1.01 Entry into a Material Definitive Agreement.
Diagonal Lending Loam
May 11, 2023, we entered into a Securities Purchase Agreement with 1800 Diagonal Lending, LLC, an accredited investor (“the Lender”),
pursuant to which the Lender made a loan to us, evidenced by promissory note in the principal amount of $144,760 (the “Note”).
A one-time interest charge of 12% ($17,371) was applied on the issuance date, resulting in net loan proceeds to us of $125,000. Accrued,
unpaid Interest and outstanding principal, subject to adjustment, is required to be paid in nine payments each in the amount of $18,014.58
(a total payback to the Lender of $162,131.00). The first payment is due June 30, 2023 with eight subsequent payments each month thereafter.
The loan closed on May 15, 2023.
Company has the right to prepay the Note at any time without premium of penalty.
the occurrence and during the continuation of any Event of Default, the Note shall become immediately due and payable and we will be
obligated to pay to the Lender, in full satisfaction of our obligations, an amount equal to 150% times the sum of (w) the then outstanding
principal amount of the Note plus (x) accrued and unpaid interest on the unpaid principal amount of the Note to the date of payment plus
(y) default interest, if any, at the rate of 22% per annum on the amounts referred to in clauses (w) and/or (x) plus (z) any amounts
owed to the Holder pursuant to the conversion rights referred to below.
a default, the Lender may in its option, convert the outstanding principal and interest on the Note into shares of our common stock at
a conversion price per share equal to 61% of the lowest daily volume weighted average price (“VWAP”) of our common stock
during the 10 trading days prior to the date of conversion. We agreed to reserve a number of shares of our common stock equal to 4.5
times the number of shares of common stock which may be issuable upon conversion of the Note at all times.
Note provides for standard and customary events of default such as failing to timely make payments under the 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 interest rate on the Note increases to 22% upon the occurrence of an event of default. The Note also
contains customary positive and negative covenants. The Note includes penalties and damages payable to the Lender in the event we do
not comply with the terms of the Note, including in the event we do not issue shares of common stock to the Lender upon conversion of
the Note within the time periods set forth therein. Additionally, upon the occurrence of certain defaults, as described in the Note,
we are required to pay the Lender liquidated damages in addition to the amount owed under the Note.
no time may the Note be converted into shares of our common stock if such conversion would result in the Lender and its affiliates owning
an aggregate of in excess of 4.99% of the then outstanding shares of our common stock.
the event that the Note is not repaid and the Lender declares a default, our shareholders may suffer significant dilution if, and to
the extent that, the balance of the Note is converted into common stock.
description of the Note and Securities Purchase Agreement above is not complete and is qualified in its entirety by the full text of
the 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.