Item 1.01 Entry into a Material Definitive Agreement.
On
private placement (the “Offering”) of
convertible promissory notes (the “Notes”). The purchase price was
There were three purchasers, including
of Directors. The third purchaser was a private investor. Each investor
purchased a Note for
The Notes bear interest at 10% per annum and mature on
“Maturity Date”). The Notes may be prepaid by the Company at any time. If the
Company shall prepay the entire outstanding principal amount of a Note on or
before
prepay the entire outstanding principal amount of a Note between
and the Maturity Date, then it shall also pay accrued interest on such principal
amount in an amount equal to 50% of such principal amount. If the Company shall
repay the outstanding principal amount of a Note on or after the Maturity Date,
then it shall also pay accrued interest on such principal amount in an amount
equal to 100% of such principal amount.
The Notes are convertible into shares of the Company’s Series A Preferred Stock
(“Series A Preferred”) at a conversion price equal to (a) the outstanding
principal amount of, plus all accrued interest on, the Note divided by (b)
$0.2065. The conversion price is subject to adjustment for certain stock splits,
recapitalizations and other similar events. The Notes are secured by a security
interest in all of the Company’s assets.
Up to 1,000,000 shares of Series A Preferred were approved by the Board. The
Series A Preferred has a 200% liquidation preference over the common stock and
any other future series of preferred stock, payable in the event of a
liquidation or merger of the Company. In such event, the holders of the Series A
Preferred will be entitled to a priority distribution equal to 200% of the
deemed issue price of $0.2065 per share, (i.e.,
Preferred is convertible at the option of the stockholder into shares of common
stock at a conversion price of $0.2065 per share, subject to adjustment for
certain stock splits, recapitalizations and other similar events.
On
Convertible Notes Subscription Agreement (the “Subscription Agreement”) with
three investors. The Subscription Agreement sets forth the economic terms set
forth above.
The Company intends to use the
corporate purposes and to fund ongoing operations and expansion of its business.
The form of Subscription Agreement, the Certificate of Designation for the
Series A Preferred and the form of Note are filed as Exhibits 10.1, 3.1, and
4.1, respectively, to this Current Report on Form 8-K. The foregoing summaries
of the terms of these documents are subject to, and qualified in their entirety
by, such documents, which are incorporated herein by reference.
The representations, warranties and covenants contained in the Subscription
Agreement were made only for purposes of such agreement and as of specific
dates, were solely for the benefit of the parties to such agreement and may be
subject to limitations agreed upon by the contracting parties, including being
qualified by confidential disclosures exchanged between the parties in
connection with the execution of the Subscription Agreement. The representations
and warranties may have been made for the purposes of allocating contractual
risk between the parties to the agreement instead of establishing these matters
as facts and may be subject to standards of materiality applicable to the
contracting parties that differ from those applicable to investors. Moreover,
information concerning the subject matter of the representations and warranties
may change after the date of the Subscription Agreement, and this subsequent
information may or may not be fully reflected in the Company’s public
disclosures.
The Notes, the shares of Series A Preferred to be issued upon conversion of the
Notes and the shares of common stock to be issued upon conversion of the Series
A Preferred sold in the private placement and to be issued have not been
registered under the Securities Act of 1933, as amended (the “Securities Act”),
or any state or other applicable jurisdiction’s securities laws, and may not be
offered or sold in
exemption from the registration requirements of the Securities Act and
applicable state or other jurisdiction’s securities laws.
This current report on Form 8-K shall not constitute an offer to sell or the
solicitation of an offer to buy these securities, nor shall there be any sale of
these securities in any state or jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or qualification under the
securities laws of any such state or jurisdiction.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
As described above in Item 1.01, which disclosures are incorporated by reference
in this Item 3.03 in their entirety, on
private investors
Item 3.02. Unregistered Sales of
As described above in Item 1.01, which disclosures are incorporated by reference
in this Item 3.02 in their entirety, on
private investors
We claim an exemption from registration for the issuance of the Notes, the
shares of Series A Preferred issuable upon conversion of the Notes and the
shares of common stock issuable upon conversion of the Series A Preferred
pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506(b) of
Regulation D thereunder, since the foregoing issuances did not involve a public
offering, the recipients were (i) “accredited investors”; and/or (ii) had access
to similar documentation and information as would be required in a registration
statement under the Securities Act, and the recipients represented that they
acquired the securities for investment only and not with a view towards, or for
resale in connection with, the public sale or distribution thereof. The
securities were offered without any general solicitation by us or our
representatives. No underwriters or agents were involved in the foregoing
issuances and we paid no underwriting discounts or commissions. The securities
sold are subject to transfer restrictions, and the certificates evidencing the
securities contain an appropriate legend stating that such securities have not
been registered under the Securities Act and may not be offered or sold absent
registration or pursuant to an exemption therefrom.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
Exhibit Number Description
3.1 Certificate of Designation of Series A Preferred Stock
4.1 Form of Convertible Note
10.1 Form of Subscription Agreement dated January 13, 2023 .
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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