SEC Company Response from HAMMER TECHNOLOGY HOLDINGS (HMMR) — Jun 11, 2024
HAMMER TECHNOLOGY HOLDINGS CORP.
Date: June 11, 2024 · CIK: 0001539680 · Accession: 0001062993-24-012352
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-35876
Referenced dates: May 14, 2024
Letter
VIA EDGAR United States Securities and Exchange Commission Division of Corporate Finance Office of Technology. Re: Hammer Fiber Optics Holding Corp. Form 10-K filed on February 16, 2024 Form 10-Q filed on March 27, 2024 File No. 001-35876
Dear Ms. Chow and Mr. Krikorian,
By letter dated May 14, 2024, the staff (the "Staff," "you" or "your") of the U.S. Securities and Exchange Commission (the "Commission") provided Hammer Fiber Optics Holdings Corp. (the "Company," "we," "us" or "our") with its comments to the Company's Form 10-K filed with the Commission on February 16, 2024 and Form 10-Q filed with the Commission on March 27, 2024. We are in receipt of your letter and set forth below are the Company's responses to the Staff's comments. For your convenience, the comments are listed below, followed by the Company's responses.
1. Please disclose the results of your assessment of the effectiveness of your disclosure controls and procedures as of January 31, 2024 in your Quarterly reports. See Item 4 - Controls and Procedures of Form 10-Q that requires you to furnish the information required by Item 307 of Regulation S-K. In addition, you should disclose any changes in internal control over financial reporting that occurred during the fiscal quarter that has materially affected, or is reasonably likely to materially affect, your internal control over financial reporting. Refer to Item 308(c) of Regulation S-K. Please apply this to all your future periodic filings.
RESPONSE: The Company's disclosure regarding the effectiveness of our disclosure controls and procedures as of January 31, 2024 is updated pursuant to the requirements of Item 307 of Regulation S-K, as stated below:
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that are designed to reasonably ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of "disclosure controls and procedures" in Rule 15d-15(e) under the Exchange Act. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
At the end of the period covered by this Quarterly Report, we conducted an evaluation under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that, as of January 31, 2024, the disclosure controls and procedures of our Company were not effective.
The Company's disclosure regarding the changes in internal control over financial reporting as of January 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting is updated pursuant to the requirements of Item 308(c) of Regulation S-K, as stated below:
Changes in Internal Control over Financial Reporting
During the fiscal year 2024, we engaged an outsourced firm with a panel of CPA consultants in 2024 to assist in building internal controls and preparing financial reports, and to establish best practices and help us document and implement all the checks and balances needed for all financial areas.
Except as listed above, there were no other changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
2. We noted your conclusions that disclosure controls and procedures and internal control over financial reporting were not effective. Please disclose any material weakness in your internal control over financial reporting that identified by management in your future filings. Refer to Item 308 of Regulation S-K.
RESPONSE: The Company will disclose any material weakness in our internal controls over financial reporting identified by management in our future periodic filings in accordance with the provisions of Item 308 of Regulation S-K.
3. We noted as of July 31, 2023, you owe Loans payable in amount of $1,443,294 to various parties. It appears such balance included both loans (Note 18) and convertible notes (Note 10); however, based on your disclosures in note 18 and Note 10, we cannot reconcile the amount of $1,443,294. In this regard, please revise your footnotes disclosures to address the following:
• Please break down loans payable in amount of $1,443,294 by respective classifications (i.e. convertible debt, loans payable), and further distinguishing between related party/non-related party debt on the face of balance sheets.
• Disclose the material contractual terms for loan amounts due and provide a tabular schedule to reconcile such amounts due to your consolidated financial statements.
RESPONSE : The Company's balance per notes payable is now segregated into three different categories based on the nature of the debt - Notes Payable, Convertibles Notes Payable and Convertible Notes Payable - Related Parties, as presented below, and will be presented on the face of the balance sheet in the Company's future periodic filings.
The Company updated the related debt disclosure by creating a separate footnote for each note category described per above as separated per consolidated balance sheet, disclosing contractual terms for each individual loan and adding a tabular schedule to each footnote to reconcile with the consolidated financials. These changes will be reflected in the Company's future periodic filings, as stated below:.
NOTE 9 - NOTES PAYABLE
On March 20, 2023, 1stPoint Communications entered into a financing agreement with a financial institution in the amount of $58,000 and $2,320 in transaction fees. As of January 31, 2024 and July 31, 2023 the principal remaining under this financial agreement was $0 and $17,234.
During the fiscal year 2022, the Company entered into a non-interest bearing loan with a financial institution in the amount of $10,972. As of January 31, 2024 and July 31, 2023 the principal remaining was $10,972.
On February 26, 2021, Endstream Communications entered into a financing agreement with a financial institution in the amount of $40,000. The amount was refinanced on March 25, 2022 and again on November 16, 2022 in the amount of $141,750. As of January 31, 2024 and July 31, 2023 the principal remaining was $9,621 and $40,234.
As of January 31, 2024 and July 31, 2023, notes payable consisted of the following:
January 31, 2024
July 31, 2023
Notes payable $ 20,593
$ 68,440
Less: current portion, net
(20,593 )
(68,440 )
Long-term notes payable, net $ -
$ -
NOTE 10 - RELATED PARTY CONVERTIBLE DEBT
On August 22, 2019, the Company entered into a convertible note with a related party in the amount of $12,000. $4,500 has been repaid. The amount will convert into Common Stock at the Company's option and bears interest at a rate of 6% annually, to be expensed at the time of conversion. The interest on this note has been forgiven by all parties. As of January 31, 2024 and July 31, 2023, the balance of this note was $7,500.
On August 24, 2019, the Company entered into a convertible note with two related parties (who were former partners in 1stPoint Communications, LLC) in the amounts of $12,000 and $6,000 respectively. Both notes bear interest at a rate of 6% annually and any interest may be accrued as either cash or stock at the option of the Company. The interest on this note has been forgiven by all parties. As of January 31, 2024 and July 31, 2023, the balances of these notes were $12,000 and $6,000 for both periods.
On March 24, 2020, the Company entered into a convertible note with the Chief Financial Officer in the amount of $43,000. The amount will convert into Common Stock at the Company's option and bears interest at a rate of 6% annually, to be expensed at the time of conversion. The interest on this note has been forgiven by all parties. As of January 31, 2024 and July 31, 2023, the balance of this note was $43,000.
On April 20, 2020, the Company entered into a convertible note with the Chief Financial Officer in the amount of $36,300 with an original maturity date of April 20, 2024. The amount will convert into Common Stock at the Company's option and bears interest at a rate of 6% annually, to be expensed at the time of conversion. The interest on this note has been forgiven by all parties. As of January 31, 2024 and July 31, 2023, the balance of this note was $36,300.
On September 1, 2020, the Company entered into a promissory note for the sum of $100,000 with a non-executive director. The amount will convert into Common Stock at the Company's option and bears interest at a rate of 6% annually, to be expensed at the time of conversion. The interest on this note has been forgiven by all parties. The note has been amended several times, with a total increase in funding of $61,300. As of January 31, 2024 and July 31, 2023, the balance of this note was $161,300.
On February 26, 2021, the Company entered into a convertible note with a related party in the amount of $25,000. The note bears interest at a rate of 6%, compounded monthly and payable upon repayment or conversion. Interest has been waived by the lender. The note has been amended several times, with a total increase in funding of $853,535. As of January 31, 2024 and July 31, 2023, the balance of this note was $878,535 and $472,500, respectively.
On January 5, 2022, the Company entered into a convertible note with a related party in the amount of $24,253. The amount will convert into Common Stock at the Company's option and bears interest at a rate of 6% annually, to be expensed at the time of conversion. The interest on this note has been forgiven by all parties. As of January 31, 2024 and July 31, 2023, the balance of this note was $24,253.
As of January 31, 2024,and July 31, 2023 all of the related party payables are reported as current liabilities in the Condensed Consolidated Balance Sheet and all interest and maturity dates have been waived by the holders of all promissory notes from all related parties.
January 31, 2024
July 31, 2023
Convertible notes payable - related parties $ 1,168,888
$ 762,854
Less: current portion, net
(1,168,888 )
(762,854 )
Long-term convertible notes payable - related parties $ -
$ -
NOTE 11 - CONVERTIBLE DEBT
On February 11, 2022, the Company entered into a Securities Purchase Agreement (the "Mast SPA") by and between the Company and Mast Hill Fund, L.P. ("Mast"). Pursuant to the terms of the Mast SPA, the Company agreed to sell to Mast and Mast agreed to purchase from the Company, a promissory note in the aggregate principal amount of $550,000 (the "Mast Note"), convertible into shares of the Company's common stock upon the terms and subject to the limitations and conditions set forth in the Mast Note. The Mast Note has an original issue discount of $55,000, resulting in gross proceeds to the Company of $495,000. Mast has piggyback registration rights pursuant to the terms of the Mast SPA.
The Company entered into the First Amendment to the Mast Note as of March 6, 2023, through which both parties agreed to increase the principal balance of the note by $62,000. As of January 31, 2024 and July 31, 2023, the balance of the Mast Note was $612,000.
Pursuant to the terms of the Mast SPA, the Company also agreed to issue (i) a common stock purchase warrant to purchase 150,000 shares of Company common stock at an exercise price of $3.00, subject to adjustment as set forth therein (the "Mast First Warrant"), (ii) a common stock purchase warrant to purchase 150,000 shares of Company common stock at an exercise price of $1.50, subject to adjustment as set forth therein (the "Mast Second Warrant" and together with the Mast First Warrant, the "Mast Warrants"), and (iii) 475,000 shares of Company common stock to Mast as additional consideration for the purchase of the Mast Note.
The Mast Note bears interest at a rate of 12% per annum and matures on February 11, 2025. Any amount of principal or interest on the Mast Note which is not paid when due will bear interest at a rate of the lesser of (i) 16% per annum and (ii) the maximum amount permitted by law. The Mast Note may not be prepaid in whole or in part except as provided in the Mast Note by way of conversion at Mast's option. Mast has the right at any time to convert all or any part of the outstanding and unpaid principal amount and interest of the Mast Note into common stock, subject to a 4.99% equity blocker, at a conversion price of $0.58 per share; provided, however, that Mast is entitled to deduct $1,750 from the conversion amount in each case to cover Mast's fees associated with conversion. Mast's right to exercise each of the Mast Warrants is subject to a 4.99% equity blocker. Each of the Mast Warrants expires on the five-year anniversary of issuance.
The foregoing description of the Mast SPA, the Mast Note and the Mast Warrants does not purport to be complete and is qualified in its entirety by reference to the Mast SPA, the Mast Note, the First Mast Warrant and the Second Mast Warrant, copies of which are filed as Exhibits 10.1, 10.2, 10.3 and 10.4 to Form 8-K filed on February 23, 2022.
On February 17, 2022, the Company entered into a Securities Purchase Agreement (the "Talos SPA") by and between the Company and Talos Victory Fund, LLC ("Talos"). Pursuant to the terms of the Talos SPA, the Company agreed to sell to Talos, and Talos agreed to purchase from the Company, a promissory note in the aggregate principal amount of $275,000 (the "Talos Note"), convertible into shares of the Company's common stock upon the terms and subject to the limitations and conditions set forth in the Talos Note. The Talos Note has an original issue discount of $27,500, resulting in gross proceeds to the Company of $247,500. Talos has piggyback registration rights pursuant to the terms of the Talos SPA. Pursuant to the terms of the Talos SPA, the Company also agreed to issue (i) a common stock purchase warrant to purchase 75,000 shares of Company common stock at an exercise price of $3.00, subject to adjustment as set forth the
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CORRESP
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Hammer Technology Holdings: CORRESP - Filed by newsfilecorp.com
HAMMER FIBER OPTICS HOLDINGS CORP.
6151 Lake Osprey Drive
Sarasota, FL. 34240
June 11, 2024
VIA EDGAR
United States Securities and Exchange Commission
Division of Corporate Finance
Office of Technology.
Washington, D.C. 20549
Attn: Becky Chow and Stephen Krikorian
Re:
Hammer Fiber Optics Holding Corp.
Form 10-K filed on February 16, 2024
Form 10-Q filed on March 27, 2024
File No. 001-35876
Dear Ms. Chow and Mr. Krikorian,
By letter dated May 14, 2024, the staff (the "Staff," "you" or "your") of the U.S. Securities and Exchange Commission (the "Commission") provided Hammer Fiber Optics Holdings Corp. (the "Company," "we," "us" or "our") with its comments to the Company's Form 10-K filed with the Commission on February 16, 2024 and Form 10-Q filed with the Commission on March 27, 2024. We are in receipt of your letter and set forth below are the Company's responses to the Staff's comments. For your convenience, the comments are listed below, followed by the Company's responses.
1. Please disclose the results of your assessment of the effectiveness of your disclosure controls and procedures as of January 31, 2024 in your Quarterly reports. See Item 4 - Controls and Procedures of Form 10-Q that requires you to furnish the information required by Item 307 of Regulation S-K. In addition, you should disclose any changes in internal control over financial reporting that occurred during the fiscal quarter that has materially affected, or is reasonably likely to materially affect, your internal control over financial reporting. Refer to Item 308(c) of Regulation S-K. Please apply this to all your future periodic filings.
RESPONSE: The Company's disclosure regarding the effectiveness of our disclosure controls and procedures as of January 31, 2024 is updated pursuant to the requirements of Item 307 of Regulation S-K, as stated below:
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that are designed to reasonably ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of "disclosure controls and procedures" in Rule 15d-15(e) under the Exchange Act. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
At the end of the period covered by this Quarterly Report, we conducted an evaluation under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that, as of January 31, 2024, the disclosure controls and procedures of our Company were not effective.
The Company's disclosure regarding the changes in internal control over financial reporting as of January 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting is updated pursuant to the requirements of Item 308(c) of Regulation S-K, as stated below:
Changes in Internal Control over Financial Reporting
During the fiscal year 2024, we engaged an outsourced firm with a panel of CPA consultants in 2024 to assist in building internal controls and preparing financial reports, and to establish best practices and help us document and implement all the checks and balances needed for all financial areas.
Except as listed above, there were no other changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
2. We noted your conclusions that disclosure controls and procedures and internal control over financial reporting were not effective. Please disclose any material weakness in your internal control over financial reporting that identified by management in your future filings. Refer to Item 308 of Regulation S-K.
RESPONSE: The Company will disclose any material weakness in our internal controls over financial reporting identified by management in our future periodic filings in accordance with the provisions of Item 308 of Regulation S-K.
3. We noted as of July 31, 2023, you owe Loans payable in amount of $1,443,294 to various parties. It appears such balance included both loans (Note 18) and convertible notes (Note 10); however, based on your disclosures in note 18 and Note 10, we cannot reconcile the amount of $1,443,294. In this regard, please revise your footnotes disclosures to address the following:
• Please break down loans payable in amount of $1,443,294 by respective classifications (i.e. convertible debt, loans payable), and further distinguishing between related party/non-related party debt on the face of balance sheets.
• Disclose the material contractual terms for loan amounts due and provide a tabular schedule to reconcile such amounts due to your consolidated financial statements.
RESPONSE : The Company's balance per notes payable is now segregated into three different categories based on the nature of the debt - Notes Payable, Convertibles Notes Payable and Convertible Notes Payable - Related Parties, as presented below, and will be presented on the face of the balance sheet in the Company's future periodic filings.
The Company updated the related debt disclosure by creating a separate footnote for each note category described per above as separated per consolidated balance sheet, disclosing contractual terms for each individual loan and adding a tabular schedule to each footnote to reconcile with the consolidated financials. These changes will be reflected in the Company's future periodic filings, as stated below:.
NOTE 9 - NOTES PAYABLE
On March 20, 2023, 1stPoint Communications entered into a financing agreement with a financial institution in the amount of $58,000 and $2,320 in transaction fees. As of January 31, 2024 and July 31, 2023 the principal remaining under this financial agreement was $0 and $17,234.
During the fiscal year 2022, the Company entered into a non-interest bearing loan with a financial institution in the amount of $10,972. As of January 31, 2024 and July 31, 2023 the principal remaining was $10,972.
On February 26, 2021, Endstream Communications entered into a financing agreement with a financial institution in the amount of $40,000. The amount was refinanced on March 25, 2022 and again on November 16, 2022 in the amount of $141,750. As of January 31, 2024 and July 31, 2023 the principal remaining was $9,621 and $40,234.
As of January 31, 2024 and July 31, 2023, notes payable consisted of the following:
January 31, 2024
July 31, 2023
Notes payable
$
20,593
$
68,440
Less: current portion, net
(20,593
)
(68,440
)
Long-term notes payable, net
$
-
$
-
NOTE 10 - RELATED PARTY CONVERTIBLE DEBT
On August 22, 2019, the Company entered into a convertible note with a related party in the amount of $12,000. $4,500 has been repaid. The amount will convert into Common Stock at the Company's option and bears interest at a rate of 6% annually, to be expensed at the time of conversion. The interest on this note has been forgiven by all parties. As of January 31, 2024 and July 31, 2023, the balance of this note was $7,500.
On August 24, 2019, the Company entered into a convertible note with two related parties (who were former partners in 1stPoint Communications, LLC) in the amounts of $12,000 and $6,000 respectively. Both notes bear interest at a rate of 6% annually and any interest may be accrued as either cash or stock at the option of the Company. The interest on this note has been forgiven by all parties. As of January 31, 2024 and July 31, 2023, the balances of these notes were $12,000 and $6,000 for both periods.
On March 24, 2020, the Company entered into a convertible note with the Chief Financial Officer in the amount of $43,000. The amount will convert into Common Stock at the Company's option and bears interest at a rate of 6% annually, to be expensed at the time of conversion. The interest on this note has been forgiven by all parties. As of January 31, 2024 and July 31, 2023, the balance of this note was $43,000.
On April 20, 2020, the Company entered into a convertible note with the Chief Financial Officer in the amount of $36,300 with an original maturity date of April 20, 2024. The amount will convert into Common Stock at the Company's option and bears interest at a rate of 6% annually, to be expensed at the time of conversion. The interest on this note has been forgiven by all parties. As of January 31, 2024 and July 31, 2023, the balance of this note was $36,300.
On September 1, 2020, the Company entered into a promissory note for the sum of $100,000 with a non-executive director. The amount will convert into Common Stock at the Company's option and bears interest at a rate of 6% annually, to be expensed at the time of conversion. The interest on this note has been forgiven by all parties. The note has been amended several times, with a total increase in funding of $61,300. As of January 31, 2024 and July 31, 2023, the balance of this note was $161,300.
On February 26, 2021, the Company entered into a convertible note with a related party in the amount of $25,000. The note bears interest at a rate of 6%, compounded monthly and payable upon repayment or conversion. Interest has been waived by the lender. The note has been amended several times, with a total increase in funding of $853,535. As of January 31, 2024 and July 31, 2023, the balance of this note was $878,535 and $472,500, respectively.
On January 5, 2022, the Company entered into a convertible note with a related party in the amount of $24,253. The amount will convert into Common Stock at the Company's option and bears interest at a rate of 6% annually, to be expensed at the time of conversion. The interest on this note has been forgiven by all parties. As of January 31, 2024 and July 31, 2023, the balance of this note was $24,253.
As of January 31, 2024,and July 31, 2023 all of the related party payables are reported as current liabilities in the Condensed Consolidated Balance Sheet and all interest and maturity dates have been waived by the holders of all promissory notes from all related parties.
January 31, 2024
July 31, 2023
Convertible notes payable - related parties
$
1,168,888
$
762,854
Less: current portion, net
(1,168,888
)
(762,854
)
Long-term convertible notes payable - related parties
$
-
$
-
NOTE 11 - CONVERTIBLE DEBT
On February 11, 2022, the Company entered into a Securities Purchase Agreement (the "Mast SPA") by and between the Company and Mast Hill Fund, L.P. ("Mast"). Pursuant to the terms of the Mast SPA, the Company agreed to sell to Mast and Mast agreed to purchase from the Company, a promissory note in the aggregate principal amount of $550,000 (the "Mast Note"), convertible into shares of the Company's common stock upon the terms and subject to the limitations and conditions set forth in the Mast Note. The Mast Note has an original issue discount of $55,000, resulting in gross proceeds to the Company of $495,000. Mast has piggyback registration rights pursuant to the terms of the Mast SPA.
The Company entered into the First Amendment to the Mast Note as of March 6, 2023, through which both parties agreed to increase the principal balance of the note by $62,000. As of January 31, 2024 and July 31, 2023, the balance of the Mast Note was $612,000.
Pursuant to the terms of the Mast SPA, the Company also agreed to issue (i) a common stock purchase warrant to purchase 150,000 shares of Company common stock at an exercise price of $3.00, subject to adjustment as set forth therein (the "Mast First Warrant"), (ii) a common stock purchase warrant to purchase 150,000 shares of Company common stock at an exercise price of $1.50, subject to adjustment as set forth therein (the "Mast Second Warrant" and together with the Mast First Warrant, the "Mast Warrants"), and (iii) 475,000 shares of Company common stock to Mast as additional consideration for the purchase of the Mast Note.
The Mast Note bears interest at a rate of 12% per annum and matures on February 11, 2025. Any amount of principal or interest on the Mast Note which is not paid when due will bear interest at a rate of the lesser of (i) 16% per annum and (ii) the maximum amount permitted by law. The Mast Note may not be prepaid in whole or in part except as provided in the Mast Note by way of conversion at Mast's option. Mast has the right at any time to convert all or any part of the outstanding and unpaid principal amount and interest of the Mast Note into common stock, subject to a 4.99% equity blocker, at a conversion price of $0.58 per share; provided, however, that Mast is entitled to deduct $1,750 from the conversion amount in each case to cover Mast's fees associated with conversion. Mast's right to exercise each of the Mast Warrants is subject to a 4.99% equity blocker. Each of the Mast Warrants expires on the five-year anniversary of issuance.
The foregoing description of the Mast SPA, the Mast Note and the Mast Warrants does not purport to be complete and is qualified in its entirety by reference to the Mast SPA, the Mast Note, the First Mast Warrant and the Second Mast Warrant, copies of which are filed as Exhibits 10.1, 10.2, 10.3 and 10.4 to Form 8-K filed on February 23, 2022.
On February 17, 2022, the Company entered into a Securities Purchase Agreement (the "Talos SPA") by and between the Company and Talos Victory Fund, LLC ("Talos"). Pursuant to the terms of the Talos SPA, the Company agreed to sell to Talos, and Talos agreed to purchase from the Company, a promissory note in the aggregate principal amount of $275,000 (the "Talos Note"), convertible into shares of the Company's common stock upon the terms and subject to the limitations and conditions set forth in the Talos Note. The Talos Note has an original issue discount of $27,500, resulting in gross proceeds to the Company of $247,500. Talos has piggyback registration rights pursuant to the terms of the Talos SPA. Pursuant to the terms of the Talos SPA, the Company also agreed to issue (i) a common stock purchase warrant to purchase 75,000 shares of Company common stock at an exercise price of $3.00, subject to adjustment as set forth the