Item 1.01 Entry into a Material Definitive Agreement.

Exchange of Outstanding Promissory Notes for Secured Convertible Promissory Note

On September 9, 2020, the Company entered into a securities exchange agreement ("GI Exchange Agreement") with Global Ichiban Limited, a British Virgin Islands corporation ("GI").

Pursuant to the terms of the GI Exchange Agreement, GI agreed to surrender and exchange all of its existing outstanding promissory notes with an aggregate principal balance of $6,374,666.57 (including accrued interest). In exchange, the Company issued to GI a secured convertible promissory note with a principal amount of $6,400,000.00 ("GI Exchange Note").





Terms of the GI Exchange Note

The GI Exchange Note will mature on September 30, 2022. Principal on the GI Exchange Note, if not converted will be payable in a lump sum on September 30, 2022. The GI Exchange Note will not bear any accrued interest but bears a default interest rate of 18% in the event of a default under the GI Exchange Note.

The GI Exchange Note contains standard and customary events of default including but not limited to: (i) failure to make payments when due under the GI Exchange Note, and (ii) bankruptcy or insolvency of the Company.

GI shall have the right, from and after 6 months from the date of issuance of the GI Exchange Note and then at any time until the GI Exchange Note is fully paid, to convert any outstanding and unpaid principal and interest into shares of Common Stock at a variable conversion price equal to 80% of the average closing bid price for the shares over the prior five trading days.

Conversion into shares of Common Stock may not be issued pursuant to the GI Exchange Note if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 4.99% of the Company's outstanding shares of Common Stock.

GI agreed not to dispose of the Common Stock (in any given month) in an amount that exceeds 5% of the principal amount of the GI Exchange Note. In addition, GI agreed that daily sales shall not exceed 10% of the average daily trading volume of the Common Stock over the five trading days preceding any sale. These restrictions shall not be applicable in the event the Company does not complete the second tranche of its pending capital raise by December 31, 2020, which combined with the first tranche, shall amount to at least $5 million.

The GI Exchange Note is secured by a lien on substantially all of the Company's assets pursuant to the Security Agreement dated November 30, 2017 (the "Security Agreement") entered into between the Company and GI.

Exchange of Outstanding Promissory Notes for Unsecured Convertible Promissory Notes

On December 18, 2020, the Company entered into a securities exchange agreement ("BD1 Exchange Agreement") with BD 1 Investment Holding LLC ("BD1"). BD1 had previously acquired all of the Company's existing outstanding unsecured notes (other than notes held by GI) from the original note holders.

Pursuant to the terms of the BD1 Exchange Agreement, BD1 agreed to surrender and exchange all of its outstanding promissory notes with principal balances of approximately $10.4 million (including accrued interest and default penalties). In exchange and without the payment of any additional consideration, the Company issued to BD1 two unsecured convertible notes with an aggregate principal amount of $10,500,000 ("BD1 Exchange Notes").

Terms of BD1 Exchange Notes

The BD1 Exchange Notes will mature on December 18, 2025.

The BD1 Exchange Notes will not bear any accrued interest but will bear a default interest rate of 10% in the event of a default under the BD1 Exchange Notes.

The BD1 Exchange Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the BD1 Exchange Notes, and (ii) bankruptcy or insolvency of the Company.

BD1 shall have the right, from and after the date of issuance and then at any time until the BD1 Exchange Notes are fully paid, to convert any outstanding and unpaid principal and interest into shares of Common Stock at a fixed conversion price equal to $0.0001 per share.

The BD1 Exchange Notes are not secured.





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The foregoing description of the Exchange Agreements and Exchange Notes is a summary and is qualified in its entirety by reference to the documents attached hereto as Exhibits, which documents are incorporated herein by reference.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 3.02 Unregistered Sales of Equity Securities.

All of the securities described in this Current Report on Form 8-K were or will be offered and sold in reliance upon exemptions from registration pursuant to Sections 3(a)(9) and 4(a)(2) under the Securities Act of 1933, as amended ("Securities Act"), and Rule 506 of Regulation D promulgated thereunder. The offerings were made to "accredited investors" (as defined by Rule 501 under the Securities Act).

Item 9.01 Financial Statements and Exhibits.






(d) Exhibits

    Exhibit
    Number                                  Description

    10.1         GI Exchange Agreement dated September 9, 2020
    10.2         GI Exchange Note dated September 9, 2020
    10.3         BD1 Exchange Agreement dated December 18, 2020
    10.4         BD1 Exchange Note dated December 18, 2020 ($160,000 principal)
    10.5         BD1 Exchange Note dated December 18, 2020 ($10,340,000 principal)

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