Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
On
The Company intends to use the net proceeds from the sale of the Securities for the Company's working capital and general corporate purposes.
A one-time interest charge of 8% was applied on the Issuance Date to the
Outstanding Balance (as defined in the Note") and will be payable, along with
the Principal (as defined in the Note), on
The unpaid outstanding principal amount and accrued and unpaid interest under
the Note shall be convertible into shares of the Company's common stock at any
time at the option of the Investor. The conversion price shall be equal to 80%
multiplied by the price per share paid by the investors in the next capital
raising transaction consummated by the Company in the amount of
The Note contains a price-based anti-dilution provision, pursuant to which the
conversion price of the Note shall be reduced upon the occurrence of certain
dilutive issuances of Company securities as set forth in the Note. The
conversion of the Note is also subject to a beneficial ownership limitation of
4.99% of the number of shares of common stock outstanding immediately after
giving effect to such conversion. In the event the Company, prior to the
Maturity Date, issues any Security (as defined in the Note) with any term more
favorable to the holder of such Security or with a term in favor of the holder
of such Security that was not similarly provided to the Investor, then at the
Investor's option such term shall become a part of the Note. The Company also
agreed to provide piggy-back registration rights to the Investor pursuant to
which the Company shall include all shares issuable upon conversion of the Note
on the next registration statement the Company files with the
The Note contains events of default which, among other things, entitle the Investor to accelerate the due date of the unpaid principal amount of, and all accrued and unpaid interest on, the Note. Upon the occurrence of any event of default, the Outstanding Balance shall immediately and automatically increase to 130% of the Outstanding Balance immediately prior to the event of default, and the conversion price of the Note shall be redefined to equal 65% of the lowest trade accruing during the 10 consecutive Trading Days (as defined in the Note) immediately preceding the applicable Conversion Date (as defined in the Note). Nickolay Kukekov, a director of the Company, and a third party, each has personally guaranteed the repayment of the Note.
The Warrant has an exercise price of
1
The foregoing is a brief description of the purchase of the Securities and is qualified in its entirety by reference to the full text of the Securities Purchase Agreement, Note, and Warrant, copies of which are included as Exhibits 10.1, 10.2 and 10.3, respectively, to this Current Report on Form 8-K, each of which are incorporated herein by reference.
Item 3.02 Unregistered Sales of
The disclosure set forth above in Item 2.03 of this Current Report on Form 8-K relating to the issuance of the Securities is incorporated by reference herein. The Note and Warrant were, and, unless subsequently registered, the shares underlying the Note and Warrant will be, issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Regulation D promulgated thereunder, as no general solicitation was used in the offer and sale of such securities.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits. Exhibit No. Description 10.1 Securities Purchase Agreement 10.2 Convertible Note 10.3 Warrant 2
© Edgar Online, source