GALAXY NEXT GENERATION, INC. Item 1.01. Entry into a Material Definitive Agreement.
On
The Note bears interest at 12% per annum and is due and payable on
The Note is convertible in the event of a default into common stock at a
conversion price (the "Conversion Price") equal to the lowest trading price (i)
during the previous twenty (20) trading day period ending on the date of
issuance of the Note, or (ii) during the previous twenty (20) trading day period
ending on the conversion date.If in the case that the Company's common stock is
not deliverable by DWAC, an additional 10% discount will apply for all future
conversions until DWAC delivery becomes available. If in the case that the
Company's common stock is "chilled" for deposit into the DTC system and only
eligible for clearing deposit, an additional 15% discount will apply for all
future conversions under all Note until such chill is lifted. Additionally, if
the Company ceases to be a 1934 Act reporting company or if the Note cannot be
converted into free trading shares after one hundred eighty-one (181) days from
the issue date (other than as a result of the holder's status as an affiliate of
the Company), an additional 15% discount will be attributed to the conversion
price.If the Company fails to maintain its status as "DTC Eligible" for any
reason, the principal amount of the Note will increase by
So long as the Note is outstanding, upon any issuance by the Company or any of its subsidiaries of any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to the holder of the Note, then the Company shall notify the holder of such additional or more favorable term and such term, at holder's option, will become a part of the transaction documents with the holder.If while the Note is outstanding a third party has the right to convert monies owed into common stock at a discount to market greater than the Conversion Price in effect at that time (before all other applicable adjustments in the Note), then the holder, in holder's sole discretion, may utilize such greater discount percentage. In no event will the holder be entitled to convert any portion of the Note in excess of that portion which would result in beneficial ownership by the holder and its affiliates of more than 9.99% of the outstanding shares of common stock.
So long as the Company shall have any obligation under the Note, the Company may not, without the holder's written consent, create, incur, assume guarantee, or otherwise become liable upon the obligation of any person or entity, except by the endorsement of negotiable instruments for deposit or collection, or suffer to exist any liability for borrowed money, except (a) borrowings in existence or committed on the date the Note was issued and of which the Company has informed holder, (b) indebtedness to trade creditors financial institutions or other lenders incurred in the ordinary course of business, (c) borrowings, the proceeds of which shall be used to repay the Note, or (d) borrowings which are expressly subordinated to the Note.
Upon the occurrence of certain events of default specified in the Note, such as
a failure to honor a conversion request, failure to maintain the Company's
listing or the Company's failure to comply with its obligations under Securities
Exchange Act of 1934, as amended, 200% of all amounts owed to holder under the
Note, including default interest if any, shall then become due and payable. Upon
the occurrence of other events of default specified in the Note, such as a
breach of the Company's representations or covenants or the failure register the
Commitment
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The Warrant is exercisable, commencing on the earlier of (i) the date that is
one hundred eighty-one (181) calendar days after its Issuance Date or (ii) the
date that the Company consummates an Uplist Offering (as defined in this
Warrant), for a period of five years at an initial exercise price of
Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an Off-balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 above of this Current Report on Form 8-K is incorporated by reference in this Item 2.03.
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Item 3.02. Unregistered Sales of
The information set forth under Item 1.01 above of this Current Report on Form
8-K is incorporated by reference in this Item 3.02. The shares of the Company's
common stock issued, and the shares to be issued, under the Securities Purchase
Agreement, the Note and the Warrant were, and will be, sold pursuant to an
exemption from the registration requirements under Section 4(a)(2) of the
Securities Act and Rule 506 of Regulation D promulgated thereunder. The investor
is an accredited investor who has purchased the securities as an investment in a
private placement that did not involve a general solicitation. The shares of
common stock not been registered under the Securities Act and may not be offered
or sold in
Item 9.01. Financial Statements and Exhibits. (d) Exhibits.
The following exhibits are filed with this Current Report on Form 8-K:
Exhibit Number Description 4.1 Promissory Note, datedAugust 31, 2022 , in the principal amount of$900,000 4.2 Warrant, datedAugust 31, 2022 10.1 Securities Purchase Agreement, datedAugust 31, 2022 104 Cover Page Interactive Data File (the cover page XBRL tags are embedded within the inline XBRL document)
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