Item 1.01. Entry into a Material Definitive Agreement.
On
The maturity date of the Note is
Prior to the 180th day of the issuance date Note, the Company may prepay the Note in whole or in part, however if it does so between the issuance date and the date which is 60 days from the issuance date, the repayment percentage is 120%. If the Company prepays the Note between the 61st day after issuance and the 120th day after issuance, the prepayment percentage is 125%. If the Company prepays the Note between the 121st day after issuance and the 180 days after issuance, the prepayment percentage is 130%. After such time, the company can submit an optional prepayment notice to Diagonal, however the prepayment shall be subject to the agreement between the Company and Diagonal on the applicable prepayment percentage.
Pursuant to the Note, as long as the Company has any obligations under the Note, the Company cannot without Diagonal's written consent, sell, lease or otherwise dispose of any significant portion of its assets which would render the Company a "shell company" as such term is defined in SEC Rule 144. Additionally, under the Note, any consent to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition.
The Note contains standard and customary events of default such as failing to timely make payments under the Note when due, the failure of the Company to timely comply with the Securities Exchange Act of 1934, as amended, reporting requirements and the failure to maintain a listing on the OTC Markets. The occurrence of any of the events of default, entitle Diagonal, among other things, to accelerate the due date of the unpaid principal amount of, and all accrued and unpaid interest on, the Note. Upon an Event of Default, interest shall accrue at a default interest rate of 22%, and the Company shall pay to the Diagonal an amount equal to the greater of (a) 150% of all amounts due and owing under the Note and (b) the highest number of shares of common stock issuable upon conversion of such amount at the highest closing price or the common stock during the default period, among other remedies for specific events of default.
The foregoing descriptions of SPA and Note, do not purport to be complete and are qualified in their entirety by the full text of the Forms of the of SPA and Note which are filed herewith as Exhibits 10.1 and 10.2, respectively, and are incorporated by reference herein.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The disclosures in Item 1.01 of this Current Report on Form 8-K are incorporated by reference into this Item 2.03.
Item 3.02 Unregistered Sales of
The disclosures in Item 1.01 of this Current Report on Form 8-K are incorporated
by reference into this Item 3.02. The issuance of the securities described in
Item 1.01 was made in reliance on the exemption from registration under Section
4(a)(2) of the Securities Act of 1933, as amended (the "Act"), in reliance upon
exemptions from the registration requirements of the Act in transactions not
involving a public offering. The Company intends to use the net proceeds of the
Note, of
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The exhibits listed in the following Exhibit Index are filed as part of this Current Report on Form 8-K.
Exhibit Description No. 10.1* Form of Securities Purchase Agreement with 1800 DiagonalLending LLC datedMay 24, 2022 . 10.2* Form of Convertible Promissory Note issued to 1800 DiagonalLending LLC datedMay 24, 2022 . 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) *Filed herewith. .
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