Item 2. Unregistered Sales of Equity Securities
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On
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.
ITEM
3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM
4. MINE SAFETY DISCLOSURE
Not
applicable.
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