Item 1.01 Entry into a Material Definitive Agreement.
On
Pursuant to the Purchase Agreement, the Company agreed that, until the sooner of the 12-month anniversary of the Closing Date, or all amounts due under the Note have been fully paid or converted, it will not, without Investor's written consent, change the nature of its business, sell or acquire any material assets, or enter into any variable rate debt transaction. In addition, the Company agreed that, for as long as the Note is outstanding, (a) the Investor will have the right of first refusal to participate in up to 100% of any subsequent offering of the Company's securities, and (b) if the Company issues any securities upon terms more favorable than those provided to the Investor, the terms of the securities issued to the Investor will be adjusted accordingly.
The Note bears interest at a rate of 12% per annum and has a stated maturity
date of
As additional incentive for the Investor to purchase the Note, on the Closing
Date, the Company issued the Investor an incentive fee of 302,500 shares of the
Company's common stock (the "Commitment Shares"), valued at
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On the Closing Date, the Company also issued the Investor a 5-year warrant (the
"Warrant") to purchase up to 800,000 shares of the Company's common stock (the
"Warrant Shares"), at an exercise price of
On the Closing Date, the Company and Investor entered into a Security Agreement (the "Security Agreement"), pursuant to which, as further inducement for the Investor to purchase the Note, the Company granted the Investor a security interest in all of the Company's assets to secure the prompt payment and performance in full of all of Company's obligations under the Note. The security interest will be discharged upon full repayment or conversion of all amounts due under the Note.
The Company and Investor also entered into Registration Rights Agreement (the
"Registration Rights Agreement"), pursuant to which the Company agreed to (a)
file a registration statement on Form S-1 (the "Registration Statement") to
register for resale the Commitment Shares, the Conversion Shares, and the
Warrant Shares (the "
The foregoing descriptions of the Purchase Agreement, the Note, the Warrant, the Security Agreement and the Registration Rights Agreement are not complete and are qualified in their entirety by reference to the full text of the forms of the Purchase Agreement, the Note, the Warrant, the Security Agreement and the Registration Rights Agreement, copies of which are attached hereto as Exhibits 10.1, 4.1, 4.2, 10.2, and 10.3, and 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.
Reference is made to the disclosure set forth under Item 1.01 above, with respect to the issuance of the Note, which disclosure is incorporated herein by reference.
Item 3.02 Unregistered Sale of
Reference is made to the disclosure set forth under Item 1.01 above, with respect to the issuance of the Note, the Conversion Shares, the Commitment Shares, the Warrant and the Warrants Shares, which disclosure is incorporated herein by reference.
The issuance of the Note, and upon conversion of the Note, the Conversion
Shares, the Commitment Shares, the Warrant, and upon the exercise of the
Warrant, the Warrant Shares, are and will be exempt from registration under
Section 4(a)(2) and/or Rule 506(b) of Regulation D as promulgated by the
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits Exhibit No. Description 4.1 12% Secured Promissory Note, datedJune 10, 2022 , in principal Amount of$880,000 , issued by the Company toAJB Capital Investments, LLC 4.2 Warrant, datedJune 10, 2022 , issued by the Company toAJG Capital Investments, LLC 10.1 Securities Purchase Agreement, datedJune 10, 2022 , by and between the Company andAJB Capital Investments, LLC 10.2 Security Agreement, datedJune 10, 2022 , by and between the Company andAJB Capital Investments, LLC 10.3 Registration Rights Agreement, datedJune 10, 2022 , by and between the Company andAJB Capital Investments, LLC 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) - 4 -
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