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. On March 3, 2022, we issued and sold to an investor
(the “Investor”) a convertible promissory note, dated March 3, 2022, in the principal amount of $55,000 (the “Note”)
under a Securities Purchase Agreement of the same date.
We
received $50,000 from the Note after applying the original issue discount to the Note.
The
maturity date for repayment of the Note is nine months from issuance and the Notes bear interest at 10% per annum. We may prepay the
Note 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 Investor pursuant to the Purchase Agreement.
All
principal and accrued interest on the Note 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 Investor 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 the investor in the amount of 60,000 shares and we also issued
a warrant (the “Warrant”) to the Investor to 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 Warrant, then the Investors may exercise the Warrant using a cashless feature.
The
Securities Purchase Agreement contain a most favored nation provision that allows the Investor 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 Securities Purchase Agreement, the Note, the Warrant, 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.