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Item
1.01.
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Entry
into a Material Definitive Agreement.
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On
July 13, 2021, we entered into a Securities Purchase Agreement (the “July SPA”) with GHS Investments, LLC (the “Purchaser”),
a Nevada limited liability company, pursuant to which for a purchase price of $250,000, the Purchaser purchased an additional two hundred
and fifty (250) shares of the Company’s Series D Convertible Preferred Stock (“Series D Preferred Stock”). Further,
subject to the terms and conditions contained in the July SPA, on or prior to the thirtieth (30) calendar day following the initial Closing
Date (as defined in the July SPA), the Company agrees to sell, and the Purchaser agrees to purchase an additional two hundred and fifty
(250) shares of Preferred Stock at price of $1,000 per share of Preferred Stock.As previously reported on a Current Report on Form 8-K
filed with the Securities and Exchange Commission (the “SEC”) on April 16, 2021, we filed a Certificate of Designation of
Preferences, Rights and Limitations of Series D Convertible Preferred Stock (the “Series D COD”) with the Delaware Secretary
of State to create a new class of preferred stock, $0.001 par value per share, designated Series D Convertible Preferred Stock and authorized
the issuance of up to four hundred (400) shares of Series D Preferred Stock. On the April 9, 2021, all of the four hundred (400) shares
of Series D Preferred Stock were issued to the Purchaser. The Series D Preferred Stock has a stated value of $1,200 per share (“Stated
Value”) and the holder of the Series D Preferred Stock has the right to receive a dividend equal to eight percent (8%) per annum,
payable quarterly, beginning on the issuance date of the Series D Preferred Stock and ending on the date that Series D Preferred Share
has been converted or redeemed. Dividends may be paid in cash or in shares of Series D Preferred Stock at the discretion of the Company.
Further, the holders of the Series D Preferred Stock have the right to receive assets in the event of liquidation, dissolution or winding
up before any distribution or payment shall be made to the holders of any securities junior to the Series D Preferred Stock.
As
reported on a Current Report on Form 8-K filed with the SEC on May 29, 2021, we filed a Certificate of Designation of Preferences, Rights
and Limitations of Series D Convertible Preferred Stock (the “May Series D COD”) with the Delaware Secretary of State to
increase the number of authorized Series D Preferred Stock to up to one thousand (1,000) shares of Series D Preferred Stock. The May
Series D Preferred Stock is identical to the Series D Preferred Stock as more fully detailed herein and on the Series D COD.
The
conversion price (the “Conversion Price”) for the Series D Preferred Stock shall be $0.008109, equal to 90% of the average
VWAP for the ten (10) Trading Days immediately preceding the date of the July SPA. The Conversion Price will be appropriately adjusted
for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases
the Common Stock. Following an “Event of Default,” as defined in the July SPA, the Conversion price shall equal the lower
of: (a) the then applicable Conversion Price; or (b) a price per share equaling eighty percent (80%) of the lowest traded price for the
Company’s common stock during the fifteen (15) Trading Days immediately preceding, but not including, the Conversion Date.
Each
share of Series D Preferred Stock is convertible, at any time and from time to time, at the option of the holder thereof, into that number
of shares of Common Stock (subject in each case to a 4.99% beneficial ownership limitation) determined by dividing the Stated Value of
such share of Series D Preferred Stock by the Series D Preferred Stock Conversion Price.
Additionally,
the Company shall have the right to redeem (a “Corporation Redemption”), all (but not less than all), shares of the Series
D Preferred Stock issued and outstanding at any time after the issuance date, upon five (5) business days’ notice, at a redemption
price per Series D Preferred Stock then issued and outstanding (the “Corporation Redemption Price”), equal to the product
of (i) the Premium Rate multiplied by (ii) the sum of (x) the Stated Value, (y) all accrued but unpaid dividends, and (z) all other amount
due to the holder pursuant to the Series D COD and the SPA including, but not limited to late fees, liquidated damages and the legal
fees and expenses of the holder’s counsel relating to the Series D COD and/or the July SPA. “Premium Rate” means (a)
1.15 if all of the Series D Preferred Stock is redeemed within ninety (90) calendar days from the issuance date thereof; (b) 1.2 if all
of the Series D Preferred Stock is redeemed after ninety (90) calendar days and within one hundred twenty (120) calendar days from the
issuance date thereof; (c) 1.25 if all of the Series D Preferred Stock is redeemed after one hundred twenty (120) calendar days and within
one hundred eighty (180) calendar days from the issuance date thereof; and (iv) each share of Series D Preferred Stock shall be redeemed
on the date that is one (1) calendar year from the date of its issuance.
Pursuant
to the May Series D COD, we are required to reserve and keep available out of our authorized and unissued shares of Common Stock two
times the number of Common Stock needed to convert or exercise all Series D Preferred Stock. Further, the holders of the Series D Preferred
Stock are entitled to vote with all holders of the Common Stock on an as converted or as exercised basis.
The
May Series D COD provides for conversion price adjustments in the event of stock dividends, stock splits and similar transactions. It
also provides for certain adjustments in connection with subsequent rights offerings, pro rata distributions to holders of our Common
Stock and fundamental transactions. Additionally, from the date of the July SPA until the date when the holder no longer holds any Series
D Preferred Stock, upon any issuance by the Company or any of its subsidiaries of Common Stock or common stock equivalents (as defined
in the Series D COD) for cash consideration, indebtedness or a combination of units thereof (a “Subsequent Financing”), the
holder may elect, in its sole discretion, to exchange (in lieu of conversion), if applicable, all or some of the shares of Series D Preferred
Stock then held for any securities or units issued in a Subsequent Financing on a $1.00 for $1.00 basis.
Following
an “Event of Default” (as defined in the May Series D COD), all outstanding shares of Series D Preferred Stock shall come
immediately due for redemption and the redemption amount shall accrue interest at the lesser of: (a) eighteen percent (18%) per annum;
or (b) the maximum legal rate. Redemption following an Event of Default shall occur at an amount equaling: 1.35 multiplied by the sum
of the Stated Value, all accrued but unpaid dividends and all other amounts due pursuant to the Series D COD for all Series D Preferred
Stock outstanding. Additionally, following an Event of Default, the Conversion Price shall equal the lower of: (a) the then applicable
conversion price; or (b) a price per share equaling eighty percent (80%) of the lowest traded price for the Company’s Common Stock
during the fifteen (15) trading days preceding the relevant conversion.
The
July SPA is attached to this Current Report as Exhibit 10.1 and the May Series D COD is incorporated by reference to Exhibit 3.1 to the
Current Report on Form 8-K filed on May 21, 2021. Descriptions of the May Series D COD and July SPA herein are qualified in their entirety
to the text of Exhibits 3.1 and 10.1 hereto, which are incorporated herein by reference.
