Item 1.01. Entry into a Material Definitive Agreement.
From
The Notes will bear interest at the rate of 12% per year and will mature one
year from the final closing date of the offering. The Notes will be convertible
into shares of common stock, at the option of the holder, commencing six months
from issuance, at a conversion price equal to the lower of
The Notes will automatically convert into common stock (in each case, subject to
the trading volume of the Company's common stock being a minimum of
The Company may prepay the Notes upon 20 days' written notice and payment of a 15% prepayment fee.
Upon conversion of the Notes, the Company will also issue to the investors
warrants (the "Warrants") to purchase 67% of the number of shares of common
stock issued upon conversion of the Notes. The Warrants will have a term of
three years and an exercise price equal to the lower of
In connection with the issuance of the Notes the Company executed a registration
rights agreement. Pursuant to the Registration Rights Agreement, the Company
agreed to file a registration statement with the
The Company agreed to use its best efforts to have the registration statement
declared effective as soon as practicable. If the registration statement is not
declared effective immediately after the Trigger Date (or 150 days if the
The Company engaged a broker dealer ("Broker Dealer") to act as consultant for the offering. The Company will pay Broker Dealer a commission of 2.5% of the gross proceeds the Company receives in the offering. The Company also agreed to issue to Broker Dealer warrants for the purchase of shares of common stock equal to 2.5% of the gross proceeds received in the offering from investors introduced to the Company by Broker Dealer, which warrants will have a term of 10 years and an exercise price equal to 120% of the volume weighted average price of the common stock for the 20 days prior to the closing date, will be exercisable on a cashless basis, and will have the same registration rights as the warrants issued to investors in the offering.
In connection with the foregoing, the Company relied upon the exemption from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended, for transactions not involving a public offering.
The foregoing descriptions of the Subscription Agreement, Notes, Warrants, and Registration Rights Agreement are qualified by reference to the full text of such documents which are filed as exhibits to this report.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information under Item 1.01 is incorporated by reference into this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. Exhibit Number Description 10.1 Form of Subscription Agreement 10.2 Form of Convertible Promissory Note) 10.3 Form of Warrant (incorporated by reference to 8-K filedAugust 6, 2020 ) 10.4 Form of Registration Rights Agreement
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