Item
1.01 Entry Into a Material Definitive Agreement
Mast
Hill
On
November 2, 2021, we consummated a Securities Purchase Agreement with Mast Hill Fund, L. P. (“Mast Hill”), whereby
we issued to Mast Hill a convertible promissory note (“Convertible Note”) in the principal amount of $810,000 and
issued to Mast Hill a common stock purchase warrant (the “Warrant”) to purchase 28,065,000 shares of our common stock
as additional consideration for Mast Hill’s purchase of the Convertible Note. As a condition to the purchase and sale the
Convertible Note and Warrant, we issued to Mast Hill 10,855,047 shares (the “Commitment Shares”) of our common stock
and entered into a Registration Rights Agreement with Mast Hill pursuant to which we are to register for resale under the Securities
Act of 1933, as amended, the Commitment Shares
and the shares issuable upon conversion of the Note and exercise of the Warrant. In consideration
of the Convertible Note and Warrant we received $729,000, less $10,800 retained by Mast Hill in reimbursement of its legal fees.
The
principal amount of the Convertible Note and all interest accrued thereon is payable on October 29, 2022. The Convertible Note
provides for interest at the rate of 12% per annum, payable at maturity, and is convertible into shares of our common stock at
a price of $0.0125 per share, subject to anti-dilution adjustments in the event of certain corporate events as set forth in the
Convertible Note. In addition, subject to certain limited exceptions, if at any time while the Convertible Note remains outstanding,
we grant any option to purchase, sell or grant any right to reprice, or otherwise dispose of, issue or sell any shares of our
common stock or securities or rights convertible into or exercisable for shares of our common stock, at a price below the then
conversion price of the Convertible Note, the holder of the Convertible Note shall have the right to reduce the conversion price
to such lower price.
The
Warrant is exercisable until October 29, 2023, at a price of $0.02 per share, subject to customary anti-dilution adjustments.
In addition, subject to certain limited exceptions, if at any time while the Warrant remains outstanding,
we grant any option to purchase, sell or grant any right to reprice, or otherwise dispose of, issue or sell any shares of our
common stock or securities or rights convertible into or exercisable for shares of our common stock, at a price below the then
exercise price of the Warrant, the holder of the Warrant shall have the right to reduce the exercise price to such lower price.
At any time when the Market Price, as defined in the Warrant, is in excess of the exercise price, the holder of the Warrant shall
have the right to exercise the Warrant by means of a “cashless exercise” in accordance with the formula provided in
the Warrant.
The
Commitment Shares and the shares issuable upon conversion of the Convertible Note and exercise of the Warrants are to be registered
under the Securities Act for resale by Mast Hill as provided in the Registration Rights Agreement. Mast Hill has agreed to limit
sales of the common stock issued upon conversion of Convertible Note, during the period beginning on the date of issuance of the
Convertible Note and ending on the maturity date or the date of occurrence of an event of default, to the greater of $5,000 or
15% of the Daily Dollar Volume, as defined in the Note.
For
a complete statement of the terms and conditions of the Convertible Note, Warrant and Registration Rights Agreements, please see
Exhibits 10.2, 10.3 and 10.4 hereto.
Talos
Victory
On
November 5, 2021, we consummated a Securities Purchase Agreement with Talos Victory Fund, LLC (“Talos”), whereby we
issued to Talos a convertible promissory note (“Talos Convertible Note”) in the principal amount of $540,000 and issued
to Talos a common stock purchase warrant (the “Talos Warrant”) to purchase 15,810,000 shares of our common stock as
additional consideration for its purchase of the Convertible Note. As a condition to the purchase and sale the Convertible Note
and Warrant, we issued to Talos 10,144,953 shares (the “Talos Commitment Shares”) of our common stock and entered
into a Registration Rights Agreement pursuant to which we are to register for resale under the Securities Act of 1933, as amended,
the Talos Commitment Shares and the shares issuable
upon conversion of the Talos Convertible Note and exercise of the Talos
Warrant. In consideration of the Talos Convertible Note and Warrant we received $486,000,
less $7,200 retained by Talos in reimbursement of its legal fees.
The
principal amount of the Talos Convertible Note and all interest accrued thereon is payable on November 3, 2022. The Talos Convertible
Note provides for interest at the rate of 12% per annum, payable at maturity, and is convertible into shares of our common stock
at a price of $0.0125 per share, subject to anti-dilution adjustments in the event of certain corporate events as set forth in
the Talos Convertible Note. In addition, subject to certain limited exceptions, if at any time while the Talos Convertible Note
remains outstanding, we grant any option to purchase, sell or grant any right to reprice, or otherwise dispose of, issue or sell
any shares of our common stock or securities or rights convertible into or exercisable for shares of our common stock, at a price
below the then conversion price of the Talos Convertible Note, the holder of the Talos Convertible Note shall have the right to
reduce the conversion price to such lower price.
The
Talos Warrant is exercisable until November 3, 2023, at a price of $0.02 per share, subject
to customary anti-dilution adjustments. In addition, subject to certain limited exceptions, if at
any time while the Talos Warrant remains outstanding, we grant any option to purchase, sell or grant any right to reprice, or
otherwise dispose of, issue or sell any shares of our common stock or securities or rights convertible into or exercisable for
shares of our common stock, at a price below the then exercise price of the Talos Warrant, the holder of the Talos Warrant shall
have the right to reduce the exercise price to such lower price. At any time when the Market Price, as defined in the Talos Warrant,
is in excess of the exercise price, the holder of the Talos Warrant shall have the right to exercise the Talos Warrant by means
of a “cashless exercise” in accordance with the formula provided in the Talos Warrant.
The
Commitment Shares and the shares issuable upon conversion of the Talos convertible Note and exercise of the Talos
Warrant are to be registered under the Securities Act for resale as provided in the Talos
Registration Rights Agreement. Talos has agreed to limit sales of the common stock issued upon conversion of Talos
Convertible Note, during the period beginning on the date of issuance of the Talos
Convertible Note and ending on the maturity date or the date of occurrence of an event of default, to the greater of $5,000 or
15% of the Daily Dollar Volume, as defined in the Talos Convertible Note.
A
portion of the proceeds to us from the sale of our convertible notes and warrants to mast Hill and Talos used to satisfy certain
outstanding promissory notes in the aggregate principal amount of $605,000 plus all interest accrued thereon and the balance will
be used for business development purposes.
For
a complete statement of the terms and conditions of the Talos Convertible Note, Talos Warrant and Talos Registration Rights Agreements,
please see Exhibits 10.6, 10.7 and 10.8 hereto.
