Item
1.01 Entry into a Material Definitive Agreement.
Mast
Hill SPA; Note and Warrants
On
August 29, 2022, American International Holdings Corp. (“American International”, the “Company”,
“we” and “us”) entered into a Securities Purchase Agreement (the “Purchase Agreement”)
with Mast Hill Fund, L.P. (“Mast Hill” or the “Investor”), an accredited institutional investor,
for the sale of a convertible promissory note in an aggregate principal amount of $62,250 (the “Mast Hill Note”) and
warrants to purchase an aggregate of 3,000,000 shares of the Company’s common stock (the “Warrants”). The Purchase
Agreement, Mast Hill Note, and Warrants are collectively referred to as the “Transaction Documents”. The Company closed
the sale of the Mast Hill Note on August 31, 2022, raising gross proceeds of $56,025.
The
Purchase Agreement
Pursuant
to the Purchase Agreement, the Company is required to use the proceeds of the sale of the Mast Hill Note for business development and
not for the repayment of any indebtedness owed to officers, directors or employees of the Company or their affiliates; any loan, credit,
or advance to any officers, directors, employees, or affiliates of the Company; the repayment of any debt issued in corporate finance
transactions; any loan to or investment in any other corporation, partnership, enterprise or other person, except in connection with
the Company’s currently existing operations; or in violation or contravention of any applicable law, rule or regulation. The Company
is not permitted to enter into any public or private offering of the Company’s securities (including convertible securities) with
any other investor that is more favorable in any material respect than the Investor’s rights under the Transaction Documents, unless
similar terms are granted to the Investor, and is prohibited from entering into certain “variable rate transactions”
(including the issuance of convertible securities with a conversion or exercise price that varies with trading prices of the Company’s
common stock or is contingent upon a future event relating to the Company’s business or the market for its common stock, or any
agreement to issue securities at a future determined price) for as long as the Mast Hill Note is outstanding. The Company is also required
to maintain the listing and trading of its common stock on the principal securities exchange or trading market where such common stock
is listed or traded and timely file all required reports with the Securities and Exchange Commission under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), with a penalty of 1% of the purchase price of the Mast Hill Note to be paid
on the date of any reporting failure and every thirty days thereafter until such reporting failure is cured. The Company also granted
the Investor piggy-back registration rights (except in connection with underwritten offerings and other customary exceptions) and agreed
to indemnify the Investor in connection with certain violations of the Exchange Act or the Securities Act of 1933, as amended (the “Securities
Act”), in connection with the piggy-back registration rights. The Purchase Agreement includes indemnification obligations of
the Company and customary representations and warranties of the Investor and the Company regarding the purchase and offer and sale of
the Mast Hill Note.
The
Mast Hill Note
The
Mast Hill Note contains a 10% original issue discount, matures one year from its date of issue, and accrues interest at a rate of 12%
per annum (16% upon the occurrence of an event of default). The Mast Hill Note also included expense reimbursements of the Investor in
the amount of $2,500. The Mast Hill Note does not provide for fixed installment payments, but provides that upon the Company’s
receipt of cash proceeds from any source, at the Investor’s option, the Company will immediately apply up to 50% of such proceeds
to repay all or any portion of the outstanding principal amount and interest then due under such Mast Hill Note.
The
Mast Hill Note (including accrued interest thereon) is convertible into shares of the Company’s common stock at any time at a conversion
price equal to $0.04 per share. We agreed to deduct $500 from each conversion amount to pay the Investor’s fees associated with
each conversion. The Mast Hill Note contains a requirement for the Company to reserve a number of shares of common stock equal to the
greater of: (i) 6,225,000 shares of common stock then issuable upon conversion of such Note or (ii) a fixed number of shares of common
stock which equal four times the initial number of shares issuable upon conversion of the Mast Hill Note. The Mast Hill Note provides
for a reduction of the conversion price to match the price per share of any dilutive issuance made while the Note is outstanding (other
than pursuant to certain customary excepted issuances). The conversion price of the Mast Hill Note may be adjusted upon the occurrence
of certain events, such as a merger, consolidation, exchange of shares, recapitalization, reorganization, or similar events.
The
Mast Hill Note has priority over all unsecured indebtedness of the Company, and while the Mast Hill Note is outstanding, the Company
is prohibited from paying or declaring any dividend or other distribution on shares of capital stock other than dividends in kind and
distributions pursuant to any shareholders’ rights plan which is approved by a majority of the Company’s disinterested directors,
selling, leasing or otherwise disposing of any significant portion of its assets outside the ordinary course of business and from lending
money, giving credit, making advances to or entering into any transaction with any person, firm, joint venture or corporation (other
than transactions in existence prior to the issuance of the Mast Hill Note of which the Investor has been informed in writing prior to
closing, transactions with unaffiliated third parties in the ordinary course of business, or transactions with unaffiliated third parties
not in excess of $100,000).
The
Mast Hill Note contains penalties for the Company’s failure to timely deliver shares due upon conversion thereof. The Mast Hill
Note contains provisions limiting the Investor’s ability to convert any portion of the Mast Hill Note if such conversion would
cause the Investor’s (or any affiliate of any such Investor’s) holdings in the Company to exceed 4.99% of the Company’s
issued and outstanding shares of common stock. The Mast Hill Note contains customary events of default, which include the suspension,
trading halt, or delisting of the Company’s common stock on the principal securities exchange or trading market on which the Company’s
common stock is listed or traded; final judgments equal to or greater than $100,000 rendered against the Company; and the Company’s
failure to comply with the reporting obligations of the Exchange Act. Upon the occurrence of an event of default, the amount of the Mast
Hill Note increases by 125% (including principal and accrued interest) and is immediately due and payable. The Company has the right
to prepay the Mast Hill Note by paying 100% of the principal and interest thereon at any time (provided we are required to provide the
holder 10 trading days’ prior written notice of such repayment), plus $750 per note holder for administrative fees.
If
at any time while the Mast Hill Note is outstanding, we have a bona fide offer of capital or financing from any third party, that we
intend to act upon, then we must first offer such opportunity to Mast Hill to provide such capital or financing on the same terms as
each respective third party’s terms.
The
Warrants
The
Warrants have a term of five years beginning, if ever, on the date that an event of default occurs under the Mast Hill Note, and an exercise
price of $0.04 per share. The exercise price and the number of shares underlying the Warrant will be adjusted to account for any dividend
or distribution by the Company to the holders of its common stock. Each Warrant provides for a reduction of the exercise price to match
the price per share of any dilutive issuance made while the Warrant is outstanding (other than in connection with stock plan issuances
and other customary exceptions), and a further increase in the number of warrant shares thereafter so that the (a) exercise price, multiplied
by (b) the number of shares of common stock issuable upon exercise of the Warrants, always equals $120,000. The exercise price of the
Warrants is subject to customary adjustment upon the occurrence of certain events, such as a subdivision (by any stock split, stock dividend,
recapitalization or otherwise) of the Company’s common stock.
The
Warrant contains a requirement for the Company to reserve two times the number of shares of common stock issuable upon the exercise of
such Warrant. If the Company undertakes certain fundamental transactions (such as certain mergers, exchanges, or the sale of substantially
all of the Company’s assets) while the Warrants are outstanding, the Investor will have the right to receive any consideration
received by the record holders of the Company’s common stock as a result of such fundamental transaction and the exercise price
of the Warrants will be adjusted to account for such additional consideration. The Warrants contain provisions limiting the Investor’s
ability to exercise the Warrants if such exercise would cause the Investor’s (or any affiliate of any such Investor’s) holdings
in the Company to exceed 4.99% of the Company’s issued and outstanding shares of common stock.
In
the event the Mast Hill Note is repaid in full by the maturity date thereof, the Warrants are cancelled and extinguished in their entirety,
unless an event of default has occurred under the Mast Hill Note in which case such requirement to extinguish the Warrants is terminated.
The
Warrants include cashless exercise rights.
Disclaimers
Regarding the Transaction Documents
The
representations, warranties, covenants, and agreements contained in the Purchase Agreement and the other Transaction Documents were made
solely for the benefit of the parties to the Purchase Agreement and such other Transaction Documents. In addition, such representations,
warranties, covenants, and agreements (i) are intended as a way of allocating the risk between the Company and the Investor and not as
statements of fact, and (ii) may apply standards of materiality in a way that is different from what may be viewed as material by shareholders
of, or other investors in, the Company. Accordingly, the Purchase Agreement, Warrant and Note are filed with this report only to provide
investors with information regarding the terms of transaction, and not to provide investors with any other factual information regarding
the Company. Shareholders should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations
of the actual state of facts or condition of the Company. Moreover, information concerning the subject matter of the representations
and warranties may change after the date of the Transaction Documents, which subsequent information may or may not be fully reflected
in public disclosures.
The
foregoing descriptions of the Purchase Agreement, Mast Hill Note, and Warrants are not complete, and qualified in their entirety by the
full text of such agreements, attached hereto as Exhibits 10.1, 10.2, and 10.3 hereto, respectively, which are incorporated
by reference herein.
Master
Services Agreement and SOW
On
September 1, 2022, and effective on August 30, 2022, Epiq Scripts, LLC (“Epiq Scripts”), which is 51% owned by the
Company, entered into a Master Services Agreement with Mangoceuticals, Inc. (“Mango”), which entity is majority owned
and controlled by Jacob D. Cohen, the Company’s Chief Executive Officer and director. Mango was wholly-owned by the Company until
June 16, 2022, as previously disclosed in the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission
on June 23, 2022, when ownership of the Company was sold to Mr. Cohen (through an entity which he controls).
Pursuant
to the Master Services Agreement and a related statement of work (SOW), Epiq Scripts agreed to provide pharmacy and related services
to Mango, and Mango agreed to exclusively use Epiq Scripts as the provider of the Services (defined below) during the term of the agreement,
so long as Epiq Scripts complies with the terms of the Master Services Agreement. The agreement also includes a 30 day right of first
refusal for Epiq Scripts to provide pharmacy services for any new product that Mango may introduce during the term of the agreement.
Pursuant
to the SOW, Epiq Scripts agreed to provide for the online fulfillment, specialty compounding, packaging, shipping, dispensing and distribution
(collectively, the “Services”) of products sold exclusively via Mango’s website that may be prescribed as part
of a telehealth consultation on Mango’s platform. Epiq Scripts also agreed to provide mail service pharmacy services to Mango on
an exclusive basis during the term of the SOW.
Mango
agreed to provide Epiq Scripts with all custom packaging materials, including but not limited to, individual sachet and/or blister packaging
materials, outer box packaging, and any custom inserts and/or marketing information to accompany the prescription shipment, if any and
to provide Epiq Scripts with quarterly sales forecasts to ensure Epiq Scripts has enough packaging materials on hand to cover a 90-day
period. Mango agreed to pay for all direct shipping, delivery and related courier costs and to provide Epiq Scripts with direct access
to any online accounts to access and generate shipping labels for the fulfillment and delivery of its products.
The
SOW has a term through December 31, 2025, automatically renewable thereafter for successive one-year terms unless either party terminates
the agreement at least 90 days before renewal thereof and the SOW is subject to the same termination rights of the parties as set forth
in the Master Services Agreement (discussed below).
Pursuant
to the SOW, Mango agreed to pay Epiq Scripts certain fixed rate fees for prescription fulfillment, processing and packaging (per prescription)
and drug compounding (per pill), provided the per pill rate is reduced upon Mango exceeding 3,500 product packages per month.
Under
the Master Services Agreement, Mango is solely responsible for billing and collecting funds from its customers and Epiq Scripts is paid
out of funds that Mango actually collects.
Mango
paid Epiq Scripts a total of $60,000 upon its entry into the Master Services Agreement, comprising $45,000 as a one-time non-refundable
technology systems setup and implementation fee and $15,000 as an upfront retainer to be credited future products sales.
The
Master Services Agreement has a term of five years, automatically renewable to additional one-year terms thereafter unless either party
provides the other notice of termination at least 90 days prior to the date of automatic renewal. The Master Services Agreement can be
terminated upon breach of the agreement by the other party, subject to a 90-day cure right; if a party enters into bankruptcy or fails
to pay its debts as they become due; or if Epiq Scripts becomes unable to perform the services covered by the Master Services Agreement
and any statements of work associated therewith.
Epiq
Scripts has filed with the Utilization Review Accreditation Commission (URAC) to obtain its pharmacy accreditation and has obtained its
first state license in the State of Texas. It is also in the process of applying for additional state licenses and plans to eventually
obtain licenses in all 50 states by the first quarter of 2023, with some state licenses easier to obtain and quicker to obtain than others.
As
a result of the above, Epiq Scripts can currently only provide the Services to Mango in Texas and will thereafter be limited to selling
products to customers only in the states in which Epiq Scripts holds licenses.
The
description of the Master Services Agreement and SOW above is not complete and is qualified in its entirety by the full text of the Master
Services Agreement and SOW, filed herewith as Exhibit 10.4, which is incorporated by reference into this Item 1.01.