior written notice (but in any event at least five (5) 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 Note. 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. [NOTE: This is not a ratchet provision, it simply prohibits the issuer from effecting a distribution of assets or stock while attempting to avoid conversion or payment of the note (i.e., in the event of an asset distribution which renders the company a shell company, without the foregoing language, although it would be a default, the note holder would be left with little other remedies to attempt to be repaid from the spin off entity). Note that the language does not change the conversion price formula.]
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1.7Prepayment. This Note may be prepaid at any time without penalty. The Holder’s conversion rights herein shall not be affected in any way until the Note is fully paid (funds received by the Holder).
ARTICLE II. CERTAIN COVENANTS
2.1Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, 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 not be unreasonably withheld as long as such disposition does not render the Borrower a “shell company” as such term is defined in Rule 144.
ARTICLE III. EVENTS OF DEFAULT
If any of the following events of default (each, an “Event of Default”) shall occur:
3.1Failure to Pay Principal and Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity or upon acceleration and such breach continues for a period of five (5) days after written notice from the Holder.
3.2Conversion 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.
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3.3Breach 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 twenty (20) days after written notice thereof to the Borrower from the Holder.
3.4Breach 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.
3.5Receiver 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.
3.6Bankruptcy. 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.
3.7Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC (which specifically includes the quotation platforms maintained by the OTC Markets Group) or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.
3.8[Omitted].
3.9Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
3.10Cessation of Operations. Any cessation of operations by Borrower rendering the Borrower a “shell company” as such term is defined in Rule 144, 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.
3.11Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with OTC Markets at any time after 180 days after the Issuance Date for any date or period until this Note is no longer outstanding, if the result of such restatement would, by comparison to the un-restated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note.
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3.12Replacement 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.
3.13Cross-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 or upon acceleration), 3.3, 3.4, 3.7, 3.8, 3.10, 3.11, 3.12, 3.13, and/or 3.14 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 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 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,
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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 and the details of the determination of such amount, 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
4.1Failure 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.
4.2Notices. 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:
Raadr, Inc.
1680 Michigan Avenue, Suite 700
Miami Beach, Florida 33139
Attention: Chief Financial Officer
E-mail: dgilcher@mexedia.com
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If to the Holder:
FirstFire Global Opportunity Fund, LLC
1040 1st Avenue
New York, New York 10022
Attention: Eli Fireman, Managing Member
E-mail: eli@firstfirecap.com
4.3Amendments. 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.
4.4Assignability. 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 Securities and Exchange Commission). Notwithstanding anything in this Note to the contrary, this Note may be assigned by the Holder without the consent of the Borrower.
4.5Cost 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.
4.6Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Nevada 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 Nevada or in the federal courts located in Las Vegas, Nevada . 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 Note, any agreement or any other document delivered in connection with this Note 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 Note 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.
4.7Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.
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4.8Remedies. 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 on December 9, 2024.
RAADR, INC.
By: /s/ Daniel Contreras
Daniel Contreras
Chief Executive Officer
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EXHIBIT A
FORM OF NOTICE OF CONVERSION
The undersigned hereby elects to convert $_________ principal amount and $_________ of accrued interest 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 Raadr, Inc., a Nevada corporation (the “Borrower”), according to the conditions of the convertible note of the Borrower dated as of December 9, 2024 (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:
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: ______________
[ Name of Holder ] ________________________________________________________________
By: __________________________________________________
8% CONVERTIBLE PROMISSORY NOTE | 13
THIS NOTE, AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE APPLICABLE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES LAWS, OR UNLESS AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE MAKER, IS OBTAINED TO THE EFFECT THAT SUCH PLEDGE, SALE, ASSIGNMENT OR TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS.
The Issue Price of this Note Is $27,500.00
the Original Issue Discount Is $2,500.00
Principal Amount: $27,500.00 Issue Date: December 9, 2024
Purchase Price: $25,000.00 Amended and Restated: February 17, 2025
RAADR, INC.
FIRST AMENDED AND RESTATED
8% CONVERTIBLE PROMISSORY NOTE
FOR VALUE RECEIVED, Raadr, Inc., a Nevada corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of FirstFire Global Opportunity Fund, LLC, or registered assigns (the “Holder”), the sum of $27,000.00 together with any interest as set forth herein, on December 9, 2025 (the “Maturity Date”), including 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. This note (the “Note”) shall contain an original issue discount (“OID”) of $2,500.00, which shall be included in the Principal Amount of this Note.
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 eighteen percent (18%) per annum from the due date thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the date that the Holder pays the full Purchase Price to the Borrower 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.
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:
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ARTICLE I. CONVERSION RIGHTS
1.1Conversion Right. The Holder shall have the right from time to time, and at any time during the period beginning on the earlier of (a) the day immediately following the SEC’s qualification of a Regulation A Offering under the Securities Act of 1933, as amended (the “Securities Act”), of the Borrower and (b) the date that is 180 days immediately following the Issue Date to convert all or any part of the outstanding and unpaid amount of this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or, in the event of a recapitalization or merger, 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”) [The foregoing is not a ratchet provision; in the event of a recapitalization or merger, if common shareholder receive any other shares or interests, i.e., shares of a different issuer in the event of a merger, the Note will convert into such shares. That is the Note conversion rights will follow the merger]; 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. The beneficial ownership limitations on conversion as set forth in the section may NOT be waived by the Holder. 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”); however, if the Notice of Conversion is sent after 6:00pm, New York, New York time the Conversion Date shall be the next business day. 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) 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 1.4 hereof.
1.1.1Rights of Qualification. The Holder shall have the right, which may be exercised at the Holder’s sole discretion, to convert any amount due under this Note into shares that have been qualified in any Regulation A Offering under the Securities Act of Borrower during the term
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of any such Regulation A Offering. The number of qualified shares to be issued upon any such conversion shall be in accordance with Section 1.2 of this Note. In conjunction with the rights granted to the Holder under this Section 1.1.1, Borrower shall, as may be required and while any amount due under this Note remains outstanding, qualify and allocate a sufficient number of shares of Common Stock to repay the remaining balance under the Note in full.
1.2Conversion 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 75% multiplied by the Market Price (as defined herein) (representing a discount rate of 25%). “Market Price” means the closing price for the Common Stock on the trading day immediately preceding the date of any conversion. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTC, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.
Notwithstanding the foregoing paragraph, should the Holder exercise its conversion rights pursuant to Section 1.1.1 of this Note, the Conversion Price shall be equal to the then-current offering price of the applicable Regulation A Offering Statement.
1.3Authorized 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 four and one half times the number of shares that would be issuable upon full conversion of the Note (assuming that the 4.99% limitation set forth in Section 1.1 is not in effect) (based on the respective Conversion Price of the Note (as defined in Section 1.2) in effect from time to time, initially 27,500,000 shares) (the “Reserved Amount”). The Reserved Amount shall be increased (or decreased with the written consent of the Holder) 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 Note. 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.
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1.4Method of Conversion.
(a)Mechanics of Conversion. As set forth in Section 1.1 hereof, from time to time, and at any time, ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount, 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 (upon payment in full of any amounts owed hereunder).
(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.
(c)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. 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 hereunder, 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.
(d)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
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set forth herein, 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.
(e)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 (3 business days after receipt of Conversion Notice) due to action and/or inaction of the Borrower, the Borrower shall pay to the Holder $500 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock (the “Fail to Deliver Fee”); provided; however that the Fail to Deliver Fee shall not be due if the failure is a result of a third party (i.e., transfer agent; and not the result of any failure to pay such transfer agent) despite the best efforts of the Borrower to effect delivery of 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(e) are justified.
1.5Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless: (i) the Borrower or its transfer agent shall have been furnished by the Holder 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 (such as Rule 144 or a successor rule) (“Rule 144”); or (ii) 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).
1.6Effect 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 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). “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.
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(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 Note, 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, ten (10) days prior written notice (but in any event at least five (5) 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 Note. 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. [NOTE: This is not a ratchet provision, it simply prohibits the issuer from effecting a distribution of assets or stock while attempting to avoid conversion or payment of the note (i.e., in the event of an asset distribution which renders the company a shell company, without the foregoing language, although it would be a default, the note holder would be left with little other remedies to attempt to be repaid from the spin off entity). Note that the language does not change the conversion price formula.]
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1.7Prepayment. This Note may be prepaid at any time without penalty. The Holder’s conversion rights herein shall not be affected in any way until the Note is fully paid (funds received by the Holder).
ARTICLE II. CERTAIN COVENANTS
2.1Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, 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 not be unreasonably withheld as long as such disposition does not render the Borrower a “shell company” as such term is defined in Rule 144.
ARTICLE III. EVENTS OF DEFAULT
If any of the following events of default (each, an “Event of Default”) shall occur:
3.1Failure to Pay Principal and Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity or upon acceleration and such breach continues for a period of five (5) days after written notice from the Holder.
3.2Conversion 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.
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3.3Breach 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 twenty (20) days after written notice thereof to the Borrower from the Holder.
3.4Breach 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.
3.5Receiver 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.
3.6Bankruptcy. 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.
3.7Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC (which specifically includes the quotation platforms maintained by the OTC Markets Group) or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.
3.8[Omitted].
3.9Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
3.10Cessation of Operations. Any cessation of operations by Borrower rendering the Borrower a “shell company” as such term is defined in Rule 144, 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.
3.11Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with OTC Markets at any time after 180 days after the Issuance Date for any date or period until this Note is no longer outstanding, if the result of such restatement would, by comparison to the un-restated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note.
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3.12Replacement 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.
3.13Cross-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 or upon acceleration), 3.3, 3.4, 3.7, 3.8, 3.10, 3.11, 3.12, 3.13, and/or 3.14 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 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 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,
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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 and the details of the determination of such amount, 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
4.1Failure 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.
4.2Notices. 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:
Raadr, Inc.
1680 Michigan Avenue, Suite 700
Miami Beach, Florida 33139
Attention: Chief Financial Officer
E-mail: dgilcher@mexedia.com
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If to the Holder:
FirstFire Global Opportunity Fund, LLC
1040 1st Avenue
New York, New York 10022
Attention: Eli Fireman, Managing Member
E-mail: eli@firstfirecap.com
4.3Amendments. 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.
4.4Assignability. 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 Securities and Exchange Commission). Notwithstanding anything in this Note to the contrary, this Note may be assigned by the Holder without the consent of the Borrower.
4.5Cost 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.
4.6Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Nevada 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 Nevada or in the federal courts located in Las Vegas, Nevada . 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 Note, any agreement or any other document delivered in connection with this Note 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 Note 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.
4.7Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.
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4.8Remedies. 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 First Amended and Restated 8% Convertible Promissory Note to be signed in its name by its duly authorized officer on February 17, 2025.
RAADR, INC.
By: /s/ Daniel Contreras
Daniel Contreras
Chief Executive Officer
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EXHIBIT A
FORM OF NOTICE OF CONVERSION
The undersigned hereby elects to convert $_________ principal amount and $_________ of accrued interest 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 Raadr, Inc., a Nevada corporation (the “Borrower”), according to the conditions of the convertible note of the Borrower dated as of December 9, 2024, and amended and restated on February 17, 2025 (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:
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: _________________________
[ Name of Holder ] _______________________________________
By: ____________________________________________________
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THIS NOTE, AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE APPLICABLE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES LAWS, OR UNLESS AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE MAKER, IS OBTAINED TO THE EFFECT THAT SUCH PLEDGE, SALE, ASSIGNMENT OR TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS.
The Issue Price of this Note Is $27,500.00
the Original Issue Discount Is $2,500.00
Principal Amount: $27,500.00 Issue Date: December 5, 2024
Purchase Price: $25,000.00 Amended and Restated: February 17, 2025
RAADR, INC.
FIRST AMENDED AND RESTATED
8% CONVERTIBLE PROMISSORY NOTE
FOR VALUE RECEIVED, Raadr, Inc., a Nevada corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of GW Capital Ventures, LLC, or registered assigns (the “Holder”), the sum of $27,000.00 together with any interest as set forth herein, on December 5, 2025 (the “Maturity Date”), including 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. This note (the “Note”) shall contain an original issue discount (“OID”) of $2,500.00, which shall be included in the Principal Amount of this Note.
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 eighteen percent (18%) per annum from the due date thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the date that the Holder pays the full Purchase Price to the Borrower 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.
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:
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ARTICLE I. CONVERSION RIGHTS
1.1Conversion Right. The Holder shall have the right from time to time, and at any time during the period beginning on the earlier of (a) the day immediately following the SEC’s qualification of a Regulation A Offering under the Securities Act of 1933, as amended (the “Securities Act”), of the Borrower and (b) the date that is 180 days immediately following the Issue Date to convert all or any part of the outstanding and unpaid amount of this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or, in the event of a recapitalization or merger, 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”) [The foregoing is not a ratchet provision; in the event of a recapitalization or merger, if common shareholder receive any other shares or interests, i.e., shares of a different issuer in the event of a merger, the Note will convert into such shares. That is the Note conversion rights will follow the merger]; 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. The beneficial ownership limitations on conversion as set forth in the section may NOT be waived by the Holder. 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”); however, if the Notice of Conversion is sent after 6:00pm, New York, New York time the Conversion Date shall be the next business day. 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) 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 1.4 hereof.
1.1.1Rights of Qualification. The Holder shall have the right, which may be exercised at the Holder’s sole discretion, to convert any amount due under this Note into shares that have been qualified in any Regulation A Offering under the Securities Act of Borrower during the term
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of any such Regulation A Offering. The number of qualified shares to be issued upon any such conversion shall be in accordance with Section 1.2 of this Note. In conjunction with the rights granted to the Holder under this Section 1.1.1, Borrower shall, as may be required and while any amount due under this Note remains outstanding, qualify and allocate a sufficient number of shares of Common Stock to repay the remaining balance under the Note in full.
1.2Conversion 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 75% multiplied by the Market Price (as defined herein) (representing a discount rate of 25%). “Market Price” means the closing price for the Common Stock on the trading day immediately preceding the date of any conversion. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTC, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.
Notwithstanding the foregoing paragraph, should the Holder exercise its conversion rights pursuant to Section 1.1.1 of this Note, the Conversion Price shall be equal to the then-current offering price of the applicable Regulation A Offering Statement.
1.3Authorized 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 four and one half times the number of shares that would be issuable upon full conversion of the Note (assuming that the 4.99% limitation set forth in Section 1.1 is not in effect) (based on the respective Conversion Price of the Note (as defined in Section 1.2) in effect from time to time, initially 27,500,000 shares) (the “Reserved Amount”). The Reserved Amount shall be increased (or decreased with the written consent of the Holder) 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 Note. 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.
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1.4Method of Conversion.
(a)Mechanics of Conversion. As set forth in Section 1.1 hereof, from time to time, and at any time, ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount, 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 (upon payment in full of any amounts owed hereunder).
(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.
(c)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. 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 hereunder, 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.
(d)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
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set forth herein, 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.
(e)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 (3 business days after receipt of Conversion Notice) due to action and/or inaction of the Borrower, the Borrower shall pay to the Holder $500 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock (the “Fail to Deliver Fee”); provided; however that the Fail to Deliver Fee shall not be due if the failure is a result of a third party (i.e., transfer agent; and not the result of any failure to pay such transfer agent) despite the best efforts of the Borrower to effect delivery of 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(e) are justified.
1.5Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless: (i) the Borrower or its transfer agent shall have been furnished by the Holder 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 (such as Rule 144 or a successor rule) (“Rule 144”); or (ii) 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).
1.6Effect 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 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). “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.
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(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 Note, 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, ten (10) days prior written notice (but in any event at least five (5) 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 Note. 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. [NOTE: This is not a ratchet provision, it simply prohibits the issuer from effecting a distribution of assets or stock while attempting to avoid conversion or payment of the note (i.e., in the event of an asset distribution which renders the company a shell company, without the foregoing language, although it would be a default, the note holder would be left with little other remedies to attempt to be repaid from the spin off entity). Note that the language does not change the conversion price formula.]
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1.7Prepayment. This Note may be prepaid at any time without penalty. The Holder’s conversion rights herein shall not be affected in any way until the Note is fully paid (funds received by the Holder).
ARTICLE II. CERTAIN COVENANTS
2.1Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, 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 not be unreasonably withheld as long as such disposition does not render the Borrower a “shell company” as such term is defined in Rule 144.
ARTICLE III. EVENTS OF DEFAULT
If any of the following events of default (each, an “Event of Default”) shall occur:
3.1Failure to Pay Principal and Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity or upon acceleration and such breach continues for a period of five (5) days after written notice from the Holder.
3.2Conversion 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.
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3.3Breach 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 twenty (20) days after written notice thereof to the Borrower from the Holder.
3.4Breach 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.
3.5Receiver 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.
3.6Bankruptcy. 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.
3.7Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC (which specifically includes the quotation platforms maintained by the OTC Markets Group) or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.
3.8[Omitted].
3.9Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
3.10Cessation of Operations. Any cessation of operations by Borrower rendering the Borrower a “shell company” as such term is defined in Rule 144, 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.
3.11Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with OTC Markets at any time after 180 days after the Issuance Date for any date or period until this Note is no longer outstanding, if the result of such restatement would, by comparison to the un-restated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note.
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3.12Replacement 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.
3.13Cross-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 or upon acceleration), 3.3, 3.4, 3.7, 3.8, 3.10, 3.11, 3.12, 3.13, and/or 3.14 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 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 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,
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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 and the details of the determination of such amount, 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
4.1Failure 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.
4.2Notices. 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:
Raadr, Inc.
1680 Michigan Avenue, Suite 700
Miami Beach, Florida 33139
Attention: Chief Financial Officer
E-mail: dgilcher@mexedia.com
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If to the Holder:
GW Capital Ventures, LLC
427 Kingston Avenue
Brooklyn, New York 11225
Attention: Noah Weinstein
E-mail: inbox@gwholdingsgroup.com
4.3Amendments. 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.
4.4Assignability. 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 Securities and Exchange Commission). Notwithstanding anything in this Note to the contrary, this Note may be assigned by the Holder without the consent of the Borrower.
4.5Cost 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.
4.6Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Nevada 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 Nevada or in the federal courts located in Las Vegas, Nevada . 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 Note, any agreement or any other document delivered in connection with this Note 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 Note 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.
4.7Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.
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4.8Remedies. 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 First Amended and Restated 8% Convertible Promissory Note to be signed in its name by its duly authorized officer on February 17, 2025.
RAADR, INC.
By: /s/ Daniel Contreras
Daniel Contreras
Chief Executive Officer
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EXHIBIT A
FORM OF NOTICE OF CONVERSION
The undersigned hereby elects to convert $_________ principal amount and $_________ of accrued interest 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 Raadr, Inc., a Nevada corporation (the “Borrower”), according to the conditions of the convertible note of the Borrower dated as of December 5, 2024, and amended and restated on February 17, 2025 (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:
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: _________________________
[ Name of Holder ] _______________________________________
By: ____________________________________________________
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THIS NOTE, AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE APPLICABLE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES LAWS, OR UNLESS AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE MAKER, IS OBTAINED TO THE EFFECT THAT SUCH PLEDGE, SALE, ASSIGNMENT OR TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS.
The Issue Price of this Note Is $27,500.00
the Original Issue Discount Is $2,500.00
Principal Amount: $27,500.00 Issue Date: December 11, 2024
Purchase Price: $25,000.00 Amended and Restated: February 17, 2025
RAADR, INC.
FIRST AMENDED AND RESTATED
8% CONVERTIBLE PROMISSORY NOTE
FOR VALUE RECEIVED, Raadr, Inc., a Nevada corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of Leonite Fund I, LP, or registered assigns (the “Holder”), the sum of $27,500.00 together with any interest as set forth herein, on December 11, 2025 (the “Maturity Date”), including 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. This note (the “Note”) shall contain an original issue discount (“OID”) of $2,500.00, which shall be included in the Principal Amount of this Note.
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 eighteen percent (18%) per annum from the due date thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the date that the Holder pays the full Purchase Price to the Borrower 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.
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:
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ARTICLE I. CONVERSION RIGHTS
1.1Conversion Right. The Holder shall have the right from time to time, and at any time during the period beginning on the earlier of (a) the day immediately following the SEC’s qualification of a Regulation A Offering under the Securities Act of 1933, as amended (the “Securities Act”), of the Borrower and (b) the date that is 180 days immediately following the Issue Date to convert all or any part of the outstanding and unpaid amount of this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or, in the event of a recapitalization or merger, 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”) [The foregoing is not a ratchet provision; in the event of a recapitalization or merger, if common shareholder receive any other shares or interests, i.e., shares of a different issuer in the event of a merger, the Note will convert into such shares. That is the Note conversion rights will follow the merger]; 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. The beneficial ownership limitations on conversion as set forth in the section may NOT be waived by the Holder. 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”); however, if the Notice of Conversion is sent after 6:00pm, New York, New York time the Conversion Date shall be the next business day. 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) 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 1.4 hereof.
1.1.1Rights of Qualification. The Holder shall have the right, which may be exercised at the Holder’s sole discretion, to convert any amount due under this Note into shares that have been qualified in any Regulation A Offering under the Securities Act of Borrower during the term
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of any such Regulation A Offering. The number of qualified shares to be issued upon any such conversion shall be in accordance with Section 1.2 of this Note. In conjunction with the rights granted to the Holder under this Section 1.1.1, Borrower shall, as may be required and while any amount due under this Note remains outstanding, qualify and allocate a sufficient number of shares of Common Stock to repay the remaining balance under the Note in full.
1.2Conversion 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 75% multiplied by the Market Price (as defined herein) (representing a discount rate of 25%). “Market Price” means the closing price for the Common Stock on the trading day immediately preceding the date of any conversion. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTC, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.
Notwithstanding the foregoing paragraph, should the Holder exercise its conversion rights pursuant to Section 1.1.1 of this Note, the Conversion Price shall be equal to the then-current offering price of the applicable Regulation A Offering Statement.
1.3Authorized 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 four and one half times the number of shares that would be issuable upon full conversion of the Note (assuming that the 4.99% limitation set forth in Section 1.1 is not in effect) (based on the respective Conversion Price of the Note (as defined in Section 1.2) in effect from time to time, initially 27,500,000 shares) (the “Reserved Amount”). The Reserved Amount shall be increased (or decreased with the written consent of the Holder) 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 Note. 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.
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1.4Method of Conversion.
(a)Mechanics of Conversion. As set forth in Section 1.1 hereof, from time to time, and at any time, ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount, 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 (upon payment in full of any amounts owed hereunder).
(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.
(c)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. 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 hereunder, 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.
(d)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
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set forth herein, 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.
(e)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 (3 business days after receipt of Conversion Notice) due to action and/or inaction of the Borrower, the Borrower shall pay to the Holder $500 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock (the “Fail to Deliver Fee”); provided; however that the Fail to Deliver Fee shall not be due if the failure is a result of a third party (i.e., transfer agent; and not the result of any failure to pay such transfer agent) despite the best efforts of the Borrower to effect delivery of 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(e) are justified.
1.5Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless: (i) the Borrower or its transfer agent shall have been furnished by the Holder 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 (such as Rule 144 or a successor rule) (“Rule 144”); or (ii) 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).
1.6Effect 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 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). “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.
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(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 Note, 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, ten (10) days prior written notice (but in any event at least five (5) 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 Note. 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. [NOTE: This is not a ratchet provision, it simply prohibits the issuer from effecting a distribution of assets or stock while attempting to avoid conversion or payment of the note (i.e., in the event of an asset distribution which renders the company a shell company, without the foregoing language, although it would be a default, the note holder would be left with little other remedies to attempt to be repaid from the spin off entity). Note that the language does not change the conversion price formula.]
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1.7Prepayment. This Note may be prepaid at any time without penalty. The Holder’s conversion rights herein shall not be affected in any way until the Note is fully paid (funds received by the Holder).
ARTICLE II. CERTAIN COVENANTS
2.1Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, 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 not be unreasonably withheld as long as such disposition does not render the Borrower a “shell company” as such term is defined in Rule 144.
ARTICLE III. EVENTS OF DEFAULT
If any of the following events of default (each, an “Event of Default”) shall occur:
3.1Failure to Pay Principal and Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity or upon acceleration and such breach continues for a period of five (5) days after written notice from the Holder.
3.2Conversion 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.
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3.3Breach 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 twenty (20) days after written notice thereof to the Borrower from the Holder.
3.4Breach 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.
3.5Receiver 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.
3.6Bankruptcy. 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.
3.7Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC (which specifically includes the quotation platforms maintained by the OTC Markets Group) or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.
3.8[Omitted].
3.9Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
3.10Cessation of Operations. Any cessation of operations by Borrower rendering the Borrower a “shell company” as such term is defined in Rule 144, 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.
3.11Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with OTC Markets at any time after 180 days after the Issuance Date for any date or period until this Note is no longer outstanding, if the result of such restatement would, by comparison to the un-restated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note.
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3.12Replacement 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.
3.13Cross-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 or upon acceleration), 3.3, 3.4, 3.7, 3.8, 3.10, 3.11, 3.12, 3.13, and/or 3.14 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 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 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,
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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 and the details of the determination of such amount, 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
4.1Failure 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.
4.2Notices. 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:
Raadr, Inc.
1680 Michigan Avenue, Suite 700
Miami Beach, Florida 33139
Attention: Chief Financial Officer
E-mail: dgilcher@mexedia.com
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If to the Holder:
Leonite Fund I, LP
600 East Crescent Ave, Suite 203
Upper Saddle River, NJ 07458
Attention: Avi Geller
E-mail: avi@leonitecap.com
4.3Amendments. 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.
4.4Assignability. 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 Securities and Exchange Commission). Notwithstanding anything in this Note to the contrary, this Note may be assigned by the Holder without the consent of the Borrower.
4.5Cost 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.
4.6Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Nevada 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 Nevada or in the federal courts located in Las Vegas, Nevada . 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 Note, any agreement or any other document delivered in connection with this Note 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 Note 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.
4.7Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.
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4.8Remedies. 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 First Amended and Restated 8% Convertible Promissory Note to be signed in its name by its duly authorized officer on February 17, 2025.
RAADR, INC.
By: /s/ Daniel Contreras
Daniel Contreras
Chief Executive Officer
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EXHIBIT A
FORM OF NOTICE OF CONVERSION
The undersigned hereby elects to convert $_________ principal amount and $_________ of accrued interest 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 Raadr, Inc., a Nevada corporation (the “Borrower”), according to the conditions of the convertible note of the Borrower dated as of December 11, 2024, and amended and restated February 17, 2025 (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:
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: _________________________
[ Name of Holder ] _______________________________________
By: ____________________________________________________
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SUBSCRIPTION AGREEMENT
Raadr, Inc.
(doing business as Telvantis)
NOTICE TO INVESTORS
The securities of Raadr, Inc., doing business as Telvantis, a Nevada corporation (the “Company”), to which this Subscription Agreement relates, represent an investment that involves a high degree of risk, suitable only for persons who can bear the economic risk for an indefinite period of time and who can afford to lose their entire investments. Investors should further understand that this investment is illiquid and is expected to continue to be illiquid for an indefinite period of time. No public market exists for the securities to which this Subscription Agreement relates.
The securities offered hereby have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities or blue sky laws and are being offered and sold in reliance on exemptions from the registration requirements of the Securities Act and state securities or blue sky laws. Although an Offering Statement has been filed with the Securities and Exchange Commission (the “SEC”), that Offering Statement does not include the same information that would be included in a Registration Statement under the Securities Act. The securities offered hereby have not been approved or disapproved by the SEC, any state securities commission or other regulatory authority, nor have any of the foregoing authorities passed upon the merits of the offering to which this Subscription Agreement relates or the adequacy or accuracy of this Subscription Agreement or any other materials or information made available to prospective investors in connection with the offering to which this Subscription Agreement. Any representation to the contrary is unlawful.
The securities offered hereby cannot be sold or otherwise transferred, except in compliance with the Securities Act. In addition, the securities offered hereby cannot be sold or otherwise transferred, except in compliance with applicable state securities or “blue sky” laws. Investors who are not “accredited investors” (as that term is defined in Section 501 of Regulation D promulgated under the Securities Act) are subject to limitations on the amount they may invest, as described in Section 4(g) of this Subscription Agreement.
To determine the availability of exemptions from the registration requirements of the Securities Act as such may relate to the offering to which this Subscription Agreement relates, the Company is relying on each investor’s representations and warranties included in this Subscription Agreement and the other information provided by each investor in connection herewith.
Prospective investors may not treat the contents of this Subscription Agreement, the Offering Circular or any of the other materials provided by the Company (collectively, the “Offering Materials”), or any prior or subsequent communications from the Company or any of its officers, employees or agents (including “Testing the Waters” materials), as investment, legal or tax advice. In making an investment decision, investors must rely on their own examinations of the Company and the terms of the offering to which this Subscription Agreement relates, including the merits and the risks involved. Each prospective investor should consult such investor’s own counsel, accountants and other professional advisors as to investment, legal, tax and other related matters concerning such investor’s proposed investment in the Company.
The Offering Materials may contain forward-looking statements and information relating to, among other things, the Company, its business plan, its operating strategy and its industries. These forward-looking statements are based on the beliefs of, assumptions made by, and information currently available to, the Company’s management. When used in the Offering Materials, the words “estimate,” “project,” “believe,” “anticipate,” “intend,” “expect” and similar expressions are intended to identify forward-looking statements, which constitute forward looking statements. These statements reflect management’s current views with respect to future events and are subject to risks and uncertainties that could cause the Company’s actual results to differ materially from those contained in the forward-looking statements. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The Company does not undertake any obligation to revise or update these forward-looking statements to reflect events or circumstances after such date or to reflect the occurrence of unanticipated events.
SUBSCRIPTION AGREEMENT
This subscription agreement (the “Subscription Agreement” or the “Agreement”) is entered into by and between Raadr, Inc., doing business as Telvantis, a Nevada corporation (the “Company”), and the undersigned investor (“Investor”), as of the date set forth on the signature page hereto. Any term used but not defined herein shall have the meaning set forth in the Offering Circular (defined below).
RECITALS
WHEREAS, the Company is offering for sale a maximum of 3,000,000,000 shares of its common stock (the “Offered Shares”), pursuant to Tier 1 of Regulation A promulgated under the Securities Act (the “Offering”) at a fixed price of $0.005 per share (the “Share Purchase Price”), on a best-efforts basis.
WHEREAS, Investor desires to acquire that number of Offered Shares (the “Subject Offered Shares”) as set forth on the signature page hereto at the Share Purchase Price.
WHEREAS, the Offering will terminate at the earlier of: (a) the date on which all of the securities offered in the Offering shall have been sold, (b) the date which is one year from the Offering having been qualified by the SEC or (c) the date on which the Offering is earlier terminated by the Company, in its sole discretion (in each case, the “Termination Date”).
NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto do hereby agree as follows:
INVESTOR INFORMATION
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Name of Investor
| SSN or EIN
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Street Address
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City
| State
| Zip Code
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Phone
| E-mail
| State/Nation of Residency
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Name and Title of Authorized Representative, if investor is an entity or custodial account
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Type of Entity or Custodial Account (IRA, Keogh, corporation, partnership, trust, limited liability company, etc.)
|
Jurisdiction of Organization
| Date of Organization
| Account Number
|
CHECK ONE:
|
| Individual Investor
|
| Custodian Entity
|
| Tenants-in-Common
|
|
|
| Community Property
|
| Corporation
|
| Joint Tenants
|
|
|
| LLC
|
| Partnership
|
| Trust
|
|
If the Subject Offered Shares are intended to be held as Community Property, as Tenants-In-Common or as Joint Tenancy, then each party (owner) must execute this Subscription Agreement.
1.Subscription.
(a)Investor hereby irrevocably subscribes for, and agrees to purchase, the Subject Offered Shares set forth on the signature page hereto at the Share Purchase Price, upon the terms and conditions set forth herein. The aggregate purchase price for the Subject Offered Shares subscribed by Investor (the “Purchase Price”) is payable to the Company in the manner provided in Section 2(a).
(b)Investor understands that the Offered Shares are being offered pursuant to the Offering Circular dated ________, 2025, and its exhibits (collectively, the “Offering Circular”), as filed with the SEC. By subscribing for the Subject Offered Shares, Investor acknowledges that Investor has received and reviewed a copy of the Offering Circular and any other information required by Investor to make an investment decision with respect to the Subject Offered Shares.
(c)This Subscription Agreement may be accepted or rejected in whole or in part, for any reason or for no reason, at any time prior to the Termination Date, by the Company in its sole and absolute discretion. The Company will notify Investor whether this Subscription Agreement is accepted or rejected. If rejected, Investor’s payment shall be returned to Investor without interest and all of Investor’s obligations hereunder shall terminate, except for Section 5 hereof, which shall remain in force and effect.
(d)The terms of this Subscription Agreement shall be binding upon Investor and Investor’s permitted transferees, heirs, successors and assigns (collectively, the “Transferees”); provided, however, that for any such transfer to be deemed effective, the proposed Transferee shall have executed and delivered to the Company, in advance, an instrument in form acceptable to the Company in its sole discretion, pursuant to which the proposed Transferee shall acknowledge and agree to be bound by the representations and warranties of Investor and the terms of this Subscription Agreement. No transfer of this Agreement may be made without the consent of the Company, which consent may be withheld by the Company in its sole and absolute discretion.
2. Payment and Purchase Procedure. The Purchase Price shall be paid simultaneously with Investor’s delivery of this Subscription Agreement. Investor shall deliver payment of the Purchase Price of the Subject Offered Shares in the manner set forth in Section 8 hereof. Investor acknowledges that, in order to subscribe for Offered Shares, Investor must comply fully with the purchase procedure requirements set forth in Section 8 hereof.
3.Representations and Warranties of the Company. The Company represents and warrants to Investor that each of the following is true and complete in all material respects as of the date of this Subscription Agreement:
(a)the Company is a corporation duly formed, validly existing and in good standing under the laws of the State of Nevada. The Company has all requisite power and authority to own and operate its properties and assets, to execute and deliver this Subscription Agreement, the Subject Offered Shares and any other agreements or instruments required hereunder. The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business;
(b)The issuance, sale and delivery of the Subject Offered Shares in accordance with this Subscription Agreement have been duly authorized by all necessary corporate action on the part of the Company. The Subject Offered Shares, when issued, sold and delivered against payment therefor in accordance with the provisions of this Subscription Agreement, will be duly and validly issued, fully paid and non-assessable; and
(c)the acceptance by the Company of this Subscription Agreement and the consummation of the transactions contemplated hereby are within the Company’s powers and have been duly authorized by all necessary corporate action on the part of the Company. Upon the Company’s acceptance of this Subscription Agreement, this Subscription Agreement shall constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except (1) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights and (2) as limited by general principles of equity that restrict the availability of equitable remedies.
4.Representations and Warranties of Investor. Investor represents and warrants to the Company that each of the following is true and complete in all material respects as of the date of this Subscription Agreement:
(a)Requisite Power and Authority. Investor has all necessary power and authority under all applicable provisions of law to execute and deliver this Subscription Agreement and to carry out the provisions hereof. Upon due delivery hereof, this Subscription Agreement will be a valid and binding obligation of Investor, enforceable in accordance with its terms, except (1) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights and (2) as limited by general principles of equity that restrict the availability of equitable remedies.
(b)Company Offering Circular; Company Information. Investor acknowledges the public availability of the Offering Circular which can be viewed on the SEC Edgar Database, under CIK number 0001384365 and that Investor has reviewed the Offering Circular. Investor acknowledges that the Offering Circular makes clear the terms and conditions of the Offering and that the risks associated therewith are described. Investor has had an opportunity to discuss the Company’s business, management and financial affairs with directors, officers and management of the Company and has had the opportunity to review the Company’s operations and facilities. Investor has also had the opportunity to ask questions of, and receive answers from, the Company and its management regarding the terms and conditions of the Offering. Investor acknowledges that, except as set forth herein, no representations or warranties have been made to Investor, or to any advisor or representative of Investor, by the Company with respect to the business or prospects of the Company or its financial condition.
(c)Investment Experience; Investor Suitability. Investor has sufficient experience in financial and business matters so as to be capable of evaluating the merits and risks of an investment in the Offered Shares, and to make an informed decision relating thereto. Alternatively, Investor has utilized the services of a purchaser representative and, together, they have sufficient
experience in financial and business matters so as to be capable of evaluating the merits and risks of an investment in the Offered Shares, and to make an informed decision relating thereto. Investor has evaluated the risks of an investment in the Offered Shares, including those described in the section of the Offering Circular entitled “Risk Factors”, and has determined that such an investment is suitable for Investor. Investor has adequate financial resources for an investment of this character. Investor is capable of bearing a complete loss of Investor’s investment in the Offered Shares.
(d)No Registration. Investor understands that the Offered Shares are not being registered under the Securities Act, on the ground that the issuance thereof is exempt under Regulation A promulgated under the Securities Act, and that reliance on such exemption is predicated, in part, on the truth and accuracy of Investor’s representations and warranties, and those of the other purchasers of the Offered Shares in the Offering.
Investor further understands that the Offered Shares are not being registered under the securities laws of any state, on the basis that the issuance thereof is exempt as an offer and sale not involving a registrable public offering in such state.
Investor covenants not to sell, transfer or otherwise dispose of any Offered Shares, unless such Offered Shares have been registered under the Securities Act and under applicable state securities laws, or exemptions from such registration requirements are available.
(e)Illiquidity and Continued Economic Risk. Investor acknowledges and agrees that there is a limited public market for the Offered Shares and that there is no guarantee that a market for their resale will continue to exist. Investor must, therefore, bear the economic risk of the investment in the Subject Offered Shares indefinitely and Investor acknowledges that Investor is able to bear the economic risk of losing Investor’s entire investment in the Subject Offered Shares.
(f)Investor Status. Investor represents that either:
(1)Investor has a minimum annual gross income of $70,000 and a minimum net worth of $70,000, exclusive of automobile, home and home furnishings; or
(2)Investor has a minimum net worth of $250,000, exclusive of automobile, home and home furnishings.
Investor represents that, to the extent Investor has any questions with respect to Investor’s satisfying the standards set forth in subparagraphs (1) and (2), Investor has sought professional advice.
(g)Investor Information. Within five (5) days after receipt of a request from the Company, Investor hereby agrees to provide such information with respect to Investor’s status as a Company shareholder and to execute and deliver such documents as may reasonably be necessary to comply with any and all laws and regulations to which the Company is, or may become, subject, including, without limitation, the need to determine the accredited investor status of the Company’s shareholders. Investor further agrees that, in the event Investor transfers any Offered Shares, Investor will require the transferee of any such Offered Shares to agree to provide such information to the Company as a condition of such transfer.
(h)Valuation; Arbitrary Determination of Share Purchase Price by the Company. Investor acknowledges that the Share Purchase Price of the Offered Shares in the Offering was set by the Company on the basis of the Company’s internal valuation and no warranties are made as to value. Investor further acknowledges that future offerings of securities of the Company may be made at lower valuations, with the result that Investor’s investment will bear a lower valuation.
(i)Domicile. Investor maintains Investor’s domicile (and is not a transient or temporary resident) at the address provided herein.
(j)Foreign Investors. If Investor is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), Investor hereby represents that Investor is in full compliance with the laws of Investor’s jurisdiction in connection with any invitation to subscribe for the Offered Shares or any use of this Subscription Agreement, including, without limitation, (1) the legal requirements within Investor’s jurisdiction for the purchase of the Subject Offered Shares, (2) any foreign exchange restrictions applicable to such purchase, (3) any governmental or other consents that may need to be obtained, and (4) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale or transfer of the Subject Offered Shares. Investor’s subscription and payment for and continued beneficial ownership of the Subject Offered Shares will not violate any applicable securities or other laws of Investor’s jurisdiction.
(k)Fiduciary Capacity. If Investor is purchasing the Subject Offered Shares in a fiduciary capacity for another person or entity, including, without limitation, a corporation, partnership, trust or any other juridical entity, Investor has been duly authorized and empowered to execute this Subscription Agreement and all other related documents. Upon request of the Company,
Investor will provide true, complete and current copies of all relevant documents creating Investor, authorizing Investor’s investment in the Company and/or evidencing the satisfaction of the foregoing.
5.Indemnity. The representations, warranties and covenants made by Investor herein shall survive the consummation of this Subscription Agreement. Investor agrees to indemnify and hold harmless the Company and its officers, directors and agents, and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act, against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all reasonable attorneys’ fees, including attorneys’ fees on appeal) and expenses reasonably incurred in investigating, preparing or defending against any false representation or warranty or breach of failure by Investor to comply with any covenant or agreement made by Investor herein or in any other document furnished by Investor to any of the foregoing in connection with the transaction contemplated hereby.
6.Governing Law; Jurisdiction; Waiver of Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of the Offering Circular, including, without limitation, this Subscription Agreement, shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada, without regard to the principles of conflicts of law thereof.
7.Notices. Notice, requests, demands and other communications relating to this Subscription Agreement and the transactions contemplated herein shall be in writing and shall be deemed to have been duly given if and when (a) delivered personally, on the date of such delivery; or (b) mailed by registered or certified mail, postage prepaid, return receipt requested, in the third day after the posting thereof; or (c) e-mailed on the date of such delivery to the address of the respective parties as follows, if to the Company, to Raadr, Inc., doing business as Telvantis, 1680 Michigan Avenue, Suite 700, Miami Beach, Florida 33139, Attention: Daniel Contreras, Chief Executive Officer. If to Investor, at Investor’s address supplied in connection herewith, or to such other address as may be specified by written notice from time to time by the party entitled to receive such notice. Any notices, requests, demands or other communications by email shall be confirmed by letter given in accordance with (a) or (b) above.
8.Purchase Procedure. Investor acknowledges that, in order to subscribe for the Subject Offered Shares, Investor must, and Investor does hereby, deliver (in a manner described below) to the Company:
(a)a single executed counterpart of the Subscription Agreement, which shall be delivered to the Company either by (1) physical delivery to: Raadr, Inc., doing business as Telvantis, Attention: Daniel Contreras, Chief Executive Officer, 1680 Michigan Avenue, Suite 700, Miami Beach, Florida 33139; (2) e-mail to: dcontreras@telvantis.com; and
(b)payment of the Purchase Price, which shall be delivered in the manner set forth in Annex I attached hereto and made a part hereof.
9.Miscellaneous. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the person or persons or entity or entities may require. Other than as set forth herein, this Subscription Agreement is not transferable or assignable by Investor. The representations, warranties and agreements contained herein shall be deemed to be made by, and be binding upon, Investor and Investor’s heirs, executors, administrators and successors and shall inure to the benefit of the Company and its successors and assigns. None of the provisions of this Subscription Agreement may be waived, changed or terminated orally or otherwise, except as specifically set forth herein or except by a writing signed by the Company and Investor. In the event any part of this Subscription Agreement is found to be void or unenforceable, the remaining provisions are intended to be separable and binding with the same effect as if the void or unenforceable part were never in this Subscription Agreement. This Subscription Agreement supersedes all prior discussions and agreements between the Company and Investor, if any, with respect to the subject matter hereof and contains the sole and entire agreement between the Company and Investor with respect to the subject matter hereof. The terms and provisions of this Subscription Agreement are intended solely for the benefit of each party hereto and their respective successors and assigns, and it is not the intention of the parties to confer, and no provision hereof shall confer, third-party beneficiary rights upon any other person. The headings used in this Subscription Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof. In the event that either party hereto shall commence any suit, action or other proceeding to interpret this Subscription Agreement, or determine to enforce any right or obligation created hereby, then such party, if it prevails in such action, shall recover its reasonable costs and expenses incurred in connection therewith, including, but not limited to, reasonable attorneys’ fees and expenses and costs of appeal, if any. All notices and communications to be given or otherwise made to Investor shall be deemed to be sufficient if sent by e-mail to such address provided by Investor herein. Unless otherwise specified in this Subscription Agreement, Investor shall send all notices or other communications required to be given hereunder to the Company via e-mail at dcontreras@telvantis.com. Any such notice or communication shall be deemed to have been delivered and received on the first business day following that on which the e-mail has been sent (assuming that there is no error in delivery). As used in this Section 9, the term “business day” shall mean any day other than a day on which banking institutions in the State of Nevada are legally closed for business. This Subscription Agreement may be executed in one or more counterparts. No failure or delay by any party in exercising any right, power or privilege under this Subscription Agreement shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.
10.Consent to Electronic Delivery of Notices, Disclosures and Forms. Investor understands that, to the fullest extent permitted by law, any notices, disclosures, forms, privacy statements, reports or other communications (collectively, “Communications”) regarding the Company, Investor’s investment in the Company and the Subject Offered Shares (including annual and other updates and tax documents) may be delivered by electronic means, such as by e-mail. Investor hereby consents to electronic delivery as described in the preceding sentence. In so consenting, Investor acknowledges that e-mail messages are not secure and may contain computer viruses or other defects, may not be accurately replicated on other systems or may be intercepted, deleted or interfered with, with or without the knowledge of the sender or the intended recipient. Investor also acknowledges that an e-mail from the Company may be accessed by recipients other than Investor and may be interfered with, may contain computer viruses or other defects and may not be successfully replicated on other systems. Neither the Company, nor any of its respective officers, directors and affiliates, and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act (collectively, the “Company Parties”), gives any warranties in relation to these matters. Investor further understands and agrees to each of the following: (a) other than with respect to tax documents in the case of an election to receive paper versions, none of the Company Parties will be under any obligation to provide Investor with paper versions of any Communications; (b) electronic Communications may be provided to Investor via e-mail or a website of a Company Party upon written notice of such website’s internet address to such Investor. In order to view and retain the Communications, Investor’s computer hardware and software must, at a minimum, be capable of accessing the Internet, with connectivity to an internet service provider or any other capable communications medium, and with software capable of viewing and printing a portable document format (“PDF”) file created by Adobe Acrobat. Further, Investor must have a personal e-mail address capable of sending and receiving e-mail messages to and from the Company Parties. To print the documents, Investor will need access to a printer compatible with his or her hardware and the required software; (c) if these software or hardware requirements change in the future, a Company Party will notify the Investor through written notification. To facilitate these services, Investor must provide the Company with his or her current e-mail address and update that information as necessary. Unless otherwise required by law, Investor will be deemed to have received any electronic Communications that are sent to the most current e-mail address that the Investor has provided to the Company in writing; (d) none of the Company Parties will assume liability for non-receipt of notification of the availability of electronic Communications in the event Investor’s e-mail address on file is invalid; Investor’s e-mail or Internet service provider filters the notification as “spam” or “junk mail”; there is a malfunction in Investor’s computer, browser, internet service or software; or for other reasons beyond the control of the Company Parties; and (e) solely with respect to the provision of tax documents by a Company Party, Investor agrees to each of the following: (1) if Investor does not consent to receive tax documents electronically, a paper copy will be provided, and (2) Investor’s consent to receive tax documents electronically continues for every tax year of the Company until Investor withdraws its consent by notifying the Company in writing.
Investor certifies that Investor has read this entire Subscription Agreement and that every statement made by Investor herein is true and complete.
The Company may not be offering the Offered Shares in every state. The Offering Materials do not constitute an offer or solicitation in any state or jurisdiction in which the Offered Shares are not being offered. The information presented in the Offering Materials was prepared by the Company solely for the use by prospective investors in connection with the Offering. Nothing contained in the Offering Materials is or should be relied upon as a promise or representation as to the future performance of the Company.
The Company reserves the right, in its sole discretion and for any reason whatsoever, to modify, amend and/or withdraw all or a portion of the Offering and/or accept or reject, in whole or in part, for any reason or for no reason, any prospective investment in the Offered Shares. Except as otherwise indicated, the Offering Materials speak as of their date. Neither the delivery nor the purchase of the Offered Shares shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since that date.
[ SIGNATURE PAGE FOLLOWS ]
[ SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT ]
IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement on the date set forth below.
Dated: _______________________.
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The foregoing subscription for ____________ Offered Shares, a Subscription Amount of $______________, is hereby accepted
on behalf of Raadr, Inc., doing business as Telvantis, a Nevada corporation, this _____ day of ______________, 202__.
RAADR, INC.
(doing business as Telvantis)
By: _______________________
Daniel Contreras
Chief Executive Officer
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (the “Agreement”) is dated as of December 9, 2024, by and between Raadr, Inc., a Nevada corporation (the “Company”), and FirstFire Global Opportunity Fund, LLC (“Buyer”).
RECITALS
WHEREAS, the Company and 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”); and
WHEREAS, Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement, a promissory note of the Company, in the form attached hereto as Exhibit A, in the aggregate principal amount of $27,500.00 (the “Note”).
NOW, THEREFORE, the Company and Buyer severally (and not jointly) hereby agree as follows:
1.Purchase and Sale of the Note.
(a)Purchase of the Note. On the Closing Date (as defined below), the Company shall issue and sell to Buyer and Buyer agrees to purchase from the Company the Note as is set forth immediately below Buyer’s name on the signature pages hereto.
(b)Form of Payment. On the Closing Date (as defined below), (i) Buyer shall pay the purchase price for the Note 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, and (ii) the Company shall deliver such duly executed Note on behalf of the Company 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 4:00 p.m., Eastern Time, on or about December 9, 2024, 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. Buyer represents and warrants to the Company that:
SECURITIES PURCHASE AGREEMENT | 1
(a)Investment Purpose. As of the date hereof, Buyer is purchasing the Note and the shares of Common Stock issuable upon conversion of or otherwise pursuant to the Note (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, 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. Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D (an “Accredited Investor”).
(c)Reliance on Exemptions. 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 Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of Buyer to acquire the Securities.
(d)Information. Buyer and its advisors, if any, have been, and for so long as the Note remains 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 Buyer or its advisors. Buyer and its advisors, if any, have been, and for so long as the Note remains outstanding will continue to be, afforded the opportunity to ask questions of the Company regarding its business and affairs. Notwithstanding the foregoing, the Company has not disclosed to Buyer any material non-public information regarding the Company or otherwise and will not disclose such information unless such information is disclosed to the public prior to or promptly following such disclosure to 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.
e.Governmental Review. 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. Buyer understands that (1) 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) Buyer shall have delivered to the Company 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 Buyer who agrees
SECURITIES PURCHASE AGREEMENT | 2
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 other applicable exemption, (e) the Securities are sold pursuant to Regulation S under the 1933 Act (or a successor rule) (“Regulation S”) or (f) the Securities are sold pursuant to Regulation A under the 1933 Act (or a successor rule) (“Regulation A”), and Buyer shall have delivered to the Company, at the cost of the Company, 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; (2) 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 (3) 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 in connection with a bona fide margin account or other lending arrangement secured by the Securities, and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and Buyer in effecting such pledge of Securities shall be not required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or otherwise.
(g)Legends. Buyer understands that the Securities have not been registered under the 1933 Act; and may bear a restrictive legend in substantially the following form:
THE SECURITIES, INCLUDING THE SECURITIES INTO WHICH THESE SECURITIES MAY BE CONVERTED, REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR (2) THE ISSUER OF SUCH SECURITIES RECEIVES AN OPINION OF COUNSEL TO THE BUYER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY ACCEPTABLE TO THE ISSUER’S TRANSFER AGENT, THAT SUCH SECURITIES MAY BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
The legend set forth above shall be removed and the Company shall issue a certificate or book entry statement for the applicable shares of Common Stock without such legend to the holder of any Security upon which it is stamped or (as requested by such holder) issue the applicable shares of Common Stock to such holder by electronic delivery by crediting the account of such holder’s broker with The Depository Trust Company (“DTC”), 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, Rule 144A, Regulation S, Regulation A or other applicable exemption without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) the Company or Buyer provides an opinion of counsel 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 Company shall be responsible for the fees of its transfer agent and all DTC fees associated with any such issuance. Buyer agrees to sell all Securities, including those represented by a certificate(s) from which the legend has been
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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 Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144, Rule 144A, Regulation S, Regulation A or other applicable exemption at the Deadline (as defined in the Note), it will be considered an Event of Default under the Note.
(f)Authorization; Enforcement. This Agreement has been duly and validly authorized. This Agreement has been duly executed and delivered on behalf of Buyer, and this Agreement constitutes a valid and binding agreement of Buyer enforceable in accordance with its terms.
3.Representations and Warranties of the Company. The Company represents and warrants to Buyer that:
(a)Organization and Qualification. The Company 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.
(b)Authorization; Enforcement. (1) 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, (2) 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 has 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, (3) 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 (4) 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; Governing Documents. As of the date of this Agreement, the authorized capital stock of the Company consists of: 15,000,000,000 shares of common stock, par value $0.001 per share, of which 6,371,260,661 shares are issued and outstanding; and 100,000,000 shares of preferred stock, par value $0.001 per share, (1) 1,000,000 shares of which are designated Series E Preferred Stock and none of which shares are issued and outstanding and (2) 75,000 shares of which are designated Series F Preferred Stock and 75,000 shares of which are issued and outstanding. All of such outstanding shares of capital stock of the Company, the Commitment Shares and the Conversion Shares 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
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date of this Agreement, other than as publicly announced prior to such date and reflected in the Disclosure Documents (defined below) of the Company (x) 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, (y) 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 (z) 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 any of the Securities. The Company has furnished to Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), 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.
(d)Issuance of Securities. The Securities are duly authorized and reserved for issuance 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 Buyer thereof.
(e)Acknowledgment of Dilution. The Company understands and acknowledges the potentially dilutive effect of the Conversion Shares to the Common Stock upon the conversion of the Note. The Company further acknowledges that its obligation to issue, upon conversion of the Note, the Conversion Shares are absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.
(f)Ranking; No Conflicts. The Note shall have no priority in payment and performance over any other indebtedness of the Company. The execution, delivery and performance of this Agreement and 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 (1) conflict with or result in a violation of any provision of the Articles of Incorporation or Bylaws, or (2) 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, note, evidence of indebtedness, indenture, patent, patent license or instrument to which the Company or any of its Subsidiaries is a party, or (3) 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 is 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
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Effect), or (4) trigger any anti-dilution and/or ratchet provision contained in any other contract in which the Company is a party thereto or any security issued by the Company. The Company is not in violation of its Articles of Incorporation, Bylaws or other organizational documents and it is not in default (and no event has occurred which with notice or lapse of time or both could put the Company in default) under, and the Company has not 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 is a party or by which any property or assets of the Company is bound or affected, except for possible defaults as would not, individually or in the aggregate, have a Material Adverse Effect. The business of the Company is not being conducted, and shall not be conducted so long as 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 and the Commitment Warrant in accordance with their respective terms hereof or thereof or to issue and sell the Note in accordance with the terms hereof and, upon conversion of the Note, issue Conversion Shares. 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 Principal Market (as defined herein) and does not reasonably anticipate that the Common Stock will be delisted by the Principal Market in the foreseeable future. The Company is unaware of any facts or circumstances which might give rise to any of the foregoing. The “Principal Market” shall mean the principal securities exchange or trading market where such Common Stock is listed or traded, including but not limited to any tier of the OTC Markets, any tier of the NASDAQ Stock Market (including NASDAQ Capital Market), or the NYSE American, or any successor to such markets.
(g)Disclosure Documents; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with OTC Markets (the “Disclosure Documents”), except for the Quarterly Report for the period ended September 30, 2024. The Company’s Quarterly Report for the period ended June 30, 2024, complies in all material respects with the requirements of OTC Markets applicable thereto, and none of the Disclosure Documents, at the time they were filed with OTC Markets, 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 Disclosure 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 Disclosure Documents complied as to form in all material respects with applicable accounting requirements and the published rules of OTC Markets 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 as of the dates thereof and the results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit
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adjustments). Except as set forth in the financial statements of the Company included in the Quarterly Report for the period ended June 30, 2024, the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to June 30, 2024, 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 not subject to the reporting requirements of the Securities Exchange Act of 1934 (the “1934 Act”). The Company has been, but no longer is, a “shell company,” as described in Rule 144(i)(1)(I).
(h)Absence of Certain Changes. Since June 30, 2024, 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 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, threatened against or affecting the Company, or their officers or directors in their capacity as such, that could have a Material Adverse Effect. The Disclosure Documents contain a complete list and summary description of any pending or, to the knowledge of the Company, threatened proceeding against or affecting the Company, without regard to whether it would have a Material Adverse Effect. The Company is unaware of any facts or circumstances which might give rise to any of the foregoing.
(j)Intellectual Property. The Company 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 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 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 has taken reasonable security measures to protect the secrecy, confidentiality and value of its Intellectual Property.
(k)No Materially Adverse Contracts, Etc. The Company is not 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. The Company is not 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 has not filed all required federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it
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is subject, the Company represents that it owes no delinquent taxes. The Company agrees to have filed all delinquent tax returns on or before January 15, 2025.
(m)Transactions with Affiliates. Except as set forth in the Disclosure Documents, none of the officers, directors or employees of the Company is presently a party to any transaction with the Company.
(n)Disclosure. All information relating to or concerning the Company set forth in this Agreement and provided to 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 its 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.
(o)Acknowledgment Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that Buyer is acting solely in the capacity of arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that 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 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 Buyer’s purchase of the Securities. The Company further represents to 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 Buyer. The issuance of the Securities to 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; No Solicitation. 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. The Company acknowledges and agrees that neither Buyer nor its employee(s), member(s), beneficial owner(s), or partner(s) solicited the Company to enter into this Agreement and consummate the transactions described in this Agreement.
(r)Permits; Compliance. The Company 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
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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. The Company is not 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.
(s)Environmental Matters.
(1)There are, to the Company’s knowledge, with respect to the Company or any predecessor of the Company, no past or present violations of Environmental Laws (as defined below). 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.
(2)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, and no Hazardous Materials were released on or about any real property previously owned, leased or used by the Company during the period the property was owned, leased or used by the Company.
(t)Title to Property. The Company has good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by it which is material to the business of the Company, in each case free and clear of all liens, encumbrances and defects.
(u)Insurance. The Company has necessary commercially reasonable insurance policies in force.
(v)Internal Accounting Controls. The Company maintains a system of internal accounting controls sufficient, in the judgment of the Company’s board of directors, to provide reasonable assurance that (1) transactions are executed in accordance with management’s general or specific authorizations, (2) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (3) access to assets is permitted only in accordance with management’s general or specific authorization and (4) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
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(w)Foreign Corrupt Practices. Neither The Company nor any director, officer, agent, employee or other person acting on behalf of the Company, 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’s financial statements for its most recent fiscal year end and interim financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
(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)No Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its public filings.
(aa)No Disqualification Events. None of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event.
(bb)Manipulation of Price. The Company has not, and to its knowledge no one acting on its behalf has: (1) taken, directly or indirectly, any action designed to cause or to result, or that could reasonably be expected to cause or result, in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (2) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities,
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or (3) paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company.
(cc)Bank Holding Company Act. The Company is not subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). The Company (1) does not exercise a controlling influence over the management or policies and (2) does not own or control, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
(dd)Illegal or Unauthorized Payments; Political Contributions. Neither the Company nor, to the Company’s knowledge, any of the officers, directors, employees, agents or other representatives of the Company or any other business entity or enterprise with which the Company is or has been affiliated or associated, has, directly or indirectly, made or authorized any payment, contribution or gift of money, property, or services, whether or not in contravention of applicable law, (1) as a kickback or bribe to any person or (2) to any political organization, or the holder of or any aspirant to any elective or appointive public office except for personal political contributions not involving the direct or indirect use of funds of the Company.
(ee)Breach of Representations and Warranties by the Company. The Company agrees that 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 Buyer pursuant to this Agreement, it will be considered an Event of Default under the Note.
4.Additional Covenants, Agreements and Acknowledgments.
(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 if required under Regulation D and to provide a copy thereof to 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 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 Buyer on or prior to the Closing Date.
(c)Use of Proceeds. The Company shall use the proceeds for general working capital purposes.
(d)Usury. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in connection with any action or proceeding that may be brought by Buyer in order to enforce any right or remedy under this Agreement, the Note and any document, agreement
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or instrument contemplated thereby. Notwithstanding any provision to the contrary contained in this Agreement, the Note and any document, agreement or instrument contemplated thereby, it is expressly agreed and provided that the total liability of the Company under this Agreement, the Note or any document, agreement or instrument contemplated thereby for payments which under applicable law are in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums which under applicable law in the nature of interest that the Company may be obligated to pay under this Agreement, the Note and any document, agreement or instrument contemplated thereby exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law applicable to this Agreement, the Note and any document, agreement or instrument contemplated thereby is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to this Agreement, the Note and any document, agreement or instrument contemplated thereby from the effective date thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to Buyer with respect to indebtedness evidenced by this Agreement, the Note and any document, agreement or instrument contemplated thereby, such excess shall be applied by Buyer to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at Buyer’s election.
(e)Restriction on Activities. Commencing as of the date first above written, and until the earlier of payment of the Note in full or full conversion of the Note, the Company shall not, directly or indirectly, without Buyer’s prior written consent, which consent shall not be unreasonably withheld: (1) change the nature of its business; or (2) sell, divest, acquire, change the structure of any material assets other than in the ordinary course of business.
(f)Listing. The Company will, so long as Buyer owns any of the Securities, maintain the listing and trading of its Common Stock on the Principal Market or any equivalent replacement exchange or electronic quotation system (including but not limited to the Pink Sheets electronic quotation system) 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 Buyer copies of any notices it receives from the Principal Market and any other exchanges or electronic quotation systems on which the Common Stock is then traded regarding the continued eligibility of the Common Stock for listing on such exchanges and quotation systems.
(g)Corporate Existence. The Company will, so long as Buyer beneficially owns any of the Securities, 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 (1) assumes the Company’s obligations hereunder and under the agreements and instruments entered into in connection herewith and (2) is a publicly traded corporation whose Common Stock is listed for trading or quotation on the Principal Market, any tier of the NASDAQ Stock Market, the New York Stock Exchange or the NYSE MKT.
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(h)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.
(i)Breach of Covenants. The Company acknowledges and agrees that if the Company breaches any of the covenants set forth in this Section 4, in addition to any other remedies available to Buyer pursuant to this Agreement, it will be considered an Event of Default under the Note.
(j)Compliance with Reporting Obligations; Public Information Failures. For so long as Buyer beneficially owns the Note or any Conversion Shares, the Company shall comply with the reporting requirements of OTC Markets and/or the 1934 Act, as such may be applicable to the Company.
(k)Acknowledgment Regarding Buyer’s Trading Activity. Until the Note is fully repaid or fully converted, Buyer shall not effect any “short sale” (as such term is defined in Rule 200 of Regulation SHO of the 1934 Act) of the Common Stock which establishes a net short position with respect to the Common Stock.
(l)Disclosure of Transactions and Other Material Information. Within four (4) business days following the date this Agreement has been fully executed, the Company shall file a Supplemental Disclosure with OTC Markets describing the terms of the transactions contemplated by this Agreement. From and after the filing of such disclosure, Buyer shall not be in possession of any material, non-public information received from the Company or any of its officers, directors, employees or agents that is not disclosed in such disclosure.
(m)Non-Public Information. The Company covenants and agrees that neither it, nor any other person acting on its behalf, will provide Buyer or its agents or counsel with any information that constitutes, or the Company reasonably believes constitutes, material non-public information, unless prior thereto Buyer shall have consented to the receipt of such information and agreed with the Company to keep such information confidential. The Company understands and confirms that Buyer shall be relying on the foregoing covenant in effecting transactions in securities of the Company. To the extent that the Company delivers any material, non-public information to Buyer without such Buyer’s consent, the Company hereby covenants and agrees that such Buyer shall not have any duty of confidentiality to the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or affiliates, not to trade on the basis of, such material, nonpublic information, provided that Buyer shall remain subject to applicable law. To the extent that any notice provided, information provided, or any other communications made by the Company, to Buyer, constitutes or contains material non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice or other material information with OTC Markets and/or the SEC, as such may be applicable to the Company.
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5.Transfer Agent Instructions. The Company shall issue irrevocable instructions to the Company’s transfer agent to issue certificates and/or issue shares electronically at Buyer’s option, registered in the name of Buyer or its nominee, upon conversion of the Note, the Conversion Shares, in such amounts as specified from time to time by Buyer to the Company in accordance with the terms thereof (the “Irrevocable Transfer Agent Instructions”). In the event that the Company proposes to replace its transfer agent, the Company 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 this Agreement (including, but not limited to, the provision to irrevocably reserved shares of Common Stock in the Reserved Amount (as defined in the Note)) signed by the successor transfer agent to the Company and the Company. Prior to registration of the Conversion Shares under the 1933 Act, the qualification of the Conversion Shares under Regulation A or the date on which the Conversion Shares may be sold pursuant to Rule 144, Rule 144A, Regulation S or other applicable exemption without any restriction as to the number of Securities as of a particular date that can then be immediately sold, all such certificates or book entry shares shall bear the restrictive legend specified in Section 2(g) of this Agreement. The Company warrants that: (1) no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5 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; (2) 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 Securities to be issued to Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement; (3) 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 Securities issued to Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and/or this Agreement and (4) it will provide any required corporate resolutions and issuance approvals to its transfer agent within 24 hours of each conversion of the Note. Nothing in this Section shall affect in any way 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 Buyer provides the Company with (y) 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 (z) Buyer provides reasonable assurances that the Securities can be sold pursuant to 144, Rule 144A, Regulation S, Regulation A or other applicable exemption, the Company shall permit the transfer, and, in the case of the Securities, 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 Buyer. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to 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 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.
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6.Conditions to the Company’s Obligation to Sell. The obligation of the Company hereunder to issue and sell the Securities to 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)Buyer shall have executed this Agreement and delivered the same to the Company.
(b)Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above.
(c)The representations and warranties of 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 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 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 Buyer’s Obligation to Purchase. The obligation of Buyer hereunder to purchase the Securities 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 Buyer’s sole benefit and may be waived by Buyer at any time in its sole discretion:
(a)The Company shall have executed this Agreement and delivered the same to Buyer.
(b)The Company shall have delivered to Buyer the duly executed Note in such denominations as Buyer shall request and in accordance with Section 1(b) above.
(c)The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to 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 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.
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(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.
(g)Trading in the Common Stock on the Principal Market shall not have been suspended by the SEC, FINRA or the Principal Market.
(h)The Company shall have delivered to Buyer (1) a certificate evidencing the formation and good standing of the Company in such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction, as of a date within twenty (20) days of the Closing Date and (2) resolutions adopted by the Company’s Board of Directors at a duly called meeting or by unanimous written consent authorizing this Agreement and all other documents, instruments and transactions contemplated hereby.
8.Governing Law; Miscellaneous.
(a)Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada 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 City and State of New York, New York. 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. Buyer shall be entitled to recover from the Company 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, the Note or any related document or agreement 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.
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(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 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 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 (1) personally served, (2) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (3) delivered by reputable air courier service with charges prepaid, or (4) transmitted by hand delivery, telegram, e-mail 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 (y) upon hand delivery or delivery by e-mail or 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 (z) 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:
Raadr, Inc.
1680 Michigan Avenue, Suite 700
Miami Beach, Florida 33139
Attention: Chief Financial Officer
E-mail: dgilcher@mexedia.com
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If to Buyer:
FirstFire Global Opportunity Fund, LLC
1040 1st Avenue
New York, New York 10022
Attention: Eli Fireman, Managing Member
E-mail: eli@firstfirecap.com
(g)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.
(h)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 Buyer shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other. Notwithstanding the foregoing, Buyer may assign its rights hereunder to any person that purchases Securities in a private transaction from Buyer or to any of its “affiliates,” as that term is defined under the 1934 Act, without the consent of the Company.
(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 Buyer. The Company agrees to indemnify and hold harmless 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)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.
(k)Publicity. The Company and Buyer shall have the right to review a reasonable period of time before issuance of any press releases, SEC, Principal Market 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 Buyer, to make any press release or SEC, Principal Market (or other applicable trading market) or FINRA filings with respect to such transactions as is required by applicable law and regulations (although 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).
(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.
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(m)Remedies. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to 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 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.
(n)Payment Set Aside. To the extent that the Company makes a payment or payments to Buyer hereunder, pursuant to the Note, pursuant to the Warrant, or pursuant to any other agreement, certificate, instrument or document contemplated hereby or thereby, or Buyer enforces or exercises its rights hereunder, pursuant to the Note, pursuant to the Warrant, or pursuant to any other agreement, certificate, instrument or document contemplated hereby or thereby, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof (including but not limited to the sale of the Securities) are for any reason subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, or disgorged by Buyer, or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person or entity under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred and the Company shall immediately pay to Buyer a dollar amount equal to the amount that was for any reason subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, or disgorged by Buyer, or required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person or entity under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action).
(o)Failure or Indulgence Not Waiver. No failure or delay on the part of Buyer 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 of Buyer existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.
[ SIGNATURE PAGE FOLLOWS ]
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[ Signature Page to Securities Purchase Agreement ]
IN WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.
THE COMPANY:
| BUYER:
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RAADR, INC.
| FIRSTFIRE GLOBAL OPPORTUNITY FUND, LLC
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By: /s/ Daniel Contreras
| By: /s/ Eli Fireman
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Daniel Contreras
| Eli Fireman
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Chief Executive Officer
| Managing Member
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Aggregate Principal Amount of Note: $27,500.00
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Original Issue Discount: $2,500.00
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Aggregate Purchase Price: $25,000.00
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EXHIBIT A
Form of Promissory Note
To be delivered separately.
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SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (the “Agreement”) is dated as of December 5, 2024, by and between Raadr, Inc., a Nevada corporation (the “Company”), and GW Capital Ventures, LLC (“Buyer”).
RECITALS
WHEREAS, the Company and 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”); and
WHEREAS, Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement, a promissory note of the Company, in the form attached hereto as Exhibit A, in the aggregate principal amount of $27,500.00 (the “Note”).
NOW, THEREFORE, the Company and Buyer severally (and not jointly) hereby agree as follows:
1.Purchase and Sale of the Note.
(a)Purchase of the Note. On the Closing Date (as defined below), the Company shall issue and sell to Buyer and Buyer agrees to purchase from the Company the Note as is set forth immediately below Buyer’s name on the signature pages hereto.
(b)Form of Payment. On the Closing Date (as defined below), (i) Buyer shall pay the purchase price for the Note 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, and (ii) the Company shall deliver such duly executed Note on behalf of the Company 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 4:00 p.m., Eastern Time, on or about December 5, 2024, 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. Buyer represents and warrants to the Company that:
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(a)Investment Purpose. As of the date hereof, Buyer is purchasing the Note and the shares of Common Stock issuable upon conversion of or otherwise pursuant to the Note (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, 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. Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D (an “Accredited Investor”).
(c)Reliance on Exemptions. 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 Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of Buyer to acquire the Securities.
(d)Information. Buyer and its advisors, if any, have been, and for so long as the Note remains 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 Buyer or its advisors. Buyer and its advisors, if any, have been, and for so long as the Note remains outstanding will continue to be, afforded the opportunity to ask questions of the Company regarding its business and affairs. Notwithstanding the foregoing, the Company has not disclosed to Buyer any material non-public information regarding the Company or otherwise and will not disclose such information unless such information is disclosed to the public prior to or promptly following such disclosure to 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.
e.Governmental Review. 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. Buyer understands that (1) 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) Buyer shall have delivered to the Company 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 Buyer who agrees
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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 other applicable exemption, (e) the Securities are sold pursuant to Regulation S under the 1933 Act (or a successor rule) (“Regulation S”) or (f) the Securities are sold pursuant to Regulation A under the 1933 Act (or a successor rule) (“Regulation A”), and Buyer shall have delivered to the Company, at the cost of the Company, 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; (2) 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 (3) 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 in connection with a bona fide margin account or other lending arrangement secured by the Securities, and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and Buyer in effecting such pledge of Securities shall be not required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or otherwise.
(g)Legends. Buyer understands that the Securities have not been registered under the 1933 Act; and may bear a restrictive legend in substantially the following form:
THE SECURITIES, INCLUDING THE SECURITIES INTO WHICH THESE SECURITIES MAY BE CONVERTED, REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR (2) THE ISSUER OF SUCH SECURITIES RECEIVES AN OPINION OF COUNSEL TO THE BUYER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY ACCEPTABLE TO THE ISSUER’S TRANSFER AGENT, THAT SUCH SECURITIES MAY BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
The legend set forth above shall be removed and the Company shall issue a certificate or book entry statement for the applicable shares of Common Stock without such legend to the holder of any Security upon which it is stamped or (as requested by such holder) issue the applicable shares of Common Stock to such holder by electronic delivery by crediting the account of such holder’s broker with The Depository Trust Company (“DTC”), 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, Rule 144A, Regulation S, Regulation A or other applicable exemption without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) the Company or Buyer provides an opinion of counsel 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 Company shall be responsible for the fees of its transfer agent and all DTC fees associated with any such issuance. Buyer agrees to sell all Securities, including those represented by a certificate(s) from which the legend has been
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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 Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144, Rule 144A, Regulation S, Regulation A or other applicable exemption at the Deadline (as defined in the Note), it will be considered an Event of Default under the Note.
(f)Authorization; Enforcement. This Agreement has been duly and validly authorized. This Agreement has been duly executed and delivered on behalf of Buyer, and this Agreement constitutes a valid and binding agreement of Buyer enforceable in accordance with its terms.
3.Representations and Warranties of the Company. The Company represents and warrants to Buyer that:
(a)Organization and Qualification. The Company 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.
(b)Authorization; Enforcement. (1) 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, (2) 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 has 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, (3) 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 (4) 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; Governing Documents. As of the date of this Agreement, the authorized capital stock of the Company consists of: 15,000,000,000 shares of common stock, par value $0.001 per share, of which 6,371,260,661 shares are issued and outstanding; and 100,000,000 shares of preferred stock, par value $0.001 per share, (1) 1,000,000 shares of which are designated Series E Preferred Stock and none of which shares are issued and outstanding and (2) 75,000 shares of which are designated Series F Preferred Stock and 75,000 shares of which are issued and outstanding. All of such outstanding shares of capital stock of the Company, the Commitment Shares and the Conversion Shares 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
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date of this Agreement, other than as publicly announced prior to such date and reflected in the Disclosure Documents (defined below) of the Company (x) 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, (y) 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 (z) 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 any of the Securities. The Company has furnished to Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), 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.
(d)Issuance of Securities. The Securities are duly authorized and reserved for issuance 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 Buyer thereof.
(e)Acknowledgment of Dilution. The Company understands and acknowledges the potentially dilutive effect of the Conversion Shares to the Common Stock upon the conversion of the Note. The Company further acknowledges that its obligation to issue, upon conversion of the Note, the Conversion Shares are absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.
(f)Ranking; No Conflicts. The Note shall have no priority in payment and performance over any other indebtedness of the Company. The execution, delivery and performance of this Agreement and 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 (1) conflict with or result in a violation of any provision of the Articles of Incorporation or Bylaws, or (2) 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, note, evidence of indebtedness, indenture, patent, patent license or instrument to which the Company or any of its Subsidiaries is a party, or (3) 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 is 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
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Effect), or (4) trigger any anti-dilution and/or ratchet provision contained in any other contract in which the Company is a party thereto or any security issued by the Company. The Company is not in violation of its Articles of Incorporation, Bylaws or other organizational documents and it is not in default (and no event has occurred which with notice or lapse of time or both could put the Company in default) under, and the Company has not 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 is a party or by which any property or assets of the Company is bound or affected, except for possible defaults as would not, individually or in the aggregate, have a Material Adverse Effect. The business of the Company is not being conducted, and shall not be conducted so long as 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 and the Commitment Warrant in accordance with their respective terms hereof or thereof or to issue and sell the Note in accordance with the terms hereof and, upon conversion of the Note, issue Conversion Shares. 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 Principal Market (as defined herein) and does not reasonably anticipate that the Common Stock will be delisted by the Principal Market in the foreseeable future. The Company is unaware of any facts or circumstances which might give rise to any of the foregoing. The “Principal Market” shall mean the principal securities exchange or trading market where such Common Stock is listed or traded, including but not limited to any tier of the OTC Markets, any tier of the NASDAQ Stock Market (including NASDAQ Capital Market), or the NYSE American, or any successor to such markets.
(g)Disclosure Documents; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with OTC Markets (the “Disclosure Documents”), except for the Quarterly Report for the period ended September 30, 2024. The Company’s Quarterly Report for the period ended June 30, 2024, complies in all material respects with the requirements of OTC Markets applicable thereto, and none of the Disclosure Documents, at the time they were filed with OTC Markets, 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 Disclosure 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 Disclosure Documents complied as to form in all material respects with applicable accounting requirements and the published rules of OTC Markets 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 as of the dates thereof and the results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit
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adjustments). Except as set forth in the financial statements of the Company included in the Quarterly Report for the period ended June 30, 2024, the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to June 30, 2024, 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 not subject to the reporting requirements of the Securities Exchange Act of 1934 (the “1934 Act”). The Company has been, but no longer is, a “shell company,” as described in Rule 144(i)(1)(I).
(h)Absence of Certain Changes. Since June 30, 2024, 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 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, threatened against or affecting the Company, or their officers or directors in their capacity as such, that could have a Material Adverse Effect. The Disclosure Documents contain a complete list and summary description of any pending or, to the knowledge of the Company, threatened proceeding against or affecting the Company, without regard to whether it would have a Material Adverse Effect. The Company is unaware of any facts or circumstances which might give rise to any of the foregoing.
(j)Intellectual Property. The Company 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 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 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 has taken reasonable security measures to protect the secrecy, confidentiality and value of its Intellectual Property.
(k)No Materially Adverse Contracts, Etc. The Company is not 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. The Company is not 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 has not filed all required federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it
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is subject, the Company represents that it owes no delinquent taxes. The Company agrees to have filed all delinquent tax returns on or before January 15, 2025.
(m)Transactions with Affiliates. Except as set forth in the Disclosure Documents, none of the officers, directors or employees of the Company is presently a party to any transaction with the Company.
(n)Disclosure. All information relating to or concerning the Company set forth in this Agreement and provided to 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 its 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.
(o)Acknowledgment Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that Buyer is acting solely in the capacity of arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that 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 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 Buyer’s purchase of the Securities. The Company further represents to 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 Buyer. The issuance of the Securities to 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; No Solicitation. 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. The Company acknowledges and agrees that neither Buyer nor its employee(s), member(s), beneficial owner(s), or partner(s) solicited the Company to enter into this Agreement and consummate the transactions described in this Agreement.
(r)Permits; Compliance. The Company 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
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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. The Company is not 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.
(s)Environmental Matters.
(1)There are, to the Company’s knowledge, with respect to the Company or any predecessor of the Company, no past or present violations of Environmental Laws (as defined below). 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.
(2)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, and no Hazardous Materials were released on or about any real property previously owned, leased or used by the Company during the period the property was owned, leased or used by the Company.
(t)Title to Property. The Company has good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by it which is material to the business of the Company, in each case free and clear of all liens, encumbrances and defects.
(u)Insurance. The Company has necessary commercially reasonable insurance policies in force.
(v)Internal Accounting Controls. The Company maintains a system of internal accounting controls sufficient, in the judgment of the Company’s board of directors, to provide reasonable assurance that (1) transactions are executed in accordance with management’s general or specific authorizations, (2) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (3) access to assets is permitted only in accordance with management’s general or specific authorization and (4) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
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(w)Foreign Corrupt Practices. Neither The Company nor any director, officer, agent, employee or other person acting on behalf of the Company, 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’s financial statements for its most recent fiscal year end and interim financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
(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)No Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its public filings.
(aa)No Disqualification Events. None of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event.
(bb)Manipulation of Price. The Company has not, and to its knowledge no one acting on its behalf has: (1) taken, directly or indirectly, any action designed to cause or to result, or that could reasonably be expected to cause or result, in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (2) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities,
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or (3) paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company.
(cc)Bank Holding Company Act. The Company is not subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). The Company (1) does not exercise a controlling influence over the management or policies and (2) does not own or control, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
(dd)Illegal or Unauthorized Payments; Political Contributions. Neither the Company nor, to the Company’s knowledge, any of the officers, directors, employees, agents or other representatives of the Company or any other business entity or enterprise with which the Company is or has been affiliated or associated, has, directly or indirectly, made or authorized any payment, contribution or gift of money, property, or services, whether or not in contravention of applicable law, (1) as a kickback or bribe to any person or (2) to any political organization, or the holder of or any aspirant to any elective or appointive public office except for personal political contributions not involving the direct or indirect use of funds of the Company.
(ee)Breach of Representations and Warranties by the Company. The Company agrees that 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 Buyer pursuant to this Agreement, it will be considered an Event of Default under the Note.
4.Additional Covenants, Agreements and Acknowledgments.
(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 if required under Regulation D and to provide a copy thereof to 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 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 Buyer on or prior to the Closing Date.
(c)Use of Proceeds. The Company shall use the proceeds for general working capital purposes.
(d)Usury. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in connection with any action or proceeding that may be brought by Buyer in order to enforce any right or remedy under this Agreement, the Note and any document, agreement
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or instrument contemplated thereby. Notwithstanding any provision to the contrary contained in this Agreement, the Note and any document, agreement or instrument contemplated thereby, it is expressly agreed and provided that the total liability of the Company under this Agreement, the Note or any document, agreement or instrument contemplated thereby for payments which under applicable law are in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums which under applicable law in the nature of interest that the Company may be obligated to pay under this Agreement, the Note and any document, agreement or instrument contemplated thereby exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law applicable to this Agreement, the Note and any document, agreement or instrument contemplated thereby is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to this Agreement, the Note and any document, agreement or instrument contemplated thereby from the effective date thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to Buyer with respect to indebtedness evidenced by this Agreement, the Note and any document, agreement or instrument contemplated thereby, such excess shall be applied by Buyer to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at Buyer’s election.
(e)Restriction on Activities. Commencing as of the date first above written, and until the earlier of payment of the Note in full or full conversion of the Note, the Company shall not, directly or indirectly, without Buyer’s prior written consent, which consent shall not be unreasonably withheld: (1) change the nature of its business; or (2) sell, divest, acquire, change the structure of any material assets other than in the ordinary course of business.
(f)Listing. The Company will, so long as Buyer owns any of the Securities, maintain the listing and trading of its Common Stock on the Principal Market or any equivalent replacement exchange or electronic quotation system (including but not limited to the Pink Sheets electronic quotation system) 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 Buyer copies of any notices it receives from the Principal Market and any other exchanges or electronic quotation systems on which the Common Stock is then traded regarding the continued eligibility of the Common Stock for listing on such exchanges and quotation systems.
(g)Corporate Existence. The Company will, so long as Buyer beneficially owns any of the Securities, 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 (1) assumes the Company’s obligations hereunder and under the agreements and instruments entered into in connection herewith and (2) is a publicly traded corporation whose Common Stock is listed for trading or quotation on the Principal Market, any tier of the NASDAQ Stock Market, the New York Stock Exchange or the NYSE MKT.
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(h)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.
(i)Breach of Covenants. The Company acknowledges and agrees that if the Company breaches any of the covenants set forth in this Section 4, in addition to any other remedies available to Buyer pursuant to this Agreement, it will be considered an Event of Default under the Note.
(j)Compliance with Reporting Obligations; Public Information Failures. For so long as Buyer beneficially owns the Note or any Conversion Shares, the Company shall comply with the reporting requirements of OTC Markets and/or the 1934 Act, as such may be applicable to the Company.
(k)Acknowledgment Regarding Buyer’s Trading Activity. Until the Note is fully repaid or fully converted, Buyer shall not effect any “short sale” (as such term is defined in Rule 200 of Regulation SHO of the 1934 Act) of the Common Stock which establishes a net short position with respect to the Common Stock.
(l)Disclosure of Transactions and Other Material Information. Within four (4) business days following the date this Agreement has been fully executed, the Company shall file a Supplemental Disclosure with OTC Markets describing the terms of the transactions contemplated by this Agreement. From and after the filing of such disclosure, Buyer shall not be in possession of any material, non-public information received from the Company or any of its officers, directors, employees or agents that is not disclosed in such disclosure.
(m)Non-Public Information. The Company covenants and agrees that neither it, nor any other person acting on its behalf, will provide Buyer or its agents or counsel with any information that constitutes, or the Company reasonably believes constitutes, material non-public information, unless prior thereto Buyer shall have consented to the receipt of such information and agreed with the Company to keep such information confidential. The Company understands and confirms that Buyer shall be relying on the foregoing covenant in effecting transactions in securities of the Company. To the extent that the Company delivers any material, non-public information to Buyer without such Buyer’s consent, the Company hereby covenants and agrees that such Buyer shall not have any duty of confidentiality to the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or affiliates, not to trade on the basis of, such material, nonpublic information, provided that Buyer shall remain subject to applicable law. To the extent that any notice provided, information provided, or any other communications made by the Company, to Buyer, constitutes or contains material non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice or other material information with OTC Markets and/or the SEC, as such may be applicable to the Company.
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5.Transfer Agent Instructions. The Company shall issue irrevocable instructions to the Company’s transfer agent to issue certificates and/or issue shares electronically at Buyer’s option, registered in the name of Buyer or its nominee, upon conversion of the Note, the Conversion Shares, in such amounts as specified from time to time by Buyer to the Company in accordance with the terms thereof (the “Irrevocable Transfer Agent Instructions”). In the event that the Company proposes to replace its transfer agent, the Company 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 this Agreement (including, but not limited to, the provision to irrevocably reserved shares of Common Stock in the Reserved Amount (as defined in the Note)) signed by the successor transfer agent to the Company and the Company. Prior to registration of the Conversion Shares under the 1933 Act, the qualification of the Conversion Shares under Regulation A or the date on which the Conversion Shares may be sold pursuant to Rule 144, Rule 144A, Regulation S or other applicable exemption without any restriction as to the number of Securities as of a particular date that can then be immediately sold, all such certificates or book entry shares shall bear the restrictive legend specified in Section 2(g) of this Agreement. The Company warrants that: (1) no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5 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; (2) 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 Securities to be issued to Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement; (3) 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 Securities issued to Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and/or this Agreement and (4) it will provide any required corporate resolutions and issuance approvals to its transfer agent within 24 hours of each conversion of the Note. Nothing in this Section shall affect in any way 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 Buyer provides the Company with (y) 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 (z) Buyer provides reasonable assurances that the Securities can be sold pursuant to 144, Rule 144A, Regulation S, Regulation A or other applicable exemption, the Company shall permit the transfer, and, in the case of the Securities, 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 Buyer. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to 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 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.
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6.Conditions to the Company’s Obligation to Sell. The obligation of the Company hereunder to issue and sell the Securities to 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)Buyer shall have executed this Agreement and delivered the same to the Company.
(b)Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above.
(c)The representations and warranties of 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 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 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 Buyer’s Obligation to Purchase. The obligation of Buyer hereunder to purchase the Securities 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 Buyer’s sole benefit and may be waived by Buyer at any time in its sole discretion:
(a)The Company shall have executed this Agreement and delivered the same to Buyer.
(b)The Company shall have delivered to Buyer the duly executed Note in such denominations as Buyer shall request and in accordance with Section 1(b) above.
(c)The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to 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 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.
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(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.
(g)Trading in the Common Stock on the Principal Market shall not have been suspended by the SEC, FINRA or the Principal Market.
(h)The Company shall have delivered to Buyer (1) a certificate evidencing the formation and good standing of the Company in such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction, as of a date within twenty (20) days of the Closing Date and (2) resolutions adopted by the Company’s Board of Directors at a duly called meeting or by unanimous written consent authorizing this Agreement and all other documents, instruments and transactions contemplated hereby.
8.Governing Law; Miscellaneous.
(a)Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada 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 City and State of New York, New York. 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. Buyer shall be entitled to recover from the Company 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, the Note or any related document or agreement 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.
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(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 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 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 (1) personally served, (2) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (3) delivered by reputable air courier service with charges prepaid, or (4) transmitted by hand delivery, telegram, e-mail 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 (y) upon hand delivery or delivery by e-mail or 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 (z) 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:
Raadr, Inc.
1680 Michigan Avenue, Suite 700
Miami Beach, Florida 33139
Attention: Chief Financial Officer
E-mail: dgilcher@mexedia.com
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If to Buyer:
GW Capital Ventures, LLC
427 Kingston Avenue
Brooklyn, New York 11225
Attention: Noah Weinstein
E-mail: inbox@gwholdingsgroup.com
(g)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.
(h)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 Buyer shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other. Notwithstanding the foregoing, Buyer may assign its rights hereunder to any person that purchases Securities in a private transaction from Buyer or to any of its “affiliates,” as that term is defined under the 1934 Act, without the consent of the Company.
(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 Buyer. The Company agrees to indemnify and hold harmless 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)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.
(k)Publicity. The Company and Buyer shall have the right to review a reasonable period of time before issuance of any press releases, SEC, Principal Market 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 Buyer, to make any press release or SEC, Principal Market (or other applicable trading market) or FINRA filings with respect to such transactions as is required by applicable law and regulations (although 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).
(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.
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(m)Remedies. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to 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 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.
(n)Payment Set Aside. To the extent that the Company makes a payment or payments to Buyer hereunder, pursuant to the Note, pursuant to the Warrant, or pursuant to any other agreement, certificate, instrument or document contemplated hereby or thereby, or Buyer enforces or exercises its rights hereunder, pursuant to the Note, pursuant to the Warrant, or pursuant to any other agreement, certificate, instrument or document contemplated hereby or thereby, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof (including but not limited to the sale of the Securities) are for any reason subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, or disgorged by Buyer, or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person or entity under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred and the Company shall immediately pay to Buyer a dollar amount equal to the amount that was for any reason subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, or disgorged by Buyer, or required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person or entity under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action).
(o)Failure or Indulgence Not Waiver. No failure or delay on the part of Buyer 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 of Buyer existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.
[ SIGNATURE PAGE FOLLOWS ]
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[ Signature Page to Securities Purchase Agreement ]
IN WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.
THE COMPANY:
| BUYER:
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RAADR, INC.
| GW CAPITAL VENTURES, LLC
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By: /s/ Daniel Contreras
| By: /s/ Noah Weinstein
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Daniel Contreras
| Noah Weinstein
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Chief Executive Officer
| Managing Member
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Aggregate Principal Amount of Note: $27,500.00
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Original Issue Discount: $2,500.00
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Aggregate Purchase Price: $25,000.00
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EXHIBIT A
Form of Promissory Note
To be delivered separately.
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SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (the “Agreement”) is dated as of December 11, 2024, by and between Raadr, Inc., a Nevada corporation (the “Company”), and Leonite Fund I, LP (“Buyer”).
RECITALS
WHEREAS, the Company and 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”); and
WHEREAS, Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement, a promissory note of the Company, in the form attached hereto as Exhibit A, in the aggregate principal amount of $27,500.00 (the “Note”).
NOW, THEREFORE, the Company and Buyer severally (and not jointly) hereby agree as follows:
1.Purchase and Sale of the Note.
(a)Purchase of the Note. On the Closing Date (as defined below), the Company shall issue and sell to Buyer and Buyer agrees to purchase from the Company the Note as is set forth immediately below Buyer’s name on the signature pages hereto.
(b)Form of Payment. On the Closing Date (as defined below), (i) Buyer shall pay the purchase price for the Note 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, and (ii) the Company shall deliver such duly executed Note on behalf of the Company 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 4:00 p.m., Eastern Time, on or about December 12, 2024, 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. Buyer represents and warrants to the Company that:
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(a)Investment Purpose. As of the date hereof, Buyer is purchasing the Note and the shares of Common Stock issuable upon conversion of or otherwise pursuant to the Note (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, 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. Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D (an “Accredited Investor”).
(c)Reliance on Exemptions. 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 Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of Buyer to acquire the Securities.
(d)Information. Buyer and its advisors, if any, have been, and for so long as the Note remains 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 Buyer or its advisors. Buyer and its advisors, if any, have been, and for so long as the Note remains outstanding will continue to be, afforded the opportunity to ask questions of the Company regarding its business and affairs. Notwithstanding the foregoing, the Company has not disclosed to Buyer any material non-public information regarding the Company or otherwise and will not disclose such information unless such information is disclosed to the public prior to or promptly following such disclosure to 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.
e.Governmental Review. 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. Buyer understands that (1) 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) Buyer shall have delivered to the Company 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 Buyer who agrees
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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 other applicable exemption, (e) the Securities are sold pursuant to Regulation S under the 1933 Act (or a successor rule) (“Regulation S”) or (f) the Securities are sold pursuant to Regulation A under the 1933 Act (or a successor rule) (“Regulation A”), and Buyer shall have delivered to the Company, at the cost of the Company, 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; (2) 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 (3) 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 in connection with a bona fide margin account or other lending arrangement secured by the Securities, and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and Buyer in effecting such pledge of Securities shall be not required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or otherwise.
(g)Legends. Buyer understands that the Securities have not been registered under the 1933 Act; and may bear a restrictive legend in substantially the following form:
THE SECURITIES, INCLUDING THE SECURITIES INTO WHICH THESE SECURITIES MAY BE CONVERTED, REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR (2) THE ISSUER OF SUCH SECURITIES RECEIVES AN OPINION OF COUNSEL TO THE BUYER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY ACCEPTABLE TO THE ISSUER’S TRANSFER AGENT, THAT SUCH SECURITIES MAY BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
The legend set forth above shall be removed and the Company shall issue a certificate or book entry statement for the applicable shares of Common Stock without such legend to the holder of any Security upon which it is stamped or (as requested by such holder) issue the applicable shares of Common Stock to such holder by electronic delivery by crediting the account of such holder’s broker with The Depository Trust Company (“DTC”), 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, Rule 144A, Regulation S, Regulation A or other applicable exemption without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) the Company or Buyer provides an opinion of counsel 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 Company shall be responsible for the fees of its transfer agent and all DTC fees associated with any such issuance. Buyer agrees to sell all Securities, including those represented by a certificate(s) from which the legend has been
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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 Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144, Rule 144A, Regulation S, Regulation A or other applicable exemption at the Deadline (as defined in the Note), it will be considered an Event of Default under the Note.
(f)Authorization; Enforcement. This Agreement has been duly and validly authorized. This Agreement has been duly executed and delivered on behalf of Buyer, and this Agreement constitutes a valid and binding agreement of Buyer enforceable in accordance with its terms.
3.Representations and Warranties of the Company. The Company represents and warrants to Buyer that:
(a)Organization and Qualification. The Company 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.
(b)Authorization; Enforcement. (1) 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, (2) 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 has 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, (3) 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 (4) 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; Governing Documents. As of the date of this Agreement, the authorized capital stock of the Company consists of: 15,000,000,000 shares of common stock, par value $0.001 per share, of which 6,371,260,661 shares are issued and outstanding; and 100,000,000 shares of preferred stock, par value $0.001 per share, (1) 1,000,000 shares of which are designated Series E Preferred Stock and none of which shares are issued and outstanding and (2) 75,000 shares of which are designated Series F Preferred Stock and 75,000 shares of which are issued and outstanding. All of such outstanding shares of capital stock of the Company, the Commitment Shares and the Conversion Shares 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
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date of this Agreement, other than as publicly announced prior to such date and reflected in the Disclosure Documents (defined below) of the Company (x) 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, (y) 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 (z) 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 any of the Securities. The Company has furnished to Buyer true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (“Articles of Incorporation”), the Company’s Bylaws, as in effect on the date hereof (the “Bylaws”), 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.
(d)Issuance of Securities. The Securities are duly authorized and reserved for issuance 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 Buyer thereof.
(e)Acknowledgment of Dilution. The Company understands and acknowledges the potentially dilutive effect of the Conversion Shares to the Common Stock upon the conversion of the Note. The Company further acknowledges that its obligation to issue, upon conversion of the Note, the Conversion Shares are absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.
(f)Ranking; No Conflicts. The Note shall have no priority in payment and performance over any other indebtedness of the Company. The execution, delivery and performance of this Agreement and 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 (1) conflict with or result in a violation of any provision of the Articles of Incorporation or Bylaws, or (2) 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, note, evidence of indebtedness, indenture, patent, patent license or instrument to which the Company or any of its Subsidiaries is a party, or (3) 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 is 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
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Effect), or (4) trigger any anti-dilution and/or ratchet provision contained in any other contract in which the Company is a party thereto or any security issued by the Company. The Company is not in violation of its Articles of Incorporation, Bylaws or other organizational documents and it is not in default (and no event has occurred which with notice or lapse of time or both could put the Company in default) under, and the Company has not 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 is a party or by which any property or assets of the Company is bound or affected, except for possible defaults as would not, individually or in the aggregate, have a Material Adverse Effect. The business of the Company is not being conducted, and shall not be conducted so long as 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 and the Commitment Warrant in accordance with their respective terms hereof or thereof or to issue and sell the Note in accordance with the terms hereof and, upon conversion of the Note, issue Conversion Shares. 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 Principal Market (as defined herein) and does not reasonably anticipate that the Common Stock will be delisted by the Principal Market in the foreseeable future. The Company is unaware of any facts or circumstances which might give rise to any of the foregoing. The “Principal Market” shall mean the principal securities exchange or trading market where such Common Stock is listed or traded, including but not limited to any tier of the OTC Markets, any tier of the NASDAQ Stock Market (including NASDAQ Capital Market), or the NYSE American, or any successor to such markets.
(g)Disclosure Documents; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with OTC Markets (the “Disclosure Documents”), except for the Quarterly Report for the period ended September 30, 2024. The Company’s Quarterly Report for the period ended June 30, 2024, complies in all material respects with the requirements of OTC Markets applicable thereto, and none of the Disclosure Documents, at the time they were filed with OTC Markets, 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 Disclosure 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 Disclosure Documents complied as to form in all material respects with applicable accounting requirements and the published rules of OTC Markets 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 as of the dates thereof and the results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit
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adjustments). Except as set forth in the financial statements of the Company included in the Quarterly Report for the period ended June 30, 2024, the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to June 30, 2024, 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 not subject to the reporting requirements of the Securities Exchange Act of 1934 (the “1934 Act”). The Company has been, but no longer is, a “shell company,” as described in Rule 144(i)(1)(I).
(h)Absence of Certain Changes. Since June 30, 2024, 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 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, threatened against or affecting the Company, or their officers or directors in their capacity as such, that could have a Material Adverse Effect. The Disclosure Documents contain a complete list and summary description of any pending or, to the knowledge of the Company, threatened proceeding against or affecting the Company, without regard to whether it would have a Material Adverse Effect. The Company is unaware of any facts or circumstances which might give rise to any of the foregoing.
(j)Intellectual Property. The Company 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 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 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 has taken reasonable security measures to protect the secrecy, confidentiality and value of its Intellectual Property.
(k)No Materially Adverse Contracts, Etc. The Company is not 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. The Company is not 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 has not filed all required federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it
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is subject, the Company represents that it owes no delinquent taxes. The Company agrees to have filed all delinquent tax returns on or before January 15, 2025.
(m)Transactions with Affiliates. Except as set forth in the Disclosure Documents, none of the officers, directors or employees of the Company is presently a party to any transaction with the Company.
(n)Disclosure. All information relating to or concerning the Company set forth in this Agreement and provided to 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 its 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.
(o)Acknowledgment Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that Buyer is acting solely in the capacity of arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that 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 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 Buyer’s purchase of the Securities. The Company further represents to 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 Buyer. The issuance of the Securities to 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; No Solicitation. 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. The Company acknowledges and agrees that neither Buyer nor its employee(s), member(s), beneficial owner(s), or partner(s) solicited the Company to enter into this Agreement and consummate the transactions described in this Agreement.
(r)Permits; Compliance. The Company 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
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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. The Company is not 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.
(s)Environmental Matters.
(1)There are, to the Company’s knowledge, with respect to the Company or any predecessor of the Company, no past or present violations of Environmental Laws (as defined below). 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.
(2)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, and no Hazardous Materials were released on or about any real property previously owned, leased or used by the Company during the period the property was owned, leased or used by the Company.
(t)Title to Property. The Company has good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by it which is material to the business of the Company, in each case free and clear of all liens, encumbrances and defects.
(u)Insurance. The Company has necessary commercially reasonable insurance policies in force.
(v)Internal Accounting Controls. The Company maintains a system of internal accounting controls sufficient, in the judgment of the Company’s board of directors, to provide reasonable assurance that (1) transactions are executed in accordance with management’s general or specific authorizations, (2) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (3) access to assets is permitted only in accordance with management’s general or specific authorization and (4) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
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(w)Foreign Corrupt Practices. Neither The Company nor any director, officer, agent, employee or other person acting on behalf of the Company, 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’s financial statements for its most recent fiscal year end and interim financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
(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)No Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its public filings.
(aa)No Disqualification Events. None of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event.
(bb)Manipulation of Price. The Company has not, and to its knowledge no one acting on its behalf has: (1) taken, directly or indirectly, any action designed to cause or to result, or that could reasonably be expected to cause or result, in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (2) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities,
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or (3) paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company.
(cc)Bank Holding Company Act. The Company is not subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). The Company (1) does not exercise a controlling influence over the management or policies and (2) does not own or control, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
(dd)Illegal or Unauthorized Payments; Political Contributions. Neither the Company nor, to the Company’s knowledge, any of the officers, directors, employees, agents or other representatives of the Company or any other business entity or enterprise with which the Company is or has been affiliated or associated, has, directly or indirectly, made or authorized any payment, contribution or gift of money, property, or services, whether or not in contravention of applicable law, (1) as a kickback or bribe to any person or (2) to any political organization, or the holder of or any aspirant to any elective or appointive public office except for personal political contributions not involving the direct or indirect use of funds of the Company.
(ee)Breach of Representations and Warranties by the Company. The Company agrees that 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 Buyer pursuant to this Agreement, it will be considered an Event of Default under the Note.
4.Additional Covenants, Agreements and Acknowledgments.
(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 if required under Regulation D and to provide a copy thereof to 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 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 Buyer on or prior to the Closing Date.
(c)Use of Proceeds. The Company shall use the proceeds for general working capital purposes.
(d)Usury. To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in connection with any action or proceeding that may be brought by Buyer in order to enforce any right or remedy under this Agreement, the Note and any document, agreement
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or instrument contemplated thereby. Notwithstanding any provision to the contrary contained in this Agreement, the Note and any document, agreement or instrument contemplated thereby, it is expressly agreed and provided that the total liability of the Company under this Agreement, the Note or any document, agreement or instrument contemplated thereby for payments which under applicable law are in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums which under applicable law in the nature of interest that the Company may be obligated to pay under this Agreement, the Note and any document, agreement or instrument contemplated thereby exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law applicable to this Agreement, the Note and any document, agreement or instrument contemplated thereby is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to this Agreement, the Note and any document, agreement or instrument contemplated thereby from the effective date thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to Buyer with respect to indebtedness evidenced by this Agreement, the Note and any document, agreement or instrument contemplated thereby, such excess shall be applied by Buyer to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at Buyer’s election.
(e)Restriction on Activities. Commencing as of the date first above written, and until the earlier of payment of the Note in full or full conversion of the Note, the Company shall not, directly or indirectly, without Buyer’s prior written consent, which consent shall not be unreasonably withheld: (1) change the nature of its business; or (2) sell, divest, acquire, change the structure of any material assets other than in the ordinary course of business.
(f)Listing. The Company will, so long as Buyer owns any of the Securities, maintain the listing and trading of its Common Stock on the Principal Market or any equivalent replacement exchange or electronic quotation system (including but not limited to the Pink Sheets electronic quotation system) 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 Buyer copies of any notices it receives from the Principal Market and any other exchanges or electronic quotation systems on which the Common Stock is then traded regarding the continued eligibility of the Common Stock for listing on such exchanges and quotation systems.
(g)Corporate Existence. The Company will, so long as Buyer beneficially owns any of the Securities, 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 (1) assumes the Company’s obligations hereunder and under the agreements and instruments entered into in connection herewith and (2) is a publicly traded corporation whose Common Stock is listed for trading or quotation on the Principal Market, any tier of the NASDAQ Stock Market, the New York Stock Exchange or the NYSE MKT.
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(h)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.
(i)Breach of Covenants. The Company acknowledges and agrees that if the Company breaches any of the covenants set forth in this Section 4, in addition to any other remedies available to Buyer pursuant to this Agreement, it will be considered an Event of Default under the Note.
(j)Compliance with Reporting Obligations; Public Information Failures. For so long as Buyer beneficially owns the Note or any Conversion Shares, the Company shall comply with the reporting requirements of OTC Markets and/or the 1934 Act, as such may be applicable to the Company.
(k)Acknowledgment Regarding Buyer’s Trading Activity. Until the Note is fully repaid or fully converted, Buyer shall not effect any “short sale” (as such term is defined in Rule 200 of Regulation SHO of the 1934 Act) of the Common Stock which establishes a net short position with respect to the Common Stock.
(l)Disclosure of Transactions and Other Material Information. Within four (4) business days following the date this Agreement has been fully executed, the Company shall file a Supplemental Disclosure with OTC Markets describing the terms of the transactions contemplated by this Agreement. From and after the filing of such disclosure, Buyer shall not be in possession of any material, non-public information received from the Company or any of its officers, directors, employees or agents that is not disclosed in such disclosure.
(m)Non-Public Information. The Company covenants and agrees that neither it, nor any other person acting on its behalf, will provide Buyer or its agents or counsel with any information that constitutes, or the Company reasonably believes constitutes, material non-public information, unless prior thereto Buyer shall have consented to the receipt of such information and agreed with the Company to keep such information confidential. The Company understands and confirms that Buyer shall be relying on the foregoing covenant in effecting transactions in securities of the Company. To the extent that the Company delivers any material, non-public information to Buyer without such Buyer’s consent, the Company hereby covenants and agrees that such Buyer shall not have any duty of confidentiality to the Company, any of its Subsidiaries, or any of their respective officers, directors, agents, employees or affiliates, not to trade on the basis of, such material, nonpublic information, provided that Buyer shall remain subject to applicable law. To the extent that any notice provided, information provided, or any other communications made by the Company, to Buyer, constitutes or contains material non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice or other material information with OTC Markets and/or the SEC, as such may be applicable to the Company.
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5.Transfer Agent Instructions. The Company shall issue irrevocable instructions to the Company’s transfer agent to issue certificates and/or issue shares electronically at Buyer’s option, registered in the name of Buyer or its nominee, upon conversion of the Note, the Conversion Shares, in such amounts as specified from time to time by Buyer to the Company in accordance with the terms thereof (the “Irrevocable Transfer Agent Instructions”). In the event that the Company proposes to replace its transfer agent, the Company 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 this Agreement (including, but not limited to, the provision to irrevocably reserved shares of Common Stock in the Reserved Amount (as defined in the Note)) signed by the successor transfer agent to the Company and the Company. Prior to registration of the Conversion Shares under the 1933 Act, the qualification of the Conversion Shares under Regulation A or the date on which the Conversion Shares may be sold pursuant to Rule 144, Rule 144A, Regulation S or other applicable exemption without any restriction as to the number of Securities as of a particular date that can then be immediately sold, all such certificates or book entry shares shall bear the restrictive legend specified in Section 2(g) of this Agreement. The Company warrants that: (1) no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5 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; (2) 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 Securities to be issued to Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement; (3) 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 Securities issued to Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and/or this Agreement and (4) it will provide any required corporate resolutions and issuance approvals to its transfer agent within 24 hours of each conversion of the Note. Nothing in this Section shall affect in any way 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 Buyer provides the Company with (y) 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 (z) Buyer provides reasonable assurances that the Securities can be sold pursuant to 144, Rule 144A, Regulation S, Regulation A or other applicable exemption, the Company shall permit the transfer, and, in the case of the Securities, 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 Buyer. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to 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 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.
SECURITIES PURCHASE AGREEMENT | 14
6.Conditions to the Company’s Obligation to Sell. The obligation of the Company hereunder to issue and sell the Securities to 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)Buyer shall have executed this Agreement and delivered the same to the Company.
(b)Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above.
(c)The representations and warranties of 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 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 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 Buyer’s Obligation to Purchase. The obligation of Buyer hereunder to purchase the Securities 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 Buyer’s sole benefit and may be waived by Buyer at any time in its sole discretion:
(a)The Company shall have executed this Agreement and delivered the same to Buyer.
(b)The Company shall have delivered to Buyer the duly executed Note in such denominations as Buyer shall request and in accordance with Section 1(b) above.
(c)The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to 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 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.
SECURITIES PURCHASE AGREEMENT | 15
(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.
(g)Trading in the Common Stock on the Principal Market shall not have been suspended by the SEC, FINRA or the Principal Market.
(h)The Company shall have delivered to Buyer (1) a certificate evidencing the formation and good standing of the Company in such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction, as of a date within twenty (20) days of the Closing Date and (2) resolutions adopted by the Company’s Board of Directors at a duly called meeting or by unanimous written consent authorizing this Agreement and all other documents, instruments and transactions contemplated hereby.
8.Governing Law; Miscellaneous.
(a)Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada 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 City and State of New York, New York. 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. Buyer shall be entitled to recover from the Company 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, the Note or any related document or agreement 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.
SECURITIES PURCHASE AGREEMENT | 16
(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 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 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 (1) personally served, (2) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (3) delivered by reputable air courier service with charges prepaid, or (4) transmitted by hand delivery, telegram, e-mail 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 (y) upon hand delivery or delivery by e-mail or 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 (z) 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:
Raadr, Inc.
1680 Michigan Avenue, Suite 700
Miami Beach, Florida 33139
Attention: Chief Financial Officer
E-mail: dgilcher@mexedia.com
SECURITIES PURCHASE AGREEMENT | 17
If to Buyer:
Leonite Fund I, LP
600 East Crescent Ave, Suite 203
Upper Saddle River, NJ 07458
Attention: Avi Geller
E-mail: avi@leonitecap.com
(g)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.
(h)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 Buyer shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other. Notwithstanding the foregoing, Buyer may assign its rights hereunder to any person that purchases Securities in a private transaction from Buyer or to any of its “affiliates,” as that term is defined under the 1934 Act, without the consent of the Company.
(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 Buyer. The Company agrees to indemnify and hold harmless 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)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.
(k)Publicity. The Company and Buyer shall have the right to review a reasonable period of time before issuance of any press releases, SEC, Principal Market 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 Buyer, to make any press release or SEC, Principal Market (or other applicable trading market) or FINRA filings with respect to such transactions as is required by applicable law and regulations (although 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).
(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.
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(m)Remedies. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to 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 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.
(n)Payment Set Aside. To the extent that the Company makes a payment or payments to Buyer hereunder, pursuant to the Note, pursuant to the Warrant, or pursuant to any other agreement, certificate, instrument or document contemplated hereby or thereby, or Buyer enforces or exercises its rights hereunder, pursuant to the Note, pursuant to the Warrant, or pursuant to any other agreement, certificate, instrument or document contemplated hereby or thereby, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof (including but not limited to the sale of the Securities) are for any reason subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, or disgorged by Buyer, or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person or entity under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred and the Company shall immediately pay to Buyer a dollar amount equal to the amount that was for any reason subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, or disgorged by Buyer, or required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person or entity under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action).
(o)Failure or Indulgence Not Waiver. No failure or delay on the part of Buyer 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 of Buyer existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.
[ SIGNATURE PAGE FOLLOWS ]
SECURITIES PURCHASE AGREEMENT | 19
[ Signature Page to Securities Purchase Agreement ]
IN WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.
THE COMPANY:
| BUYER:
|
|
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RAADR, INC.
| LEONITE FUND I, LP
|
| By its Manager, Leonite Advisors LLC
|
|
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|
|
By: /s/ Daniel Contreras
| By: /s/ Avi Geller
|
Daniel Contreras
| Avi Geller
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Chief Executive Officer
| Manager
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|
|
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Aggregate Principal Amount of Note: $27,500.00
|
Original Issue Discount: $2,500.00
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Aggregate Purchase Price: $25,000.00
|
SECURITIES PURCHASE AGREEMENT | 20
EXHIBIT A
Form of Promissory Note
To be delivered separately.
SECURITIES PURCHASE AGREEMENT | 21
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