Item
3.02 Unregistered Sales of Equity Securities.
On
January 21, 2020, the Company’s board of directors authorized: (i) the filing with the Secretary of State of the State of
Nevada of a Certificate of Designation (the “Series B Certificate of Designations”) with respect to its a new series
of preferred stock, par value $0.001 per share, designated as “Super Voting Preferred Stock”; and (ii) the issuance
to 27 Health Inc., a private company at January 21, 2020, of all of the authorized Super Voting Preferred Stock. The Series B
Certificate of Designations designated 1,000,000 shares of its authorized but previously undesignated shares of preferred stock,
hereinafter referred to as “Series B Super Voting Preferred Stock” or “Super Voting Preferred Stock.”
27 Health Inc., the Super Voting Preferred Stockholder, is entitled to vote on all matters subject to a vote or written consent
of the holders of the Company’s Common Stock and all capital stock of the Company having voting rights, a number of votes
equal to 68% of the total number of votes that the issued and outstanding shares of Common Stock and all other voting securities
of the Company as of any such date of determination, voting together as a single class, on a fully diluted basis, such that the
Super Voting Preferred Stockholder shall have effective voting control of the Company, on a fully diluted basis.
On
July 30, 2020, the Company entered into a Stock Purchase Agreement and Warrant Agreement pursuant to which an accredited investor
(the “Investor”) purchased 450 Series N Convertible Preferred Stock, par value $0.001, convertible into 450,000 shares
of Common Stock for a total of $405,000 including a 10% OID. In addition, the Company granted 450,000 warrants exercisable on
a cashless basis if there is no effective registration statement with respect to the shares of Common Stock underlying the warrants,
at an exercise price of $1.10 per share for a term of five years. Upon signing of the Stock Purchase Agreement dated July 30,
2020 (the “SPA”) with the Investor, the Company shall receive a first tranche of $250,000 followed by a second tranche
of $155,000 after 90 days.
The
authorized number of Series N Convertible Preferred Shares shall be 2,000 shares with a stated value of $1,000 per share (the
“Series N Preferred Stock”), subject to the terms and conditions of the Series N Certificate of Designations, attached
as Exhibit 3.1(iv) hereto. The number of Series N Preferred Stock initially to be issued to the Investor pursuant to the SPA shall
be 450 Series N Convertible Preferred Shares which amount has been determined by the stated value of $1,000 per Preferred Share
(as defined in the SPA) multiplied by the 450 Preferred Shares. If, as of a date 100 days after the date of the SPA, the Investor
has not paid the Subsequent Purchase Price (as defined in the SPA), the number of Preferred Shares owned by the Investor shall
be reduced to 278 Preferred Shares. At any time after the Initial Issuance Date, each Series N Preferred Stock shall be convertible
into shares of Common Stock on the terms and conditions set forth in this Section 4 of the Series N Certificate of Designations.
The
Company’s issuance of the above-referenced Preferred Stock and Warrants was in reliance upon the exemption from registration
pursuant to Section 4(2) and Regulations D and S promulgated by the SEC under the Act and are restricted securities. Unless stated
otherwise: (i) the Preferred Stock and Warrants were offered and sold only to accredited investors; (ii) there was no general
solicitation or general advertising related to the Offering; (iii) each of the persons who received these unregistered Preferred
Stock and Warrants had knowledge and experience in financial and business matters which allowed them to evaluate the merits and
risk of the receipt of these securities, and that they were knowledgeable about our operations and financial condition; (iv) no
underwriter participated in, nor did we pay any commissions or fees to any underwriter in connection with the transactions; and,
(v) each certificate issued for these unregistered Preferred Stock and Warrants contained a legend stating that the securities
have not been registered under the Securities Act and setting forth the restrictions on the transferability and the sale of the
securities.
The
Stock Purchase Agreement and the Warrant Agreement are attached hereto as exhibits 10.3 and 10.4, respectively.
The
foregoing summaries of the Certificate of Designation of the Series B Preferred Stock and Series N Convertible Preferred Stock
are not complete and are qualified in their entirety by reference to Certificate of Designation of the Series B Preferred Stock
and Series N Convertible Preferred Stock, a copy of which is attached hereto as Exhibit 3.1(iii) and Exhibit 3.1 (iv) and are
incorporated herein by reference.