Infinite Group, Inc. announced that it has entered into securities purchase agreement with returning investor, Talos Victory Fund, LLC for a private placement of a convertible promissory note of principal amount $296,000 at original issue discount of 10% for gross proceeds of $266,400 on April 12, 2022. The note bears interest at a rate of 8% per annum and will mature in 12 months from date of issue. The note is convertible into shares of common stock, $0.001 par value per share at a conversion price of $0.10 per share, upon the terms and subject to the limitations and conditions set forth in such note. Under the terms of the note, amortization payments are due beginning August 12, 2022, and each month thereafter with the final payment due on April 12, 2023. Additionally, in the event of a default or if the company elects to pre-pay the note, the lender has the right to convert any portion or all of the outstanding and unpaid principal and interest into fully paid and non-assessable shares of the company's common stock at a conversion price of $0.10 per share. The conversion price is subject to adjustment under certain circumstances, including issuances of company common stock below the conversion price. The company is not required to issue additional shares to investor in the event an adjustment to the conversion price occurs. Except for the option to convert the note in the event of a pre-payment, there is no pre-payment penalty associated with the promissory note. The loan is subject to customary events of default, including cross-defaults on the agreements and on other indebtedness of the company, violations of securities laws (including Regulation FD), and failure to issue shares upon a conversion of the note. Amounts due under the note are subject to a 15% penalty in the event of a default. The company issued a 5-year warrant to purchase 740,000 shares of common stock at a fixed price of $0.16 per share, subject to price adjustments for certain actions, including dilutive issuances, representing 50% warrant coverage on the principal amount of the note. The company will reimburse $5,000 of the investors' legal fees.
J.H. Darbie & Co., Inc. acted as a finder and was paid a cash fee of 4.25% of gross proceeds or $11,320 and issued a 5-year warrant to purchase 97,125 shares of common stock at a fixed price of $0.192 per share, subject to price adjustments for certain actions, including dilutive issuances, representing 7% warrant coverage on the gross proceeds of the note. The company has issued note in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended and Rule 506(b) promulgated by the United States Securities and Exchange Commission under the 1933 Act.