Item
1.01 Entry into a Material Definitive Agreement.
1800
Diagonal Convertible Note Transaction
On
May 13, 2022, effective May 16, 2022, American International Holdings Corp. (the “Company”, “we”
or “us”) entered into a Securities Purchase Agreement with 1800 Diagonal Lending LLC, an accredited investor (“1800
Diagonal”), pursuant to which the Company sold 1800 Diagonal a convertible promissory note in the principal amount of $137,500
(the “1800 Diagonal Note”). The 1800 Diagonal Note accrues interest at a rate of 6% per annum (22% upon the occurrence
of an event of default) and has a maturity date of May 13, 2023. The 1800 Diagonal Note included an original issue discount of $9,050,
and was purchased for an aggregate of $128,450.
The
Company has the right to prepay the 1800 Diagonal Note at any time during the first six months the note is outstanding at the rate of
120% of the unpaid principal amount of the note plus interest. The 1800 Diagonal Note may not be prepaid after the 180th day
following the issuance date, unless 1800 Diagonal agrees to such repayment and such terms.
1800
Diagonal may in its option, at any time beginning 180 days after the date of the note, convert the outstanding principal and interest
on the 1800 Diagonal Note into shares of our common stock at a conversion price per share equal to 75% of the lowest daily volume weighted
average price (“VWAP”) of our common stock during the 7 days trading days prior to the date of conversion; provided
that such conversion price cannot be lower than 75% of the VWAP on May 13, 2022, provided that if the daily VWAP on any 7 consecutive
trading days is ever less than the then applicable floor price, the applicable floor price is reduced to 75% of the VWAP on such seventh
trading day. We agreed to reserve three and one half times the number of shares of our common stock which may be issuable upon conversion
of the 1800 Diagonal Note at all times (initially 1,527,777 shares of common stock).
The
1800 Diagonal Note provides for standard and customary events of default such as failing to timely make payments under the 1800 Diagonal
Note when due, the failure of the Company to timely comply with the Securities Exchange Act of 1934, as amended, reporting requirements
and the failure to maintain a listing on the OTC Markets. The 1800 Diagonal Note also contains customary positive and negative covenants.
The 1800 Diagonal Note includes penalties and damages payable to 1800 Diagonal in the event we do not comply with the terms of such note,
including in the event we do not issue shares of common stock to 1800 Diagonal upon conversion of the note within the time periods set
forth therein. Additionally, upon the occurrence of certain defaults, as described in the 1800 Diagonal Note, we are required to pay
1800 Diagonal liquidated damages in addition to the amount owed under the 1800 Diagonal Note (including in some cases up to 300% of the
amount of the note and in other cases the value of the shares which 1800 Diagonal could have been issued upon the full conversion of
the note after including default fees equal to 150% of the amount of such note).
The
1800 Diagonal Note also includes a right of first refusal which prevents the Company from undertaking a financing in an amount less than
$150,000 in the nine months following the date of the 1800 Diagonal Note, without first providing 1800 Diagonal a right of first refusal
to provide such funding on proposed terms.
At
no time may the 1800 Diagonal Note be converted into shares of our common stock if such conversion would result in 1800 Diagonal and
its affiliates owning an aggregate of in excess of 4.99% of the then outstanding shares of our common stock.
We
hope to repay the 1800 Diagonal Note prior to any conversion. In the event that the 1800 Diagonal Note is not repaid in cash in its entirety,
Company shareholders may suffer significant dilution if, and to the extent that, the balance of the 1800 Diagonal Note is converted into
common stock.
The
description of the 1800 Diagonal Note and Securities Purchase Agreement above is not complete and is qualified in its entirety by
the full text of the 1800 Diagonal Note and Securities Purchase Agreement, filed herewith as Exhibits 10.2 and 10.1,
respectively, which are incorporated by reference in this Item 1.01.