Item 3.02.Unregistered Sales of Equity Securities.
On December 30, 2022, the Company entered into a letter agreement (the
"Redemption Agreement") with T3 Investing LLC ("T3"), an entity owned and
controlled by Trent Crane, who serves as the Company's Regional Vice President
of Sales, pursuant to which the Corporation has purchased and redeemed from T3
one (1) share of Series C Preferred Stock of the Corporation (the "Series C
Share") in exchange for (i) the issuance to T3 of 8,000,000 shares (the "T3
Shares") of the Company's common stock and (ii) the issuance to Trent Crane of a
nonqualified stock option (the "Crane Option") to purchase up to 2,000,000
shares of the Company's common stock, which Crane Option has a term of 10 years,
an exercise price of $0.093 per share, and vests and becomes exercisable in four
equal amounts of 500,000 shares on each of January 1, 2023, January 1, 2024,
January 1, 2025 and January 1, 2026 so long as Mr. Crane provides continuous
service to the Company through the applicable vesting date. After redemption of
the Series C Share, the Company has no shares of Series C Preferred Stock
outstanding.
Pursuant to the Redemption Agreement, T3 also converted 1,000,000 shares of
Series B Preferred Stock of the Company into 10,000,000 shares of the Company's
common stock (the "Conversion Common Shares"), which conversion was effected in
accordance with the conversion terms of the Series B Preferred Stock.
The T3 Shares and the Crane Option were offered and sold to T3 and Mr. Crane,
respectively, each an accredited investor, in a transaction exempt from
registration under the Securities Act, as a transaction not involving a public
offering, pursuant to Section 4(a)(2) of the Securities Act and Rule 506 of
Regulation D promulgated thereunder. The Conversion Common Shares were issued to
T3 in a transaction exempt from registration under the Securities Act pursuant
to Section 3(a)(9) of the Securities Act. Each of T3 and Mr. Crane represented
their intentions to acquire the securities for investment only and not with a
view to or for sale in connection with any distribution thereof in violation of
the Securities Act, and the T3 Shares and the shares of common stock acquired
upon exercise of the Crane Option will bear appropriate legends if applicable.
The offer and sale of the securities to T3 and Mr. Crane were made without any
general solicitation or advertising.
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