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Item
1.01
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Entry
into a Material Definitive Agreement.
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Stock
Purchase Agreement with GHS Investments LLC
On
December 26, 2021, we entered into a stock purchase agreement with GHS Investments LLC (“GHS”). Under the stock purchase
agreement with GHS (the “GHS Purchase Agreement”), the Company may require GHS to purchase a maximum of Four Hundred Million
(400,000,000) shares of common stock (“GHS Purchase Shares”) over a six-month term that ends on June 26, 2022.
The
GHS Purchase Agreement provides that, upon the terms and subject to the conditions and limitations set forth in the agreement, the Company
has the right from time to time during the term of the agreement, in its sole discretion, to deliver to GHS a purchase notice (a “Purchase
Notice”) directing GHS to purchase (each, a “GHS Purchase”) a specified number of GHS Purchase Shares. A GHS Purchase
will be made in a minimum amount of Ten Thousand Dollars ($10,000) and up to a maximum of: (a) One Hundred Million (100,000,000) shares
of common stock if the average volume weighted average price of the common stock on the OTC Pink Market (the “VWAP”) during
the ten (10) consecutive business days immediately before, but not including, the date of a Purchase Notice (a “Valuation Period’),
is below $0.03 (subject to adjustments for stock splits, dividends, and similar occurrences), (b) One Hundred and Fifty Million (150,000,000)
shares of common stock if the average VWAP during the relevant Valuation Period is between $0.03 and $0.035 (subject to adjustments for
stock splits, dividends, and similar occurrences), and (c) Two Hundred Million (200,000,000) shares of common stock if the average VWAP
during the relevant Valuation Period is above $0.035 (subject to adjustments for stock splits, dividends, and similar occurrences), all
subject to the maximum of Four Hundred Million (400,000,000) GHS Purchase Shares.
On
the first trading day after the last day of the relevant Valuation Period, the Company will cause to be delivered to GHS that number
of shares of common stock that equal one hundred percent (100%) of the aggregate GHS Purchase Shares specified in the Purchase Notice.
The
GHS Purchase Agreement prohibits the Company from directing GHS to purchase any shares of common stock if those shares, when aggregated
with all other shares of our common stock then beneficially owned by GHS and its affiliates, would result in GHS and its affiliates having
beneficial ownership, at any single point in time, of more than 4.99% of the then total outstanding shares of our common stock.
There
are no trading volume requirements or restrictions under the GHS Purchase Agreement. We will control the timing and amount of any sales
of our common stock to GHS.
Events
of default under the GHS Purchase Agreement include the following:
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the
effectiveness of the registration statement registering the resale of the GHS Purchase Shares
lapses for any reason;
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the
common stock is suspended from trading on the OTC Pink for a period of two consecutive trading
days, during which time the Company may not direct GHS to purchase any shares during that
time;
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the
common stock is delisted from the OTC Pink provided, however, that the commons stock is not
immediately thereafter trading on The NASDAQ Capital Market, The NASDAQ Global Market, The
NASDAQ Global Select Market, the New York Stock Exchange, the NYSE American, or the OTCQB
or the OTCQX operated by the OTC Markets Group, Inc. (or any nationally recognized successor
to any of the foregoing);
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the
failure for any reason by the transfer agent to issue GHS Purchase Shares to GHS within three
(3) business days after the date on which GHS was entitled to receive the shares;
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the
Company breaches any representation, warranty, covenant or other term or condition under
the GHS Purchase Agreement, its Schedules, or any related document if the breach could have
a material adverse effect and except, in the case of a breach of a covenant that is reasonably
curable, only if the breach continues for a period of at least five (5) Business Days;
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a
proceeding against the Company is commenced by any person or entity pursuant to or within
the meaning of any bankruptcy law;
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the
Company, pursuant to or within the meaning of any bankruptcy law, (i) commences a voluntary
case, (ii) consents to the entry of an order for relief against it in an involuntary case,
(iii) consents to the appointment of a Custodian of it or for all or substantially all of
its property, or (iv) makes a general assignment for the benefit of its creditors or is generally
unable to pay its debts as they become due;
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a
court of competent jurisdiction enters an order or decree under any bankruptcy law that (i)
is for relief against the Company in an involuntary case, (ii) appoints a custodian of the
Company or for all or substantially all of its property, or (iii) orders the liquidation
of the Company; or
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if
at any time the Company is not eligible to transfer its common stock electronically as DWAC
Eligible.
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So
long as an Event of Default has occurred and is continuing, the Company shall not deliver to the Investor any Purchase Notice.
The
preceding summary of the GHS Purchase Agreement is not intended to be complete and is qualified in its entirety by reference to the full
text of the GHS Purchase Agreement, a copy of which is filed herewith as Exhibit 10.1, which is incorporated by reference into this Form
8-K.
Initial
Stock Purchase Agreement with GHS Investments LLC
The
GHS Purchase Agreement is the second stock purchase agreement entered into between the Company and GHS. As part of the initial stock
purchase transaction between the Company and GHS, dated September 15, 2021 (the “Initial GHS Purchase Agreement”), the parties
entered into a Registration Rights Agreement pursuant to which the Company will register the Purchase Shares for resale by GHS. A
copy of the Initial GHS Purchase Agreement was filed on September 30, 2021 as Exhibit 10.1 to Post-Effective Amendment No. 1 to the Company’s
Form S-3.