On May 24, 2012, Options Media Group Holdings, Inc. and its wholly owned subsidiary, PhoneGuard, Inc. (together, the "Company") entered into a Confidential Settlement Agreement and Mutual Release and Amendment No. 1 to Exclusive Distributorship Agreement with Quality One Wireless, LLC ("Q1"). Q1 had initiated an arbitration proceeding based on alleged defaults in its March 24, 2011 Exclusive Distributorship Agreement with the Company. In settlement of Q1's claims, and without admitting or denying the allegations, in the Agreement the Company agreed to issue to Q1 24,000 codes for its anti-texting software and 140,000,000 shares of Options Media Group Holdings, Inc. common stock. The parties also exchanged general releases.

Pursuant to the Agreement, Q1 also committed to purchase a minimum of 24,000 codes for the Company's anti-texting software every quarter beginning with the third quarter of 2012, subject to repurchase provisions, and the Company agreed to give Q1 "Most Favored Nation" pricing whereby if the Company sells its products at a lower price than to Q1 to another party, Q1 will receive the same price. The Company can terminate the agreement should Q1 not meet its minimum quarterly purchase requirement. Q1 also agreed to exceptions to its exclusivity for two distributors.

As of May 24, 2012, two investors in the Company's Series A Convertible Preferred Stock (the "Series A") converted such shares of Series A into an aggregate of 20,000,000 shares of common stock.