Item 1.01 Entry into a Material Definitive Agreement.
Financing
On
The obligations under the Note incur interest equal to 12% per annum, subject to
increase to the lesser of 16% per annum or the maximum amount permitted by law
upon an Event of Default as defined by the Note. The Note's maturity date is
On the Closing Date, we paid the Lender a commitment fee ("Commitment Fee") of
83,160 shares of our common stock ("Commitment Shares") that are earned in full
on the Closing Date and are restricted securities under the Securities Act. On
the Closing Date, we also issued two warrants to the Lender. One warrant (the
"Note Warrant") may be exercised for 1,134,000 shares of our common stock from
and after an Event of Default under the Note at a price per share of
The Note ranks as our senior unsecured debt. No security interests were granted
by the Company to the Lender.
The Lender has certain rights that may be exercised only upon an Event of
Default (as defined by the Note). The Lender also has the right to convert the
obligations under the Note, from and after an Event of Default, at a price per
share equal to
We have agreed to reserve shares of our common stock for issuance to the Lender upon any conversion of the Note, which may be converted only after an Event of Default. The number of shares reserved is the greater of (i) 3,024,000 or (ii) the number of shares that may be issued upon a conversion of the Note. We have also agreed to reserve shares of common stock that may be issued upon each warrant equal to two times the number of shares of common stock that may be issued upon full exercise of each warrant.
We agreed to register under the Securities Act the Commitment Shares and the shares of common stock underlying the Note Warrant, Other Warrant and the Note under the terms of a Registration Rights Agreement within 180 days after the funding date, if the Note has not been repaid prior to such date. We have also provided under the Securities Purchase Agreement that we will provides for such registration of such shares of our common stock in any other registration statement that we may file under the Securities Act, subject to certain customary exceptions.
We have provided the Lender with a right of first refusal with respect to any bona fide offer of any financing that we intend to pursue that may be exercised by the Lender within five trading days after we provide a notice of such proposed financing. If the Lender does not exercise its right of first refusal, then we may close such financing within 30 days. The Lender's right of first refusal is not applicable to any of the following: (1) a bona fide offer of capital or financing from a nationally recognized broker dealer that is retained by Borrower and acceptable to the Holder, which acceptance will not be unreasonably delayed, withheld or conditioned ("Investment Banker"), or any person or party that is introduced to the Company by the Investment Banker in its capacity as a placement agent, (ii) a bona fide offer of capital or financing from a person or party if such capital or financing is used by the Company for the acquisition or refinance of real property so long as (a) any security interest granted to such person or party is solely limited to the real property being acquired or refinanced and (b) such person or party shall have no rights at any time in such transaction or any related transaction to acquire Common Stock or Common Stock Equivalents of the Company (each a "Real Property Transaction"), as well as (iii) a bona fide offer of capital or financing from a person or party if such person or party is solely purchasing the Company's accounts receivable(s) or sharing of the Company's revenues, in each case so long as such person or party shall have no rights at any time to acquire Common Stock or Common Stock Equivalents of the Company (each a "Factoring Transaction").
The Note is subject to repayment from the use the proceeds of certain
transactions. If, prior to the full repayment or satisfaction of the Note's
obligations, we receive cash proceeds of more than
The Lender has "most favored nations" status. While the Note's obligations are outstanding, we will provide the Lender with any terms under any other public or private offering of our securities (including securities convertible into shares of our common stock) with any individual or entity (an "Other Investor") that has the effect of establishing rights or otherwise benefiting such Other Investor in a manner more favorable in any material respect to such Other Investor than the rights and benefits established in favor of the Lender, in each case, other than with respect to any Real Property Transaction (as defined in the Note), Factoring Transaction (as defined in the Note), or Buyout Transaction (as defined in the Note, generally to be when we use the proceeds to repay the Note's obligations).
The Note and the Securities Purchase Agreement each has customary representations, warranties and covenants, including, without limitation, our indemnification of the Lender a judgement that is unvacated, unbonded or unstayed for a period of twenty (20) days, other than certain specified matters. Each of the Note Warrant, the Other Warrant, the Registration Rights Agreement and the Guaranty has customary representations, warranties and covenants, and additional terms provided in such agreement or document. . . .
Item 3.02 Unregistered Sales of
The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated into this Item 3.02 by reference.
Forward Looking Statements
This communication contains forward-looking statements (including within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and
Section 27A of the Securities Act of 1933, as amended) concerning the Company.
These statements may discuss goals, intentions and expectations as to future
plans, trends, events, results of operations or financial condition, or
otherwise, based on current beliefs of the management of the Company, as well as
assumptions made by, and information currently available to, management.
Forward-looking statements generally include statements that are predictive in
nature and depend upon or refer to future events or conditions, and include
words such as "may," "will," "should," "would," "expect," "anticipate," "plan,"
"likely," "believe," "estimate," "project," "intend," and other similar
expressions. Statements that are not historical facts are forward-looking
statements. Forward-looking statements are based on current beliefs and
assumptions that are subject to risks and uncertainties and are not guarantees
of future performance. Actual results could differ materially from those
contained in any forward-looking statement as a result of various factors,
including, without limitation: the risks regarding the Company and its business,
generally; risks related to the Company's ability to correctly estimate and
manage its operating expenses and develop its innovate non-acute care businesses
and the acceptance of its proposed products and services, including with respect
to future financial and operating results; the ability of the Company to protect
its intellectual property rights; competitive responses to the Company's
businesses including its innovative non-acute care business; unexpected costs,
charges or expenses; regulatory requirements or developments; changes in capital
resource requirements; and legislative, regulatory, political and economic
developments. The foregoing review of important factors that could cause actual
events to differ from expectations should not be construed as exhaustive and
should be read in conjunction with statements that are included herein and
elsewhere, including the risk factors included in the Company's most recent
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K filed with the
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
No. Description 10.1 Securities Purchase Agreement dated as ofJanuary 12, 2023 by and between the Company andMast Hill Fund , L.P.* 10.2 Promissory Note datedJanuary 12, 2023 issued by the Company to Mast Hill Fund, L.P. in the initial principal amount of$600,000 . 10.3 Common Stock Purchase Warrant datedJanuary 12, 2023 for 1,134,000 shares of common stock issued toMast Hill Fund, L.P. 10.4 Common Stock Purchase Warrant datedJanuary 12, 2023 for 851,000 shares of common stock issued toMast Hill Fund, L.P. 10.5 Registration Rights Agreement dated as ofJanuary 12, 2023 by and between the Company andMast Hill Fund, L.P. 10.6 Guaranty dated as ofJanuary 12, 2023 by SRP Artesia, LLC* 104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
* Certain schedules and exhibits have been omitted pursuant to Item 601(b)(2) of
Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished
to the
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