Quarterly report pursuant to Section 13 or 15(d)

Subsequent Events

v3.22.1
Subsequent Events
3 Months Ended
Mar. 31, 2022
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

NOTE 14 – SUBSEQUENT EVENTS

 

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, other than as described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.

 

2022 Convertible Note

 

On March 28, 2022, the Company entered into Securities Purchase Agreement with an accredited investor providing for the sale by the Company to the investor of a Convertible Note in the amount of $4,000,000 (the “2022 Convertible Note”). In addition to the 2022 Convertible Note, the investor will also receive a Stock Purchase Warrant (the “2022 Warrant”) to acquire an aggregate of 1,333,333 shares of common stock. The 2022 Warrants will be exercisable for five years at an exercise price of $1.25. The financing closed with respect to $2,669,521.60 of the financing on April 15, 2022 and with respect to $659,580.64 of the financing on April 29, 2022. The Company and the investor expect to close on the balance of the $4,000,000 in funding no later than May 15, 2022. As a result of the first closing, the Company issued the investor a 2022 Convertible Note in the principal amount of $2,669,521.60 and a 2022 Warrant to acquire 889,840 shares of common stock and as a result of the second closing, the Company issued the investor a 2022 Convertible Note in the principal amount of $659,580.64 and a 2022 Warrant to acquire 219,860 shares of common stock.

 

The 2022 Convertible Note bears interest at 1% per annum payable at maturity and matures ten years from issuance. The investor may elect to convert all or part of the 2022 Convertible Note, plus accrued interest, at any time into shares of common stock of the Company at a conversion price equal to 95% of the average of the highest three trading prices for the common stock during the 20-trading day period ending one trading day prior to the conversion date but in no event will the conversion price be lower than $0.75 per share.

 

The investor agreed to restrict its ability to convert the 2022 Convertible Note and exercise the 2022 Warrants and receive shares of common stock such that the number of shares of common stock held by the investor after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock. Further, the investor agreed to not sell or transfer any or all of the shares of common stock underlying the 2022 Convertible Note or the 2022 Warrant for a period of 90 days beginning on the closing date (the “Lock-Up Period”). Following the expiration of the Lock-Up Period, the investor has agreed to limit its sale or transfer of such shares of common stock to a maximum monthly amount equal to 20% of the shares of common stock issuable upon conversion of the 2022 Convertible Note. The Company agreed to use its reasonable best efforts to file a registration statement on Form S-3 (or other appropriate form) providing for the resale by the investor of the shares of common stock underlying the 2022 Convertible Note and the 2022 Warrant.

 

Common Shares Issued for Services

 

In April 2022, the Company issued a total of 329,592 shares of its common stock for services rendered and to be rendered. These shares were valued at $290,950, the fair market values on the grant dates using the reported closing share prices on the dates of grant, and the Company reduced accrued liabilities of $251,590 and recorded prepaid expense of $39,360 which will be amortized over the rest of corresponding service periods.