Item 1.01 Entry into a Material Definitive Agreement.
On
The Note has an interest rate of 12% per annum and matures six (6) months after
its issuance date. The Note is convertible into shares of the Company's common
stock ("Common Stock") at any time at the lower of (i)
The Note may be prepaid; provided, the Company pays all accrued interest and fees and an amount equal to 110% of outstanding principal.
The Note and FirstFire Agreement include a number of anti-dilution protections for FirstFire, including but not limited to, limitations on future variable rate transactions, prohibitions of certain types issuances of securities, reduction of the conversion price and amendment to terms of Note if the Company issues certain securities on better terms than those contained in the Note and adjustment to the number of shares to be received upon the happening of certain events. In addition, upon an event of default under the Note, FirstFire will be entitled to a reduced conversion price, default interest in the maximum permitted by law, and to accelerate the Note with principal to be paid equal to 105% of the outstanding principal.
In connection with funding of the Note, the Company agreed to issue (i) 6,000,000 shares of the Company's common stock as a commitment fee (the "Commitment Shares") and (ii) 29,852,143 shares of the Company's common stock to be returned to the Company's treasury only if the Company repays the Note within 180 days following the issuance date of the Note (the "Returnable Shares"). In addition, the Company is required to reserve shares sufficient to convert the Note and has executed an irrevocable letter agreement with its transfer agent providing for the reservation of shares and issuance to FirstFire. The Company is subject to penalties for failure to timely deliver shares to FirstFire following a conversion request.
The Note is secured by a security agreement encumbering all assets of the Company and ranks senior to all other debt, subject to a carve out for certain future debt that may be incurred by the Company.
The Note and FirstFire Agreement contain other covenants and restrictions common with this type of debt transaction.
The transactions contemplated by the FirstFire Agreement closed on
The foregoing descriptions of the FirstFire Agreement, Security Agreement and the Note are qualified in their entirety by the terms of the full text of the FirstFire Agreement, Security Agreement and Note, attached hereto as Exhibits.
Item 2.01 Completion of Acquisition or Disposition of Assets
On
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 for discussion regarding the Note issued to FirstFire.
Item 3.02 Unregistered Sales of
See Item 1.01 for discussion regarding the issuance of the Commitment Shares and Returnable Shares to FirstFire, as well as Item 2.01 for discussion regarding the issuance of the Purchase Shares to ICNB. All securities discussed above were issued pursuant to Section 4(a)(2) of the Securities Act of 1933.
Forward- Looking Statements
Statements contained in this Current Report that are not statements of historical fact are intended to be and are hereby identified as "forward-looking statements" for purposes of the safe harbor provided by the Private Securities Litigation Reform Act of 1995. Generally, forward-looking statements include expressed expectations of future events and the assumptions on which the expressed expectations are based. All forward-looking statements are inherently uncertain as they are based on various expectations and assumptions concerning future events and they are subject to numerous known and unknown risks and uncertainties which could cause actual events or results to differ materially from those projected. The Company undertakes no obligation to update or revise this Current Report to reflect future developments except as otherwise required by the Securities Exchange Act of 1934.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are filed herewith.
Exhibit No. Description 10.1 FirstFire Securities Purchase Agreement 10.2 FirstFire Convertible Promissory Note 10.3 FirstFire Security Agreement
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