Convertible Note Payable

12 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

CONVERTIBLE NOTE PAYABLE

NOTE 9 – CONVERTIBLE NOTE PAYABLE

On November 17, 2021, the Company entered into a Securities Purchase Agreement (the “Agreement”) pursuant to which the Company issued an unsecured convertible promissory note (the “Note”) to an institutional accredited investor Streeterville Capital, LLC (the “Investor”). The Note matures fifteen months after the purchase price of the Note is delivered from the Investor to the Company (the “Purchase Price Date”). The Note has the original principal amount of $5,250,000 and Investor gave consideration of $5,000,000, reflecting original issue discount of $250,000. The transaction contemplated under the Agreement was closed on November 19, 2021 and the Company anticipates using the proceeds for general working capital purposes.

The Note is convertible into 3,500,000 shares of the Company’s common stock at a price of $1.50 per share through April 19, 2022. Thereafter, the Note is convertible into 1,750,000 shares at a price of $3.00 per share.

Interest accrues on the outstanding balance of the Note at 5% per annum compounded daily. Upon the occurrence of an Event of Default as defined in the Note, interest accrues at the lesser of 22% per annum or the maximum rate permitted by applicable law. In addition, upon any Event of Default, the Investor may accelerate the outstanding balance payable under the Note, which will increase automatically upon such acceleration by 15% or 5%, depending on the nature of the Event of Default.

Pursuant to the terms of the Agreement and the Note, the Company must obtain Investor’s consent for certain fundamental transactions such as consolidation, merger with or into another entity (excerpt for a reincorporation merger), disposition of substantial assets, change of control, reorganization or recapitalization. Any occurrence of a fundamental transaction without Investor’s prior written consent will be deemed an Event of Default.

Investor may redeem all or any part the outstanding balance of the Note, subject to $500,000 per calendar month, at any time after one hundred twenty-one (121) days from the Purchase Price Date upon three trading days’ notice, in cash or converting into shares of the Company’s common stock, at a price equal to 85% multiplied by the lowest daily volume weighted average price during the ten trading days immediately preceding the applicable redemption conversion, subject to certain adjustments and ownership limitations specified in the Note. The Note provides for liquidated damages upon failure to comply with any of the terms or provisions of the Note. The Company may prepay the outstanding balance of the Note with the Investor’s consent. At inception, the Note was redeemable into 8,811,430 shares based on the lowest volume weighted average price of $0.595817 on the inception date of November 19, 2021. As of December 31, 2021, the Note was convertible into 11,975,447 shares of common stock based on the lowest volume weighted average price of $0.438397 on that date.

The original issue discount of $250,000 was fully earned at the inception of the Note, and accordingly was recognized as interest expense in the accompanying statement of operations for the year ended December 31, 2021. Total interest expense for the years ended December 31, 2021 and 2020 was $279,979 and $0, respectively.

On March 21, 2022 the Investor delivered its notice of redemption for $100,000 of the Note at the lowest volume weighted average price of $0.3113 during the ten trading days immediately preceding the applicable redemption conversion. Accordingly, the Company issued a total of 321,233 shares of common stock to the Investor on March 23, 2022.