Item
3.03 Material Modification to Rights of Security Holders.
The
applicable information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference in this Item 3.03.
Certificates
of Designations
On
December 7, 2021, the Company filed the CODs which contain the designations, rights, preferences and privileges of the Preferred Stock,
as further described below. With the exception of the Conversion Ratio (as defined below), the CODs for the Series C Preferred and Series
D Preferred contain identical terms.
Series
C and D Preferred
The
Company has designated 200 shares of preferred stock, $0.001 par value per share, for each of the Series C Preferred and Series D Preferred.
The holders of the Preferred Stock shall be entitled to receive, upon liquidation, dissolution or winding up of the Company, the amount
of cash, securities or other property to which such holder would be entitled to receive with respect to such shares of Preferred Stock
if such shares had been converted to common stock immediately prior to such liquidation.
Holders
of the Preferred Stock shall have no voting rights. However, as long as any shares of Preferred Stock are outstanding, the Company shall
not, without the affirmative vote of the holders of a majority of the then outstanding series of Preferred Stock, (a) disproportionally
alter or change adversely the powers, preferences or rights given to the Preferred Stock or alter or amend the CODs, (b) amend its certificate
of incorporation or other charter documents in any manner that disproportionally adversely affects any rights of the holders of the Preferred
Stock, (c) increase or decrease the number of authorized shares of each series of Preferred Stock or (d) enter into any agreement with
respect to any of the foregoing.
Each
share of Preferred Stock shall be convertible, at any time and from time to time from and after the date of issuance, at the option of
the holder thereof, into a number of shares of common stock determined in accordance with the applicable Conversion Ratio, calculated
on the Conversion Date (as defined in the CODs), assuming that all options, warrants or other convertible securities or instruments or
other rights to acquire common stock or any other existing or future classes of capital stock have been exercised or converted, as applicable,
in full, regardless of whether any such options, warrants, convertible securities or instruments or other rights are then vested or exercisable
or convertible in accordance with their terms (the “Fully Diluted Basis”).
The
Conversion Ratio for each share of Series C Preferred, and Series D Preferred, shall be a number of shares of common stock equal to 0.064113%,
and 0.0651869%, respectively, (or up to maximum of 24.96% in the aggregate) of the Company’s common stock, on a Fully Diluted
Basis (the “Conversion Ratio”). The Conversion Ratio is subject to an adjustment in connection with any dilutive issuances,
whereby prior to an Anti-Dilution Termination Event (as defined below), in order to maintain the Conversion Ratio, the Fully Diluted
Basis shall be calculated as of the Conversion Date and after an Anti-Dilution Termination Event the Conversion Ratio will be set to
the Fully Diluted Basis as of the moment after the Anti-Dilution Termination Event. an “Anti-Dilution Termination Event”
shall mean the earlier of (i) September 30, 2022, or (ii) the closing of the Qualified Financing.
The
Conversion Ratio is also subject to adjustments in connection with stock dividends, stock splits, fundamental transactions and subsequent
rights offerings, as fully described in the CODs.
Each
holder of Preferred Stock shall be subject to limitations on conversions, with such limitations providing that no conversion shall be
effected which would result in the converting holder beneficially owning in excess of 9.99% of the shares of the Company’s common
stock outstanding immediately after giving effect to such conversion (the “Beneficial Ownership Limitation”). By written
notice to the Company, a holder of Series C Preferred may from time to time increase or decrease the Beneficial Ownership Limitation
upon 61-day written notice to the Company. The Beneficial Ownership Limitation shall be calculated in accordance with Section 13(d) of
the Exchange Act.
The
foregoing descriptions of the Series C Preferred and the Series D Preferred contain only a brief summary of the rights associated with
each, and such description is qualified, in its entirety, by the Series C Designations Series D Designations, attached hereto as Exhibits
3.1 and 3.2, respectively.
Certificates
of Corrections
On
December 8, 2021, the Company filed two certificates of corrections with the Nevada Secretary of State, for the purpose of correcting
each of the Series C Designations (the “Series C Certificate of Correction”) and the Series D Designations (the “Series
D Certificate of Correction”), to indicate that the effective date of each of the CODs shall be December 7, 2021.
The
foregoing descriptions of the Series C Certificate of Correction and the Series D Certificate of Correction contain only a brief summary
of the rights associated with each, and such description is qualified, in its entirety, by the Series C Certificate of Correction and
the Series D Certificate of Correction, attached hereto as Exhibits 3.3 and 3.4, respectively.
