XML 29 R19.htm IDEA: XBRL DOCUMENT v3.22.1
SUBSEQUENT EVENTS
3 Months Ended
Mar. 31, 2022
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

NOTE 13 – SUBSEQUENT EVENTS

 

The Company granted 1,000,000 shares of Common Stock on April 1, 2022 to Peter Troy pursuant to that certain Employment Agreement dated October 1, 2021, by and between Mr. Troy and the Company. At the date of grant, the per-share fair market value of the shares was $0.0085 based on the closing price of the Common Stock as reported by the OTCM on the date of grant, for a total value of $8,500. On April 11, 2022, these shares were issued to Mr. Troy.

 

Subsequent to March 31, 2022, the Company issued an aggregate of 89,755,667 shares of Common Stock upon the conversion of $510,000 of principal, and $875 of accrued interest on its secured convertible debentures, at an average price of $0.0061 (see Note 9).

 

Pursuant to a Securities Purchase Agreement dated May 2, 2022 (the “SPA”), the Company completed a private placement with an investor (the “Investor”) of a Secured Convertible Debenture (the “Debenture”) with an initial principal balance of $500,000 and the grant of a common stock purchase Warrant (the “Warrant”) that is exercisable for the purchase of up to an aggregate of 8,333,333 million shares (the “Warrant Shares”) of Common Stock. In addition, to secure the Company’s obligations to the holder of the Debenture, we also entered into (i) a Security Agreement, (ii) an Intellectual Property Security Agreement, and (iii) a Global Guaranty (collectively, the “Security and Guaranty Agreements”) with and in favor of the Investor. The Company’s subsidiaries are also parties to the Security and Guaranty Agreements.

 

The transactions contemplated by the SPA were consummated on May 5, 2022. Upon the funding, the Company sold and issued the Debenture and granted the Warrant. Pursuant to the SPA, the purchase price for the Debenture was $500,000, less $25,000 in fees, which consisted of a 4% “original issue discount” of $20,000 and due diligence and structuring fees of $5,000.

 

 

The Debenture is due 12 months from its issuance date and is secured by all of the Company’s assets and the assets of each of its subsidiaries pursuant to the Security and Guaranty Agreements. Initially, the Debenture is convertible into shares of Common Stock (the “Conversion Shares”) at the lower of (i) the fixed conversion price, which is $0.03 per share, subject to adjustment (the “Fixed Conversion Price”), or (ii) 80% of the lowest daily volume weighted average price (“VWAP”) of Common Stock during the 10 trading days immediately preceding the conversion date, subject to adjustment (the “Market Conversion Price”). The Debenture contains an adjustment provision that, subject to certain exceptions, reduces the conversion price if we issue shares of Common Stock or common stock equivalents at a price lower than the then-current conversion price of the Debenture. Any stock splits, reverse stock splits, recapitalizations, mergers, combinations and asset sales, stock dividends, and similar events will result in an equitable adjustment of the conversion price of the Debenture. The Debenture is subject to a “conversion blocker” such that the Investor cannot convert any portion of the Debenture that would result in the Investor and its affiliates holding more than 4.99% of the then-issued and outstanding shares of Common Stock following such conversion (excluding, for purposes of such determination, shares of Common Stock issuable upon conversion of the Debenture or exercise of the Warrant that had not then been converted or exercised, respectively). The Debenture accrues interest at an annual rate equal to 6% and is due and payable on its maturity date (or sooner if the Investor converts the Debenture or otherwise accelerates the maturity date, as provided for in the Debenture). Interest is payable either in cash or, if certain Equity Conditions (as defined in the Debenture) are then satisfied, in shares of the Common Stock at the Market Conversion Price on the trading day immediately prior to the date paid.

 

At the Company’s option, it has the right to redeem, in part or in whole, the outstanding principal and interest under the Debenture prior to its maturity date; provided, that, as of the date of the holder’s receipt of the redemption notice, (i) the VWAP of the Common Stock is less than the Fixed Conversion Price and (ii) there is no Equity Conditions failure. We must pay an amount equal to the principal amount being redeemed plus outstanding and accrued interest thereon, as well as a redemption premium equal to 15% of the outstanding principal amount being redeemed (the “Redemption Premium”). We must provide to the then-holder of the Debenture 10 business days’ advance notice of the Company’s intent to make a redemption, setting forth the amount of principal and interest that we desire to redeem plus the applicable Redemption Premium.

 

The Company also granted the Warrant to purchase up to an aggregate of the 8,333,333 Warrant Shares. The Warrant has a three-year term and is immediately exercisable at an exercise price of $0.03 per share, subject to adjustment and is exercisable by the then-holder on a “cashless” basis.

 

The Warrant contains an adjustment provision that, subject to certain exceptions, reduces the exercise price if we issue shares of Common Stock or common stock equivalents at a price lower than the then-current exercise price of the Warrant. Any stock splits, reverse stock splits, recapitalizations, mergers, combinations and asset sales, stock dividends, and similar events will result in an equitable adjustment of the exercise price of the Warrant. The Warrant is subject to an “exercise blocker,” such that the Investor cannot exercise any portion of the Warrant that would result in the Investor and its affiliates holding more than 4.99% of the then-issued and outstanding shares of Common Stock following such exercise (excluding, for purposes of such determination, shares of the Common Stock issuable upon exercise of the Warrant or conversion of the Debenture that had not then been exercised or converted, respectively).