ITEM 1.01 - ENTRY
INTO A MATERIAL DEFINITIVE AGREEMENT
As previously disclosed, on January 28, 2022,
we entered into Securities Purchase Agreements (the “Purchase Agreements”) with two accredited investors, pursuant
to which we issued and sold to the investors two convertible promissory notes, dated January 28, 20022, each in the principal amount
of $275,000 for an aggregate principal amount of $550,000.
The
Purchase Agreements allow for additional notes to be issued to investors up to $750,000, prior
to any original issue discount being added. On February 4, 2022, we issued and sold to two
investors (the “Investors”) two convertible promissory notes, dated February 4, 2022, each in the principal
amount of $55,000 for an aggregate principal amount of $110,000 (the “Notes”).
We received $100,000
from the Notes after applying the original issue discount to the Notes.
The
maturity date for repayment of the Notes is nine months from issuance and the Notes bear interest at 10% per annum. We may prepay the
Notes provided that we shall make payment to the investors of an amount in cash equal to the sum of: the then outstanding principal amount
of this Note, plus interest on the unpaid principal amount of the Note, plus any Default Interest on the amounts, plus any amounts owed
to the Holder pursuant to the Purchase Agreement.
All
principal and accrued interest on the Notes is convertible into shares of our common stock. The conversion price shall equal a fixed
price of $0.15 per share or, at the option of the investors in the event that we fail to complete a Qualified Offering before the five
(5) month anniversary of the issue date, the Registration Conversion Price. The “Registration Conversion Price” shall mean
75% multiplied by the volume weighted average of the Common Stock during the twenty (20) Trading Day period ending on the latest complete
Trading Day prior to the Conversion Date. The investor shall be entitled to add to the principal amount of the Note $750.00 for each
conversion to cover investor’s deposit fees associated with each Notice of Conversion. “Qualified Offering” means any
offer and sale by us of an original issuance of equity securities, comprised of either Common Stock or preferred stock of the Company,
in a single transaction to investors pursuant to which at least an aggregate of $2,000,000.00 gross proceeds are received by the Company.
In
the event that by the five (5) month anniversary of the issue date a Qualified Offering (as defined above) has not occurred, then we
shall file with the SEC a registration statement on Form S-1 covering the resale of the maximum number of Registrable Securities, defined
as the Commitment Shares, Conversion Shares and Warrant Shares.
In
connection with the investment, we issued Commitment Shares to each investor in the amount of 60,000 shares and we also issued warrants
to the investors to each purchase 62,500 shares of our common stock at an exercise price of $0.40 per share. In the event that there
is no effective registration statement five months from the issue date registering the shares underlying the warrants, then the investors
may exercise the warrants using a cashless feature.
The
Purchase Agreements contain a most favored nation provision that allows investors to claim any lower price from any future securities
six months after this closing and a blocker on issuing variable rate investments.
The
foregoing description of the Purchase Agreements, the Notes, the Warrants, and the transactions contemplated thereby does not purport
to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Purchase Agreements, the Notes
and the Warrants, which are included in this Current Report as Exhibits 10.1-10.2 and 4.1-4.4, respectively, and are incorporated herein
by reference.