What changed in this filing

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Item 2. Unregistered Sales of Equity Securities

2021-05-17 compared with 2020-11-16 · 22 added, 50 removed, 3 unchanged (96% of the section changed)

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

August 21, 2020, the Company entered into a Note Purchase Agreement (the “NPA”) by and among the Company and certain

lenders set forth on the lender schedule to the NPA (the “Lenders”).

Pursuant to the terms of the NPA, the Company

sold an aggregate principal amount of $933,000 of its convertible promissory notes (the “Notes”).

The Notes are general,

unsecured obligations of the Company and bear simple interest at a rate of 6% per annum, and mature on the third anniversary of

the date of issuance (the “Maturity Date”), to the extent that the Notes and the principal amounts and any interest

accrued thereunder have not been converted into shares of the Company’s common stock.

In the event that any amount due under

the Notes is not paid as and when due, such amounts will accrue interest at the rate of 12% per year, simple interest, non-compounding,

The Company may not pre-pay or redeem the Notes other than as required by the Agreement.

The Note holders have an

optional right of conversion such that a Noteholder may elect to convert his Note, in whole or in part, outstanding as of such

time, into the number of fully paid and non-assessable shares of the Company’s common stock as determined by dividing the

outstanding indebtedness by $0.20, subject to certain adjustments.

This optional right of conversion is subject to a beneficial

ownership limitation of 9.99% of the number of shares of the Company’s common stock outstanding immediately after giving

effect to the share issuance upon conversion.

The holders of the Notes are granted demand registration rights and pre-emptive

In addition, the NPA includes customary events of default, including, among others:

(i) non-payment of amounts due thereunder,

(ii) non-compliance with covenants thereunder, (iii) bankruptcy or insolvency.

Upon the occurrence of an event of default, a majority

of the Holders may accelerate the maturity of the Indebtedness.

The closing of this offering took place on August 21, 2020.

Company’s issuance of the Notes under the terms of the NPA was made pursuant to an exemption from registration under the

Securities Act of 1933, as amended (the “Securities Act”) in reliance on Section 4(a)(2) of the Securities Act as

a transaction by an issuer not involving a public offering and Regulation D promulgated thereunder.

The investors in the Notes

were “accredited investors”

(as such term is defined in Rule 501(a) of Regulation D under the Securities Act.

were no discounts or brokerage fees associated with this offering.

The Company used the offering proceeds for business development,

investment in increased inventory and other strategic growth initiatives, including market expansion and personnel recruitment

in North America.

August 21, 2020, the Company’s Board of Directors approved and adopted the Company’s 2020 Equity Incentive Plan (the

“Plan”).

The purpose of the Plan is to provide a means for the Company to continue to attract, motivate and retain

management, key employees, directors and consultants.

The Plan provides that up to a maximum of 2,250,000 shares of the Company’s

common stock, subject to adjustment, are available for issuance under the Plan.

Following the adoption of the Plan, the Board

approved issuances of certain stock options to its executives, directors and employees under the Plan.

Specifically, the stock

options issued to David Phipps, CEO (400,000), Theresa Carlise, former CFO (71,000) and Hector Delgado, a Board member (21,000),

all have an exercise price of $0.20 per share, respectively, fully vest upon issuance and expire on August 20, 2030.

the Board approved additional 160,000 stock options to the Company’s 7 key employees, on the same terms as those issued

to the Company’s officers and director.

Finally, the Board additionally approved restricted stock awards of 5,000 each to

Theresa Carlise and Hector Delgado, as well as a total of 15,000 restricted shares to the Company’s 7 key employees.

March 5, 2021, the Company entered into a Note Purchase Agreement by and between the Company and one individual accredited investor (the

“Noteholder”) where the Company sold a convertible promissory note with a principal amount of $350,000 (the “March

2021 Note”).

The Noteholder has an optional right of conversion such that the Noteholder may elect to convert his Note, in whole

or in part, outstanding as of such time, into the number of fully paid and non-assessable shares of the Company’s common stock

as determined by dividing the indebtedness under the March 2021 Note by a price equal to the lesser of (a) $1.50 per share, and (b) a

30% discount to the price of the common stock in the qualified transaction, subject to certain adjustments.

Following an event of

default, the conversion price will be adjusted to be equal to the lower of:

(i) the then applicable conversion price or (ii) the price

per share of 85% of the lowest traded price for the Company’s common stock during the 15 trading days preceding the relevant conversion.

In addition, subject to the ownership limitations, if a qualified transaction is completed, without further action from the Noteholder,

on the closing date of the qualified transaction, 50% of the principal amount of this March 2021 Note and all accrued and unpaid interest

shall be converted into Company common stock at a conversion price equal to the 30% discount to the offering price in such qualified

transaction, which price shall be proportionately adjusted for stock splits, stock dividends or similar events.

A “qualified transaction”

refers the completion of the public offering of the Company’s securities stock with gross proceeds of at least $10,000,000 pursuant

to which the Company’s securities become registered pursuant to Section 12(b) of the Securities Exchange Act of 1934, as amended,

or a merger with a company listed on the Nasdaq or Canadian stock exchanges, as amended.

The Company’s issuance of the March

2021 Note was made pursuant to an exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”),

in reliance on Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering.

DEFAULTS UPON SENIOR SECURITIES

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Unregistered Sales of Equity Securities