Item 1.01 Entry into a Material Definitive Agreement.
Securities Purchase Documents
On June 9, 2022, Can B Corp., a Florida corporation (the "Company") entered into
a definitive agreement (the "Agreement") with an investor ("Investor") for the
sale of a promissory note ("Note") and warrants ("Warrants") to Investor for
total consideration of $56,250.
The Note is in the principal amount of $62,500 with an original issue discount
of 10%. The Note is convertible into common stock of the Company at a price per
share of $4.00, subject to adjustment pursuant to the terms of the Note. The
Note bears interest at the rate of 12% per year, which increases to 16% per year
in the event of default. The Company has agreed to pay $500 to Investor for each
conversion under the Note to cover its expenses related thereto. The Company has
agreed to reserve at least two times the number of shares convertible under the
Note at all times and has entered into an irrevocable letter agreement with its
transfer agent to issue Investor shares resulting from its conversion of the
Note and exercise of Warrants. In the event that the Company issues common stock
or securities convertible into common stock at a price per share less than the
conversion price under the Note, the Note's conversion price will be decreased
to match such dilutive issuance; provided that, in the event a dilutive issuance
occurs in the first 180 days after Note issuance, such adjustment will not be
applied until the date 180 days after the Note is issued. The Note contains
similar most favored nations terms where the adjustments will take place, if
any, no sooner than 180 days after the Note is issued. The Company may prepay
the Note subject to a 10% prepayment penalty and shall repay all of the Note in
the event its current S-1 offering, as amended, is declared effective by the
Securities and Exchange Commission ("SEC") and shall repay at least 50% of the
Note in the event of an alternative financing occurring after the company has
raised at least $1,250,000 in bridge financing. The Company has agreed to offer
Investor the first right to participate in future financings. The Note otherwise
contains default and other restrictive terms typical of debt finance deals of
this nature. The Note may be accelerated upon an event of default.
In conjunction with the issuance of the Note to Investor, the Company also
issued Investor Warrants to purchase 9,766 shares of common stock at a price per
share of $6.40. However, if within 180 days after the Warrant issuance the
Company's current S-1 offering, as amended, is declared effective by the SEC,
the exercise price will be adjusted to 120% of the offering price per unit or
share offered. The Company has agreed to register the common stock issuable upon
exercise of the Warrant with the SEC pursuant to a registration rights
agreement. If the shares are not so registered within 180 days from Warrant
issuance, the Warrant shall have a cashless exercise feature. No fractional
shares will be issued upon exercise of any portion of the Warrant. There are
penalties to the Company in the event it does not timely issue shares upon
exercise of the Warrant. The Warrant has anti-dilution terms similar to the
Warrant, except that if the Company's current S-1 offering, as amended, is
declared effective by the SEC and the Note is paid in full, the exercise price
shall never be adjusted due to a dilutive issuance.
In addition to the foregoing, the Company has agreed to pay $5,000 in Investor's
legal fees and to grant Investor piggyback registration rights requiring the
Company to register all common shares held by Investor resulting from conversion
of the Note or exercise of the Warrants in the event it files a registration
statement with the SEC, excluding certain types of registration statements where
such piggyback rights would not apply. Otherwise, the Note, Warrants,
registration rights agreement and Agreement contain covenants, representations
and warranties typical of transactions of this type. All such agreements are
governed by Delaware law.
The foregoing descriptions of definitive agreements are qualified in their
entirety by the terms of the full text of the agreements, respectively, attached
hereto as exhibits.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
See item 1.01 regarding the Investor Note and the obligations of the Company
relating thereto.
Item 3.02 Unregistered Sales of Equity Securities.
See Item 1.01 for discussion of the Note and Warrants issued to Investor. The
foregoing securities were issued in reliance upon the exemption from securities
registration afforded by Section 4(a)(2) of the Securities Act of 1933 (the
"Securities Act"), as amended, and Regulation D as promulgated under the
Securities Act.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are filed herewith.
Exhibit No. Description
10.1 Investor Purchase Agreement
10.2 Investor Note
10.3 Investor Warrant
10.4 Investor RRA
104 Cover Page Interactive Data File, formatted in Inline XBRL
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