FORE PROT Item 1.01 Entry into a Material Definitive Agreement.
On
Pursuant to the terms of the SAFE, at any time that the Company sells its securities (a "Financing") prior to the termination of the SAFE, SRAX may, at its option, convert the SAFE into: (i) the number of shares of non-voting Series D Convertible Preferred Stock ("Series D Preferred Stock") equal to such (a) SAFE Amount divided by (b) the lowest price per share of equity securities sold in any Financing (prior to the termination of the SAFE) multiplied by eighty percent (80%) (the "Conversion Price") and (ii) such number of warrants to purchase Series D Preferred Stock (the "Warrants") equal to the SAFE Amount divided by the Conversion Price. Upon issuance, the Warrants will (i) have a term of five (5) years, (ii) an exercise price equal to the Conversion Price, and (iii) contain price protection provisions for subsequent financings.
The Series D Preferred Stock is non-voting (except as required by law), subject to a beneficial ownership limitation of 4.99% (up to 9.99% on 61 days' notice) and otherwise on parity with the Company's common stock ("Common Stock") with regard to its rights, preferences and limitations. There are 252,078 shares of Series D Preferred Stock outstanding that are convertible into 149,562,566,584 shares of Common Stock, subject to beneficial ownership limitations, all of which are held by SRAX.
Upon certain "Liquidity Events" as defined in the SAFE, including but not limited to a "Change of Control", as defined in the SAFE, SRAX will automatically be entitled to receive a portion of the proceeds due and payable upon such Liquidity Event equal to the greater of, at the election of SRAX: (i) the SAFE amount, (ii) the amount payable on the number of shares of the Common Stock equal to the SAFE amount divided by the Conversion Price, or (iii) such number of shares of Series D Preferred Stock and Warrants equal to the SAFE Amount divided by the Conversion Price.
Upon a dissolution or bankruptcy (a "Dissolution Event"), as described in the SAFE, SRAX will be entitled to (subject to liquidation prior of indebtedness and creditor claims), receive a portion of the proceeds qual to the SAFE Amount.
The SAFE automatically terminates immediately following the earliest to occur of (i) the issuance of the Series D Preferred Stock to SRAX pursuant to the full conversion of the SAFE Amount or (ii) payment of amounts due pursuant to a Liquidity Event or Dissolution Event.
The foregoing summary of the SAFE is qualified in its entirety by reference to the full text of such document, a copy of the form of which is attached hereto as Exhibit 10.01, and which is incorporated herein in its entirety by reference.
The securities offered have not been registered under the Securities Act of
1933, as amended, and may not be offered or sold in
Item 3.02 Unregistered Sale of
The information set forth above in Item 1.01 of this current report on Form 8-K is incorporated herein by reference in its entirety.
Item 9.01 Financial Statement and Exhibits.
Exhibit
No. Description
10.01 Form of SAFE Agreement
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
Forward-Looking Statements
This Current Report on Form 8-K contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance. These forward-looking statements reflect views and assumptions regarding expectations and projections about future events, including the future funding of the remainder of the SAFE, and are based on currently available information. The use of words such as "anticipates," "estimates," "expects," "intends," "plans," and "believes," among others, generally identifies forward-looking statements. However, these words are not the exclusive means of identifying such statements. These forward-looking statements are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict.
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