Item 1.01 Entry into a Material Definitive Agreement
The information set forth in Item 2.03 in this Form 8-K regarding the Notes (as
defined in Item 2.03) is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant
$250,000 Promissory Note
On June 17, 2021 (the "$250K Issue Date"), the Company executed an Optional
Convertible Promissory Note (the "$250K Note") with an investor who loaned to
the Company $250,000 (the "$250K Loan").
The $250K Note bears interest at the rate of 2% per annum, and shall be payable,
along with the principal, on the earlier of March 31, 2022 or the date in which
the $250K Note is converted into common stock in accordance with its terms.
All of the outstanding principal and accrued interest shall, at the option of
the holder upon five day's prior written notice to the Company, convert into
that number of shares of the common stock of the Company, based upon a
conversion price equal to $.30 per share.
The Company intends to use the net proceeds from the $250K Loan for its general
working capital.
The $250K Note contains customary events of default. Additionally, there is a
default penalty fee of $50,000, which will be paid in addition to the amounts
due under the $250K Note.
$50,000 Promissory Note
On June 22, 2021, the Company executed a Convertible Promissory Note (the "$50K
Note" and, with the $250K Note, the "Notes") with an investor who loaned to the
Company $50,000 (the "$50K Loan").
The $50K Note bears interest at the rate of 10% per annum, and shall be payable,
along with the principal, on June 22, 2022 or the date in which the $50K Note is
converted into common stock in accordance with its terms.
All of the outstanding principal and accrued interest shall convert into that
number of shares of "new round stock" of the Company upon the consummation of
the next equity round of financing of the Company that raises $2.0 million or
more in gross proceeds, based upon a conversion price equal to $.30 per share.
In addition, all of the outstanding principal and accrued interest shall, at the
option of the holder upon five day's prior written notice to the Company,
convert into that number of shares of the common stock of the Company, based
upon a conversion price equal to $.30 per share.
The Company intends to use the net proceeds from the $50K Loan for its general
working capital.
The $50K Note contains customary events of default.
The foregoing is a brief description of the terms of the $50K Note and the $250K
Note and is qualified in its entirety by reference to the full text of the $50K
Note and the $250K Note, the forms of which are included as Exhibits 10.1 and
10.2, respectively, to this Current Report on Form 8-K, which are incorporated
herein by reference.
Item 9.01 Financial Statements and Exhibits.
Exhibit Description
10.1 $50K Convertible Promissory Note
10.2 $250K Optional Convertible Promissory Note
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