The Company’s convertible promissory notes and detachable warrants gave rise to derivative financial instruments. The notes embodied certain terms and conditions that were not clearly and closely related to the host debt agreement in terms of economic risks and characteristics. These terms and features consist of the embedded conversion option. Additionally, the detachable warrants contained terms and features that gave rise to derivative liability classification. As of March 31, 2021, the Company does not have enough authorized shares to settle all potential conversion and warrant transactions.
In order to comply with the terms of the Agreement, our Board of Directors has determined that it is advisable and in our and our stockholders’ best interests that the Board of Directors be granted the authority to implement a reverse stock split of the issued and outstanding shares of our Common Stock in a ratio of 15 (Fifteen) for 1 (One). In conjunction with the reverse split the Company will amend its articles of incorporation to authorize 5,000,000,000 (Five Billion) common shares.
