Item
3.02.
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Unregistered
Sales of Equity Securities
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On
March 5, 2021, LGBTQ Loyalty Holdings, Inc. (the “Company”) entered into a Securities Purchase Agreement (the
“SPA”) with Power Up Lending Group Ltd., a Virginia corporation (the “Purchaser”). Pursuant to the terms
of the SPA, the Purchaser agreed to purchase from the Company, for a purchase price of $78,500, a 10% Convertible Note (the “Note”)
in the principal amount of $86,350. The Note matures and becomes due and payable on March 5, 2022 and accrues interest at a rate
of 10% per annum (increasing to 22% upon an event of default) while the Note remains outstanding. The Note, plus all accrued but
unpaid interest and other amounts due on the Note, may be prepaid at any time prior to the maturity date. If the Note is prepaid
on or prior to the 30th calendar day after the issuance date, the amount due upon prepayment will be multiplied by 110%. If the
Note is prepaid between the 31st and 60th calendar day after the issuance date, the amount due upon prepayment will be multiplied
by 115%. If the Note is prepaid between the 61st and 90th calendar day after the issuance date, the amount due upon prepayment
will be multiplied by 120%. If the Note is prepaid between the 91st and 120th calendar day after the issuance date, the amount
due upon prepayment will be multiplied by 125%. If the Note is prepaid between the 121st and 150th calendar day after the issuance
date, the amount due upon prepayment will be multiplied by 130%. If the Note is prepaid between the 151st and 180th calendar day
after the issuance date, the amount due upon prepayment will be multiplied by 135%. The Company must provide advanced notice to
the holder of any prepayments and the holder may elect to convert all or any portion of the Note prior to prepayment.
The
Note is convertible into shares of the Company’s common stock (the “Common Stock”) at any time at a conversion
price (the “Conversion Price”), which shall equal the Variable Conversion Price (as defined herein) (subject to equitable
adjustments by the Company relating to the Company’ securities or the securities of any subsidiary of the Borrower, combinations,
recapitalization, reclassifications, extraordinary distributions and similar events). The “Variable Conversion Price”
shall mean 60% multiplied by the Market Price (as defined herein) (representing a discount rate of 40%). “Market Price”
means the lowest Trading Price (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the
latest complete Trading Day prior to the Conversion Date. “Trading Price” means, for any security as of any date,
the closing bid price on the OTCQB, OTCQX, Pink Sheets electronic quotation system or applicable trading market (the “OTC”)
as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. Bloomberg) or, if
the OTC is not the principal trading market for such security, the closing bid price of such security on the principal securities
exchange or trading market where such security is listed or traded or, if no closing bid price of such security is available in
any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in
the “pink sheets”. If the Trading Price cannot be calculated for such security on such date in the manner provided
above, the Trading Price shall be the fair market value as mutually determined by the Borrower and the holders of a majority in
interest of the Notes being converted for which the calculation of the Trading Price is required in order to determine the Conversion
Price of such Notes. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the
OTC, or on the principal securities exchange or other securities market on which the Common Stock is then being traded. The conversion
price is subject to customary adjustments. The conversion price is not subject to a floor.
The
Note contains customary event of default provisions, including, but not limited to: (i) failure to pay principal or interest payments
when they come due, (ii) failure to issue shares of Common Stock to the Purchaser upon exercise by the Purchaser of the conversion
rights of the Purchaser in accordance with the terms of this Note, (iii) failure to transfer or cause its transfer agent to transfer
(issue) any certificate for shares of Common Stock issued to the Purchaser upon conversion of or otherwise pursuant to this Note
as and when required by this Note, (iv) breaches of any material covenants in the Note or SPA, (v) breaches of any representations
or warranties in the Note or SPA, (vi) the appointment of a receiver or trustee, (vii) any bankruptcy or similar proceeding is
instituted by or against the Company, and (viii) failure to maintain the listing of the Common Stock on at least one of the OTC
exchanges, (ix) failure to comply with the requirements of the Exchange Act, (x) any dissolution, liquidation, winding up or cessation
of operations, (xi) the restatement of any financial statements filed by the Company with the SEC 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 Purchaser with
respect to this Note, (xii) failing to provide fully executed Irrevocable Transfer Agent Instructions to a new transfer agent
that the Company seeks to retain, and (xiii) a breach or default by the Company of any covenant or other term or condition contained
in any Other Agreement (as defined in the Note), after passage of applicable notice and cure or grace periods.
Upon
the occurrence of an event of default, the Note shall become immediately due and payable and the Company shall pay to the Purchaser,
in full satisfaction of its obligations hereunder, an amount equal to the Default Amount (as defined herein). The Note shall become
immediately due and payable and the Company 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 Authorized
Shares and Method of Conversion Sections of the Note (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.
The
Note also provides for certain liquidated damages upon failure to timely delivery shares of Common Stock upon conversion of the
Note. The Company is subject to a restrictive covenant regarding sales of assets.
The
SPA and Note are attached to this Current Report as Exhibits 10.1 and 10.2, respectively. All descriptions of the SPA and Note
herein are qualified in their entirety to the text of Exhibits 10.1 and 10.2 hereto, which is incorporated herein by reference.
The
Note issued in the offering is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities
Act”), pursuant to Section 4(a)(2) of the Securities Act and Rule 506 promulgated thereunder because, among other things,
the transaction did not involve a public offering, the investor is an accredited investors, the investor took the securities for
investment and not resale and the Company took appropriate measures to restrict the transfer of the securities.